N-CSR 1 form-dltf.htm ANNUAL REPORT form-dltf
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT 
INVESTMENT COMPANIES

Investment Company Act file number 811-3700

The Dreyfus/Laurel Tax-Free Municipal Funds 
(Exact name of Registrant as specified in charter) 
 
 
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Address of principal executive offices) (Zip code) 
 
Michael A. Rosenberg, Esq.
200 Park Avenue
New York, New York 10166
(Name and address of agent for service)

Registrant's telephone number, including area code: (212) 922-6000

Date of fiscal year end:    06/30 
Date of reporting period:    06/30/08 

FORM N-CSR

Item 1. Reports to Stockholders.

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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.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    A Letter from the CEO 
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 
19    Statement of Assets and Liabilities 
20    Statement of Operations 
21    Statement of Changes in Net Assets 
22    Financial Highlights 
23    Notes to Financial Statements 
29    Report of Independent Registered 
    Public Accounting Firm 
30    Important Tax Information 
31    Information About the Review and 
    Approval of the Fund’s Investment 
        Management Agreement
35    Board Members Information 
37    Officers of the Fund 
 
FOR MORE INFORMATION
    Back Cover 

Dreyfus BASIC 
California Municipal 
Money Market Fund 

The    Fund 

A LETTER FROM THE CEO

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, 2007, through June 30, 2008.

Although the U.S. economy has teetered on the brink of recession and the financial markets have encountered heightened volatility in an ongoing credit crisis, the Federal Reserve Board’s accommodative monetary policy and innovative measures to inject liquidity into the banking system have helped to mitigate some of the market instability directly caused by the ongoing credit situation.But a degree of economic uncertainty still remains throughout other long-term asset classes,and the result has been record asset flows into the money markets from investors seeking a relatively safe haven.

While the FOMC continued to reduce the overnight rate through to its meeting on April 30, it maintained the current level of 2% at its latest meeting on June 25. Statements from that meeting suggested that it intends on remaining in a holding pattern in an attempt to help alleviate inflationary pressure. So now, money market asset managers continue to monitor future economic data and the federal futures markets for indications of what to expect with regards to current yields and interest rates. In times like these, your financial advisor can help you assess current risks and your need for liquidity, and take advantage of potential long-term opportunities in other asset classes, given your individual needs and financial goals.

For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.

Thank you for your continued confidence and support.

2

DISCUSSION OF FUND PERFORMANCE

For the period of July 1, 2007, through June 30, 2008, as provided by Joseph Irace, Senior Portfolio Manager

Fund and Market Performance Overview

For the 12-month period ended June 30, 2008, Dreyfus BASIC California Municipal Money Market Fund produced a yield of 2.68% . Taking into account the effects of compounding, the fund produced an effective yield of 2.72% .1

Tax-exempt money market instruments were primarily influenced by lower short-term interest rates during the reporting period, as the Federal Reserve Board (the “Fed”) took aggressive action to stimulate economic growth and promote liquidity in the midst of a credit crisis.

The Fund’s Investment Approach

The fund seeks to provide a high level of current income exempt from federal and California state 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 high-quality California exempt issuers that we believe are most likely to provide high tax-exempt current income.We also actively manage the fund’s weighted average 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.

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.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 fund’s

The Fund 3

DISCUSSION OF FUND PERFORMANCE (continued)

average weighted maturity to maintain current yields for as long as we deem practical. At other times, we try to maintain a neutral average weighted maturity.

Credit and Economic Woes Hurt Investor Sentiment

Economic conditions in California deteriorated over the reporting period as a result of sustained weakness in U.S. housing markets and soaring food and energy costs. Moreover, a credit crisis that originated in the sub-prime mortgage market caused newly risk-averse investors to flock to the relative safety of U.S.Treasury securities and money market funds, sparking price dislocations in longer-term fixed-income markets.

The Fed attempted to address the downturn in the economy and credit markets by injecting liquidity into the banking system and, in September 2007, cutting the federal funds rate from 5.25% to 4.75%, the first such reduction in more than four years. However, more disappointing economic data and news of massive sub-prime related losses by major financial institutions led to renewed fixed-income market turbulence,and the Fed responded with additional rate cuts in October and December.

Additional evidence of economic weakness accumulated over the first several months of 2008, including the first monthly job losses in more than four years.The Fed took particularly aggressive action in late January, easing the federal funds rate by 125 basis points in two moves.Additional reductions of 75 basis points in March and 25 basis points in April left the federal funds rate at just 2.00% by the end of the reporting period.

Assets Flowed into Tax-Exempt Money Market Funds

Although tax-exempt money market yields declined along with short-term interest rates, a record level of assets flowed into municipal money market funds from risk-averse investors. Early in the reporting period, rising demand was met with an ample supply of short-term variable-rate demand notes and tender option bonds driving yields higher, at times, than those of longer-dated municipal notes. However, unrelenting investor demand later began to overwhelm supply, putting downward pressure on short-term yields.

4

The fiscal conditions of most California issuers remained sound during the reporting period, but the economic downturn and housing slump are widely expected to result in renewed budget shortfalls for California and its municipalities.

Maintaining a Conservative Investment Posture

We generally maintained a cautious investment approach, as always, investing exclusively in instruments that have been reviewed and approved by our credit analysts. In some cases, these research efforts identified municipal money market instruments that, in our judgment, were punished too severely in the downturn and represented attractive values.We have attempted to stagger the maturities of the fund’s holdings to help cushion market volatility and guard against unexpected changes in interest rates.

Over much of the reporting period, we set the fund’s weighted average maturity in a range that was longer than industry averages to capture higher yields for as long as we deemed practical while interest rates fell. However, due to intensifying inflation concerns, it appears that the Fed’s interest-rate reductions may be complete for now.Therefore, we recently reduced the fund’s weighted average maturity to a range that is in line with industry averages.

July 15, 2008

    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. 
1    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. 

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.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not 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 California Municipal Money Market Fund from January 1, 2008 to June 30, 2008. 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 June 30, 2008 
 
Expenses paid per $1,000 †    $ 2.25 
Ending value (after expenses)    $1,011.00 

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 June 30, 2008 
 
Expenses paid per $1,000 †    $ 2.26 
Ending value (after expenses)    $1,022.63 

† Expenses are equal to the fund’s annualized expense ratio of .45%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

6

STATEMENT OF INVESTMENTS 
June 30, 2008 

Short-Term    Coupon    Maturity    Principal     
Investments—106.3%    Rate (%)    Date    Amount ($)    Value ($) 
California—90.3%                 
ABAG Finance Authority for                 
Non-Profit Corporations,                 
Revenue (Grauer Foundation for                 
Education Project) (LOC;                 
Comerica Bank)    1.57    7/7/08    3,840,000 a    3,840,000 
ABAG Finance Authority for                 
Nonprofit Corporations,                 
Revenue (Northbay Healthcare                 
Group) (LOC; JPMorgan Chase                 
Bank)    1.45    7/7/08    7,000,000 a    7,000,000 
California,                 
CP (Liquidity Facility:                 
Bayerische Landesbank,                 
California Public Employees                 
Retirement System, California                 
State Teachers Retirement                 
System, Calyon NA, DEPFA Bank                 
PLC, Dexia Credit Locale,                 
Landesbank Hessen-Thuringen                 
Girozentrale, Royal Bank of                 
Canada and Wells Fargo Bank)    1.55    9/3/08    7,500,000    7,500,000 
California,                 
CP (Liquidity Facility:                 
Bayerische Landesbank,                 
California Public Employees                 
Retirement System, California                 
State Teachers Retirement                 
System, Calyon NA, DEPFA Bank                 
PLC, Dexia Credit Locale,                 
Landesbank Hessen-Thuringen                 
Girozentrale, Royal Bank of                 
Canada and Wells Fargo Bank)    1.60    9/9/08    7,500,000    7,500,000 
California,                 
CP (Liquidity Facility:                 
Bayerische Landesbank,                 
California State Teachers                 
Retirement System, Calyon NA,                 
DEPFA Bank PLC, Dexia Credit                 
Locale, Landesbank Hessen-                 
Thuringen Girozentrale, Royal Bank             
of Canada and Wells Fargo Bank)    1.55    9/2/08    7,500,000    7,500,000 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
California,                 
Economic Recovery Bonds    3.00    7/1/08    14,400,000    14,400,000 
California,                 
Economic Recovery Bonds    5.00    7/1/08    950,000    950,000 
California,                 
Economic Recovery Bonds    5.00    1/1/09    2,440,000    2,475,308 
California,                 
Economic Recovery Bonds    5.00    7/1/09    1,000,000    1,032,694 
California,                 
Economic Recovery Bonds    5.00    7/1/09    250,000    257,512 
California,                 
GO Notes    4.50    8/1/08    150,000    150,301 
California,                 
GO Notes    4.00    10/1/08    500,000    502,651 
California,                 
GO Notes    4.75    10/1/08    100,000    100,418 
California,                 
GO Notes    10.00    10/1/08    100,000    101,810 
California,                 
GO Notes    4.00    12/1/08    400,000    402,750 
California,                 
GO Notes    5.00    3/1/09    250,000    254,421 
California,                 
GO Notes                 
(Kindergarten-University)                 
(LOC: Citibank NA, National                 
Australia Bank and State                 
Street Bank and Trust Co.)    1.33    7/7/08    5,500,000 a    5,500,000 
California,                 
GO Notes (Various Purpose)    7.00    8/1/08    100,000    100,332 
California,                 
GO Notes (Various Purpose)    6.25    9/1/08    140,000    140,848 
California,                 
GO Notes (Various Purpose)    6.30    9/1/08    150,000    151,025 
California,                 
GO Notes (Various Purpose)    6.40    9/1/08    100,000    100,554 
California,                 
GO Notes (Various Purpose)    3.00    11/1/08    300,000    300,575 

8

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
California,                 
GO Notes (Various Purpose)    4.00    2/1/09    300,000    303,811 
California,                 
GO Notes (Various Purpose)    4.50    2/1/09    150,000    151,851 
California,                 
GO Notes (Various Purpose)    5.00    2/1/09    700,000    711,675 
California,                 
GO Notes (Various Purpose)                 
(Liquidity Facility; Goldman                 
Sachs Group Inc. and LOC;                 
Goldman Sachs Group Inc.)    1.55    7/7/08    9,495,000 a,b    9,495,000 
California,                 
GO Notes, Refunding    5.00    10/1/08    150,000    150,832 
California,                 
GO Notes, Refunding (Insured;                 
FSA)    5.50    10/1/08    100,000    100,584 
California Department of Veteran                 
Affairs, Home Purchase Revenue    4.65    12/1/08    330,000    331,816 
California Department of Water                 
Resources, Power Supply                 
Revenue (LOC: JPMorgan Chase                 
Bank and Societe Generale)    1.75    7/1/08    4,600,000 a    4,600,000 
California Department of Water                 
Resources, Power Supply                 
Revenue (LOC; Landesbank                 
Hessen-Thuringen Girozentrale)    1.45    7/1/08    10,000,000 a    10,000,000 
California Department of Water                 
Resources, Power Supply                 
Revenue (LOC; State Street                 
Bank and Trust Co.)    1.60    7/1/08    2,100,000 a    2,100,000 
California Department of Water                 
Resources, Water Revenue, CP                 
(Liquidity Facility;                 
Landesbank Hessen-Thuringen                 
Girozentrale)    1.62    11/12/08    992,000    992,000 
California Educational Facilities                 
Authority, Revenue, Refunding                 
(Art Center College of Design)                 
(LOC; Allied Irish Banks)    1.45    7/7/08    3,850,000 a    3,850,000 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
California Health Facilities                 
Financing Authority, Health                 
Facility Revenue (Catholic                 
Healthcare West) (LOC; Bank of             
America)    1.28    7/7/08    6,000,000 a    6,000,000 
California Housing Finance Agency,             
Home Mortgage Revenue    3.15    2/1/09    100,000    100,000 
California Housing Finance Agency,             
Home Mortgage Revenue                 
(Insured; FGIC)    3.70    8/1/08    400,000    400,000 
California Housing Finance Agency,             
Home Mortgage Revenue                 
(Insured; FSA)    3.75    2/1/09    125,000    125,310 
California Infrastructure and                 
Economic Development Bank, IDR             
(Starter and Alternator                 
Exchange, Inc. Project) (LOC;                 
California State Teachers                 
Retirement System)    1.69    7/7/08    1,100,000 a    1,100,000 
California Pollution Control                 
Financing Authority, SWDR                 
(CR&R Inc. Project) (LOC; Bank             
of the West)    1.73    7/7/08    6,000,000 a    6,000,000 
California Pollution Control                 
Financing Authority, SWDR                 
(GreenWaste Recovery, Inc.                 
Project) (LOC; Comerica Bank)    1.75    7/7/08    6,800,000 a    6,800,000 
California Pollution Control                 
Financing Authority, SWDR                 
(Metropolitan Recycling Inc.)                 
(LOC; Comerica Bank)    1.75    7/7/08    2,885,000 a    2,885,000 
California Pollution Control                 
Financing Authority, SWDR                 
(Metropolitan Recycling Inc.)                 
(LOC; Comerica Bank)    1.75    7/7/08    970,000 a    970,000 
California Pollution Control                 
Financing Authority, SWDR                 
(Northern Recycling and Waste             
Services, LLC Project) (LOC;                 
Union Bank of California)    1.75    7/7/08    3,435,000 a    3,435,000 

