LETTER TO SHAREHOLDERS
Dear Shareholder:
As your Fund ended its annual reporting period on May 31, 1994, its net
asset value was $16.03 per share. Income dividends of approximately $.92 per
share were paid during this period, representing an annualized distribution
rate of 5.52% per share based on the May 31, 1994 closing price, adjusted for
capital gain distributions. In addition, we are pleased to report that all
dividends paid from net investment income during this period were exempt from
Federal and Commonwealth of Massachusetts income taxes, although certain
shareholders may be subject to the Federal Alternative Minimum Tax on some
portfolio income.*
As the reporting period began, the market for fixed-income securities was
very strong as the economy remained weak and inflation worries were virtually
nonexistent. By the fourth quarter of 1993, however, signs of solid economic
growth appeared and prices for fixed-income securities weakened.
The bond market weakness was a direct result of the fear of rising
inflation as rapid economic growth was recorded in the fourth quarter of 1993
and the first quarter of 1994. The impressive increase in Gross Domestic
Product in the first quarter of 1994 came despite extremely bad weather and
the earthquake in southern California. It had been anticipated that the bad
weather throughout much of the nation and the earthquake's impact on a major
economic center would have a significantly negative impact on overall U.S.
economic growth. However, economic growth continued quite strong.
As the economy continued to improve in the fourth quarter of 1993 and
into the first quarter of 1994, fears of rising inflation intensified. It
became clear to market participants that the economy had, over the past year,
moved from recession to rapid expansion. Supporting this view were increases
in several key economic indicators such as capacity utilization, retail
sales, consumer confidence, commodity prices and new orders for durable
goods, just to name a few.
Reaction by the Federal Reserve Board to this rapid economic growth and
its perceived threat to price stability was swift, with two quarter-point
increases in the Federal Funds rate in the first quarter of 1994. Further
rate increases followed as the economy continued to grow and inflation
indicators became troublesome. The bond market's negative reaction to these
increases was dramatic, resulting in substantial price declines by the end of
1994's first quarter. Following the Fed's action, the market improved
somewhat as market participants' fear of inflation subsided in anticipation
of a slower economy.
The Federal Reserve appears determined to respond quickly to any
perceived inflationary threat. Near-term, this policy will continue to create
an uncertain and volatile market. Longer-term, however, this should bode
well for the value of long-term securities as inflationary pressures subside.
In the coming year, we anticipate greater market volatility as continued
threats to portfolio values occur if inflationary pressures rise with
economic growth. Our strategy in this environment has become more defensive
than during 1993. We have shortened the average maturity of the Fund and
increased the short-term holdings to reflect this more cautious outlook on
long-term rates. Securities with shorter maturities tend to be less volatile
in a rising rate environment, but they may provide somewhat less income to
the Fund. This strategy should help to lessen the Fund's vulnerability to
dramatic price swings such as were experienced in the first quarter of 1994.
We expect 1994 to be a year of strong demand for municipal securities.
The market for Massachusetts municipal bonds has improved greatly following
the difficulties experienced several years ago. This is due, in large
measure, to the successful efforts by the current administration to improve
governmental operating efficiencies since coming to office. The past year saw
a continuation of this improvement in both the fiscal and economic health of
the Commonwealth. In addition, the national municipal market is in a strong
position as 1994 unfolds due to the expectation of substantially reduced
supplies in the face of increased tax rates. We also believe that the Federal
Reserve's vigilance in fighting inflation will benefit all fixed-income
securities during the coming year.
We have included a current Statement of Investments and recent financial
statements for your review. We greatly appreciate your investment in the Fund
and look forward to serving your investment needs in the future.
Very truly yours,
(Richard J. Moynihan Signature Logo)
Richard J. Moynihan
President
June 16, 1994
New York, N.Y.
*Capital gains, if any, are generally subject to Federal, State and local
taxes.
