YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report for the Dreyfus Massachusetts
Tax Exempt Bond Fund for the six-month period ended November 30, 1998. Your Fund
produced a total return, including share price changes and dividend income
generated, of 3.66%,* and an annualized tax-free distribution rate per share of
4.77%.**
Economic Review
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. began the period with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year. The U.S. economy cooled enough over the months that the Fed decided to
stand pat. Evidence of economic cooling continued to accumulate and worries
about the world economy intensified. Financial stresses pushed the Fed to ease
beginning in September. After many years of subpar economic growth, continental
Europe moved into a sustained economic expansion. The overall European economy
benefited as interest rates in peripheral countries such as Spain and Italy
fell, approaching the lower levels established by Germany, on the eve of
currency unification. Unlike the U.S., Europe has substantial excess capacity of
productive plants and labor. In Asia, weak economies were pervasive as a result
of the Asian financial crisis. The Latin American economies weakened as the
financial stresses spread throughout that region.
A main influence on the U.S. economy this year was the foreign financial
crisis and cooling of the world economy. The positive effects hit first. Actual
inflation and expected inflation dropped, causing a decline in long-term
Treasury bond yields and mortgage rates. This caused a boom in housing. The drop
in inflation helped the consumer sector as more of the growth in consumer income
was left over after inflation to buy goods and services. Consumers benefited
from a combination of good growth in real income, a strong labor market and past
increases in the prices of assets they owned.
The negative effect of Asian weakness was felt in the industrial sector more
than the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports. One result of the industrial weakness was to cool off a U.S.
economy that had been growing rapidly.
The major change in the economic outlook over recent months has been a
downward shift in expectations for world economic growth. A credit crunch
developed in emerging countries and former communist countries, sharply reducing
the economic outlook for Asia and Latin America as well as for commodity
exporting countries throughout the world. The effect on Europe and the U.S. has
been to lower expectations of profit growth and drive down bond yields. Monetary
policy has begun to ease in both the U.S. and Europe.
Evidence of a weaker world economy accumulated as the financial stresses
continued. A worsened financial crisis occurred between the Russian default in
mid-August and the fallout from the Long-Term Capital Management hedge fund
crisis through early October. However, proactive steps were taken to stabilize
the Japanese banks, design a support package for Brazil and ease monetary
policy. There appears to be a shift in the priorities of key policymakers from
fighting potential inflation to restimulating future world economic growth.
Market Environment
Prices moved higher during the reporting period as various classes of
investors found municipal bonds appealing, despite the extent to which equities
vied for investors' attention for most of the period. Low inflation and low
interest rates helped create and maintain a bond-friendly atmosphere. Not to be
overlooked, either, is the improved fiscal posture enjoyed by many states and
municipalities, the result of several years of strong economic growth that
enhanced the creditworthiness of many municipal securities' issuers, and gave
added comfort to investors. The dollar value of newly issued bonds so far in
1998 has surpassed the volume experienced in all but a few previous years. At
$255 billion, it is approximately 29% above the same period last year, but
nonetheless, a dearth of appropriate bonds persists in several states.
Fortunately, the market has absorbed the new issuance without inordinate
volatility in the process. Municipal yields have been, and continue to be, very
favorably aligned vis-a-vis U.S. Treasury Bonds. Historically, longer-term
municipals have been viewed as being good values when their yields approached
80% to 85% of the yields available on comparable Treasuries. Presently, most
measures place the ratio well in excess of 90%. The environment for municipal
bonds still appears to be positive, particularly with the Federal Reserve
Board's Open Market Committee signaling explicitly, by recent cuts in the target
rate for Federal Funds, its preference for lower interest rates.
PORTFOLIO OVERVIEW
Trading activity during your Fund's most recent reporting period was guided
by a distinctly positive view of the Massachusetts market. Much of the time a
fully invested position was maintained by drawing portfolio cash reserves to the
minimum levels necessary to fulfill ongoing liquidity needs. Attention was
focused on those bonds offering not only generous levels of Federal and
Massachusetts tax exempt income, but also the potential for significant price
appreciation as interest rates declined. To this end, decisions in both the
primary and secondary markets were biased toward those securities selling at
significant discounts to full par value, which respond more quickly to movements
in interest rates than do fuller coupon, par bonds. Additional emphasis was
placed on capital appreciation bonds which can be secured at accrual rates
higher than conventional bonds and which also historically have mirrored the
price movements of the overall market quite consistently.