10

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
California Pollution Control                 
Financing Authority, SWDR                 
(Pena’s Disposal, Inc.                 
Project) (LOC; Comerica Bank)    1.75    7/7/08    1,255,000 a    1,255,000 
California Pollution Control                 
Financing Authority, SWDR                 
(Rainbow Disposal Company Inc.             
Project) (LOC; Union Bank of                 
California)    1.75    7/7/08    3,910,000 a    3,910,000 
California Pollution Control                 
Financing Authority, SWDR                 
(South Tahoe Refuse Company                 
Project) (LOC; Union Bank of                 
California)    1.75    7/7/08    5,540,000 a    5,540,000 
California Pollution Control                 
Financing Authority, SWDR                 
(Sunset Waste Paper, Inc.                 
Project) (LOC; Comerica Bank)    1.75    7/7/08    4,000,000 a    4,000,000 
California Pollution Control                 
Financing Authority, SWDR                 
(Valley Vista Services, Inc.                 
Project) (LOC; Comerica Bank)    1.75    7/7/08    2,000,000 a    2,000,000 
California School Boards                 
Association Finance                 
Corporation, COP, TRAN                 
(California School Cash                 
Reserve Program)                 
(Insured; AMBAC)    4.25    7/1/08    3,000,000    3,000,000 
California School Cash Reserve                 
Program, COP, TRAN (LOC; U.S.             
Bank NA)    3.00    7/6/09    6,000,000 c    6,081,060 
California State University                 
Trustees, Systemwide Revenue                 
(Liquidity Facility; Morgan                 
Stanley Bank and LOC; Morgan                 
Stanley Bank)    1.75    7/7/08    4,000,000 a,b    4,000,000 
California Statewide Communities             
Development Authority, Revenue             
(House Ear Institute Project)                 
(LOC; City National Bank)    1.65    7/7/08    5,900,000 a    5,900,000 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
California Statewide Communities                 
Development Authority, Revenue             
(Kaiser Permanente)    1.33    7/7/08    2,950,000 a    2,950,000 
California Statewide Communities                 
Development Authority, Revenue             
(Kaiser Permanente)    1.33    7/7/08    6,200,000 a    6,200,000 
California Statewide Communities                 
Development Authority,                 
Revenue, Refunding (University                 
Retirement Community at Davis                 
Project) (LOC; Bank of America)    1.50    7/1/08    3,470,000 a    3,470,000 
Chabot-Las Positas Community                 
College District, GO Notes,                 
Refunding (Insured; AMBAC)    3.50    8/1/08    210,000    210,044 
Contra Costa County,                 
MFHR (Pleasant Hill BART                 
Transit Village Apartments                 
Project) (Insured; XLCA)    3.65    8/1/08    2,500,000    2,500,000 
Golden State Tobacco                 
Securitization Corporation,                 
Enhanced Tobacco Settlement                 
Asset-Backed Bonds (Insured;                 
FGIC and Liquidity Facility;                 
Morgan Stanley Bank)    1.75    7/7/08    5,000,000 a,b    5,000,000 
Irvine Reassessment District                 
Number 85-7, Limited                 
Obligation Improvement Bonds                 
(Insured; FSA and Liquidity                 
Facility; Dexia Credit Locale)    2.30    7/1/08    1,000,000 a    1,000,000 
Los Angeles County Housing                 
Authority, MFHR, Refunding                 
(Meadowridge Apartments                 
Project) (LOC; FNMA)    1.40    7/7/08    1,760,000 a    1,760,000 
Los Angeles County School and                 
Community College Districts,                 
COP, TRAN (Los Angeles County             
Schools Pooled Financing                 
Program) (Insured; FSA)    3.50    6/30/09    2,860,000 c    2,911,880 

12

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
Macon Trust Various Certificates                 
(Irvine Unified School                 
District) (Liquidity Facility;                 
Bank of America and LOC; Bank                 
of America)    1.58    7/7/08    2,700,000 a,b    2,700,000 
Menlo Park Community Development             
Agency, Tax Allocation                 
Revenue, Refunding (Las Pulgas                 
Community Development Project)             
(LOC; State Street Bank and                 
Trust Co.)    2.25    7/1/08    10,800,000 a    10,800,000 
Metropolitan Water District of                 
Southern California, Water                 
Revenue, Refunding    3.00    7/1/09    1,000,000 c    1,012,830 
Metropolitan Water District of                 
Southern California,                 
Waterworks GO Notes,                 
Refunding    8.00    3/1/09    2,000,000    2,082,847 
Modesto Irrigation District                 
Financing Authority, Revenue                 
(Domestic Water Project)                 
(Liquidity Facility; DEPFA                 
Bank PLC)    1.65    7/7/08    7,165,000 a,b    7,165,000 
Orange County Sanitation District,                 
COP (Liquidity Facility; Dexia                 
Credit Locale)    1.60    7/1/08    2,950,000 a    2,950,000 
Puttable Floating Option Tax                 
Exempt Receipts (California                 
Statewide Communities                 
Development Authority, MFHR                 
(La Mision Village Apartments                 
Project)) (Liquidity Facility;                 
FHLMC and LOC; FHLMC)    1.72    7/7/08    6,205,000 a,b    6,205,000 
Ravenswood City School District,                 
GO Notes, TRAN    4.00    7/1/08    2,400,000    2,400,000 
Riverside,                 
Electric Revenue (Insured; FSA)    3.63    10/1/08    160,000    160,224 

The Fund 13

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
California (continued)                 
San Bernardino Joint Powers                 
Financing Authority, Tax                 
Allocation Revenue, Refunding                 
(Central City Merged Project)                 
(Insured; AMBAC)    5.50    7/1/08    100,000    100,000 
San Diego County,                 
COP (Friends of Chabad                 
Lubavitch) (LOC; Comerica Bank)    1.31    7/7/08    1,600,000 a    1,600,000 
San Francisco City and County                 
Redevelopment Financing                 
Authority, Tax Allocation                 
Revenue, Refunding (San                 
Francisco Redevelopment                 
Projects) (Insured; MBIA, Inc.)    5.00    8/1/08    1,930,000    1,932,552 
San Jose Redevelopment Agency,                 
Tax Allocation Revenue (Merged                 
Area Redevelopment Project)                 
(Insured; AMBAC)    4.75    8/1/08    200,000    200,277 
Santa Clara Unified School                 
District, TRAN    2.00    6/29/09    1,800,000 c    1,806,156 
Sequoia Union High School                 
District, GO Notes    3.00    7/1/09    1,900,000    1,924,381 
Tustin Community Redevelopment                 
Agency, Revenue (Liquidity                 
Facility; Citigroup and LOC;                 
Citigroup)    1.57    7/7/08    645,000 a,b    645,000 
University of California Regents,                 
General Revenue (Insured; FSA)    4.00    5/15/09    500,000    508,582 
University of California Regents,                 
Limited Project Revenue                 
(Liquidity Facility; Wells                 
Fargo Bank and LOC; Wells                 
Fargo Bank)    1.61    7/7/08    5,000,000 a,b    5,000,000 
West Covina Public Financing                 
Authority, LR, Refunding                 
(Public Facilities Project)                 
(LOC; California State                 
Teachers Retirement System)    1.51    7/7/08    2,650,000 a    2,650,000 

14

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
U.S. Related—16.0%                 
BB&T Municipal Trust                 
(Puerto Rico Infrastructure                 
Financing Authority, Special                 
Tax Revenue) (Liquidity Facility;                 
Branch Banking and Trust Co.)    1.57    7/7/08    4,000,000 a,b    4,000,000 
Puerto Rico Commonwealth,                 
Public Improvement GO Notes                 
(Insured; MBIA, Inc.)    5.50    7/1/08    125,000    125,000 
Puerto Rico Commonwealth,                 
Public Improvement GO Notes                 
(Insured; MBIA, Inc.)    5.50    7/1/08    10,000    10,000 
Puerto Rico Commonwealth,                 
Public Improvement GO Notes                 
(Insured; MBIA, Inc.)    5.75    7/1/08    240,000    240,000 
Puerto Rico Commomwealth,                 
Public Improvement GO Notes,                 
Refunding (Insured; FSA and                 
Liquidity Facility; Dexia                 
Credit Locale)    1.80    7/1/08    14,325,000 a    14,325,000 
Puerto Rico Commonwealth,                 
Public Improvement GO Notes,                 
Refunding (LOC; Wachovia Bank)    1.32    7/7/08    5,000,000 a    5,000,000 
Puerto Rico Commonwealth,                 
Public Improvement GO Notes,                 
Refunding (LOC; Wachovia Bank)    1.32    7/7/08    4,000,000 a    4,000,000 
Puerto Rico Commonwealth,                 
TRAN (LOC: Banco Bilbao                 
Vizcaya Argentaria S.A., Banco                 
Santander S.A., Bank of Nova                 
Scotia, BNP Paribas, Dexia                 
Credit Locale, Fortis Bank and                 
KBC Bank)    4.25    7/30/08    7,000,000    7,004,620 
Puerto Rico Electric Power                 
Authority, Power Revenue                 
(Insured; FSA)    5.00    7/1/08    190,000    190,000 
Puerto Rico Electric Power                 
Authority, Power Revenue,                 
Refunding (Insured; MBIA, Inc.)    5.50    7/1/08    500,000    507,500 

The Fund 15

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
U.S. Related (continued)                 
Puerto Rico Infrastructure                 
Financing Authority, Special                 
Tax Revenue, Refunding                 
(Insured; AMBAC)    5.50    7/1/08    1,500,000    1,500,000 
Puerto Rico Municipal Finance                 
Agency, GO Notes (Insured; FSA)    5.50    8/1/08    100,000    100,144 
Puerto Rico Public Buildings                 
Authority, Government                 
Facilities Revenue (Insured;                 
AMBAC)    6.25    7/1/08    120,000    120,000 
Puttable Floating Option Tax                 
Exempt Receipts (Puerto Rico                 
Highways and Transportation                 
Authority, Highway Revenue)                 
(Liquidity Facility; Dexia                 
Credit Locale and LOC; Dexia                 
Credit Locale)    1.65    7/7/08    4,500,000 a,b    4,500,000 
 
Total Investments (cost $276,017,175)            106.3%    276,017,175 
 
Liabilities, Less Cash and Receivables            (6.3%)    (16,334,443) 
 
Net Assets            100.0%    259,682,732 

a Variable rate demand note — rate shown is the interest rate in effect at June 30, 2008. Maturity date represents the 
next demand date, not the ultimate maturity date. 
b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in 
transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2008, these securities 
amounted to $48,710,000 or 18.8% of net assets. 
c Purchased on a delayed delivery basis. 

16

Summary of Abbreviations         
 
ABAG    Association of Bay Area Governments    ACA    American Capital Access 
AGC    ACE Guaranty Corporation    AGIC    Asset Guaranty Insurance Company 
AMBAC    American Municipal Bond         
    Assurance Corporation    ARRN    Adjustable Rate Receipt Notes 
BAN    Bond Anticipation Notes    BIGI    Bond Investors Guaranty Insurance 
BPA    Bond Purchase Agreement    CGIC    Capital Guaranty Insurance Company 
CIC    Continental Insurance Company    CIFG    CDC Ixis Financial Guaranty 
CMAC    Capital Market Assurance Corporation    COP    Certificate of Participation 
CP    Commercial Paper    EDR    Economic Development Revenue 
EIR    Environmental Improvement Revenue    FGIC    Financial Guaranty Insurance 
            Company 
FHA    Federal Housing Administration    FHLB    Federal Home Loan Bank 
FHLMC    Federal Home Loan Mortgage    FNMA    Federal National 
    Corporation        Mortgage Association 
FSA    Financial Security Assurance    GAN    Grant Anticipation Notes 
GIC    Guaranteed Investment Contract    GNMA    Government National 
            Mortgage Association 
GO    General Obligation    HR    Hospital Revenue 
IDB    Industrial Development Board    IDC    Industrial Development Corporation 
IDR    Industrial Development Revenue    LOC    Letter of Credit 
LOR    Limited Obligation Revenue    LR    Lease Revenue 
MFHR    Multi-Family Housing Revenue    MFMR    Multi-Family Mortgage Revenue 
PCR    Pollution Control Revenue    PILOT    Payment in Lieu of Taxes 
RAC    Revenue Anticipation Certificates    RAN    Revenue Anticipation Notes 
RAW    Revenue Anticipation Warrants    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 Mortgage Agency    SWDR    Solid Waste Disposal Revenue 
TAN    Tax Anticipation Notes    TAW    Tax Anticipation Warrants 
TRAN    Tax and Revenue Anticipation Notes    XLCA    XL Capital Assurance 

The Fund 17

STATEMENT OF INVESTMENTS (continued)

Summary of Combined Ratings (Unaudited)     
 
Fitch    or    Moody’s    or    Standard & Poor’s    Value (%)† 
F1+,F1        VMIG1,MIG1,P1        SP1+,SP1,A1+,A1    81.2 
AAA,AA,A d        Aaa,Aa,A d        AAA,AA,A d    18.8 
                    100.0 

†    Based on total investments. 
d    Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. 
See notes to financial statements. 

18

STATEMENT OF ASSETS AND LIABILITIES 
June 30, 2008 

    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    276,017,175    276,017,175 
Cash        3,507,062 
Interest receivable        1,357,793 
        280,882,030 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 2        72,561 
Payable for investment securities purchased        20,804,842 
Dividend payable        321,895 
        21,199,298 
Net Assets ($)        259,682,732 
Composition of Net Assets ($):         
Paid-in capital        259,675,970 
Accumulated net realized gain (loss) on investments        6,762 
Net Assets ($)        259,682,732 
Shares Outstanding         
(unlimited number of shares of Beneficial Interest authorized)    259,675,970 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

The Fund 19

STATEMENT OF OPERATIONS 
Year Ended June 30, 2008 

Investment Income ($):     
Interest Income    6,174,352 
Expenses:     
Management fee—Note 2    921,350 
Trustees’ fees—Note 2    19,796 
Total Expenses    941,146 
Less—Trustees’ fees reimbursed by the Manager—Note 2    (19,796) 
Net Expenses    921,350 
Investment Income—Net    5,253,002 
Net Realized Gain (Loss) on Investments—Note 1(b) ($)    6,762 
Net Increase in Net Assets Resulting from Operations    5,259,764 

See notes to financial statements.