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN dreyfus massachusetts
tax exempt bond fund
AND THE lehman brothers municipal bond index
[Exhibit A]
$22,472
Lehman Brothers
Municipal Bond Index*
$19,285
Dreyfus Massachusetts Tax Exempt
Bond Fund
*Source: Lehman Brothers
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION (6/11/85)
MAY 31, 1994 MAY 31, 1994 TO MAY 31, 1994
----------------- ------------------ ---------------------------
<S> <C> <C>
2.07% 7.49% 7.59%
</TABLE>
The above graph compares a $10,000 investment made in the Dreyfus Massachusetts
Tax Exempt Bond Fund on 6/11/85 (Inception Date)
to a $10,000 investment made in the Lehman Brothers Municipal Bond Index on
that date. For comparative purposes the value of the Index on 5/31/85 is used
as the beginning value on 6/11/85. All dividends and capital gain
distributions are reinvested.
The Fund invests primarily in Massachusetts municipal securities and its
performance takes into account fees and expenses. Unlike the Fund, the Lehman
Brothers Municipal Bond Index is an unmanaged total return performance
benchmark for the long-term, investment-grade tax exempt bond market,
calculated by using municipal bonds selected to be representative of the
market. The Index does not take into account charges, fees and other
expenses. The Index also is not limited to the securities of a single State,
which are more vulnerable to changes in that State's economy. Further
information relating to Fund performance, including expense reimbursements,
if applicable, is contained in the Condensed Financial Information section of
the Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS--94.5% AMOUNT VALUE
------------- -------------
<S> <C> <C>
MASSACHUSETTS--89.2%
Boston:
6.75%, 7/1/2011 (Insured; MBIA, Prerefunded 7/1/2001) (a)............... $ 2,500,000 $ 2,772,775
6.50%, 7/1/2012 (Insured; AMBAC)........................................ 3,000,000 3,156,090
Boston City Hospital, Revenue, Refunding 5.75%, 2/15/2013 (Insured; FHA).... 2,000,000 1,877,800
Boston - Mount Pleasant Housing Development Corp., MFHR, Refunding
6.75%, 8/1/2023 (Insured; FHA).......................................... 1,700,000 1,734,867
Boston Water and Sewer Commission, Revenue 6%, 11/1/2021 (Insured; FGIC).... 4,000,000 3,915,520
Massachusetts Bay Transportation Authority:
6.40%, 3/1/2015 (Guaranteed; Massachusetts Commonwealth)................ 3,000,000 3,056,040
General Transportation System 6.10%, 3/1/2023........................... 2,500,000 2,453,200
Refunding 6.20%, 3/1/2016............................................... 1,225,000 1,255,907
Massachusetts Commonwealth:
Consolidated Loan:
6%, 6/1/2011.......................................................... 3,500,000 3,501,960
6%, 7/1/2012.......................................................... 2,000,000 1,986,800
Refunding:
5.25%, 2/1/2008....................................................... 1,500,000 1,430,910
6%, Series A, 8/1/2012................................................ 2,000,000 1,986,680
6%, Series B, 8/1/2012 (Insured; FGIC)................................ 1,755,000 1,756,843
Massachusetts Convention Center Authority (Boston Common Parking Garage)
5.375%, 9/1/2013........................................................ 2,250,000 2,047,500
Massachusetts Education Loan Authority, Education Loan Revenue:
7.55%, 1/1/2002 (Insured; MBIA)......................................... 925,000 973,313
8%, 6/1/2002 (LOC; Rabobank Nederland) (b).............................. 790,000 846,319
Massachusetts Health and Educational Facilities Authority, Revenue:
(Addison Gilbert Hospital) 9.25%, 7/1/2014 (Prerefunded 7/1/1995) (a)... 1,045,000 1,123,250
(Amherst College) 6.375%, 11/1/2019..................................... 1,000,000 1,011,210
(Berklee College of Music) 6.875%, 10/1/2021 (Insured; MBIA)............ 4,380,000 4,610,388
(Boston University) 6%, 10/1/2022 (Insured; MBIA)....................... 1,175,000 1,152,910
(Holyoke Hospital) 9.50%, 7/1/2015 (Prerefunded 7/1/1995) (a)........... 1,500,000 1,597,485
(Jordan Hospital) 7.85%, 8/15/2028 (Insured; FHA, Prerefunded 8/15/1998) (a) 3,355,000 3,730,559
(Lahey Clinic Medical Center):
5.625%, 7/1/2015 (Insured; MBIA)...................................... 6,800,000 6,373,300
5.375%, 7/1/2023 (Insured; MBIA)...................................... 1,000,000 882,100
(Massachusetts General Hospital):
6.25%, 7/1/2020 (Insured; AMBAC)...................................... 3,500,000 3,521,980
Refunding:
6%, 7/1/2015 (Insured; AMBAC)..................................... 2,000,000 1,967,000
5.25%, 7/1/2023 (Insured; AMBAC).................................. 2,000,000 1,730,920
(Mclean Hospital) 6.50%, 7/1/2010 (Insured; FGIC)....................... 1,000,000 1,042,730
(New England Medical Center Hospitals) 6.50%, 7/1/2012 (Insured; FGIC).. 1,000,000 1,038,880
(Refunding - Baystate Medical Center) 6%, 7/1/2015 (Insured; FGIC)...... 1,140,000 1,121,190
