LETTER TO SHAREHOLDERS
Dear Shareholder:
As your Fund ended its annual reporting period on May 31, 1995, its net
asset value was $16.25 per share. Income dividends of approximately $.906 per
share were paid during this period, representing a distribution rate per
share of 5.57% based on the May 31, 1995 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 (AMT) on some portfolio
income.
As 1994 drew to a close, the bond market continued to exhibit great
volatility. Yields, as measured by the Bond Buyer 20-Bond GO Index,* rose
dramatically during the year from a low of 5.25% in February to a high of
7.06% in November. Much of this rise was attributable to tightening moves by
the Federal Reserve Board during the year in an effort to slow what appeared
to be a very strong economy. The "last gasp" of this apparent strength
occurred with the strong retail sales data reported at year-end.
While the economy grew at its fastest pace in 10 years during calendar
year 1994, signs were developing in 1994's last months that the expansion was
moderating as higher interest rates began to take hold. As an example,
existing home sales, new home construction and auto sales slowed during the
first quarter of 1995. In addition, jobless claims and inventories rose
during the latter part of the reporting period as sales slowed. Many
forecasts for economic growth in the first half of 1995 are being adjusted
downward to reflect the slowdown. Economic discussions suggesting a "soft
landing" have recently been broadened to include the growing likelihood of an
outright recession.
The Massachusetts economy has participated fully in the improvement seen
in the national economy. We are aware that the improvement in the
Commonwealth's economy will be negatively affected by a return to a national
economic slowdown.
With inflation remaining subdued and economic activity slowing, the case
for Fed tightening has disappeared, and there is now expectation of a Fed
easing of interest rates. An easing of credit by the Fed should prove very
positive for your Fund.
The Fund's performance during most of its year reflected our ongoing
emphasis on maximizing tax exempt income through the use of high coupon
securities. The Fund also continued a policy which emphasized strong credit
quality during a market period which weathered many uncertainties, including
those caused by the Orange County, California bankruptcy. The use of high
coupon securities to maximize income, and the use of a significant percentage
of highly rated securities, tends to lessen the volatility of the Fund.
Our strategy in this current environment is to remain fully invested in
order to take advantage of any continued market improvement and provide a
high level of tax exempt income. Our view of a continuation of the market
rally is a cautious one, however, since much of the advance in bond prices
may already be behind us-even as the economy slows further. As the year goes
forward, we will be slowly adding more defensive securities to the portfolio
in anticipation of an increase in inflationary pressures by year-end.
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
Director, Municipal Portfolio Management
The Dreyfus Corporation
June 16, 1995
New York, N.Y.
* The Bond Buyer 20-Bond GO Index is a sampling of national general
obligation bonds maturing in 20 years and has a rating roughly equivalent to
A1.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND MAY 31, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS MASSACHUSETTS
TAX EXEMPT BOND FUND AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
In Dollars
$24,519
Lehman Brothers Municipal Bond Index*
$20,710
Dreyfus Massachusetts Tax Exempt Bond Fund
*Source: Lehman Brothers
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION (6/11/85)
MAY 31, 1995 MAY 31, 1995 TO MAY 31, 1995
----------------- ------------------ ---------------------------
7.39% 7.86% 7.57%
</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 shown in the line graph 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,
geographically unrestricted tax exempt bond market, calculated by using
municipal bonds selected to be representative of the municipal market
overall. The Index does not take into account charges, fees and other expenses
. Also, unlike the Fund which principally limits investments to Massachusetts
municipal obligations, the Index is not state-specific. These factors can
contribute to the Index potentially outperforming the Fund. 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, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.4% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
MASSACHUSETTS-95.0%
Boston:
6.75%, 7/1/2011 (Insured; MBIA, Prerefunded 7/1/2001) (a)............... $ 2,500,000 $ 2,815,925
6.50%, 7/1/2012 (Insured; AMBAC)........................................ 3,000,000 3,255,270
Revenue, Refunding (Boston City Hospital):
5.75%, 2/15/2013 (Insured; FHA)....................................... 2,000,000 1,954,220
5.75%, 2/15/2023 (Insured; FHA)....................................... 5,750,000 5,526,383
5.75%, 2/15/2023 (Insured; MBIA)...................................... 3,950,000 3,911,764
Boston-Mount Pleasant Housing Development Corp., MFHR, Refunding
6.75%, 8/1/2023 (Insured; FHA).......................................... 1,700,000 1,768,051
Massachusetts Bay Transportation Authority:
6.40%, 3/1/2015
(Guaranteed; Massachusetts Commonwealth, Prerefunded 3/1/1997) (a).... 3,000,000 3,164,730
General Transportation System 5.875%, 3/1/2019.......................... 3,000,000 2,997,750