20

STATEMENT OF CHANGES IN NET ASSETS

        Year Ended June 30, 
    2008    2007 
Operations ($):         
Investment income—net    5,253,002    3,608,079 
Net realized gain (loss) on investments    6,762    39,377 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    5,259,764    3,647,456 
Dividends to Shareholders from ($):         
Investment income—net    (5,292,379)    (3,632,117) 
Beneficial Interest Transactions ($1.00 per share):     
Net proceeds from shares sold    785,737,822    457,305,950 
Dividends reinvested    1,230,486    1,585,060 
Cost of shares redeemed    (635,245,659)    (422,980,781) 
Increase (Decrease) in Net Assets from         
Beneficial Interest Transactions    151,722,649    35,910,229 
Total Increase (Decrease) in Net Assets    151,690,034    35,925,568 
Net Assets ($):         
Beginning of Period    107,992,698    72,067,130 
End of Period    259,682,732    107,992,698 

See notes to financial statements.

The Fund 21

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,     
    2008    2007    2006    2005    2004 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .027    .032    .025    .014    .005 
Distributions:                     
Dividends from investment income—net    (.027)    (.032)    (.025)    (.014)    (.005) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    2.72    3.21    2.50    1.34    .53 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .46    .45    .45    .46    .45 
Ratio of net expenses                     
to average net assets    .45    .45    .45    .45    .45 
Ratio of net investment income                     
to average net assets    2.57    3.16    2.49    1.37    .52 
Net Assets, end of period ($ x 1,000)    259,683    107,993    72,067    72,141    57,791 

See notes to financial statements.

22

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 three series including the fund.The fund’s investment objective is to provide 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. 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 to the public without a sales charge.

The fund’s financial statements are prepared in accordance with U.S. 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 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 Financial Accounting Standards Board (“FASB”) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative def-

The Fund 23

NOTES TO FINANCIAL STATEMENTS (continued)

inition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.

(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 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.

In March 2008, the FASB released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years.At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.

(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.

All cash balances were maintained with the Custodian, Mellon Bank, N.A., a subsidiary of BNY Mellon and a Dreyfus affiliate.

(d) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net; such dividends are paid

24

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 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.

(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.

During the current year, the fund adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. The adoption of FIN 48 had no impact on the operations of the fund for the period ended June 30, 2008.

As of and during the period ended June 30, 2008, the fund did not have any liabilities for any unrecognized tax benefits.The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.

Each of the tax years in the four-year period ended June 30, 2008, remains subject to examination by the Internal Revenue Service and state taxing authorities.

The Fund 25

NOTES TO FINANCIAL STATEMENTS (continued)

At June 30, 2008, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The tax character of distributions paid to shareholders during the fiscal periods ended June 30, 2008 and June 30, 2007, were all tax exempt income.

During the period ended June 30, 2008, as a result of permanent book to tax differences, primarily due to dividend reclassification, the fund increased accumulated undistributed investment income-net by $39,377 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.

At June 30, 2008, 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:

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 $45,000 per year, plus $6,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., the Trust and The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) attended, $2,000 for

26

separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $1,500 for Board meetings and separate committee meetings attended that are conducted by telephone and is reimbursed for travel and out-of-pocket expenses. With respect to Board meetings, the Chairman of the Board receives an additional 25% of such compensation (with the exception of reimbursable amounts). With respect to compensation committee meetings, the Chairman of the compensation committee receives $900 per meeting and, with respect to audit committee meetings prior to April 12, 2008, the Chair of the audit committee received $1,350 per meeting. In the event that there is an in-person joint committee or a joint telephone meeting of the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund.These fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.

The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $72,561.

NOTE 3—Bank Line of Credit:

Effective May 1, 2008, the fund participates with other Dreyfus-managed funds in a $300 million unsecured line of credit primarily to be utilized for temporary or emergency purposes. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. Prior to May 1, 2008, the fund participated with other Dreyfus-managed funds in a $100 million unsecured line of credit. During the period ended June 30, 2008, the fund did not borrow under the line of credit.

The Fund 27

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 4—Subsequent Event:

Effective July 1, 2008, BNY Mellon has reorganized and consolidated a number of its banking and trust company subsidiaries. As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of New York, which has changed its name to The Bank of New York Mellon.

28

REPORT OF INDEPENDENT REGISTERED 
PUBLIC ACCOUNTING FIRM 

The Board of Trustees and Shareholders of 
The Dreyfus/Laurel Tax-Free Municipal Funds: 

We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC California Municipal Money Market Fund (the “Fund”) of The Dreyfus/Laurel Tax-Free Municipal Funds, including the statement of investments, as of June 30, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in two-year period then ended, and the financial highlights for each of the years in the five-year period then ended.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received.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, 2008, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

New York, New York 
August 20, 2008 

The Fund 29

IMPORTANT TAX INFORMATION ( U n a u d i t e d )

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, 2008 as “exempt-interest dividends” (not subject to regular federal and, for individuals who are California residents, California personal income taxes).As required by federal tax law rules, shareholders will receive notification of their portion of the fund’s exempt-interest dividends paid for the 2008 calendar year on Form 1099-INT, which will be mailed by January 31, 2009.

30

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE 
FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) 

At a meeting of the fund’s Board of Trustees held on February 12 and 13, 2008, the Board considered the re-approval of the fund’s Investment Management Agreement (“Management Agreement”), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members considered information previously provided to them in a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus fund complex, and representatives of the Manager confirmed that there had been no material changes in this information. The Board also discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Manager’s representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund. The Manager provided the number of shareholder accounts in the fund, as well as the fund’s asset size.

The Board members also considered the Manager’s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager’s extensive administrative, accounting and compliance infrastructure.

The Fund 31

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE 
FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) 

Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and comparisons to a group of retail, no-load California tax-exempt money market funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional California tax-exempt money market funds (the “Performance Universe”) selected and provided by Lipper, Inc., an independent provider of investment company data.The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below). The Board members discussed the results of the comparisons for various periods ended December 31, 2007, and noted that the fund’s total return performance was above the Performance Group and Performance Universe medians for each of the periods.The Board also noted that the fund was the top performer in the Performance Group for each of the periods, except the 10-year period ended December 31, 2007, when the fund was ranked second among its Performance Group.

The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios of a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper. Noting the fund’s “unitary fee” structure, the Board noted that the fund’s management fee was at and above the Expense Group and Expense Universe medians, respectively, and the expense ratio was below the Expense Group and Expense Universe medians.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates with similar investment objectives, policies and strategies, and included in the same Lipper category as the fund (the “Similar Funds”).They also noted that there were no other accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.The Manager’s rep-

32

resentatives also reviewed the costs associated with distribution through intermediaries.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the services provided, noting the fund’s “unitary fee” structure. The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.

Analysis of Profitability and Economies of Scale. The Manager’s representatives reviewed the dollar amount of expenses allocated and profit received by the Manager and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding the Manager’s approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board also was informed that the methodology had also been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s portfolio.

It was noted that the Board members should consider the Manager’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s

The Fund 33

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE 
FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) 

assets had been decreasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided by the Manager.

At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the ser- vices provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund’s performance.
  • The Board concluded that the fee paid by the fund to the Manager was reasonable in light of the services provided, comparative perfor- mance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that the economies of scale which may accrue to the Manager and its affiliates in connection with the man- agement of the fund had been adequately considered by the Manager in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund’s Management Agreement was in the best interests of the fund and its shareholders and that the Management Agreement would be renewed through April 4, 2009.

34

BOARD MEMBERS INFORMATION ( U n a u d i t e d )

Joseph S. DiMartino (64) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and 
businesses, Director 
No. of Portfolios for which Board Member Serves: 160 

James M. Fitzgibbons (73) 
Board Member (1983) 
Principal Occupation During Past 5 Years: 
• Corporate Director, Davidson Cotton Company (1998-2002) 
Other Board Memberships and Affiliations: 
• Bill Barrett Company, an oil and gas exploration company, Director 
No. of Portfolios for which Board Member Serves: 25 

Kenneth A. Himmel (62) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO, Related Urban Development, a real estate development company 
(1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 25 

Stephen J. Lockwood (61) 
Board Member (1993) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
No. of Portfolios for which Board Member Serves: 25 

The Fund 35

BOARD MEMBERS INFORMATION (Unaudited) (continued)

Roslyn M. Watson (58) 
Board Member (1992) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
• SBLI-USA, Director 
No. of Portfolios for which Board Member Serves: 25 

Benaree Pratt Wiley (62) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• Principal,The Wiley Group, a firm specializing in strategy and business development 
(2005-present) 
• President and CEO,The Partnership, an organization dedicated to increasing the representation 
of African Americans in positions of leadership, influence and decision-making in Boston, MA 
(1991-2005) 
Other Board Memberships and Affiliations: 
• Boston College,Trustee Associate 
• Blue Cross Blue Shield of Massachusetts, Director 
• CBIZ, professional support consultants and service providers for small, midsized and corporate 
businesses, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Chair of Advisory Board 
• The Boston Foundation, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
No. of Portfolios for which Board Member Serves: 35 

Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.

Francis P. Brennan, Emeritus Board Member J.Tomlinson Fort, Emeritus Board Member

36

OFFICERS OF THE FUND ( U n a u d i t e d )

J. DAVID OFFICER, President since 
December 2006. 

Chief Operating Officer,Vice Chairman and a Director of the Manager, and an officer of 76 investment companies (comprised of 160 portfolios) managed by the Manager. He is 59 years old and has been an employee of the Manager since April 1998.

PHILLIP N. MAISANO, Executive Vice 
President since July 2007. 

Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 76 investment companies (comprised of 160 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or Board member of certain other investment management subsidiaries of The Bank of New York Mellon Corporation, each of which is an affiliate of the Manager. He is 61 years old and has been an employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004, and served as Chief Executive Officer of Evaluation Associates, a leading institutional investment consulting firm, from 1988 until 2004.

MICHAEL A. ROSENBERG, Vice President 
and Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1991.

JAMES BITETTO, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel and Secretary of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since December 1996.

JONI LACKS CHARATAN, Vice President 
and Assistant Secretary since 
August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. She is 52 years old and has been an employee of the Manager since October 1988.

JOSEPH M. CHIOFFI, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since June 2000.

JANETTE E. FARRAGHER, Vice President 
and Assistant Secretary since 
August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. She is 45 years old and has been an employee of the Manager since February 1984.

JOHN B. HAMMALIAN, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since February 1991.

ROBERT R. MULLERY, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 56 years old and has been an employee of the Manager since May 1986.

The Fund 37

OFFICERS OF THE FUND (Unaudited) (continued)

JEFF PRUSNOFSKY, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since October 1990.

JAMES WINDELS, Treasurer since 
November 2001. 

Director – Mutual Fund Accounting of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer 
since September 2007. 

Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since September 1982.

GAVIN C. REILLY, Assistant Treasurer 
since December 2005. 

Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since April 1991.

ROBERT ROBOL, Assistant Treasurer 
since December 2002. 

Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1988.

ROBERT SALVIOLO, Assistant Treasurer 
since July 2007. 

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since June 1989.

ROBERT SVAGNA, Assistant Treasurer 
since August 2005. 

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since November 1990.

JOSEPH W. CONNOLLY, Chief Compliance 
Officer since October 2004. 

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (77 investment companies, comprised of 177 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon’s Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 51 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money 
Laundering Compliance Officer since 
July 2002. 

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 73 investment companies (comprised of 173 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Distributor since October 1998.

38

NOTES

Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.

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.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND 
2    A Letter from the CEO 
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 
14    Statement of Assets and Liabilities 
15    Statement of Operations 
16    Statement of Changes in Net Assets 
17    Financial Highlights 
18    Notes to Financial Statements 
24    Report of Independent Registered 
    Public Accounting Firm 
25    Important Tax Information 
26    Information About the Review and 
    Approval of the Fund’s Investment 
        Management Agreement
30    Board Members Information 
32    Officers of the Fund 
 
FOR MORE INFORMATION
    Back Cover 

Dreyfus BASIC 
Massachusetts Municipal 
Money Market Fund 

The    Fund 

A LETTER FROM THE CEO

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, 2007, through June 30, 2008.

Although the U.S. economy has teetered on the brink of recession and the financial markets have encountered heightened volatility in an ongoing credit crisis, the Federal Reserve Board’s accommodative monetary policy and innovative measures to inject liquidity into the banking system have helped to mitigate some of the market instability directly caused by the ongoing credit situation. But a degree of economic uncertainty still remains throughout other long-term asset classes, and the result has been record asset flows into the money markets from investors seeking a relatively safe haven.

While the FOMC continued to reduce the overnight rate through to its meeting on April 30, it maintained the current level of 2% at its latest meeting on June 25. Statements from that meeting suggested that it intends on remaining in a holding pattern in an attempt to help alleviate inflationary pressure. So now, money market asset managers continue to monitor future economic data and the federal futures markets for indications of what to expect with regards to current yields and interest rates. In times like these, your financial advisor can help you assess current risks and your need for liquidity, and take advantage of potential long-term opportunities in other asset classes, given your individual needs and financial goals.

For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.

Thank you for your continued confidence and support.

2

DISCUSSION OF FUND PERFORMANCE

For the period of July 1, 2007, through June 30, 2008, as provided by J. Christopher Nicholl, Portfolio Manager

Fund and Market Performance Overview

For the 12-month period ended June 30, 2008, Dreyfus BASIC Massachusetts Municipal Money Market Fund produced a yield of 2.56% .Taking into account the effects of compounding, the fund also produced an effective yield of 2.59% .1

Yields of tax-exempt money market instruments declined along with short-term interest rates as the Federal Reserve Board (the “Fed”) attempted to address an economic downturn and an intensifying credit crisis.

The Fund’s Investment Approach

The fund seeks 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.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 fund’s weighted average 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.

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.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 3

DISCUSSION OF FUND PERFORMANCE (continued)

the fund’s weighted average maturity to maintain current yields for as long as practical.At other times, we try to maintain a neutral weighted average maturity.

Economic and Credit Woes Dampened Investor Sentiment

Economic conditions deteriorated over the reporting period as U.S. housing markets slumped, food and energy costs soared and, in 2008, the labor market posted six consecutive months of job losses. Moreover, a credit crisis that originated in the sub-prime mortgage market spread to other asset classes, creating difficult liquidity conditions in some fixed-income markets and causing investors to flock to the relative safety of U.S.Treasury securities and money market funds.The credit crisis also produced massive losses for major commercial banks, investment banks and bond insurers.