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA).............. 1,000,000 1,070,570
(Youville Hospital):
8.875%, 8/1/2004 (Insured; FHA)....................................... 1,295,000 1,404,738
9.10%, 8/1/2015 (Insured; FHA)........................................ 2,030,000 2,205,493
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------- -------------
MASSACHUSETTS (CONTINUED)
Massachusetts Housing Finance Agency, Revenue:
Housing Projects, Refunding:
6.15%, 10/1/2015...................................................... $ 3,365,000 $ 3,282,726
6.375%, 4/1/2021...................................................... 3,000,000 2,971,110
Multi-Family Residential Housing 9.60%, 8/1/2022........................ 1,810,000 1,847,612
Residential Development 6.25%, 11/15/2012 (Collateralized; FNMA)........ 4,100,000 4,137,392
Single-Family Housing 5.60%, 6/1/2025................................... 1,300,000 1,293,500
Massachusetts Industrial Finance Agency, Revenue:
Electrical Utility (Nantucket Electric Co.), 8.50%, 3/1/2016............ 3,000,000 3,278,070
(Refunding-Harvard Community Health) 8.125%, 10/1/2017.................. 4,000,000 4,389,120
(Refunding-Holy Cross College):
6%, 11/1/2002......................................................... 400,000 420,732
6.375%, 11/1/2015..................................................... 2,000,000 2,037,180
Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue,
Refunding:
6.40%, 7/1/2002....................................................... 400,000 421,612
4.70%, 7/1/2006 (Insured; MBIA)....................................... 4,000,000 3,670,280
6.625%, 7/1/2018...................................................... 3,500,000 3,573,220
6.125%, 7/1/2019...................................................... 2,500,000 2,422,100
Massachusetts Port Authority, Revenue:
6%, 7/1/2013............................................................ 2,050,000 2,011,091
9.375%, 7/1/2015 (Prerefunded 7/1/1995) (a)............................. 325,000 348,673
9.375%, 7/1/2015 (Prerefunded 7/1/1995) (a)............................. 675,000 726,806
6%, 7/1/2023............................................................ 5,000,000 4,885,400
Special Project (Harborside Hyatt) 10%, 3/1/2026........................ 8,000,000 8,720,000
Massachusetts Water Resources Authority:
5.25%, 3/1/2013......................................................... 4,550,000 4,055,733
6.50%, 12/1/2019 (Prerefunded 12/1/2001) (a)............................ 2,750,000 3,016,640
New Bedford 5.75%, 3/1/2006................................................. 1,565,000 1,546,705
New England Education Loan Marketing Corp., Student Loan Revenue:
5.40%, 6/1/2000......................................................... 2,000,000 2,006,080
6.90%, 11/1/2009........................................................ 3,000,000 3,115,500
Quincy, Revenue (Quincy City Hospital):
5.25%, 1/15/2016 (Insured; FSA)......................................... 2,000,000 1,777,420
7.875%, 1/15/2016 (Insured; FHA, Prerefunded 7/1/1996) (a).............. 2,400,000 2,612,856
Southbridge 6.375%, 1/1/2012 (Insured; AMBAC)............................... 1,000,000 1,026,960
Southern Berkshire Regional School District, Refunding
5.375%, 4/15/2010 (Insured; MBIA)....................................... 2,285,000 2,166,797
Worcester, IDR (National Envelope Corp. Project)
8%, 12/1/2004 (LOC; Manufacturers Hanover Trust Co.) (b)................ 4,000,000 4,317,040
U.S. RELATED--5.3%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 3,000,000 3,020,670
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017......... 2,000,000 2,006,840
Virgin Islands Water and Power Authority, Electric System Revenue 7.40%, 7/1/2011 3,450,000 3,734,107
-------------
TOTAL MUNICIPAL BONDS (cost $151,220,025)................................... $155,177,199
=============
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS--5.5% AMOUNT VALUE
------------- -------------
MASSACHUSETTS;
Massachusetts Health and Educational Facilities Authority, Revenue, VRDN:
(Saint Elizabeth Hospital) 2.48% (Insured; FSA) (c)..................... $ 4,050,000 $ 4,050,000
(William's College) 2.25% (c)........................................... 5,000,000 5,000,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $9,050,000).................... $ 9,050,000
=============
TOTAL INVESTMENTS--100.0%
(cost $160,270,025)..................................................... $164,227,199
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
FGIC Financial Guaranty Insurance Corporation LOC Letter of Credit
FHA Federal Housing Administration MBIA Municipal Bond Insurance Association
FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 40.9%
AA Aa AA 9.0
A A A 33.8
BBB Baa BBB 6.0
F1 MIG1, VMG1 & P1 SP1 & A1 3.0
Not Rated Not Rated Not Rated 7.3
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
Securities which are held in escrow and are used to pay principal and