Refunding 6.20%, 3/1/2016............................................... 4,225,000 4,506,385
Massachusetts Commonwealth:
Consolidated Loan:
6%, 6/1/2011.......................................................... 3,500,000 3,536,785
6%, 7/1/2012.......................................................... 2,000,000 2,024,220
Refunding:
5.25%, 2/1/2008....................................................... 1,500,000 1,482,810
6%, Series A, 8/1/2012................................................ 2,000,000 2,024,420
6%, Series B, 8/1/2012 (Insured; FGIC)................................ 1,755,000 1,785,519
Massachusetts Convention Center Authority (Boston Common Parking Garage)
5.375%, 9/1/2013........................................................ 2,250,000 2,160,090
Massachusetts Education Loan Authority, Education Loan Revenue
8%, 6/1/2002 (LOC; Rabobank Nederland) (b).............................. 760,000 802,492
Massachusetts Health and Educational Facilities Authority, Revenue:
(Amherst College) 6.375%, 11/1/2019..................................... 1,000,000 1,034,390
(Berklee College of Music) 6.875%, 10/1/2021 (Insured; MBIA)............ 4,380,000 4,757,644
(Boston University) 6%, 10/1/2022 (Insured; MBIA)....................... 1,175,000 1,189,452
(Jordan Hospital) 7.85%, 8/15/2028 (Insured; FHA, Prerefunded 8/15/1998) (a). 3,295,000 3,630,991
(Lahey Clinic Medical Center):
5.625%, 7/1/2015 (Insured; MBIA)...................................... 3,085,000 3,039,219
5.375%, 7/1/2023 (Insured; MBIA)...................................... 1,000,000 949,330
(Massachusetts General Hospital):
6.25%, 7/1/2020 (Insured; AMBAC)...................................... 3,500,000 3,624,145
Refunding:
6%, 7/1/2015 (Insured; AMBAC)..................................... 2,000,000 2,040,800
5.25%, 7/1/2023 (Insured; AMBAC).................................. 2,000,000 1,866,640
(Mclean Hospital) 6.50%, 7/1/2010 (Insured; FGIC)....................... 1,000,000 1,076,460
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS MAY 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MASSACHUSETTS (CONTINUED)
Massachusetts Health and Educational Facilities Authority, Revenue
(continued):
(Medical Academic & Scientific) 6.625%, 1/1/2015........................ $ 3,000,000 $ 3,056,850
(Mount Auburn Hospital) 6.30%, 8/15/2024 (Insured; MBIA)................ 5,000,000 5,186,650
(New England Medical Center Hospitals) 6.50%, 7/1/2012 (Insured; FGIC).. 1,000,000 1,071,420
(Refunding - Baystate Medical Center) 6%, 7/1/2015 (Insured; FGIC)...... 1,140,000 1,159,756
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA).............. 1,000,000 1,098,140
(Youville Hospital):
8.875%, 8/1/2004 (Insured; FHA, Prerefunded 2/1/1996) (a)............. 1,295,000 1,363,441
9.10%, 8/1/2015 (Insured; FHA, Prerefunded 2/1/1996) (a).............. 2,030,000 2,137,610
Massachusetts Housing Finance Agency, Revenue:
Housing Projects, Refunding:
6.30%, 10/1/2013 (Insured; AMBAC)..................................... 1,000,000 1,037,730
6.375%, 4/1/2021...................................................... 4,385,000 4,443,584
Multi-Family Residential Housing 9.60%, 8/1/2022........................ 1,795,000 1,834,598
Rental, Refunding:
6.65%, 7/1/2019 (Insured; AMBAC)...................................... 2,475,000 2,578,257
6.75%, 7/1/2028 (Insured; AMBAC)...................................... 2,870,000 2,994,960
Single-Family Housing:
6.60%, Series 32, 12/1/2026........................................... 2,000,000 2,033,840
6.60%, Series 36, 12/1/2026........................................... 1,000,000 1,021,000
Massachusetts Industrial Finance Agency, Revenue:
Electrical Utility (Nantucket Electric Co.) 8.50%, 3/1/2016............. 3,000,000 3,244,800
(Refunding-Harvard Community Health) 8.125%, 10/1/2017.................. 4,000,000 4,429,920
(Refunding-Holy Cross College):
6%, 11/1/2002......................................................... 400,000 425,788
6.375%, 11/1/2015..................................................... 2,000,000 2,092,740
Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue,
Refunding:
6.40%, 7/1/2002....................................................... 400,000 429,092
6.625%, 7/1/2018...................................................... 3,500,000 3,653,720
6.125%, 7/1/2019...................................................... 2,500,000 2,502,400
6.125%, 7/1/2019 (Insured; MBIA)...................................... 2,975,000 3,042,324
Massachusetts Port Authority, Revenue:
6%, 7/1/2013............................................................ 2,050,000 2,063,735
9.375%, 7/1/2015 (Prerefunded 7/1/1995) (a)............................. 325,000 333,027
9.375%, 7/1/2015 (Prerefunded 7/1/1995) (a)............................. 675,000 691,497
6%, 7/1/2023............................................................ 3,000,000 2,991,720
Special Project (Harborside Hyatt) 10%, 3/1/2026........................ 8,000,000 8,865,280
New Bedford 5.75%, 3/1/2006................................................. 1,565,000 1,568,302
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS MAY 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MASSACHUSETTS (CONTINUED)
New England Education Loan Marketing Corp., Student Loan Revenue
6.90%, 11/1/2009........................................................ $ 3,000,000 $ 3,209,880
Quincy, Revenue, Refunding (Quincy City Hospital):
5%, 1/15/2005 (Insured; FSA)............................................ 2,000,000 1,983,320