The Fed attempted to address the downturns in the economy and credit markets by injecting liquidity into the banking system and,in September 2007, cutting the federal funds rate from 5.25% to 4.75%, the first such reduction in more than four years. However, more disappointing economic data led to renewed fixed-income market turbulence, and the Fed responded with additional rate cuts in October and December.

Additional evidence of economic weakness accumulated over the first several months of 2008, including the first monthly job losses in more than four years. The Fed took particularly aggressive action in late January, easing the federal funds rate by 125 basis points in two moves. Additional reductions in March and April left the federal funds rate at just 2.00% by the end of the reporting period.

Assets Flowed into Tax-Exempt Money Market Funds

Although tax-exempt money market yields declined along with short-term interest rates, a record level of assets flowed into municipal money market funds from risk-averse investors. Early in the reporting period, rising demand was met with ample supply of short-term variable-rate demand notes (“VRDNs”) and tender option bonds, driving their yields higher, at times, than yields of longer-dated municipal notes.

4

However, unrelenting investor demand later began to overwhelm supply, putting downward pressure on short-term yields. As a result, yields of one-year municipal notes declined less, on average, than yields of floating-rate instruments.

Meanwhile, Massachusetts’ fiscal condition has remained sound, but the housing slump and recent health care reforms are expected to result in future budget shortfalls. Still, robust “rainy day” reserves and the state’s track record of strong financial management should help it meet these challenges.

Maintaining a Conservative Investment Posture

We have maintained a cautious investment approach in this unsettled environment. For most of the reporting period, we set the fund’s weighted average maturity in a range that was modestly shorter than industry averages to capture higher yields among VRDNs. In May 2008, when the money-market yield curve returned to a positive slope, we increased the fund’s weighted average maturity to a range we considered in line with industry averages.The fund’s composition remained relatively constant over the reporting period, as we complemented VRDNs with municipal notes and, at times, tax-exempt commercial paper.

As of mid-year, the U.S. economy has continued to falter, and the credit crisis has persisted.We intend to maintain a conservative credit posture and a neutral weighted average maturity until we see convincing evidence that the Fed is ready to alter monetary policy one way or the other.

July 15, 2008
    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. 
1    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. 

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.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not 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 Massachusetts Municipal Money Market Fund from January 1, 2008 to June 30, 2008. 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 June 30, 2008 
 
Expenses paid per $1,000 †    $ 2.25 
Ending value (after expenses)    $1,010.00 

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 June 30, 2008 
 
Expenses paid per $1,000 †    $ 2.26 
Ending value (after expenses)    $1,022.63 

† Expenses are equal to the fund’s annualized expense ratio of .45%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

6

STATEMENT OF INVESTMENTS 
June 30, 2008 

Short-Term    Coupon    Maturity    Principal     
Investments—97.9%    Rate (%)    Date    Amount ($)    Value ($) 
ABN AMRO Munitops Certificates                 
Trust (Massachusetts Water                 
Resources Authority) (Insured;                 
FSA and Liquidity Facility;                 
ABN-AMRO)    1.57    7/7/08    5,845,000 a,b    5,845,000 
Boston,                 
GO Notes    5.00    4/1/09    6,360,000    6,498,764 
Boston Industrial Development                 
Financing Authority, Revenue                 
(Fenway Community Health                 
Center Project) (LOC; Fifth                 
Third Bank)    1.65    7/7/08    5,625,000 a    5,625,000 
Boston Industrial Development                 
Financing Authority, Revenue                 
(Fenway Community Health                 
Center Project) (LOC; Fifth                 
Third Bank)    1.65    7/7/08    4,240,000 a    4,240,000 
Boston Industrial Development                 
Financing Authority, Revenue                 
(Fenway Community Health                 
Center Project) (LOC; Fifth                 
Third Bank)    1.65    7/7/08    6,000,000 a    6,000,000 
Canton Housing Authority,                 
MFHR, Refunding (Canton                 
Arboretum Apartments)                 
(LOC; FNMA)    1.80    7/7/08    6,665,000 a    6,665,000 
Falmouth,                 
GO Notes, BAN    4.00    10/10/08    1,000,000    1,001,601 
Grafton,                 
GO Notes, BAN    4.00    10/30/08    2,100,000    2,104,438 
Massachusetts,                 
Consolidated Loan (Liquidity                 
Facility; Dexia Credit Locale)    2.85    7/1/08    1,200,000 a    1,200,000 
Massachusetts,                 
GO Notes, Refunding (Liquidity                 
Facility; Citibank NA)    1.53    7/7/08    3,995,000 a    3,995,000 
Massachusetts Bay Transportation             
Authority (General                 
Transportation System)    1.60    7/7/08    3,500,000 a    3,500,000 
Massachusetts Development Finance             
Agency, First Mortgage Revenue             
(Brookhaven at Lexington                 
Project) (LOC; Bank of America)    1.45    7/7/08    3,230,000 a    3,230,000 

The Fund 7

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
Massachusetts Development Finance                 
Agency, Higher Education                 
Revenue, Refunding (Smith                 
College Issue)    1.25    7/7/08    5,000,000 a    5,000,000 
Massachusetts Development Finance                 
Agency, Revenue (Babson                 
College Issue) (LOC; Royal                 
Bank of Scotland)    1.45    7/7/08    4,075,000 a    4,075,000 
Massachusetts Development Finance                 
Agency, Revenue (Beaver                 
Country Day School Issue)                 
(LOC; Allied Irish Banks)    1.58    7/7/08    4,400,000 a    4,400,000 
Massachusetts Development Finance                 
Agency, Revenue (Boston                 
Children’s Museum Issue) (LOC;                 
Royal Bank of Scotland)    1.45    7/7/08    3,565,000 a    3,565,000 
Massachusetts Development Finance                 
Agency, Revenue (Boston                 
University Issue) (LOC; Allied                 
Irish Banks)    2.85    7/1/08    1,900,000 a    1,900,000 
Massachusetts Development Finance                 
Agency, Revenue (Boston University             
Issue) (LOC; BNP Paribas)    1.45    7/7/08    5,000,000 a    5,000,000 
Massachusetts Development Finance                 
Agency, Revenue (Elderhostel,                 
Inc. Issue) (LOC; Royal Bank                 
of Scotland PLC)    1.58    7/7/08    3,045,000 a    3,045,000 
Massachusetts Development Finance                 
Agency, Revenue (Exploration                 
School, Inc. Issue) (LOC; TD                 
Banknorth NA)    1.57    7/7/08    2,750,000 a    2,750,000 
Massachusetts Development Finance                 
Agency, Revenue (Fay School                 
Issue) (LOC; TD Banknorth NA)    1.55    7/7/08    4,300,000 a    4,300,000 
Massachusetts Development Finance                 
Agency, Revenue (Harvard                 
University Issue)    1.25    7/7/08    6,000,000 a    6,000,000 
Massachusetts Development Finance                 
Agency, Revenue (Hillside School                 
Issue) (LOC; JPMorgan Chase Bank)    1.56    7/7/08    5,000,000 a    5,000,000 

8

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
Massachusetts Development Finance             
Agency, Revenue (Lasell                 
College Issue) (LOC; Citizens                 
Bank of Massachusetts)    1.57    7/7/08    4,000,000 a    4,000,000 
Massachusetts Development Finance             
Agency, Revenue (Meadowbrook             
School Project) (LOC; Allied                 
Irish Banks)    1.55    7/7/08    1,330,000 a    1,330,000 
Massachusetts Development Finance             
Agency, Revenue (Smith College             
Issue) (Liquidity Facility;                 
JPMorgan Chase Bank)    1.34    7/7/08    1,800,000 a    1,800,000 
Massachusetts Development Finance             
Agency, Revenue (Worcester                 
Academy Issue) (LOC; Allied                 
Irish Banks)    1.63    7/7/08    3,000,000 a    3,000,000 
Massachusetts Development Finance             
Agency, Revenue (Youth                 
Opportunities Upheld, Inc.                 
Issue) (LOC; TD Banknorth NA)    1.58    7/7/08    5,000,000 a    5,000,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Bentley                 
College Issue) (LOC; JPMorgan                 
Chase Bank)    1.55    7/7/08    4,500,000 a    4,500,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Falmouth                 
Assisted Living Issue) (LOC;                 
Bank of America)    1.59    7/7/08    2,200,000 a    2,200,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Great                 
Brook Valley Health Center                 
Issue) (LOC; TD Banknorth NA)    1.57    7/7/08    1,600,000 a    1,600,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue                 
(Massachusetts Institute of                 
Technology Issue)    1.45    7/7/08    2,500,000 a    2,500,000 

The Fund 9

STATEMENT OF INVESTMENTS (continued)

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Partners                 
HealthCare System—Capital                 
Asset Program Issue) (Insured;             
FSA and Liquidity Facility:                 
Bayerische Landesbank and                 
JPMorgan Chase Bank)    1.45    7/7/08    2,500,000 a    2,500,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Partners                 
HealthCare System Issue)                 
(LOC; Citibank NA)    1.47    7/7/08    6,000,000 a    6,000,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Peabody                 
Essex Museum Issue) (LOC;                 
Royal Bank of Scotland)    1.45    7/7/08    2,900,000 a    2,900,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Pool Loan             
Program Issue) (LOC; TD                 
Banknorth NA)    2.40    7/1/08    3,300,000 a    3,300,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (South                 
Shore Property Issue) (LOC;                 
Wachovia Bank)    1.45    7/7/08    5,000,000 a    5,000,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Tufts                 
University Issue)    1.45    7/7/08    1,400,000 a    1,400,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Tufts                 
University Issue)    1.45    7/7/08    1,500,000 a    1,500,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (University             
of Massachusetts Issue) (LOC;             
Dexia Credit Locale)    1.43    7/7/08    2,400,000 a    2,400,000 

10

Short-Term    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 
Massachusetts Health and                 
Educational Facilities Authority,                 
Revenue (Wellesley College Issue)    1.30    7/7/08    1,000,000 a    1,000,000 
Massachusetts Health and                 
Educational Facilities Authority,                 
Revenue (Wellesley College Issue)    1.40    7/7/08    4,475,000 a    4,475,000 
Massachusetts Health and                 
Educational Facilities Authority,                 
Revenue (Williams College Issue)    1.25    7/7/08    1,800,000 a    1,800,000 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Williams                 
College Issue)    1.25    7/7/08    3,490,000 a    3,490,000 
Massachusetts Housing Finance                 
Agency, Housing Revenue                 
(Insured; FSA and Liquidity                 
Facility; Dexia Credit Locale)    1.70    7/7/08    3,000,000 a    3,000,000 
Massachusetts Industrial Finance                 
Agency, IDR, Refunding                 
(Nova Realty Trust)                 
(LOC; Bank of America)    1.57    7/7/08    3,000,000 a    3,000,000 
Massachusetts School Building                 
Authority, CP (LOC; Bank of                 
Nova Scotia)    1.35    7/7/08    2,000,000    2,000,000 
Massachusetts Water Resources                 
Authority, Multi-Modal                 
Subordinated General Revenue,                 
Refunding (LOC; Landesbank                 
Hessen-Thuringen Girozentrale)    2.97    7/1/08    1,415,000 a    1,415,000 
Nantucket,                 
GO Notes, BAN    2.25    2/27/09    5,500,000    5,503,532 
Swampscott,                 
GO Notes, BAN    4.00    10/17/08    3,986,000    3,992,822 
 
Total Investments (cost $175,546,157)            97.9%    175,546,157 
 
Cash and Receivables (Net)            2.1%    3,684,913 
 
Net Assets            100.0%    179,231,070 

a Variable rate demand note — rate shown is the interest rate in effect at June 30, 2008. Maturity date represents the 
next demand date, not the ultimate maturity date. 
b Security exempt from registration under Rule 144A of the Securities Act of 1933.This security may be resold in 
transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2008, this security 
amounted to $5,845,000 or 3.3% of net assets. 

The Fund 11

STATEMENT OF INVESTMENTS (continued)

Summary of Abbreviations         
 
ABAG    Association of Bay Area Governments    ACA    American Capital Access 
AGC    ACE Guaranty Corporation    AGIC    Asset Guaranty Insurance Company 
AMBAC    American Municipal Bond         
    Assurance Corporation    ARRN    Adjustable Rate Receipt Notes 
BAN    Bond Anticipation Notes    BIGI    Bond Investors Guaranty Insurance 
BPA    Bond Purchase Agreement    CGIC    Capital Guaranty Insurance Company 
CIC    Continental Insurance Company    CIFG    CDC Ixis Financial Guaranty 
CMAC    Capital Market Assurance Corporation    COP    Certificate of Participation 
CP    Commercial Paper    EDR    Economic Development Revenue 
EIR    Environmental Improvement Revenue    FGIC    Financial Guaranty Insurance 
            Company 
FHA    Federal Housing Administration    FHLB    Federal Home Loan Bank 
FHLMC    Federal Home Loan Mortgage    FNMA    Federal National 
    Corporation        Mortgage Association 
FSA    Financial Security Assurance    GAN    Grant Anticipation Notes 
GIC    Guaranteed Investment Contract    GNMA    Government National 
            Mortgage Association 
GO    General Obligation    HR    Hospital Revenue 
IDB    Industrial Development Board    IDC    Industrial Development Corporation 
IDR    Industrial Development Revenue    LOC    Letter of Credit 
LOR    Limited Obligation Revenue    LR    Lease Revenue 
MFHR    Multi-Family Housing Revenue    MFMR    Multi-Family Mortgage Revenue 
PCR    Pollution Control Revenue    PILOT    Payment in Lieu of Taxes 
RAC    Revenue Anticipation Certificates    RAN    Revenue Anticipation Notes 
RAW    Revenue Anticipation Warrants    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 Mortgage Agency    SWDR    Solid Waste Disposal Revenue 
TAN    Tax Anticipation Notes    TAW    Tax Anticipation Warrants 
TRAN    Tax and Revenue Anticipation Notes    XLCA    XL Capital Assurance 

12

Summary of Combined Ratings (Unaudited)     
 
Fitch    or    Moody’s    or    Standard & Poor’s    Value (%)† 
F1+,F1        VMIG1,MIG1,P1        SP1+,SP1,A1+,A1    90.2 
AAA,AA,A c        Aaa,Aa,A c        AAA,AA,A c    4.7 
Not Rated d        Not Rated d        Not Rated d    5.1 
                    100.0 

†    Based on total investments. 
c    Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. 
d    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. 

