DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus
Massachusetts Tax Exempt Bond Fund. For its semi-annual reporting period
ended November 30, 1995, your Fund produced a total return of 4.46% per
share.* Income dividends of approximately $.450 per share** were paid, exempt
from Federal and Commonwealth of Massachusetts personal income taxes, which
is equivalent to an annualized tax-free distribution rate per share of
5.43%.***
THE ECONOMY
Modest economic growth and low inflation have spurred a dramatic rally in
the bond market for most of 1995. The Federal Reserve Board's recent
reduction of the Fed Funds rate confirms what investors had already
suspected: inflation, at least for the immediate future, is under control.
Now questions abound regarding the duration of the economic recovery and the
likelihood of recession.
The economic recovery of the 1990s was productivity-driven. Corporations
implemented extraordinary cost control measures that, while dramatically
improving bottom line earnings, now contribute to the slow rate of employment
growth. Job creation is a significant factor that affects consumer spending,
and is a major component of economic activity. New job creation, currently
running at the slowest pace of the post-World War II era, is worrisome.
Indeed, wages and salaries grew at under 3% over the past year, barely
keeping pace with inflation. Still, surveys indicate that consumers remain
optimistic, despite indications that their spending is being affected by the
slow growth in disposable income. Recent reports on retail sales confirm this
reticence in spending. A consumer-led weakening of the economy could lead to
further Federal Reserve easing of monetary policy.
It was concern about lagging economic growth that prompted the Federal
Reserve to ease the Federal Funds Rate two times in 1995: first in July and
then again in December. The housing market and new home construction had been
helped earlier this year by low interest rates, though both have exhibited
signs of weakness recently. Business capital spending, another engine of
economic growth, has been solid. Exports remain another bright area of the
economy. Because of the new competitiveness of American businesses abroad,
the U.S. trade deficit continues to shrink. Through September, the trade
deficit with Japan narrowed for the sixth consecutive month. Exports, while a
relatively small component of overall economic activity in this country,
provide an important support for the job market. If U.S. products lose
competitiveness in world markets, foreign orders may go elsewhere and jobs
could be lost here.
MARKET ENVIRONMENT
Municipal bonds have enjoyed a dramatic bull market for the past 12
months. Current business sluggishness may result in further Fed easing next
year, particularly if the Clinton Administration and Congress can arrive at a
meaningful budget agreement. Of course, the prospect of a balanced Federal
budget should be beneficial to the bond market since it could mean a
reduction in the issuance of government securities. A similar supply
situation is present in the municipal bond market. The redemption of existing
municipal bonds has outpaced the rate of new issuance for two years, and is
expected to recur in 1996.
Overall, we remain confident in our optimistic view of the municipal bond
market. Yet we are also mindful of the stimulatory effect of easing monetary
policy, and are watchful for any signs of a reigniting of inflationary
pressures in the economy.
THE PORTFOLIO
The portfolio's structure during the reporting period must be viewed as
somewhat conservative, given the dramatic decline in yields which occurred.
While our returns were attractive, the emphasis on income and strong credit
quality were attributes that were not rewarded as well as funds which
featured portfolio structures that did not concentrate so heavily on income.
Our ability to shift to a more aggressive structure was hampered by the low
new issue volume during 1995.
As mentioned previously, market yields have declined for most of this
year. The persistently low interest rate environment is a challenge for an
income-oriented fund such as your Dreyfus Massachusetts Tax Exempt Bond Fund.
A principal strategy to address this challenge has been to identify
securities in danger of early call, attempt to achieve a price above the call
price, and reinvest proceeds at an attractive level of income. This will be
an ongoing exercise in the coming year.
With inflation low, the economy sluggish but resilient and the Federal
Reserve Board's outstanding track record to date, we do not envision a major
sell-off due to accelerating inflation. We therefore will continue to
maintain a fully invested position with strong credit quality during the
coming months.