interest on the tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letters of credit.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $160,270,025)-see statement..................................... $164,227,199
Cash.................................................................... 1,128,555
Interest receivable..................................................... 3,256,406
Prepaid expenses........................................................ 12,544
--------------
168,624,704
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 92,840
Accrued expenses ....................................................... 58,913 151,753
------------ --------------
NET ASSETS ................................................................ $168,472,951
==============
REPRESENTED BY:
Paid-in capital......................................................... $167,099,155
Accumulated net realized capital losses and distributions in excess of
net realized gain on investments-Note 1(c)............................ (2,583,378)
Accumulated net unrealized appreciation on investments-Note 3........... 3,957,174
--------------
NET ASSETS at value applicable to 10,508,487 shares outstanding
(unlimited number of $.01 par value shares of Beneficial
Interest authorized).................................................... $168,472,951
==============
NET ASSET VALUE, offering and redemption price per share
($168,472,951 / 10,508,487 shares)...................................... $16.03
======
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1994
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 11,322,486
EXPENSES:
Management fee--Note 2(a)............................................. $1,104,362
Shareholder servicing costs-Note 2(b)................................. 244,978
Professional fees..................................................... 50,140
Prospectus and shareholders' reports.................................. 20,250
Custodian fees........................................................ 18,865
Registration fees..................................................... 12,344
Trustees' fees and expenses-Note 2(c)................................. 11,401
Miscellaneous......................................................... 18,343
------------
TOTAL EXPENSES.................................................. 1,480,683
--------------
INVESTMENT INCOME--NET.......................................... 9,841,803
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................. $(1,956,469)
Net unrealized (depreciation) on investments............................ (3,680,332)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (5,636,801)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 4,205,002
==============
See notes to financial statements.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
--------------------------------
1993 1994
-------------- --------------
OPERATIONS:
Investment income--net............................................... $ 10,022,090 $ 9,841,803
Net realized gain (loss) on investments.............................. 6,751,188 (1,956,469)
Net unrealized appreciation (depreciation) on investments for the year 1,523,402 (3,680,332)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 18,296,680 4,205,002
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net.......................................... (9,992,814) (9,922,292)
From net realized gain on investments................................ -- (2,229,211)
In excess of net realized gain on investments........................ -- (2,583,378)
-------------- --------------
TOTAL DIVIDENDS.................................................... (9,992,814) (14,734,881)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................ 48,849,342 47,458,511
Dividends reinvested................................................. 7,691,333 11,443,149
Cost of shares redeemed.............................................. (38,304,055) (63,499,837)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 18,236,620 (4,598,177)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ 26,540,486 (15,128,056)
NET ASSETS:
Beginning of year.................................................... 157,060,521 183,601,007
-------------- --------------
End of year (including undistributed investment income-net of
$80,489 on May 31, 1993)........................................... $183,601,007 $168,472,951
============== ==============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 2,946,281 2,815,211
Shares issued for dividends reinvested............................... 462,681 673,634
Shares redeemed...................................................... (2,308,690) (3,772,878)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING...................... 1,100,272 (284,033)
============== ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
YEAR ENDED MAY 31,
-------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.............. $15.66 $15.43 $15.59 $16.20 $17.01