The Fund 13

STATEMENT OF ASSETS AND LIABILITIES 
June 30, 2008 

    Cost    Value 
Assets ($):         
Investments in securities—See Statement of Investments    175,546,157    175,546,157 
Cash        3,336,312 
Interest receivable        577,692 
        179,460,161 
Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 2        25,357 
Dividend payable        184,397 
Payable for shares of Beneficial Interest redeemed        19,337 
        229,091 
Net Assets ($)        179,231,070 
Composition of Net Assets ($):         
Paid-in capital        179,198,080 
Accumulated net realized gain (loss) on investments        32,990 
Net Assets ($)        179,231,070 
Shares Outstanding         
(unlimited number of shares of Beneficial Interest authorized)    179,209,165 
Net Asset Value, offering and redemption price per share ($)    1.00 

See notes to financial statements.

14

STATEMENT OF OPERATIONS 
Year Ended June 30, 2008 

Investment Income ($):     
Interest Income    5,160,433 
Expenses:     
Management fee—Note 2    784,348 
Trustees’ fees—Note 2    13,666 
Total Expenses    798,014 
Less—Trustees’ fees reimbursed by the Manager—Note 2    (13,666) 
Net Expenses    784,348 
Investment Income—Net    4,376,085 
Net Realized Gain (Loss) on Investments—Note 1(b) ($)    32,990 
Net Increase in Net Assets Resulting from Operations    4,409,075 

See notes to financial statements.

The Fund 15

STATEMENT OF CHANGES IN NET ASSETS

        Year Ended June 30, 
    2008    2007 
Operations ($):         
Investment income—net    4,376,085    4,302,893 
Net realized gain (loss) on investments    32,990    1,050 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    4,409,075    4,303,943 
Dividends to Shareholders from ($):         
Investment income—net    (4,377,135)    (4,302,893) 
Beneficial Interest Transactions ($1.00 per share):     
Net proceeds from shares sold    464,381,058    351,391,108 
Dividends reinvested    622,358    752,420 
Cost of shares redeemed    (447,865,845)    (320,369,276) 
Increase (Decrease) in Net Assets from         
Beneficial Interest Transactions    17,137,571    31,774,252 
Total Increase (Decrease) in Net Assets    17,169,511    31,775,302 
Net Assets ($):         
Beginning of Period    162,061,559    130,286,257 
End of Period    179,231,070    162,061,559 

See notes to financial statements.

16

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,     
    2008    2007    2006    2005    2004 
Per Share Data ($):                     
Net asset value, beginning of period    1.00    1.00    1.00    1.00    1.00 
Investment Operations:                     
Investment income—net    .026    .032    .024    .013    .005 
Distributions:                     
Dividends from                     
investment income—net    (.026)    (.032)    (.024)    (.013)    (.005) 
Net asset value, end of period    1.00    1.00    1.00    1.00    1.00 
Total Return (%)    2.59    3.21    2.48    1.34    .53 
Ratios/Supplemental Data (%):                     
Ratio of total expenses                     
to average net assets    .46    .46    .46    .45    .45 
Ratio of net expenses                     
to average net assets    .45    .45    .45    .45    .45 
Ratio of net investment income                     
to average net assets    2.51    3.17    2.46    1.33    .53 
Net Assets, end of period ($ x 1,000)    179,231    162,062    130,286    131,162    141,930 

See notes to financial statements.

The Fund 17

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 three 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.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 to the public without a sales charge.

The fund’s financial statements are prepared in accordance with U.S. 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 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 Financial Accounting Standards Board (“FASB”) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements”

18

(“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements.The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.

(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 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.

In March 2008, the FASB released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.

(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.

All cash balances were maintained with the Custodian, Mellon Bank, N.A., a subsidiary of BNY Mellon and a Dreyfus affiliate.

The Fund 19

NOTES TO FINANCIAL STATEMENTS (continued)

(d) 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 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.

(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.

During the current year, the fund adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. The adoption of FIN 48 had no impact on the operations of the fund for the period ended June 30, 2008.

As of and during the period ended June 30, 2008, the fund did not have any liabilities for any unrecognized tax benefits.The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.

Each of the tax years in the four-year period ended June 30, 2008, remains subject to examination by the Internal Revenue Service and state taxing authorities.

20

At June 30, 2008, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The tax character of distributions paid to shareholders during the fiscal periods ended June 30, 2008 and June 30, 2007, were all tax exempt income.

During the period ended June 30, 2008, as a result of permanent book to tax differences, primarily due to dividend reclassification, the fund increased accumulated undistributed investment income-net by $1,050 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.

At June 30, 2008, 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:

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 $45,000 per year, plus $6,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., the Trust and The

The Fund 21

NOTES TO FINANCIAL STATEMENTS (continued)

Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) attended, $2,000 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $1,500 for Board meetings and separate committee meetings attended that are conducted by telephone and is reimbursed for travel and out-of-pocket expenses.With respect to Board meetings, the Chairman of the Board receives an additional 25% of such compensation (with the exception of reimbursable amounts). With respect to compensation committee meetings, the Chairman of the compensation committee receives $900 per meeting and, with respect to audit committee meetings prior to April 12, 2008, the Chair of the audit committee received $1,350 per meeting. In the event that there is an in-person joint committee or a joint telephone meeting of the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund.These fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.

The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $25,357.

NOTE 3—Bank Line of Credit:

Effective May 1, 2008, the fund participates with other Dreyfus-managed funds in a $300 million unsecured line of credit primarily to be utilized for temporary or emergency purposes. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. Prior to May 1, 2008, the fund participated with other Dreyfus-managed funds in a $100 million unsecured line of credit. During the period ended June 30, 2008, the fund did not borrow under the line of credit.

22

NOTE 4—Subsequent Event:

Effective July 1, 2008, BNY Mellon has reorganized and consolidated a number of its banking and trust company subsidiaries. As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of New York, which has changed its name to The Bank of New York Mellon.

The Fund 23

REPORT OF INDEPENDENT REGISTERED 
PUBLIC ACCOUNTING FIRM 

The Board of Trustees and Shareholders of 
The Dreyfus/Laurel Tax-Free Municipal Funds: 

We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC Massachusetts Municipal Money Market Fund (the “Fund”) of The Dreyfus/Laurel Tax-Free Municipal Funds, including the statement of investments, as of June 30, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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, 2008, by correspondence with the custodian.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus BASIC Massachusetts Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30, 2008, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

New York, New York
August 20, 2008

24

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, 2008 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 exempt-interest dividends paid for the 2008 calendar year on Form 1099-INT, which will be mailed by January 31, 2009.

The Fund 25

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE 
FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) 

At a meeting of the fund’s Board of Trustees held on February 12 and 13, 2008, the Board considered the re-approval of the fund’s Investment Management Agreement (“Management Agreement”), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund. The Board members considered information previously provided to them in a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus fund complex, and representatives of the Manager confirmed that there had been no material changes in this information. The Board also discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement.The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each. The Manager’s representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund. The Manager provided the number of shareholder accounts in the fund, as well as the fund’s asset size.

The Board members also considered the Manager’s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements.The Board members also considered the Manager’s extensive administrative, accounting and compliance infrastructure.

26

Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and comparisons to a group of retail, no-load Massachusetts tax-exempt money market funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional Massachusetts tax-exempt money market funds (the “Performance Universe”) selected and provided by Lipper, Inc., an independent provider of investment company data. The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below).The Board members discussed the results of the comparisons for various periods ended December 31, 2007, and noted that the fund’s total return performance was above the Performance Group and Performance Universe medians for each of the periods.

The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios of a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper. Noting that the fund was the only fund in the Expense Group with a “unitary fee” structure, the Board noted that the fund’s management fee was above the Expense Group and Expense Universe medians and the expense ratio was below the Expense Group and Expense Universe medians.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates with similar investment objectives, policies and strategies, and included in the same Lipper category as the fund (the “Similar Funds”). They also noted that there were no other accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.The Manager’s representatives

The Fund 27

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE 
FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) 

also reviewed the costs associated with distribution through intermediaries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager’s performance and the services provided, noting the fund’s “unitary fee” structure.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.

Analysis of Profitability and Economies of Scale. The Manager’s representatives reviewed the dollar amount of expenses allocated and profit received by the Manager and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding the Manager’s approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board also was informed that the methodology had also been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s portfolio.

It was noted that the Board members should consider the Manager’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that the Manager may have

28

realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided by the Manager.

At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the ser- vices provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund’s performance.
  • The Board concluded that the fee paid by the fund to the Manager was reasonable in light of the services provided, comparative perfor- mance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that the economies of scale which may accrue to the Manager and its affiliates in connection with the man- agement of the fund had been adequately considered by the Manager in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund’s Management Agreement was in the best interests of the fund and its shareholders and that the Management Agreement would be renewed through April 4, 2009.

The Fund 29

BOARD MEMBERS INFORMATION (Unaudited)

Joseph S. DiMartino (64) 
Chairman of the Board (1999) 
Principal Occupation During Past 5 Years: 
• Corporate Director and Trustee 
Other Board Memberships and Affiliations: 
• The Muscular Dystrophy Association, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium size 
companies, Director 
• The Newark Group, a provider of a national market of paper recovery facilities, paperboard 
mills and paperboard converting plants, Director 
• Sunair Services Corporation, a provider of certain outdoor-related services to homes and 
businesses, Director 
No. of Portfolios for which Board Member Serves: 160 

James M. Fitzgibbons (73) 
Board Member (1983) 
Principal Occupation During Past 5 Years: 
• Corporate Director, Davidson Cotton Company (1998-2002) 
Other Board Memberships and Affiliations: 
• Bill Barrett Company, an oil and gas exploration company, Director 
No. of Portfolios for which Board Member Serves: 25 

Kenneth A. Himmel (62) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• President and CEO,Related Urban Development,a real estate development company (1996-present) 
• President and CEO, Himmel & Company, a real estate development company (1980-present) 
• CEO, American Food Management, a restaurant company (1983-present) 
No. of Portfolios for which Board Member Serves: 25 

Stephen J. Lockwood (61) 
Board Member (1993) 
Principal Occupation During Past 5 Years: 
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company 
(2000-present) 
No. of Portfolios for which Board Member Serves: 25 

30

Roslyn M. Watson (58) 
Board Member (1992) 
Principal Occupation During Past 5 Years: 
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) 
Other Board Memberships and Affiliations: 
• American Express Bank, Director 
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee 
• National Osteoporosis Foundation,Trustee 
• SBLI-USA, Director 
No. of Portfolios for which Board Member Serves: 25 

Benaree Pratt Wiley (62) 
Board Member (1998) 
Principal Occupation During Past 5 Years: 
• Principal,The Wiley Group, a firm specializing in strategy and business development (2005-present) 
• President and CEO,The Partnership, an organization dedicated to increasing the 
representation of African Americans in positions of leadership, influence and 
decision-making in Boston, MA (1991-2005) 
Other Board Memberships and Affiliations: 
• Boston College,Trustee Associate 
• Blue Cross Blue Shield of Massachusetts, Director 
• CBIZ, professional support consultants and service providers for small, midsized and corporate 
businesses, Director 
• Commonwealth Institute, Director 
• Efficacy Institute, Director 
• PepsiCo African-American, Chair of Advisory Board 
• The Boston Foundation, Director 
• Century Business Services, Inc., a provider of outsourcing functions for small and medium 
size companies, Director 
No. of Portfolios for which Board Member Serves: 35 

Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.

Francis P. Brennan, Emeritus Board Member J.Tomlinson Fort, Emeritus Board Member

The Fund 31

OFFICERS OF THE FUND (Unaudited)

J. DAVID OFFICER, President since 
December 2006. 

Chief Operating Officer,Vice Chairman and a Director of the Manager, and an officer of 76 investment companies (comprised of 160 portfolios) managed by the Manager. He is 59 years old and has been an employee of the Manager since April 1998.

PHILLIP N. MAISANO, Executive Vice 
President since July 2007. 

Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 76 investment companies (comprised of 160 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or Board member of certain other investment management subsidiaries of The Bank of New York Mellon Corporation, each of which is an affiliate of the Manager. He is 61 years old and has been an employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004, and served as Chief Executive Officer of Evaluation Associates, a leading institutional investment consulting firm, from 1988 until 2004.

MICHAEL A. ROSENBERG, Vice President 
and Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1991.

JAMES BITETTO, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel and Secretary of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since December 1996.

JONI LACKS CHARATAN, Vice President 
and Assistant Secretary since 
August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. She is 52 years old and has been an employee of the Manager since October 1988.

JOSEPH M. CHIOFFI, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since June 2000.

JANETTE E. FARRAGHER, Vice President 
and Assistant Secretary since 
August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. She is 45 years old and has been an employee of the Manager since February 1984.

JOHN B. HAMMALIAN, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since February 1991.

ROBERT R. MULLERY, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 56 years old and has been an employee of the Manager since May 1986.

32

JEFF PRUSNOFSKY, Vice President and 
Assistant Secretary since August 2005. 

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since October 1990.

JAMES WINDELS, Treasurer since 
November 2001. 

Director – Mutual Fund Accounting of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer 
since September 2007. 

Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since September 1982.

GAVIN C. REILLY, Assistant Treasurer 
since December 2005. 

Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since April 1991.

ROBERT ROBOL, Assistant Treasurer 
since December 2002. 

Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1988.

ROBERT SALVIOLO, Assistant Treasurer 
since July 2007. 

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since June 1989.

ROBERT SVAGNA, Assistant Treasurer 
since August 2005. 

Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since November 1990.

JOSEPH W. CONNOLLY, Chief Compliance 
Officer since October 2004. 

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (77 investment companies, comprised of 177 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon’s Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 51 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money 
Laundering Compliance Officer since 
July 2002. 