The high level of volatility exhibited by the market in recent years
underscores the need to maintain a disciplined and long-term focus. Our
primary task - to maximize current income exempt from Federal and
Massachusetts income taxes to the extent consistent with preservation of
capital - continues to guide our portfolio management decisions.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
December 21, 1995
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
***Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the net asset
value per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.3% AMOUNT VALUE
-------- -------
MASSACHUSETTS-93.9%
<S> <C> <C>
Boston, Revenue, Refunding (Boston City Hospital):
5.75%, 2/15/2013 (Insured; FHA)......................................... $ 2,000,000 $ 2,008,640
5.75%, 2/15/2023 (Insured; FHA)......................................... 5,750,000 5,733,727
5.75%, 2/15/2023 (Insured; MBIA)........................................ 4,645,000 4,671,477
Boston - Mount Pleasant Housing Development Corp., MFHR, Refunding
6.75%, 8/1/2023 (Insured; FHA).......................................... 1,700,000 1,780,342
Massachusetts Bay Transportation Authority:
General Transportation System:
5.875%, 3/1/2019...................................................... 3,000,000 3,038,880
5.75%, 3/1/2025....................................................... 1,500,000 1,501,695
Refunding 6.20%, 3/1/2016............................................... 4,225,000 4,651,556
Massachusetts Commonwealth, Refunding 6%, 8/1/2012 (Insured; FGIC).......... 1,755,000 1,815,635
Massachusetts Convention Center Authority (Boston Common Parking Garage)
5.375%, 9/1/2013........................................................ 2,250,000 2,224,462
Massachusetts Education Loan Authority, Education Loan Revenue
8%, 6/1/2002 (LOC; Rabobank Nederland) (a).............................. 740,000 769,593
Massachusetts Health and Educational Facilities Authority, Revenue:
(Boston University) 6%, 10/1/2022 (Insured; MBIA)....................... 1,175,000 1,209,686
(Cape Cod Health System) 5.25%, 11/15/2021 (Insured; CONNIE LEE)........ 5,175,000 4,938,761
(Cooley Dickinson Hospital) 5.50%, 11/15/2018 (Insured; AMBAC).......... 1,800,000 1,787,184
(Lahey Clinic Medical Center):
5.625%, 7/1/2015 (Insured; MBIA)...................................... 3,085,000 3,096,168
5.375%, 7/1/2023 (Insured; MBIA)...................................... 1,000,000 984,400
(Massachusetts General Hospital):
6.25%, 7/1/2020 (Insured; AMBAC)...................................... 3,500,000 3,686,690
Refunding:
6%, 7/1/2015 (Insured; AMBAC)..................................... 2,000,000 2,078,900
5.25%, 7/1/2023 (Insured; AMBAC).................................. 2,000,000 1,939,000
(Mclean Hospital) 6.50%, 7/1/2010 (Insured; FGIC)....................... 1,000,000 1,095,620
(Medical Academic & Scientific) 6.625%, 1/1/2015........................ 3,000,000 3,135,180
(Mount Auburn Hospital) 6.30%, 8/15/2024 (Insured; MBIA)................ 5,000,000 5,292,950
(New England Medical Center Hospitals) 6.50%, 7/1/2012 (Insured; FGIC).. 1,000,000 1,087,970
(Refunding - Baystate Medical Center) 6%, 7/1/2015 (Insured; FGIC)...... 1,140,000 1,181,530
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA).............. 1,000,000 1,104,540
(Refunding - Wentworth Technology Institute)
5.625%, 10/1/2013 (Insured; CONNIE LEE)............................... 1,350,000 1,361,056
(Youville Hospital):
8.875%, 8/1/2004 (Insured; FHA, Prerefunded 2/1/1996) (b)............. 1,295,000 1,336,505
9.10%, 8/1/2015 (Insured; FHA, Prerefunded 2/1/1996) (b).............. 2,030,000 2,088,829
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- ------
MASSACHUSETTS (CONTINUED)
Massachusetts Housing Finance Agency, Revenue:
Housing Projects, Refunding:
6.30%, 10/1/2013...................................................... $ 2,765,000 $ 2,815,461
6.30%, 10/1/2013 (Insured; AMBAC)..................................... 1,000,000 1,033,370
6.375%, 4/1/2021...................................................... 4,385,000 4,453,844
Multi-Family Residential Housing 9.60%, 8/1/2022........................ 1,780,000 1,793,866
Rental Housing:
6.50%, 7/1/2025 (Insured; AMBAC)...................................... 1,500,000 1,551,750
6.45%, 1/1/2036 (Insured; AMBAC)...................................... 2,135,000 2,189,144
Refunding:
6.65%, 7/1/2019 (Insured; AMBAC).................................. 2,475,000 2,587,711
6.75%, 7/1/2028 (Insured; AMBAC).................................. 2,870,000 3,002,336
Massachusetts Industrial Finance Agency, Revenue:
Electrical Utility (Nantucket Electric Co.) 8.50%, 3/1/2016............. 3,000,000 3,269,610
(Refunding - Boston Edison Co. Project) 5.75%, 2/1/2014................. 5,000,000 4,876,900
(Refunding - Harvard Community Health) 8.125%, 10/1/2017................ 4,000,000 4,396,720
(Refunding - Holy Cross College):
6%, 11/1/2002......................................................... 400,000 433,096
6.375%, 11/1/2015..................................................... 2,000,000 2,112,580
Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue,
Refunding:
6.40%, 7/1/2002....................................................... 400,000 437,168
6.125%, 7/1/2019 (Insured; MBIA)...................................... 2,975,000 3,107,953
Massachusetts Port Authority, Revenue:
6%, 7/1/2013............................................................ 1,050,000 1,077,248
6%, 7/1/2023............................................................ 3,000,000 3,046,770