Throughout the period, also influencing trading decisions were two more
general themes owing more to a desire to enhance the structural integrity of the
portfolio than to the direction of the market in general. First, there was a
desire to extend the optional redemption provisions of the Fund's holdings. The
majority of all outstanding Massachusetts exempt municipal bonds were issued
prior to 1993 and the standard method of issuance allows the issuer to retain a
ten-year optional redemption, so the majority of bonds available are subject to
a premature call in six years or less. To the extent that the optional
redemption characteristics of the portfolio can be structured to exceed that of
the general market, it should increase the potential performance characteristics
of the portfolio in both rising and declining market environments.
The second general theme that guided transactions was a desire to increase
the underlying credit quality of the Fund's assets. In recent years, as investor
demand for Massachusetts tax-free municipal bonds has increased and as the
economic fundamentals supporting these credits have improved, the rates of
return available on higher and lower rated bonds have narrowed dramatically. As
such, one is no longer adequately compensated for holding the debt of lower
rated issuers. Should recent trends in higher levels of issuance continue, or
the local economic fundamentals begin to deteriorate as a result of the global
economic slowdown, a significant widening of these spreads would be expected. By
emphasizing higher quality issues and those supported by external credit
enhancements, like insurance policies underwritten by one of the major municipal
bond insurers, trading seeks to insulate the portfolio from the potential
underperformance of lower rated issues.
Going forward, while we continue to maintain a constructive outlook for the
bond market, we remain alert for any signals that the current accommodative
stance of monetary policy could be reversed, should unintended inflationary
signals emerge. Should this occur, a decidedly more conservative posture will be
employed in which, for example, a greater emphasis could be placed on those
issues bearing higher levels of income and lesser degrees of potential principal
volatility. We appreciate your investment in the Dreyfus Massachusetts Tax
Exempt Bond Fund, and we want to assure you that we are, at all times, working
in the Fund's best interest.
Very truly yours
[Signature logo Richard J. Moynihan]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
December 15, 1998
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
Income may be subject to state and local income taxes for non-Massachusetts
residents.
**Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset value
per share at the end of the period. Some income may be subject to the Federal
Alternative Minimum Tax (AMT) for certain shareholders.
<TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS NOVEMBER 30, 1998 (UNAUDITED)
Principal
Long-Term Municipal Investments--98.4% Amount Value
- -------------------------------------------------------
_____________ _____________
<S> <C> <C>
Massachusetts--95.2%
Amesbury:
5.25%, 3/15/2011 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,120,000 $ 1,190,986
5.25%, 3/15/2012 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010,000 1,068,479
5.25%, 3/15/2013 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,110,000 1,167,376
5.25%, 3/15/2014 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,085,000 1,134,324
Boston-Mount Pleasant Housing Development Corporation., MFHR, Refunding
6.75%, 8/1/2023 (Insured; FHA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,620,000 1,727,908
Haverhill 5%, 6/15/2017 (Insured; FGIC). . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,512,810
Lynn 5%, 2/15/2017 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,360,000 2,372,909
Mansfield, Municipal Purpose Loan 5.125%, 8/15/2017 (Insured; FGIC). . . . . . . . . . . . 1,685,000 1,722,660
Mashpee, Municipal Purpose Loan 5.50%, 2/1/2017 (Insured; MBIA). . . . . . . . . . . . . . 2,525,000 2,681,651
Massachusetts Bay Transportation Authority, General Transportation System,
Refunding:
6.20%, 3/1/2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,225,000 4,932,349
4.50%, 3/1/2026 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 2,320,175
Massachusetts Development Finance Agency, Revenue (Regis College)
5.25%, 10/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,240,000 1,210,798
Massachusetts Education Loan Authority, Education Loan Revenue
8%, 6/1/2002 (LOC; Rabobank Nederland) . . . . . . . . . . . . . . . . . . . . . . . . . 525,000 535,930
Massachusetts Educational Financing Authority, Education Loan Revenue
5.125%, 12/1/2014 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,054,900
Massachusetts Federal Highway Grant 5.125%, 6/15/2015. . . . . . . . . . . . . . . . . . . 2,500,000 2,572,400
Massachusetts Health and Educational Facilities Authority, Revenue:
(Bentley College) 5%, 7/1/2023 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . 3,500,000 3,477,810
(Brandeis University) 4.75%, 10/1/2028 (Insured; MBIA) . . . . . . . . . . . . . . . . . 2,500,000 2,390,425
(Massachusetts General Hospital):
6.25%, 7/1/2020 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500,000 3,856,510