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 73 investment companies (comprised of 173 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Distributor since October 1998.

The Fund 33


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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.

Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value

Contents
 
    THE FUND
 
2   A Letter from the CEO
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
18   Statement of Assets and Liabilities
19   Statement of Operations
20   Statement of Changes in Net Assets
21   Financial Highlights
22   Notes to Financial Statements
28   Report of Independent Registered
    Public Accounting Firm
29   Important Tax Information
30   Information About the Review and
    Approval of the Fund’s Investment
Management Agreement
35   Board Members Information
37   Officers of the Fund
 
FOR MORE INFORMATION
    Back Cover

The Fund

Dreyfus BASIC
New York Municipal
Money Market Fund


A LETTER FROM THE CEO

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, 2007, through June 30, 2008.

Although the U.S. economy has teetered on the brink of recession and the financial markets have encountered heightened volatility in an ongoing credit crisis, the Federal Reserve Board’s accommodative monetary policy and innovative measures to inject liquidity into the banking system have helped to mitigate some of the market instability directly caused by the ongoing credit situation.But a degree of economic uncertainty still remains throughout other long-term asset classes,and the result has been record asset flows into the money markets from investors seeking a relatively safe haven.

While the FOMC continued to reduce the overnight rate through to its meeting on April 30, it maintained the current level of 2% at its latest meeting on June 25. Statements from that meeting suggested that it intends on remaining in a holding pattern in an attempt to help alleviate inflationary pressure. So now, money market asset managers continue to monitor future economic data and the federal futures markets for indications of what to expect with regards to current yields and interest rates. In times like these, your financial advisor can help you assess current risks and your need for liquidity, and take advantage of potential long-term opportunities in other asset classes, given your individual needs and financial goals.

For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.

Thank you for your continued confidence and support.


  Jonathan R. Baum
Chief Executive Officer
The Dreyfus Corporation
July 15, 2008

2


DISCUSSION OF FUND PERFORMANCE

For the period of July 1, 2007, through June 30, 2008, as provided by Joseph Irace, Senior Portfolio Manager

Fund and Market Performance Overview

For the 12-month period ended June 30, 2008, Dreyfus BASIC New York Municipal Money Market Fund produced a yield of 2.63% . Taking into account the effects of compounding, the fund produced an effective yield of 2.66% .1

Tax-exempt money market instruments were primarily influenced by lower short-term interest rates during the reporting period, as the Federal Reserve Board (the “Fed”) took aggressive action to stimulate economic growth and promote liquidity in the midst of a credit crisis.

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 liq-uidity.To pursue this objective, we attempt to add value by selecting the individual tax-exempt money market instruments from high-quality NewYork-exempt issuers that we believe are most likely to provide high tax-exempt current income.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.

Rather than focusing on economic or market trends, we search for securities that, in our opinion, will help us enhance the fund’s yield.

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.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

3

DISCUSSION OF FUND PERFORMANCE (continued)

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.

Credit and Economic Woes Hurt Investor Sentiment

Economic conditions deteriorated during much of the reporting period as a result of sustained weakness in U.S.housing markets and soaring food and energy costs. Moreover, a credit crisis originating in the sub-prime mortgage market spread to other asset classes, causing investors to flock to the relative safety of U.S.Treasury securities and money market funds, and sparking price dislocations in longer-term fixed-income markets.

The Fed attempted to address the downturn in the economy and credit markets by injecting liquidity into the banking system and, in September 2007, cutting the federal funds rate from 5.25% to 4.75%, the first such reduction in more than four years. However, more disappointing economic data and news of massive sub-prime related losses by major financial institutions led to renewed fixed-income market turbulence,and the Fed responded with additional rate cuts in October and December.

Additional evidence of economic weakness accumulated over the first several months of 2008, including the first monthly job losses in more than four years.The Fed took particularly aggressive action in late January, easing the federal funds rate by 125 basis points in two moves.Additional reductions of 75 basis points in March and 25 basis points in April left the federal funds rate at just 2.00% by the end of the reporting period.

Assets Flowed into Tax-Exempt Money Market Funds

Although tax-exempt money market yields declined along with short-term interest rates, a record level of assets flowed into municipal money market funds from risk-averse investors. Early in the reporting period, rising demand was met with an ample supply of short-term variable-rate demand notes and tender option bonds driving yields higher, at times, than those of longer-dated municipal notes. However, unrelenting investor demand later began to overwhelm supply, putting downward pressure on short-term yields.

4

The fiscal conditions of most NewYork issuers remained sound during the reporting period, but the economic downturn and layoffs on Wall Street are widely expected to result in renewed budget pressures for NewYork state and NewYork city.

Maintaining a Conservative Investment Posture

We generally maintained a cautious investment approach, as always, investing exclusively in instruments that have been reviewed and approved by our credit analysts. In some cases, these research efforts identified municipal money market instruments that, in our judgment, were punished too severely in the downturn and represented attractive values.We have attempted to stagger the maturities of the fund’s holdings to help cushion market volatility and guard against unexpected changes in interest rates.

Over much of the reporting period, we set the fund’s weighted average maturity in a range that was longer than industry averages to capture higher yields for as long as we deemed practical while interest rates fell. However, due to intensifying inflation concerns, it appears that the Fed’s interest-rate reductions may be complete for now.Therefore, we recently reduced the fund’s weighted average maturity to a range that is in line with industry averages.

July 15, 2008

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.

1      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.
 

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.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not 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 New York Municipal Money Market Fund from January 1, 2008 to June 30, 2008. 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 June 30, 2008

Expenses paid per $1,000†   $ 2.25
Ending value (after expenses)   $1,010.30

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 June 30, 2008

Expenses paid per $1,000†   $ 2.26
Ending value (after expenses)   $1,022.63

  • Expenses are equal to the fund’s annualized expense ratio of .45%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

6

STATEMENT OF INVESTMENTS                
June 30, 2008                    
 
 
 
 
 
 
 
 
 
Short-Term   Coupon   Maturity   Principal        
Investments—101.5%   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York—100.3%                    
Albany Housing Authority,                    
Revenue (Nutgrove Garden                    
Apartments Project) (LOC;                    
Citizens Bank of Massachusetts)   1.69   7/7/08   1,495,000   a   1,495,000
Albany Industrial Development                    
Agency, Civic Facility Revenue                    
(Albany College of Pharmacy                    
Project) (LOC; TD Banknorth NA)   1.52   7/7/08   6,000,000   a   6,000,000
Albany Industrial Development                    
Agency, Civic Facility Revenue                    
(CHF Holland Suites, L.L.C.                    
Project) (LOC; TD Banknorth NA)   1.58   7/7/08   6,390,000   a   6,390,000
Albany Industrial Development                    
Agency, Civic Facility Revenue                    
(CHF-Holland Suites II, L.L.C.                    
Project) (LOC; TD Banknorth NA)   1.52   7/7/08   3,000,000   a   3,000,000
Albany Industrial Development                    
Agency, Civic Facility Revenue                    
(Corning Preserve/Hudson                    
Riverfront Development                    
Project) (LOC; Key Bank)   1.59   7/7/08   1,245,000   a   1,245,000
Alexandria Bay,                    
GO Notes, BAN   4.25   9/18/08   2,000,000       2,001,871
Amsterdam Enlarged City School                    
District, GO Notes, BAN   4.00   7/3/08   1,346,000       1,346,018
Auburn Industrial Development                    
Authority, IDR (Fat Tire LLC                    
Project) (LOC; Citizens Bank                    
of Pennsylvania)   1.76   7/7/08   1,350,000   a   1,350,000
Avoca Central School District,                    
GO Notes, BAN   3.00   6/26/09   4,000,000       4,032,824
Board of Cooperative Educational                    
Services for the Sole                    
Supervisory District in the                    
Counties of Cattaraugus,                    
Allegany, Erie and Wyoming, RAN   4.00   12/30/08   3,000,000       3,012,320
Dutchess County Industrial                    
Development Agency, Civic                    
Facility Revenue, Refunding                    
(Lutheran Center at                    
Poughkeepsie, Inc. Project)                    
(LOC; Key Bank)   1.59   7/7/08   1,900,000   a   1,900,000

The Fund

7

STATEMENT OF INVESTMENTS (continued)

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
East Hampton,                    
GO Notes, BAN   2.00   6/4/09   1,600,000       1,602,904
Erie County Industrial Development                    
Agency, IDR (Luminescent                    
System Inc. Project) (LOC;                    
HSBC Bank USA)   1.70   7/7/08   3,645,000   a   3,645,000
Hamburg Central School District,                    
GO Notes, BAN   4.25   7/3/08   2,400,000       2,400,057
Hamburg Central School District,                    
GO Notes, BAN   3.35   7/2/09   4,400,000   b   4,448,048
Hudson Yards Infrastructure                    
Corporation, Hudson Yards                    
Senior Revenue (Insured; FGIC                    
and Liquidity Facility;                    
Landesbank Hessen-Thuringen                    
Girozentrale)   1.59   7/7/08   21,800,000   a,c   21,800,000
Hudson Yards Infrastructure                    
Corporation, Hudson Yards                    
Senior Revenue (Insured; FGIC                    
and Liquidity Facility; Morgan                    
Stanley Bank)   1.75   7/7/08   10,000,000   a,c   10,000,000
Lancaster Industrial Development                    
Agency, IDR (Jiffy-Tite                    
Company, Inc. Project) (LOC;                    
Key Bank)   1.76   7/7/08   1,120,000   a   1,120,000
Laurens Central School District,                    
GO Notes, BAN   2.10   6/25/09   1,446,475       1,447,869
Long Island Power Authority,                    
Electric System Subordinated                    
Revenue (LOC; Bayerische                    
Landesbank)   1.70   7/1/08   1,000,000   a   1,000,000
Metropolitan Transportation                    
Authority, Transportation                    
Revenue (Insured; Assured                    
Guaranty and Liquidity                    
Facility; PB Finance Inc.)   1.56   7/7/08   9,310,000   a,c   9,310,000
Metropolitan Transportation                    
Authority, Transportation                    
Revenue, CP (LOC; ABN AMRO)   1.40   7/8/08   3,000,000       3,000,000

8

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
Monroe County Industrial                    
Development Agency, Civic                    
Facility Revenue (YMCA of                    
Greater Rochester Project)                    
(LOC; M&T Bank)   1.60   7/7/08   2,500,000   a   2,500,000
Monroe County Industrial                    
Development Agency, Civic                    
Facility Revenue (YMCA of                    
Greater Rochester Project)                    
(LOC; M&T Bank)   1.60   7/7/08   5,250,000   a   5,250,000
Monroe County Industrial                    
Development Agency, IDR (2883                    
Associates LP) (LOC; HSBC Bank                    
USA)   1.70   7/7/08   625,000   a   625,000
Monroe County Industrial                    
Development Agency, IDR (Axelrod                    
Realty Partnership Facility)                    
(LOC; JPMorgan Chase Bank)   3.00   12/1/09   260,000       260,000
Monroe County Industrial                    
Development Agency, IDR                    
(Mercury Print Productions,                    
Inc. Facility) (LOC; M&T Bank)   1.74   7/7/08   225,000   a   225,000
Naples Central School District,                    
GO Notes, BAN   2.25   6/16/09   1,700,000       1,705,591
Nassau County Industrial                    
Development Agency, Revenue                    
(Rockville Centre Housing                    
Project) (LOC; M&T Bank)   1.26   7/7/08   8,000,000   a   8,000,000
New York City                    
(Insured; FSA and Liquidity                    
Facility; Dexia Credit Locale)   1.60   7/1/08   13,625,000   a   13,625,000
New York City                    
(Insured; FSA and Liquidity                    
Facility; State Street Bank                    
and Trust Co.)   1.70   7/1/08   2,000,000   a   2,000,000
New York City                    
(Insured; FSA and Liquidity                    
Facility; State Street Bank                    
and Trust Co.)   1.70   7/1/08   1,575,000   a   1,575,000

The Fund

9

STATEMENT OF INVESTMENTS (continued)

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
New York City                    
(Insured; FSA and Liquidity                    
Facility; State Street Bank                    
and Trust Co.)   1.70   7/1/08   5,000,000   a   5,000,000
New York City                    
(Liquidity Facility; Allied                    
Irish Banks)   1.60   7/1/08   9,600,000   a   9,600,000
New York City                    
(LOC; Bank of America)   2.35   7/1/08   6,500,000   a   6,500,000
New York City                    
(LOC; Bayerische Landesbank)   1.60   7/1/08   3,750,000   a   3,750,000
New York City                    
(LOC; JPMorgan Chase Bank)   1.70   7/1/08   2,400,000   a   2,400,000
New York City                    
(LOC; Westdeutsche Landesbank)   1.60   7/1/08   1,100,000   a   1,100,000
New York City,                    
GO Notes   4.88   8/1/08   300,000       300,418
New York City,                    
GO Notes   5.00   8/1/08   175,000       175,415
New York City,                    
GO Notes   5.25   8/1/08   4,460,000       4,472,858
New York City,                    
GO Notes   5.25   8/1/08   950,000       952,007
New York City,                    
GO Notes   3.65   4/1/09   100,000       100,475
New York City Housing Development                    
Corporation, MFMR (Cook Street                    
Apartments) (LOC; JPMorgan                    
Chase Bank)   1.45   7/7/08   7,000,000   a   7,000,000
New York City Industrial                    
Development Agency, Civic                    
Facility Revenue (Abraham                    
Joshua Heschel High School                    
Project) (LOC; Allied Irish                    
Banks)   1.54   7/7/08   3,850,000   a   3,850,000

New York City Industrial
Development Agency, Civic
Facility Revenue (Columbia
Grammar and Preparatory School
Project) (LOC; Allied Irish
Banks)