Special Project (Harborside Hyatt) 10%, 3/1/2026........................ 8,000,000 9,032,800
Massachusetts Water Resources Authority, Revenue, Refunding:
5.25%, 3/1/2013......................................................... 7,500,000 7,349,400
5%, 3/1/2022............................................................ 5,000,000 4,625,050
5%, 3/1/2022 (Insured; MBIA)............................................ 2,615,000 2,456,688
New Bedford 5.75%, 3/1/2006................................................. 1,565,000 1,591,793
New England Education Loan Marketing Corp., Student Loan Revenue
6.90%, 11/1/2009........................................................ 3,000,000 3,241,830
Quincy, Revenue, Refunding (Quincy City Hospital):
5%, 1/15/2005 (Insured; FSA)............................................ 2,000,000 2,004,240
5.25%, 1/15/2016 (Insured; FSA)......................................... 2,000,000 1,947,760
Southbridge 6.375%, 1/1/2012 (Insured; AMBAC)............................... 1,000,000 1,073,310
Worcester, IDR (National Envelope Corp. Project)
8%, 12/1/2004 (LOC; Manufacturers Hanover Trust Co.) (a)................ 4,000,000 4,217,960
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------- -------
U.S. RELATED-4.4%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ $ 3,000,000 $ 3,092,190
Virgin Islands Water and Power Authority, Electric System Revenue
7.40%, 7/1/2011......................................................... 3,450,000 3,736,868
---------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $144,092,573)................... $152,156,392
============
SHORT-TERM MUNICIPAL INVESTMENTS- 1.7%
MASSACHUSETTS-1.3%
Massachusetts Health and Educational Facilities Authority, Revenue, VRDN
(Saint Elizabeth Hospital) 3.74% (Insured; FSA) (c)..................... $ 2,000,000 $ 2,000,000
U.S. RELATED-.4%
Puerto Rico Electric Power Authority, Power Revenue 3.68% (Insured; FSA) (d) 600,000 600,000
----------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $2,600,000).................... $ 2,600,000
============
TOTAL INVESTMENTS-100.0%
(cost $146,692,573)..................................................... $154,756,392
============
</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 Assurance
FHA Federal Housing Administration 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 (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ---------------- ------------------
<S> <C> <S> <C>
AAA Aaa AAA 41.0%
AA Aa AA 11.7
A A A 29.9
BBB Baa BBB 8.6
Not Rated(f) Not Rated(f) Not Rated(f) 8.8
-----
100.0%
=====
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) 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.
(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) Inverse floater security - the interest rate is subject to change
periodically.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) 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.
(g) At November 30, 1995, the Fund had $53,822,667 (34.4% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $146,692,573)-see statement..................................... $154,756,392
Cash.................................................................... 2,026,465
Receivable for investment securities sold............................... 3,351,220
Interest receivable..................................................... 2,815,529
Prepaid expenses........................................................ 5,578
----------
162,955,184
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 78,995
Payable for investment securities purchased............................. 6,583,733
Accrued expenses........................................................ 56,390 6,719,118
--------- ----------
NET ASSETS ................................................................ $156,236,066
============
REPRESENTED BY:
Paid-in capital......................................................... $150,256,032
Accumulated net realized (loss) on investments.......................... (2,083,785)
Accumulated net unrealized appreciation on investments-Note 3........... 8,063,819
---------
NET ASSETS at value applicable to 9,465,677 outstanding shares of
Beneficial Interest, equivalent to $16.51 per share (unlimited
number of $.01 par value shares authorized)............................. $156,236,066
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $4,868,847
EXPENSES:
Management fee-Note 2(a).............................................. $ 458,452
Shareholder servicing costs-Note 2(b)................................. 88,669
Professional fees..................................................... 30,448
Trustees' fees and expenses-Note 2(c)................................. 10,685
Custodian fees........................................................ 8,164
Registration fees..................................................... 7,786
Prospectus and shareholders' reports.................................. 992
Miscellaneous......................................................... 9,121
------
TOTAL EXPENSES.................................................. 614,317
--------
INVESTMENT INCOME-NET........................................... 4,254,530
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $2,489,054
Net unrealized (depreciation) on investments............................ (96,075)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 2,392,979
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,647,509
==========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
MAY 31, NOVEMBER 30, 1995
1995 (UNAUDITED)
-------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 9,079,650 $ 4,254,530