Refunding 6%, 7/1/2015 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,148,260
(Massachusetts Institute of Technology) 5.20%, 1/1/2028 . . . . . . . . . . . . . . . . 2,500,000 2,629,500
(Mclean Hospital) 6.50%, 7/1/2010 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . 1,000,000 1,095,470
(Medical Academic & Scientific) 6.625%, 1/1/2015 . . . . . . . . . . . . . . . . . . . . 3,000,000 3,333,330
(Mount Auburn Hospital) 6.30%, 8/15/2024 (Insured; MBIA) . . . . . . . . . . . . . . . . 5,000,000 5,583,500
(New England Medical Center Hospitals) 6.50%, 7/1/2012 (Insured; FGIC) . . . . . . . . . 2,000,000 2,190,600
(Newton--Wellesley Hospital) 5.875%, 7/1/2015 (Insured; MBIA) . . . . . . . . . . . . . 2,000,000 2,172,440
(Refunding--Baystate Medical Center) 6%, 7/1/2015 (Insured; FGIC) . . . . . . . . . . . 1,140,000 1,226,469
(Refunding--Berklee College of Music) 5%, 10/1/2018 (Insured; MBIA) . . . . . . . . . . 1,075,000 1,081,633
(Refunding--Daughters of Charity) 6.10%, 7/1/2014 . . . . . . . . . . . . . . . . . . . 1,100,000 1,198,340
(Refunding--Milton Hospital) 7%, 7/1/2016 (Insured; MBIA) . . . . . . . . . . . . . . . 1,000,000 1,066,480
(Sisters Providence Health System) 6.625%, 11/15/2022 (Prerefunded; 11/15/2004) (a) . . 3,510,000 3,936,290
Massachusetts Housing Finance Agency, Revenue:
Housing Projects, Refunding:
6.30%, 10/1/2013 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,064,560
6.375%, 4/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,300,000 4,609,213
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1998 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
- -------------------------------------------------------
_____________ _____________
Massachusetts (continued)
Massachusetts Housing Finance Agency, Revenue (continued):
Multi-Family Residential Housing 9.60%, 8/1/2022 . . . . . . . . . . . . . . . . . . . . $ 1,725,000 $ 1,738,593
Rental Housing:
6.50%, 7/1/2025 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,628,010
6.45%, 1/1/2036 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,135,000 2,311,308
6%, 7/1/2037 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,650,000 2,792,014
Refunding 6.65%, 7/1/2019 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . 2,385,000 2,591,303
Single-Family Housing 6.35%, 6/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . 2,700,000 2,909,682
Massachusetts Industrial Finance Agency, Revenue:
(Babson College):
5.375%, 10/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,125,000 2,215,291
5.25%, 10/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200,000 3,248,672
Electrical Utility (Nantucket Electric Co.) 8.50%, 3/1/2016 . . . . . . . . . . . . . . 2,885,000 3,095,778
(Groton School) 5%, 3/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,440,000 3,405,806
Parking Facility (Avon Associates LLC) 5.375%, 4/1/2020 (Insured; MBIA) . . . . . . . . 2,000,000 2,048,340
(Refunding--Holy Cross College):
6%, 11/1/2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 432,888
6.375%, 11/1/2015 (Prerefunded; 11/1/2002) (a) . . . . . . . . . . . . . . . . . . . . 2,000,000 2,226,160
(Refunding--Merrimack College):
5%, 7/1/2017 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,008,550
5%, 7/1/2027 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000 3,575,448
(Refunding--Ogden Haverhill Project) 5.60%, 12/1/2019 . . . . . . . . . . . . . . . . . 1,000,000 1,002,690
(Refunding--Phillips Academy) 5.375%, 9/1/2023 . . . . . . . . . . . . . . . . . . . . . 4,330,000 4,517,662
(Refunding--Worcester Polytechnic Institute) 5.125%, 9/1/2017 (Insured; MBIA) . . . . . 1,000,000 1,020,650
(WGBH Educational Foundation) 5%, 3/1/2028 (Insured; AMBAC) . . . . . . . . . . . . . . 1,750,000 1,737,890
Massachusetts Municipal Wholesale Electric Company,
Power Supply System Revenue, Refunding:
6.40%, 7/1/2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 430,788
6.125%, 7/1/2019 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,088,170
Massachusetts Port Authority, Revenue:
Special Facilities (US Air Project) 5.75%, 9/1/2016 (Insured; MBIA) . . . . . . . . . . 5,000,000 5,400,450
Special Project (Harborside Hyatt) 10%, 3/1/2026 . . . . . . . . . . . . . . . . . . . . 8,000,000 8,838,480
Massachusetts Turnpike Authority, Metropolitan Highway System Revenue:
5.25%, 1/1/2017 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,215,000 6,423,700
Zero Coupon, 1/1/2028 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . 24,000,000 5,547,120
Massachusetts Water Pollution Abatement Trust
(Pool Loan Program) 5.625%, 2/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,339,350
Methuen 5.125%, 5/15/2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,665,000 1,720,944
North Attleborough 5.25%, 3/1/2017 (Insured; AMBAC). . . . . . . . . . . . . . . . . . . . 1,680,000 1,741,303
Northampton (School Project Loan Act of 1948) 5.75%, 5/15/2016 (Insured; MBIA) . . . . . . 1,520,000 1,650,431
South Essex Sewerage District, Refunding
5.25%, 6/15/2018 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,720,000 2,799,125
Southbridge 6.375%, 1/1/2012 (Insured; AMBAC). . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,085,660
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1998 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
