Dreyfus
Massachusetts Tax Exempt Bond Fund
SEMIANNUAL REPORT November 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by Dreyfus and
the fund's other service providers do not properly process and calculate
date-related information from and after January 1, 2000. Dreyfus has taken steps
designed to avoid year 2000-related problems in its systems and to monitor the
readiness of other service providers. 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.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Massachusetts
Tax Exempt Bond Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Massachusetts Tax
Exempt Bond Fund, covering the six-month period from June 1, 1999 through
November 30, 1999. Inside, you'll find valuable information about how the fund
was managed during the reporting period, including a discussion with the fund's
portfolio manager, Joseph Darcy.
When the reporting period began, evidence had emerged that the U.S. economy was
growing strongly in an environment characterized by high levels of consumer
spending and low levels of unemployment. Concerns that inflationary pressures
might re-emerge caused the Federal Reserve Board to raise short-term interest
rates three times during the summer and fall of 1999. Higher interest rates led
to some erosion of municipal bond prices, especially toward the end of the
reporting period.
Municipal bonds were also adversely affected by supply-and-demand
considerations. Recently, however, these technical influences have caused the
yields of tax-exempt bonds to rise to very attractive levels compared to the
after-tax yields of taxable bonds of comparable maturity and credit quality.
This is especially true for investors in the higher federal income tax brackets
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Massachusetts Tax Exempt Bond Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
December 15, 1999
DISCUSSION OF FUND PERFORMANCE
Joseph Darcy, Portfolio Manager
How did Dreyfus Massachusetts Tax Exempt Bond Fund perform?
The fund achieved a -3.76% total return(1) over the six-month period ended
November 30, 1999. In comparison, the Lipper Massachusetts Municipal Debt Funds
Category Average, the Lipper category in which the fund is reported, achieved a
- -3.66% total return for the same period.(2)
We attribute the fund's negative return over the period to a declining municipal
bond market and a rising interest-rate environment. The fund's very modest
underperformance of the Lipper average was primarily the result of our security
selection strategy, which was designed to help position the fund for the future
by taking advantage of attractive values created by the market's decline.
What is the fund's investment approach?
The fund' s objective is to seek as high a level of federal and Massachusetts
state tax-exempt income as is practical from a diversified portfolio of
municipal bonds. To achieve this objective, we employ two primary strategies.
First, we attempt to add value by evaluating interest-rate trends and
supply-and-demand factors. Based on that assessment, we select the individual
tax-exempt bonds that we believe are most likely to provide the highest returns
with the least risk. We look at such criteria as the bond's yield, price, age,
the creditworthiness of its issuer, and any provisions for early redemption
Second, we actively manage the portfolio's average duration in anticipation of
temporary supply-and-demand changes. If we expect the supply of newly issued
bonds to increase temporarily, we may reduce the portfolio's average duration to
make cash available for the purchase of higher yielding securities. Conversely,
if we expect demand for municipal bonds to surge at a time when we anticipate
little issuance, The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
we may increase the portfolio's average duration to maintain current yields for
as long as practical. At other times, we try to maintain a "neutral" average
duration of about seven years, which is consistent with our benchmark index.
What other factors influenced the portfolio's performance?
The portfolio was adversely affected by rising interest rates and a fall-off in
demand from institutional investors over the past six months that created
generally reduced liquidity in the municipal market.
When the reporting period began on June 1, 1999, investors had become concerned
that stronger than expected economic growth, low unemployment and rising
commodity prices might rekindle long-dormant inflationary pressures. In fact, in
an attempt to forestall a potential reacceleration of inflation, the Federal
Reserve Board raised short-term interest rates three times during the summer and
fall of 1999, causing most bond prices to fall.
Municipal bond prices fell substantially for this reason, and also because of
differing supply-and-demand influences. For a variety of reasons, institutional
investors such as insurance companies and hedge funds participated less in the
tax-exempt market over the past year, which reduced overall demand and drove
municipal bond prices down significantly. One result has been that demand for
U.S. Treasury securities has remained strong from both domestic and foreign
investors, while the supply has fallen because of the federal budget surplus. As
a result, municipal bonds -- including those from Massachusetts issuers -- are
currently offering tax-exempt yields that compare very favorably with the
taxable yields on U.S. Treasury securities, after adjusting for taxes. Of
course, this yield increase comes at the cost of having achieved a negative
total return.
What is the portfolio's current strategy?
When the reporting period began on June 1, 1999, we had reduced the fund's
average duration because of evidence that U.S. and international economic growth
was stronger than many analysts expected. A
shorter duration posture was designed to mitigate the portfolio's sensitivity to
the eroding effects of higher interest rates. A lower average duration also put
the fund in a good position to capture higher yields as they became available
To achieve a lower duration, we sold some of our longer maturity bonds that were
priced at a discount to face value. We reinvested the proceeds of those sales in
tax-exempt money market instruments as well as higher yielding,
intermediate-term bonds.