5.25%, 1/15/2016 (Insured; FSA)......................................... 2,000,000 1,893,820
Southbridge 6.375%, 1/1/2012 (Insured; AMBAC)............................... 1,000,000 1,052,880
Worcester, IDR (National Envelope Corp. Project)
8%, 12/1/2004 (LOC; Manufacturers Hanover Trust Co.) (b)................ 4,000,000 4,250,440
U.S. RELATED-4.4%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 3,000,000 3,087,480
Virgin Islands Water and Power Authority, Electric System Revenue 7.40%, 7/1/2011 3,450,000 3,691,776
--------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $145,287,768)................... $153,447,662
==============
SHORT-TERM MUNICIPAL INVESTMENTS-.6%
MASSACHUSETTS;
Massachusetts Health and Educational Facilities Authority, Revenue, VRDN
(Capital Asset Program) 3.80% (Insured; MBIA) (c)
(cost $1,000,000)....................................................... $ 1,000,000 $ 1,000,000
==============
TOTAL INVESTMENTS-100.0%
(cost $146,287,768)..................................................... $154,447,662
==============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors
FHA Federal Housing Administration Assurance Insurance Corporation
FSA Financial Security Assurance MFHR Multi-Family Housing Revenue
IDR Industrial Development Revenue 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> <C> <C>
AAA Aaa AAA 39.7%
AA Aa AA 13.1
A A A 31.1
BBB Baa BBB 5.4
F1+ & F1 MIG1, VMG1 & P1 SP1 & A1 .6
Not Rated (e) Not Rated (e) Not Rated (e) 10.1
-------
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 municipal 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.
(e) Securites which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
(f) At May 31, 1995, the Fund had $48,944,028 (30.4% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $146,287,768)-see statement..................................... $154,447,662
Cash.................................................................... 614,584
Receivable for investment securities sold............................... 5,663,150
Interest receivable..................................................... 3,292,587
Prepaid expenses........................................................ 8,001
-------------
164,025,984
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 88,003
Payable for investment securities purchased............................. 3,076,480
Accrued expenses........................................................ 111,832 3,276,315
--------------- -------------
NET ASSETS ................................................................ $160,749,669
=============
REPRESENTED BY:
Paid-in capital......................................................... $157,162,614
Accumulated net realized capital losses and distributions in excess of
net realized gain on investments...................................... (4,572,839)
Accumulated net unrealized appreciation on investments-Note 3........... 8,159,894
-------------
NET ASSETS at value applicable to 9,893,424 shares outstanding
(unlimited number of $.01 par value shares of Beneficial Interest authorized)
$160,749,669
=============
NET ASSET VALUE, offering and redemption price per share
($160,749,669 / 9,893,424 shares)....................................... $16.25
=======
See notes to financial statements.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 10,334,220
EXPENSES:
Management fee-Note 2(a).............................................. $ 943,634
Shareholder servicing costs-Note 2(b)................................. 205,473
Professional fees..................................................... 35,649
Custodian fees........................................................ 16,934
Trustees' fees and expenses-Note 2(c)................................. 16,224
Prospectus and shareholders' reports.................................. 14,252
Registration fees..................................................... 13,606
Miscellaneous......................................................... 8,798
-----------
TOTAL EXPENSES.................................................. 1,254,570
--------------
INVESTMENT INCOME-NET........................................... 9,079,650
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(1,987,488)
Net unrealized appreciation on investments.............................. 4,202,720
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 2,215,232
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 11,294,882
==============
See notes to financial statements.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
--------------------------------
1994 1995
-------------- --------------
OPERATIONS:
Investment income-net................................................... $ 9,841,803 $ 9,079,650
Net realized (loss) on investments...................................... (1,956,469) (1,987,488)
Net unrealized appreciation (depreciation) on investments for the year.. (3,680,332) 4,202,720
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 4,205,002 11,294,882
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net.............................................. (9,922,292) (9,079,650)
From net realized gain on investments................................... (2,229,211) (1,973)
In excess of net realized gain on investments........................... (2,583,378) ---
-------------- --------------
TOTAL DIVIDENDS....................................................... (14,734,881) (9,081,623)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 47,458,511 57,695,559
Dividends reinvested.................................................... 11,443,149 6,757,358