- -------------------------------------------------------
_____________ _____________
U.S. Related--3.2%
Guam Airport Authority, Revenue 6.70%, 10/1/2023 . . . . . . . . . . . . . . . . . . . . . $ 3,000,000 $ 3,284,730
Virgin Islands Water and Power Authority, Electric System Revenue
7.40%, 7/1/2011 (Prerefunded 7/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . 1,815,000 1,992,743
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $151,743,270). . . . . . . . . . . . . . . . . $163,116,214
=============
Short-Term Municipal Investments--1.2%
- -------------------------------------------------------
Massachusetts;
Massachusetts Health and Educational Facilities Authority, Revenue , VRDN
(Capital Assets Program) 2.50% (Insured; MBIA) (b) (cost $2,100,000) . . . . . . . . . . $ 2,100,000 $ 2,100,000
=============
TOTAL INVESTMENTS (cost $153,843,270). . . . . . . . . . . . . . . . . . . . . . . . . . . 99.6% $165,216,214
======== =============
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4% $ 601,653
======== =============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $165,817,867
======== =============
Summary of Abbreviations
- -----------------------------------------------------------------------------
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
Summary of Combined Ratings
- -----------------------------------------------------------------------------
Fitch or Moody's or Standard & Poor's Percentage of Value
____ ________ _________________ ___________________
AAA Aaa AAA 64.1%
AA Aa AA 13.4
A A A 9.2
BBB Baa BBB 4.8
F1+ & F-1 MIG1, VMIG1 & P1 SP1 & A1 1.3
Not Rated (c) Not Rated (c) Not Rated (c) 7.2
_______
100.0%
=======
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)Security payable on demand. Variable interest rate-subject to periodic
change.
(c)Securites which, while not rated by Fitch, Moody's and Standard & Poor's
have been determined by the Manager to be of comparable quality to those rated
securities in which the Fund may invest.
(d) At November 30, 1998, 34.2% of the Fund's net assets are insured by MBIA.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1998 (UNAUDITED)
Cost Value
_____________ ____________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments . $153,843,270 $165,216,214
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 636,964
Receivable for shares of Beneficial Interest subscribed . . 3,431,000
Interest receivable . . . . . . . . . . . . . . . . . . . 2,729,485
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 36,351
_____________
172,050,014
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 79,346
Payable for investment securities purchased . . . . . . . 6,119,743
Payable for shares of Beneficial Interest redeemed . . . 2,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . 31,058
_____________
6,232,147
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $165,817,867
=============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $153,343,340
Accumulated net realized gain (loss) on investments . . . 1,101,583
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b) . . . . . . . . . . . . . . . 11,372,944
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $165,817,867
=============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.01 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED). . . . . . . 9,639,696
NET ASSET VALUE, offering and redemption price per share-Note 3(d) . . . . . . . . . . . . $17.20
========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest . . . . . . . . . . . . . . . . . . . . . . . . $4,554,002
EXPENSES: Management fee-Note 3(a) . . . . . . . . . . . . . . . . $ 485,825
Shareholder servicing costs--Note 3(b) . . . . . . . . . 121,621
Professional fees . . . . . . . . . . . . . . . . . . . . 21,200
Trustees' fees and expenses--Note 3(c) . . . . . . . . . 11,302
Custodian fees . . . . . . . . . . . . . . . . . . . . . 8,476
Registration fees . . . . . . . . . . . . . . . . . . . . 6,548
Prospectus and shareholders' reports . . . . . . . . . . 6,369
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 182
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 7,352
___________
Total Expenses . . . . . . . . . . . . . . . . . . . . 668,875
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,885,127
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . $ 551,823
Net unrealized appreciation (depreciation) on investments . . 1,284,433
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 1,836,256
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $5,721,383
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
November 30, 1998 Year Ended
(Unaudited) May 31, 1998
______________ _____________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,885,127 $ 7,696,276
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . 551,823 1,613,125
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . 1,284,433 4,856,951
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . 5,721,383 14,166,352
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,927,680) (7,675,059)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . -- (15,621)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,927,680) (7,690,680)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 15,461,243 29,221,354
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,891,110 5,583,861