More recently, we have begun to increase the fund' s average duration by
redeploying some of our cash reserves to longer term municipal bonds. We made
this change because we believe that the bulk of the recent market declines may
be behind us, giving us the opportunity to lock in prevailing high yields. We
have found particularly attractive yield opportunities in current-coupon bonds
from Massachusetts issuers, for which investor demand and market liquidity tend
to be greatest. We have also found attractive total return opportunities in some
discounted bonds that, in our view, were punished more severely than
circumstances warrant, and we believe they have the potential to recover
strongly when investors recognize their perceived value. Of course, there can be
no guarantee when the municipal market might recover, or how the fund might
perform in the future. Finally, we have continued to carefully and independently
evaluate the creditworthiness of issuers in order to help ensure the high credit
quality of the portfolio.
December 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL
TAXES FOR NON-MASSACHUSETTS RESIDENTS, AND SOME INCOME MAY BE SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF
ANY, ARE FULLY TAXABLE.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
<TABLE>
<CAPTION>
The Fund
STATEMENT OF INVESTMENTS
November 30, 1999 (Unaudited)
Principal
LONG-TERM MUNICIPAL INVESTMENTS--96.8% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--93.4%
<S> <C> <C>
Barnstable 4.75%, 3/15/2017 2,645,000 2,337,519
Boston Water and Sewer Commission, Revenue
5%, 11/1/2028 (Insured; FGIC) 2,500,000 2,145,225
Boston--Mount Pleasant Housing Development Corp., MFHR
6.75%, 8/1/2023 (Insured; FHA) 1,590,000 1,652,169
Haverhill 5%, 6/15/2017 (Insured; FGIC) 1,500,000 1,365,105
Lynn 5%, 2/15/2017 (Insured; MBIA) 2,360,000 2,149,984
Mansfield, Municipal Purpose Loan
5.125%, 8/15/2017 (Insured; FGIC) 1,685,000 1,559,299
Massachusetts College Building Authority, Project Revenue:
Zero Coupon, 5/1/2026 (Insured; MBIA) 8,510,000 1,704,468
Zero Coupon, 5/1/2027 (Insured; MBIA) 1,510,000 284,348
Zero Coupon, 5/1/2028 (Insured; MBIA) 11,790,000 2,083,293
Massachusetts Bay Transportation Authority,
General Transportation System:
6.20%, 3/1/2016 4,225,000 4,471,867
4.50%, 3/1/2026 (Insured; MBIA) 2,500,000 1,972,625
Massachusetts Development Finance Agency, Revenue:
(Boston University) 5.45%, 5/15/2059 2,500,000 2,131,675
(Regis College) 5.25%, 10/1/2018 1,240,000 1,094,362
Massachusetts Education Loan Authority,
Education Loan Revenue
8%, 6/1/2002 (LOC; Rabobank Nederland)
(Prerefunded 12/1/1999) 385,000 (a) 385,042
Massachusetts Educational Financing Authority,
Education Loan Revenue
5.125%, 12/1/2014 (Insured; MBIA) 3,000,000 2,796,360
Massachusetts Federal Highway Grant 5.125%, 6/15/2015 2,500,000 2,356,950
Massachusetts Health and
Educational Facilities Authority, Revenue:
(Baystate Medical Center) 6%, 7/1/2015 (Insured; FGIC) 1,140,000 1,150,944
(Brandeis University) 4.75%, 10/1/2028 (Insured; MBIA) 2,500,000 2,046,100
(Daughters of Charity) 6.10%, 7/1/2014 1,100,000 1,169,058
(Massachusetts General Hospital):
6.25%, 7/1/2020 (Insured; AMBAC)
(Prerefunded; 7/1/2003) 3,500,000 (a) 3,754,835
6%, 7/1/2015 (Insured; AMBAC) 2,000,000 2,064,380
(Massachusetts Institute of Technology) 5.20%, 1/1/2028 5,000,000 4,506,600
(Mclean Hospital) 6.50%, 7/1/2010 (Insured; FGIC)
(Prerefunded; 7/1/2002) 1,000,000 (a) 1,068,250
(Medical Academic & Scientific) 6.625%, 1/1/2015 3,000,000 3,053,970
(Milton Hospital) 7%, 7/1/2016 (Insured; MBIA) 1,000,000 1,033,430
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Health and