Cost of shares redeemed................................................. (63,499,837) (74,389,458)
-------------- --------------
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........ (4,598,177) (9,936,541)
-------------- --------------
TOTAL (DECREASE) IN NET ASSETS.................................... (15,128,056) (7,723,282)
NET ASSETS:
Beginning of year....................................................... 183,601,007 168,472,951
-------------- --------------
End of year............................................................. $168,472,951 $160,749,669
============== ==============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 2,815,211 3,687,475
Shares issued for dividends reinvested.................................. 673,634 430,673
Shares redeemed......................................................... (3,772,878) (4,733,211)
============== ==============
NET (DECREASE) IN SHARES OUTSTANDING.................................. (284,033) (615,063)
============== ==============
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: 1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $15.43 $15.59 $16.20 $17.01 $16.03
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net........................ 1.06 1.01 .97 .91 .91
Net realized and unrealized gain (loss) on investments .16 .60 .81 (.52) .22
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS........... 1.22 1.61 1.78 .39 1.13
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net......... (1.06) (1.00) (.97) (.92) (.91)
Dividends from net realized gain on investments -- -- -- (.21) --
Dividends in excess of net realized gain on investments -- -- -- (.24) --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS........................ (1.06) (1.00) (.97) (1.37) (.91)
------- ------- ------- ------- -------
Net asset value, end of year................. $15.59 $16.20 $17.01 $16.03 $16.25
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN.......................... 8.20% 10.62% 11.27% 2.07% 7.39%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .81% .84% .81% .80% .80%
Ratio of net investment income to average net assets 6.87% 6.30% 5.83% 5.30% 5.77%
Portfolio Turnover Rate...................... 49.73% 68.07% 85.29% 29.73% 38.34%
Net Assets, end of year (000's Omitted)...... $120,540 $157,061 $183,601 $168,473 $160,750
See notes to financial statements.
</TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
(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 in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund 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, 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. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(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 and
excise taxes.
The Fund has an unused capital loss carryover of $3,440,000 available for
Federal income tax purposes to be applied against future net securities
profit, if any, realized subsequent to May 31, 1995. The carryover does not
include net realized securities losses from November 1, 1994 through May 31,
1995 which are treated, for Federal income tax purposes, as arising in fiscal
1996. If not applied, the carryover expires in fiscal 2003.
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 the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. The most stringent state
expense limitation applicable to the Fund presently requires reimbursement of
expenses in any full fiscal year that such expenses (exclusive of certain
expenses as described above) exceed 21\2% of the first $30 million, 2% of the
next $70 million and 11\2% of the excess over $100 million of the average
value of the Fund's net assets in accordance with California "blue sky"
regulations. There was no expense reimbursement for the year ended May 31,
1995.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation 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, 1995, the Fund was charged an aggregate of $79,272 pursuant to the
Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $1,500 and an attendance fee of $250 per meeting.
The Chairman of the Board receives an additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $134,160,020 and $146,186,793, respectively, for the year ended
May 31, 1995, and consisted entirely of long-term and short-term municipal
investments.
At May 31, 1995, accumulated net unrealized appreciation on investments
was $8,159,894, consisting of $8,397,152 gross unrealized appreciation and
$237,258 gross unrealized depreciation.
At May 31, 1995, 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 LLP, 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, as of May 31, 1995, including the
statement of investments, 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, 1995 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Massachusetts Tax Exempt Bond Fund at May 31, 1995, 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 LLP Signature Logo
New York, New York
June 28, 1995
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, 1995:
- 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 $.0002 per share paid by the Fund on December 7, 1994 represents a
long-term capital gain distribution, none of which is exempt from
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 1995 calendar year on Form
1099-DIV which will be mailed by January 31, 1996.
DREYFUS MASSACHUSETTS
TAX EXEMPT BOND FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 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. 267AR955
Massachusetts
Tax Exempt
Bond Fund
Annual Report
May 31, 1995
(Dreyfus Logo)