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,546,434) (32,442,095)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . . 3,805,919 2,363,120
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . 5,599,622 8,838,792
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,218,245 151,379,453
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $165,817,867 $160,218,245
============= =============
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . -- $ 42,553
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901,487 1,734,657
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . 168,624 332,552
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (849,917) (1,930,393)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . 220,194 136,816
============= =============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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
November 30, 1998 Year Ended May 31,
_______________________________________________________
PER SHARE DATA: (Unaudited) 1998 1997 1996 1995 1994
_________________ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . $17.01 $16.31 $15.86 $16.25 $16.03 $17.01
_______ _______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . .42 .83 .85 .88 .91 .91
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . .19 .70 .45 (.39) .22 (.52)
_______ _______ _______ _______ _______ _______
Total from Investment Operations . . . . . .61 1.53 1.30 .49 1.13 .39
_______ _______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . (.42) (.83) (.85) (.88) (.91) (.92)
Dividends from net realized gain on investments -- -- -- -- -- (.21)
Dividends in excess of net realized gain
on investments . . . . . . . . . . . . -- -- -- -- -- (.24)
_______ _______ _______ _______ _______ _______
Total Distributions . . . . . . . . . . . . (.42) (.83) (.85) (.88) (.91) (1.37)
_______ _______ _______ _______ _______ _______
Net asset value, end of period . . . . . . $17.20 $17.01 $16.31 $15.86 $16.25 $16.03
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . 7.30%(1) 9.52% 8.37% 3.06% 7.39% 2.07%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . .83%(1) .81% .79% .79% .80% .80%
Ratio of net investment income
to average net assets . . . . . . . . . 4.80%(1) 4.97% 5.27% 5.43% 5.77% 5.30%
Portfolio Turnover Rate . . . . . . . . . . 11.12%(2) 28.53% 38.29% 60.67% 38.34% 29.73%
Net Assets, end of period (000's Omitted) . . $ 165,818 $ 160,218 $ 151,379 $ 151,722 $ 160,750 $ 168,473
- -----------------------------
(1) Annualized.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Massachusetts Tax Exempt Bond Fund ("the Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act") as a non-diversified
open-end management investment company. The Fund's investment objective is to
provide investors with as high a level of current income exempt from Federal and
Massachusetts income taxes as is consistent with the preservation of capital.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment adviser.
The Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund
Services, Inc. is the distributor of the Fund's shares, which are sold to the
public without a sales charge.
The Fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities are valued 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. Under the terms of the custody
agreement, the Fund received net earnings of $6,988 during the period ended
November 30, 1998 based on available cash balances left on deposit. Income
earned under this arrangement is included in interest income.
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 of 1986, as
amended (the "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.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify
as a regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
November 30, 1998, the Fund did not borrow under the Facility.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management fee
is computed at the annual rate of .60 of 1% of the value of the Fund's average
daily net assets and is payable monthly.
(B) Under the 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 period ended
November 30, 1998, the Fund was charged $67,858 pursuant to the Shareholder
Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended November 30, 1998, the Fund was charged $33,452 pursuant to the transfer
agency agreement.
(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.
(D) A 1% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemptions through use of the Fund
Exchanges service) where the redemption or exchange occurs less than fifteen
days following the date of issuance. During the period ended November 30, 1998,
redemption fees amounted to $4,975.
DREYFUS MASSACHUSETTS TAX EXEMPT BOND FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended November 30, 1998,
amounted to $23,812,266 and $17,550,910, respectively.
(B) At November 30, 1998, accumulated net unrealized appreciation on
investments was $11,372,944 consisting of $11,418,074 gross unrealized
appreciation and $45,130 gross unrealized depreciation.
At November 30, 1998, 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 lion "d" logo (reg.tm)
Dreyfus logo (reg.tm)
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.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 267SA9811
Massachusetts
Tax Exempt
Bond Fund
Semi-Annual Report
November 30, 1998