1.58 7/7/08 4,630,000 a

4,630,000

10

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
New York City Industrial                    
Development Agency, Civic                    
Facility Revenue (Hewitt                    
School Project) (LOC; Allied                    
Irish Banks)   1.58   7/7/08   1,570,000   a   1,570,000
New York City Industrial                    
Development Agency, Civic                    
Facility Revenue (Sephardic                    
Community Youth Center, Inc.                    
Project) (LOC; M&T Bank)   1.21   7/7/08   2,500,000   a   2,500,000
New York City Industrial                    
Development Agency, Civic                    
Facility Revenue                    
(Spence-Chapin, Services to                    
Families and Children Project)                    
(LOC; Allied Irish Banks)   1.58   7/7/08   3,935,000   a   3,935,000
New York City Industrial                    
Development Agency, Civic                    
Facility Revenue (The                    
Allen-Stevenson School                    
Project) (LOC; Allied Irish                    
Banks)   1.58   7/7/08   3,005,000   a   3,005,000
New York City Industrial                    
Development Agency, Civic                    
Facility Revenue, Refunding                    
(Federation of Protestant                    
Welfare Agencies Inc. Project)                    
(LOC; Allied Irish Banks)   1.58   7/7/08   2,880,000   a   2,880,000
New York City Industrial                    
Development Agency, IDR                    
(Novelty Crystal Corporation                    
Project) (LOC; Commerce Bank                    
N.A.)   1.68   7/7/08   3,560,000   a   3,560,000
New York City Industrial                    
Development Agency, IDR                    
(Super-Tek Products, Inc.                    
Project) (LOC; Citibank NA)   1.63   7/7/08   5,155,000   a   5,155,000
New York City Industrial                    
Development Agency, Special                    
Facility Revenue (Air Express                    
International Corporation                    
Project) (LOC; Citibank NA)   1.57   7/7/08   5,000,000   a   5,000,000

The Fund

11

STATEMENT OF INVESTMENTS (continued)

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
New York City Municipal Water                    
Finance Authority, CP                    
(Liquidity Facility: Dexia                    
Credit Locale and JPMorgan                    
Chase Bank)   1.68   8/11/08   7,300,000       7,300,000
New York City Municipal Water                    
Finance Authority, Water and                    
Sewer System Revenue                    
(Liquidity Facility; Depfa                    
Bank PLC)   1.70   7/1/08   5,400,000   a   5,400,000
New York City Transitional Finance                    
Authority, Future Tax Secured                    
Revenue   5.50   2/1/09   500,000       509,361
New York City Transitional Finance                    
Authority, Future Tax Secured                    
Revenue (Liquidity Facility;                    
Landesbank Baden-Wurttemberg)   1.60   7/1/08   11,265,000   a   11,265,000
New York City Transitional Finance                    
Authority, Revenue (New York                    
City Recovery) (Liquidity                    
Facility; Landesbank                    
Baden-Wurttemberg)   1.60   7/1/08   9,350,000   a   9,350,000
New York Counties Tobacco Trust                    
IV, Tobacco Settlement                    
Pass-Through Bonds (Liquidity                    
Facility; Merrill Lynch                    
Capital Services and LOC;                    
Merrill Lynch)   1.67   7/7/08   17,000,000   a,c   17,000,000
New York State Dormitory                    
Authority, Revenue (Mount                    
Saint Mary College) (LOC;                    
JPMorgan Chase Bank)   1.63   7/7/08   4,300,000   a   4,300,000
New York State Dormitory                    
Authority, Revenue (Park Ridge                    
Hospital Inc.) (LOC; JPMorgan                    
Chase Bank)   1.54   7/7/08   13,100,000   a   13,100,000
New York State Dormitory                    
Authority, State Personal                    
Income Tax Revenue (Education)   5.00   3/15/09   220,000       224,586

12

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
New York State Housing Finance                    
Agency, Revenue (Worth Street)                    
(LOC; FNMA)   1.55   7/7/08   9,400,000   a   9,400,000
New York State Urban Development                    
Corporation, COP (James A.                    
Farley Post Office Project)                    
(Liquidity Facility; Citigroup                    
and LOC; Citigroup)   1.60   7/7/08   5,000,000   a,c   5,000,000
Newburgh Industrial Development                    
Agency, Civic Facility Revenue                    
(Community Development                    
Properties Dubois Street II,                    
Inc. Project) (LOC; Key Bank)   1.59   7/7/08   10,605,000   a   10,605,000
North Greenbush,                    
GO Notes, BAN   2.75   4/17/09   2,000,000       2,005,382
Olean,                    
GO Notes, RAN   4.00   8/14/08   1,800,000       1,800,416
Orangetown,                    
GO Notes, BAN   4.00   10/3/08   1,100,000       1,101,555
Otsego County Industrial                    
Development Agency, Civic                    
Facility Revenue (Noonan                    
Community Service Corporation                    
Project) (LOC; FHLB)   1.57   7/7/08   1,235,000   a   1,235,000
Plattsburgh,                    
BAN (Municipal Lighting)   2.50   6/19/09   2,100,000       2,110,947
Port Authority of New York                    
and New Jersey,                    
Equipment Notes   1.61   7/7/08   4,000,000   a   4,000,000
Port Byron School District,                    
GO Notes, BAN   2.75   6/26/09   2,000,000       2,009,626
Putnam County Industrial                    
Development Agency, Civic                    
Facility Revenue (United                    
Cerebral Palsy of Putnam and                    
Southern Dutchess Project)                    
(LOC; Commerce Bank N.A.)   1.60   7/7/08   8,025,000   a   8,025,000

The Fund

13

STATEMENT OF INVESTMENTS (continued)

Short-Term   Coupon   Maturity   Principal        
Investments (continued)   Rate (%)   Date   Amount ($)       Value ($)
 
 
 
 
 
New York (continued)                    
Rensselaer County Industrial                    
Development Agency, Civic                    
Facility Revenue (The Sage                    
Colleges Project) (LOC; M&T                    
Bank)   1.66   7/7/08   2,300,000   a   2,300,000
Rockland County Industrial                    
Development Agency, Civic                    
Facility Revenue (Dominican                    
College of Blauvelt Project)                    
(LOC; Commerce Bank N.A.)   1.63   7/7/08   6,230,000   a   6,230,000
Rockland County Industrial                    
Development Agency, IDR                    
(Intercos America, Inc.                    
Project) (LOC; HSBC Bank USA)   1.70   7/7/08   3,600,000   a   3,600,000
Rome City School District,                    
RAN   2.25   6/25/09   3,900,000       3,913,157
Sackets Harbor Central School                    
District, GO Notes, BAN   3.00   7/2/09   2,594,437   b   2,612,131
Saint Lawrence County Industrial                    
Development Agency, Civic                    
Facility Revenue                    
(Canton-Potsdam Hospital                    
Project) (LOC; Key Bank)   1.59   7/7/08   10,605,000   a   10,605,000
Salamanca City Central School                    
District, GO Notes, BAN   4.00   9/26/08   1,300,000       1,302,648
Tobacco Settlement Financing                    
Corporation, Asset-Backed                    
Revenue Bonds (State                    
Contingency Contract Secured)   5.00   6/1/09   350,000       357,535
Tompkins County Industrial                    
Development Agency, Civic                    
Facility Revenue (Cortland                    
College) (LOC; HSBC Bank USA)   1.63   7/7/08   3,945,000   a   3,945,000
Triborough Bridge and Tunnel                    
Authority, General Revenue                    
(LOC; Dexia Credit Locale)   1.44   7/7/08   2,905,000   a   2,905,000

14

Short-Term   Coupon   Maturity   Principal    
Investments (continued)   Rate (%)   Date   Amount ($)   Value ($)
 
 
 
 
New York (continued)                
Westchester County Industrial                
Development Agency, Civic                
Facility Revenue (Northern                
Westchester Hospital                
Association Civic Facility)                
(LOC; Commerce Bank N.A.)   1.53   7/7/08   6,900,000 a   6,900,000
U.S. Related—1.2%                
Puerto Rico Industrial Tourist                
Educational Medical and                
Environmental Control                
Facilities Financing                
Authority, Environmental                
Control Facilities Revenue                
(Bristol-Myers Squibb Company                
Project)   1.60   7/7/08   4,400,000 a   4,400,000
 
 
 
 
 
Total Investments (cost $369,561,019)           101.5%   369,561,019
 
Liabilities, Less Cash and Receivables           (1.5%)   (5,440,194)
 
Net Assets           100.0%   364,120,825

a      Variable rate demand note — rate shown is the interest rate in effect at June 30, 2008. Maturity date represents the next demand date, not the ultimate maturity date.
 
b      Purchased on a delayed delivery basis.
 
c      Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2008, these securities amounted to $63,110,000 or 17.3% of net assets.
 

The Fund

15

STATEMENT OF INVESTMENTS (continued)

Summary of Abbreviations        
 
ABAG   Association of Bay Area Governments   ACA   American Capital Access
AGC   ACE Guaranty Corporation   AGIC   Asset Guaranty Insurance Company
AMBAC   American Municipal Bond        
    Assurance Corporation   ARRN   Adjustable Rate Receipt Notes
BAN   Bond Anticipation Notes   BIGI   Bond Investors Guaranty Insurance
BPA   Bond Purchase Agreement   CGIC   Capital Guaranty Insurance Company
CIC   Continental Insurance Company   CIFG   CDC Ixis Financial Guaranty
CMAC   Capital Market Assurance Corporation   COP   Certificate of Participation
CP   Commercial Paper   EDR   Economic Development Revenue
EIR   Environmental Improvement Revenue   FGIC   Financial Guaranty Insurance
            Company
FHA   Federal Housing Administration   FHLB   Federal Home Loan Bank
FHLMC   Federal Home Loan Mortgage   FNMA   Federal National
    Corporation       Mortgage Association
FSA   Financial Security Assurance   GAN   Grant Anticipation Notes
GIC   Guaranteed Investment Contract   GNMA   Government National
            Mortgage Association
GO   General Obligation   HR   Hospital Revenue
IDB   Industrial Development Board   IDC   Industrial Development Corporation
IDR   Industrial Development Revenue   LOC   Letter of Credit
LOR   Limited Obligation Revenue   LR   Lease Revenue
MFHR   Multi-Family Housing Revenue   MFMR   Multi-Family Mortgage Revenue
PCR   Pollution Control Revenue   PILOT   Payment in Lieu of Taxes
RAC   Revenue Anticipation Certificates   RAN   Revenue Anticipation Notes
RAW   Revenue Anticipation Warrants   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 Mortgage Agency   SWDR   Solid Waste Disposal Revenue
TAN   Tax Anticipation Notes   TAW   Tax Anticipation Warrants
TRAN   Tax and Revenue Anticipation Notes   XLCA   XL Capital Assurance

16

Summary of Combined Ratings (Unaudited)    
 
Fitch   or   Moody’s   or   Standard & Poor’s   Value (%)†
 
 
 
 
 
F1+,F1       VMIG1,MIG1,P1   SP1+,SP1,A1+,A1   86.1
AAA,AA,A d       Aaa,Aa,A d       AAA,AA,A d   3.8
Not Rated e       Not Rated e       Not Rated e   10.1
                    100.0
 
† Based on total investments.            

d      Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers.
 
e      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.

The Fund

17

STATEMENT OF ASSETS AND LIABILITIES

June 30, 2008

    Cost   Value
 
 
Assets ($):        
Investments in securities—See Statement of Investments   369,561,019   369,561,019
Cash       871,225
Interest receivable       1,275,740
        371,707,984
 
 
Liabilities ($):        
Due to The Dreyfus Corporation and affiliates—Note 2       122,438
Payable for investment securities purchased       7,060,179
Dividend payable       398,613
Payable for shares of Beneficial Interest redeemed       5,929
        7,587,159
 
 
Net Assets ($)       364,120,825
 
 
Composition of Net Assets ($):        
Paid-in capital       364,096,336
Accumulated net realized gain (loss) on investments       24,489
 
 
Net Assets ($)       364,120,825
 
 
Shares Outstanding        
(unlimited number of shares of Beneficial Interest authorized)       364,096,346
Net Asset Value, offering and redemption price per share ($)       1.00
See notes to financial statements.        

 

18

STATEMENT OF OPERATIONS

Year Ended June 30, 2008

Investment Income ($):    
Interest Income   10,653,306
Expenses:    
Management fee—Note 2   1,564,504
Trustees’ fees—Note 2   27,737
Total Expenses   1,592,241
Less—Trustees’ fees reimbursed by the Manager—Note 2   (27,737)
Net Expenses   1,564,504
Investment Income—Net   9,088,802
 
Net Realized Gain (Loss) on Investments—Note 1(b) ($)   24,489
Net Increase in Net Assets Resulting from Operations   9,113,291
 
See notes to financial statements.    

 

The Fund

19

STATEMENT OF CHANGES IN NET ASSETS

        Year Ended June 30,
   
 
    2008   2007
 
 
Operations ($):        
Investment income—net   9,088,802   9,910,503
Net realized gain (loss) on investments   24,489   4,501
Net Increase (Decrease) in Net Assets        
Resulting from Operations   9,113,291   9,915,004
 
 
Dividends to Shareholders from ($):        
Investment income—net   (9,093,303)   (9,910,503)
 
 
Beneficial Interest Transactions ($1.00 per share):        
Net proceeds from shares sold   382,586,890   294,839,753
Dividends reinvested   7,621,024   8,588,102
Cost of shares redeemed   (348,000,006)   (268,532,909)
Increase (Decrease) in Net Assets from        
Beneficial Interest Transactions   42,207,908   34,894,946
Total Increase (Decrease) in Net Assets   42,227,896   34,899,447
 
 
Net Assets ($):        
Beginning of Period   321,892,929   286,993,482
End of Period   364,120,825   321,892,929
 
See notes to financial statements.        

20

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,    
   
 
 
    2008   2007   2006   2005   2004
 
 
 
 
 
Per Share Data ($):                    
Net asset value, beginning of period   1.00   1.00   1.00   1.00   1.00
Investment Operations:                    
Investment income—net   .026   .032   .025   .013   .005
Distributions:                    
Dividends from investment income—net   (.026)   (.032)   (.025)   (.013)   (.005)
Net asset value, end of period   1.00   1.00   1.00   1.00   1.00
 
 
 
 
 
Total Return (%)   2.67   3.25   2.52   1.34   .52
 
 
 
 
 
Ratios/Supplemental Data (%):                    
Ratio of total expenses                    
to average net assets   .46   .45   .45   .45   .45
Ratio of net expenses                    
to average net assets   .45   .45   .45   .45   .45
Ratio of net investment income                    
to average net assets   2.61   3.21   2.49   1.33   .52
 
 
 
 
 
Net Assets, end of period ($ x 1,000)   364,121   321,893   286,993   308,322   302,652
 
See notes to financial statements.                    