Net realized gain (loss) on investments.............................. (1,987,488) 2,489,054
Net unrealized appreciation (depreciation) on investments for the period 4,202,720 (96,075)
--------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 11,294,882 6,647,509
--------- ---------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ (9,079,650) (4,254,530)
Net realized gain on investments..................................... (1,973) --
--------- ----------
TOTAL DIVIDENDS.................................................... (9,081,623) (4,254,530)
--------- ----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................ 57,695,559 17,979,801
Dividends reinvested................................................. 6,757,358 3,129,156
Cost of shares redeemed.............................................. (74,389,458) (28,015,539)
----------- ----------
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..... (9,936,541) (6,906,582)
----------- ----------
TOTAL (DECREASE) IN NET ASSETS................................. (7,723,282) (4,513,603)
NET ASSETS:
Beginning of period.................................................. 168,472,951 160,749,669
----------- ----------
End of period........................................................ $160,749,669 $156,236,066
=========== ===========
SHARES SHARES
------- -------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 3,687,475 1,117,524
Shares issued for dividends reinvested............................... 430,673 193,503
Shares redeemed...................................................... (4,733,211) (1,738,774)
--------- ---------
NET (DECREASE) IN SHARES OUTSTANDING............................... (615,063) (427,747)
======== ========
See independent accountants' review report and 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 period indicated. This
information has been derived from the Fund's financial statements.
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30, 1995
----------------------------------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED)
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.43 $15.59 $16.20 $17.01 $16.03 $16.25
---- ---- ---- ---- ---- ------
INVESTMENT OPERATIONS:
Investment income-net.............. 1.06 1.01 .97 .91 .91 .45
Net realized and unrealized gain (loss)
on investments................... .16 .60 .81 (.52) .22 .26
---- ---- ---- ---- ---- ------
TOTAL FROM INVESTMENT OPERATIONS 1.22 1.61 1.78 .39 1.13 .71
---- ---- ---- ---- ---- ------
DISTRIBUTIONS:
Dividends from investment income-net (1.06) (1.00) (.97) (.92) (.91) (.45)
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) (.45)
---- ---- ---- ---- ---- ------
Net asset value, end of period..... $15.59 $16.20 $17.01 $16.03 $16.25 $16.51
==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN................ 8.20% 10.62% 11.27% 2.07% 7.39% 8.90%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .81% .84% .81% .80% .80% .80%(1)
Ratio of net investment income to
average net assets............... 6.87% 6.30% 5.83% 5.30% 5.77% 5.55%(1)
Portfolio Turnover Rate............ 49.73% 68.07% 85.29% 29.73% 38.34% 23.67%(2)
Net Assets, end of period (000's Omitted) $120,540 $157,061 $183,601 $168,473 $160,750 $156,236
(1) Annualized.
(2) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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. Premier Mutual
Fund Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares, which are sold to the public without a sales charge. 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. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
(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 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.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Fund has an unused capital loss carryover of approximately $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 six months ended
November 30, 1995.
Effective December 1, 1995, Dreyfus Transfer Inc., a wholly-owned
subsidiary of the Manager, serves as the Fund's Transfer and Dividend
Disbursing Agent.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining 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 six months ended November 30, 1995, the Fund was charged an
aggregate of $30,681 pursuant to the Shareholder Services Plan.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund 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,
excluding short-term securities, during the six months ended November 30,
1995 amounted to $35,352,856 and $39,037,790, respectively.
At November 30, 1995, accumulated net unrealized appreciation on
investments was $8,063,819, consisting of $8,168,209 gross unrealized
appreciation and $104,390 gross unrealized depreciation.
At November 30, 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
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Massachusetts Tax Exempt Bond Fund, including the statement of
investments, as of November 30, 1995, and the related statements of
operations and changes in net assets and financial highlights for the six
month period ended November 30, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
May 31, 1995 and financial highlights for the five years in the period ended
May 31, 1995 and in our report dated June 28, 1995, we expressed an
unqualified opinion on such statement of changes in net assets and financial
highlights.
[Ernst and Young LLP signature logo]
New York, New York
January 2, 1996
[Dreyfus lion "d" logo]
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
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 267SA9511
[Dreyfus logo]
Massachusetts
Tax Exempt
Bond Fund
Semi-Annual Report
November 30, 1995