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net.......................... 1.08 1.06 1.01 .97 .91
Net realized and unrealized gain (loss) on investments (.23) .16 .60 .81 (.52)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.............. .85 1.22 1.61 1.78 .39
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income--net........... (1.08) (1.06) (1.00) (.97) (.92)
Dividends from net realized gain on investments. -- -- -- -- (.21)
Dividends in excess of net realized gain on investments -- -- -- -- (.24)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS........................... (1.08) (1.06) (1.00) (.97) (1.37)
------- ------- ------- ------- -------
Net asset value, end of year.................... $15.43 $15.59 $16.20 $17.01 $16.03
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN 5.58% 8.20% 10.62% 11.27% 2.07%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... .83% .81% .84% .81% .80%
Ratio of net investment income to average net assets 6.92% 6.87% 6.30% 5.83% 5.30%
Portfolio Turnover Rate......................... 55.02% 49.73% 68.07% 85.29% 29.73%
Net Assets, end of year (000's Omitted)......... $107,861 $120,540 $157,061 $183,601 $168,473
See notes to financial statements.
</TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the exclusive distributor of the Fund's
shares, which are sold to the public without a sales charge. The Distributor
is a wholly-owned subsidiary of The Dreyfus Corporation ("Manager").
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market are valued in the judgment
of the Service at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and, when appropriate,
discounts on investments, is earned from settlement date and recognized on
the accrual basis. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
Dividends in excess of net realized gains on investment for financial
statement purposes result primarily from losses from security transactions
during the year ended May 31, 1994 which are treated for Federal income tax
purposes as arising in fiscal 1995.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed 1 1/2% of the average value of the Fund's net
assets for any full fiscal year. There was no expense reimbursement for the
year ended May 31, 1994.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
the Distributor an amount not to exceed an annual rate of .25 of 1% of the
value of the Fund's average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts. During the year ended May 31, 1994, the
Fund was charged an aggregate of $99,107 pursuant to the Shareholder Services
Plan.
(C) Certain officers and trustees of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each trustee
who is not an "affiliated person" receives an annual fee of $1,500 and an
attendance fee of $250 per meeting.
(D) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Manager
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in August 1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's
shareholders before completion of the merger. Proxy materials, approved by
the Fund's Board, recently have been mailed to Fund shareholders.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $116,381,745 and
$117,520,669, respectively, for the year ended May 31, 1994, and consisted
entirely of municipal bonds and short-term municipal investments.
At May 31, 1994, accumulated net unrealized appreciation on investments
was $3,957,174, consisting of $5,814,175 gross unrealized appreciation and
$1,857,001 gross unrealized depreciation.
At May 31, 1994, 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).
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus Massachusetts Tax Exempt Bond Fund, including the statement of
investments, as of May 31, 1994, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit 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 May 31, 1994 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 Massachusetts Tax Exempt Bond Fund at May 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
(Ernst & Young Signature Logo)
New York, New York
July 9, 1994
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended May 31, 1994:
-- all the dividends paid from investment income-net are
"exempt-interest dividends" (not subject to regular Federal and, for
individuals who are Massachusetts residents, Massachusetts personal
income taxes), and
-- the portion of the $.4458 per share paid by the Fund on December
6, 1993 representing a long-term capital gain distribution is $.4042
per share (29.15% of which is not subject to Massachusetts personal
income tax).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1994 calendar year
on Form 1099-DIV which will be mailed by January 31, 1995.
(Dreyfus Logo)
Massachusetts
Tax Exempt
Bond Fund
Annual Report
May 31, 1994
(Dreyfus Lion Logo)
(Dreyfus "D" Logo)
DREYFUS MASSACHUSETTS
TAX EXEMPT BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 267AR945
Registration Mark