The Fund

21

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 three series including the fund.The fund’s investment objective is to provide a high level of current income exempt from federal, NewYork state and NewYork 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 to the public without a sales charge.

The fund’s financial statements are prepared in accordance with U.S. 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 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 Financial Accounting Standards Board (“FASB”) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative def-

22

inition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.

(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 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.

In March 2008, the FASB released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years.At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.

(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.

All cash balances were maintained with the Custodian, Mellon Bank, N.A., a subsidiary of BNY Mellon and a Dreyfus affiliate.

The Fund

23

NOTES TO FINANCIAL STATEMENTS (continued)

(d) 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 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.

(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.

During the current year, the fund adopted FASB Interpretation No. 48 “Accounting for Uncertainty in IncomeTaxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. The adoption of FIN 48 had no impact on the operations of the fund for the period ended June 30, 2008.

As of and during the period ended June 30, 2008, the fund did not have any liabilities for any unrecognized tax benefits.The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.

Each of the tax years in the four-year period ended June 30, 2008, remains subject to examination by the Internal Revenue Service and state taxing authorities.

24

At June 30, 2008, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.

The tax character of distributions paid to shareholders during the fiscal periods ended June 30, 2008 and June 30, 2007, were all tax exempt income.

During the period ended June 30, 2008, as a result of permanent book to tax differences, primarily due to dividend reclassification, the fund increased accumulated undistributed investment income-net by $4,501 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets and net asset value per share were not affected by this reclassification.

At June 30, 2008, 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:

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 $45,000 per year, plus $6,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., the Trust and The

The Fund

25

NOTES TO FINANCIAL STATEMENTS (continued)

Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) attended, $2,000 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $1,500 for Board meetings and separate committee meetings attended that are conducted by telephone and is reimbursed for travel and out-of-pocket expenses.With respect to Board meetings, the Chairman of the Board receives an additional 25% of such compensation (with the exception of reimbursable amounts). With respect to compensation committee meetings, the Chair of the compensation committee receives $900 per meeting and, with respect to audit committee meetings prior to April 12, 2008, the Chair of the audit committee received $1,350 per meeting. In the event that there is an in-person joint committee or a joint telephone meeting of the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund.These fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.

The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $122,438.

NOTE 3—Bank Line of Credit:

Effective May 1, 2008, the fund participates with other Dreyfus-managed funds in a $300 million unsecured line of credit primarily to be utilized for temporary or emergency purposes. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. Prior to May 1, 2008, the fund participated with other Dreyfus-managed funds in a $100 million unsecured line of credit. During the period ended June 30, 2008, the fund did not borrow under the line of credit.

26

NOTE 4—Subsequent Event:

Effective July 1, 2008, BNY Mellon has reorganized and consolidated a number of its banking and trust company subsidiaries. As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of New York, which has changed its name to The Bank of New York Mellon.

The Fund

27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of The Dreyfus/Laurel Tax-Free Municipal Funds

We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC NewYork Municipal Money Market Fund (the “Fund”) of The Dreyfus/Laurel Tax-Free Municipal Funds, including the statement of investments, as of June 30, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received.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, 2008, and the results of its operations for the year then ended, changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

  New York, New York
August 20, 2008

28

IMPORTANT TAX INFORMATION ( U n a u d i t e d )

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, 2008 as “exempt-interest dividends” (not subject to regular federal and, for individuals who are NewYork residents, NewYork State and New York City personal income taxes). As required by federal tax law rules, shareholders will receive notification of their portion of the fund’s exempt-interest dividends paid for the 2008 calendar year on Form 1099-INT, which will be mailed by January 31, 2009.

The Fund

29

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited)

At a meeting of the fund’s Board of Trustees held on February 12 and 13, 2008, the Board considered the re-approval of the fund’s Investment Management Agreement (“Management Agreement”), pursuant to which the Manager provides the fund with investment advisory and administrative services.The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.

Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members considered information previously provided to them in a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus fund complex, and representatives of the Manager confirmed that there had been no material changes in this information.The Board also discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement. The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Manager’s representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund.The Manager provided the number of shareholder accounts in the fund, as well as the fund’s asset size.

The Board members also considered the Manager’s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager’s extensive administrative, accounting and compliance infrastructure.

30

Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and comparisons to a group of retail, no-load New York tax-exempt money market funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional New York tax-exempt money market funds (the “Performance Universe”) selected and provided by Lipper, Inc., an independent provider of investment company data. The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below). The Board members discussed the results of the comparisons for various periods ended December 31, 2007, and noted that the fund’s total return performance was above the Performance Group and Performance Universe medians for each of the periods.

The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios of a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper. Noting the fund’s “unitary fee” structure, the Board noted that the fund’s management fee was above the Expense Group and Expense Universe medians and the expense ratio was below the Expense Group and Expense Universe medians.

Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates with similar investment objectives, policies and strategies, and included in the same Lipper category as the fund (the “Similar Funds”). They also noted that there were no other accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund. The Manager’s representatives also reviewed the costs associated with distribution through intermedi-

The Fund

31

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued)

aries. The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager’s performance and the services provided, noting the fund’s “unitary fee” structure.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.

Analysis of Profitability and Economies of Scale. The Manager’s representatives reviewed the dollar amount of expenses allocated and profit received by the Manager and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding the Manager’s approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board also was informed that the methodology had also been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s portfolio.

It was noted that the Board members should consider the Manager’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by the Manager, including

32

the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided by the Manager.

At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.

  • The Board concluded that the nature, extent and quality of the ser- vices provided by the Manager are adequate and appropriate.
  • The Board was satisfied with the fund’s performance.
  • The Board concluded that the fee paid by the fund to the Manager was reasonable in light of the services provided, comparative perfor- mance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
  • The Board determined that the economies of scale which may accrue to the Manager and its affiliates in connection with the man- agement of the fund had been adequately considered by the Manager in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.

The Fund

33

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE

FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued)

The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund’s Management Agreement was in the best interests of the fund and its shareholders and that the Management Agreement would be renewed through April 4, 2009.

34

BOARD MEMBERS INFORMATION ( U n a u d i t e d )

Joseph S. DiMartino (64)
Chairman of the Board (1999)
Principal Occupation During Past 5Years:
• Corporate Director and Trustee
Other Board Memberships and Affiliations:

  • The Muscular Dystrophy Association, Director
  • Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director
  • The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director
  • Sunair Services Corporation, a provider of certain outdoor-related services to homes and businesses, Director

No. of Portfolios for which Board Member Serves: 160

———————

James M. Fitzgibbons (73)
Board Member (1983)

Principal Occupation During Past 5Years:

• Corporate Director, Davidson Cotton Company (1998-2002)

Other Board Memberships and Affiliations:

• Bill Barrett Company, an oil and gas exploration company, Director

No. of Portfolios for which Board Member Serves: 25

———————

Kenneth A. Himmel (62)
Board Member (1998)
Principal Occupation During Past 5Years:

  • President and CEO, Related Urban Development, a real estate development company (1996-present)
  • President and CEO, Himmel & Company, a real estate development company (1980-present)
  • CEO, American Food Management, a restaurant company (1983-present)

No. of Portfolios for which Board Member Serves: 25

———————

Stephen J. Lockwood (61)
Board Member (1993)
Principal Occupation During Past 5Years:

  • Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company (2000-present)

No. of Portfolios for which Board Member Serves: 25

The Fund

35

BOARD MEMBERS INFORMATION ( U n a u d i t e d ) (continued)

Roslyn M. Watson (58)
Board Member (1992)

Principal Occupation During Past 5Years:

• Principal,Watson Ventures, Inc., a real estate investment company (1993-present)

Other Board Memberships and Affiliations:

  • American Express Bank, Director
  • The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee
  • National Osteoporosis Foundation,Trustee
  • SBLI-USA, Director

No. of Portfolios for which Board Member Serves: 25

———————

Benaree Pratt Wiley (62)
Board Member (1998)
Principal Occupation During Past 5Years:

  • Principal,The Wiley Group, a firm specializing in strategy and business development (2005-present)
  • President and CEO,The Partnership, an organization dedicated to increasing the representation of African Americans in positions of leadership, influence and decision-making in Boston, MA
    (1991-2005)

Other Board Memberships and Affiliations:

  • Boston College,Trustee Associate
  • Blue Cross Blue Shield of Massachusetts, Director
  • CBIZ, professional support consultants and service providers for small, midsized and corporate businesses, Director
  • Commonwealth Institute, Director
  • Efficacy Institute, Director
  • PepsiCo African-American, Chair of Advisory Board
  • The Boston Foundation, Director
  • Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director

No. of Portfolios for which Board Member Serves: 35

———————

Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, NewYork, NewYork 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.

Francis P. Brennan, Emeritus Board Member
J.Tomlinson Fort, Emeritus Board Member

36

OFFICERS OF THE FUND ( U n a u d i t e d )

J. DAVID OFFICER, President since December 2006.

Chief Operating Officer,Vice Chairman and a Director of the Manager, and an officer of 76 investment companies (comprised of 160 portfolios) managed by the Manager. He is 59 years old and has been an employee of the Manager since April 1998.

PHILLIP N. MAISANO, Executive Vice President since July 2007.

Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 76 investment companies (comprised of 160 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or Board member of certain other investment management subsidiaries of The Bank of New York Mellon Corporation, each of which is an affiliate of the Manager. He is 61 years old and has been an employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004, and served as Chief Executive Officer of Evaluation Associates, a leading institutional investment consulting firm, from 1988 until 2004.

MICHAEL A. ROSENBERG, Vice President and Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since October 1991.

JAMES BITETTO, Vice President and Assistant Secretary since August 2005.

Associate General Counsel and Secretary of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since December 1996.

JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. She is 52 years old and has been an employee of the Manager since October 1988.

JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since June 2000.

JANETTE E. FARRAGHER, Vice President and Assistant Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. She is 45 years old and has been an employee of the Manager since February 1984.

JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since February 1991.

ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 56 years old and has been an employee of the Manager since May 1986.

The Fund

37

OFFICERS OF THE FUND ( U n a u d i t e d ) (continued)

JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005.

Associate General Counsel of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since October 1990.

JAMES WINDELS, Treasurer since November 2001.

Director-Mutual Fund Accounting of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since April 1985.

RICHARD CASSARO, Assistant Treasurer since September 2007.

Senior Accounting Manager — Money Market and Municipal Bond Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 49 years old and has been an employee of the Manager since September 1982.

GAVIN C. REILLY, Assistant Treasurer since December 2005.

Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since April 1991.

ROBERT ROBOL, Assistant Treasurer since December 2002.

Senior Accounting Manager - Fixed Income Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since October 1988.

ROBERT SALVIOLO, Assistant Treasurer since July 2007.

Senior Accounting Manager - Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since June 1989.

ROBERT SVAGNA, Assistant Treasurer since August 2005.

Senior Accounting Manager - Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 177 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since November 1990.

JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.

Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (77 investment companies, comprised of 177 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon’s Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 51 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.

WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since July 2002.

Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 73 investment companies (comprised of 173 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Distributor since October 1998.

38

NOTES


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 12-month period ended June 30, 2008, is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.


Ticker Symbol: DNIXX
 
Telephone 1-800-645-6561
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

Item 2. Code of Ethics.

The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.

Item 3. Audit Committee Financial Expert.

The Registrant's Board has determined that Joseph S. DiMartino, a member of the Audit Committee of Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). Joseph S. DiMartino is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.

Item 4. Principal Accountant Fees and Services.

(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $74,550 in 2007 and $76,800 in 2008.

(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $6,150 in 2007 and $6,450 in 2008.

The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 2007 and $0 in 2008.

Note: For the second paragraph in each of (b) through (d) of this Item 4, certain of such services were not pre-approved prior to May 6, 2003, when such services were required to be pre-approved. On and after May 6, 2003, 100% of all services provided by the Auditor were pre-approved as required. For comparative purposes, the fees shown assume that all such services were pre-approved, including services that were not pre-approved prior to the compliance date of the pre-approval requirement.

(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning ("Tax Services") were $6,270 in 2007 and $6,450 in 2008. These services consisted of review or preparation of U.S. federal, state, local and excise tax returns.

The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates which required pre-approval by the Audit Committee were $0 in 2007 and $0 in 2008.

(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $0 in 2007 and $0 in 2008.

The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee were $0 in 2007 and $0 in 2008.

Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.

Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $3,669,000 in 2007 and $3,951,740 in 2008.

Auditor Independence. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates which were not pre-approved (not requiring pre-approval) is compatible with maintaining the Auditor's independence.

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.

The Registrant has a Nominating Committee (the "Committee"), which is responsible for selecting and nominating persons for election or appointment by the Registrant's Board as Board members. The Committee has adopted a Nominating Committee Charter (the "Charter"). Pursuant to the Charter, the Committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Registrant, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8th Floor East, New York, New York 10166. A nomination submission must include information regarding the recommended nominee as specified in the Charter. This information includes all information relating to a recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Board members, as well as information sufficient to evaluate the factors to be considered by the Committee, including character and integrity, business and professional experience, and whether the person has the ability to apply sound and independent business judgment and would act in the interests of the Registrant and its shareholders. Nomination submissions are required to be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.

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.

(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) Code of ethics referred to in Item 2.

(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/ J. David Officer 
    J. David Officer 
    President 
 
Date:    August 25, 2008 

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/ J. David Officer 
    J. David Officer 
    President
 
Date:    August 25, 2008 
 
By:    /s/ James Windels 
    James Windels 
    Treasurer
 
Date:    August 25, 2008 

EXHIBIT INDEX

(a)(1) Code of ethics referred to in Item 2.

(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)

(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)