Educational Facilities Authority, Revenue (continued):
(Mount Auburn Hospital) 6.30%, 8/15/2024 (Insured; MBIA) 5,000,000 5,060,650
(New England Medical Center Hospitals)
6.50%, 7/1/2012 (Insured; FGIC) 2,000,000 2,113,280
(Newton--Wellesley Hospital)
5.875%, 7/1/2015 (Insured; MBIA) 2,000,000 2,009,580
(Sisters Providence Health System) 6.625%, 11/15/2022 3,510,000 3,786,237
Massachusetts Housing Finance Agency, Revenue:
Housing Projects:
6.30%, 10/1/2013 (Insured; AMBAC) 1,000,000 1,034,600
6.375%, 4/1/2021 4,300,000 4,368,327
Multi-Family Residential Housing 9.60%, 8/1/2022
(Prerefunded; 2/1/2000) 1,705,000 (a) 1,720,584
Rental Housing:
6.65%, 7/1/2019 (Insured; AMBAC) 2,385,000 2,469,477
6.50%, 7/1/2025 (Insured; AMBAC) 1,500,000 1,545,990
6.45%, 1/1/2036 (Insured; AMBAC) 2,135,000 2,200,587
6%, 7/1/2037 (Insured; AMBAC) 2,650,000 2,584,254
Single-Family Housing 6.35%, 6/1/2017 2,675,000 2,729,276
Massachusetts Industrial Finance Agency, Revenue:
(Babson College):
5.375%, 10/1/2017 2,125,000 1,992,740
5.25%, 10/1/2027 3,200,000 2,814,720
Electrical Utility (Nantucket Electric Co.) 8.50%, 3/1/2016 2,820,000 2,947,859
(Holy Cross College):
6%, 11/1/2002 400,000 417,172
6.375%, 11/1/2015 (Prerefunded; 11/1/2002) 2,000,000 (a) 2,141,400
(Merrimack College) 5%, 7/1/2017 (Insured; MBIA) 1,000,000 909,910
(Ogden Haverhill Project) 5.60%, 12/1/2019 1,000,000 879,750
Parking Facility (Avon Associates LLC)
5.375%, 4/1/2020 (Insured; MBIA) 3,000,000 2,823,060
(Worcester Polytechnic Institute)
5.125%, 9/1/2017 (Insured; MBIA) 1,000,000 921,120
Massachusetts Municipal Wholesale Electric Company,
Power Supply System Revenue:
6.40%, 7/1/2002 400,000 415,244
6.125%, 7/1/2019 (Insured; MBIA) 1,000,000 1,011,060
Massachusetts Port Authority, Revenue:
5%, 7/1/2023 1,315,000 1,149,363
Special Facilities (US Air Project)
5.75%, 9/1/2016 (Insured; MBIA) 5,000,000 4,943,900
Special Project (Harborside Hyatt) 10%, 3/1/2026 8,000,000 8,489,600
The Fund
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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MASSACHUSETTS (CONTINUED)
Massachusetts Turnpike Authority,
Metropolitan Highway System Revenue:
5.25%, 1/1/2017 (Insured; MBIA) 6,215,000 5,856,830
5%, 1/1/2039 (Insured; AMBAC) 2,500,000 2,087,300
Massachusetts Water Pollution Abatement Trust:
(Pool Loan Program) 5.625%, 2/1/2017 5,000,000 4,945,350
Water Pollution Abatement Revenue
4.75%, 2/1/2021 (Insured; FGIC) 1,945,000 1,640,121
Massachusetts Water Resources Authority
4.50%, 8/1/2022 (Insured; FSA) 2,500,000 2,018,575
North Attleborough 5.25%, 3/1/2017 (Insured; AMBAC) 1,680,000 1,582,560
Northampton (School Project Loan Act of 1948)
5.75%, 5/15/2016 (Insured; MBIA) 1,520,000 1,525,502
South Essex Sewerage District
5.25%, 6/15/2018 (Insured; MBIA) 2,720,000 2,538,168
Southbridge 6.375%, 1/1/2012 (Insured; AMBAC) 1,000,000 1,050,000
U.S. RELATED--3.4%
Guam Airport Authority, Revenue 6.70%, 10/1/2023 3,000,000 3,121,830
Virgin Islands Water and Power Authority,
Electric System Revenue
7.40%, 7/1/2011 (Prerefunded 7/1/2001) 1,690,000 (a) 1,786,277
TOTAL LONG-TERM INVESTMENTS (cost $143,770,733) 141,970,111
SHORT-TERM MUNICIPAL INVESTMENTS--1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--.5%
Massachusetts Health and
Educational Facilities Authority, Revenue
VRDN (Capital Asset Program) 3.75%, (Insured; MBIA) 700,000 (b) 700,000
U.S. RELATED-.8%
Puerto Rico Highway and Transportation Authority,
Transportation Revenue
VRDN 3.65% (Insured; AMBAC) 1,200,000 (b) 1,200,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,900,000) 1,900,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $145,670,733) 98.1% 143,870,111
CASH AND RECEIVABLES (NET) 1.9% 2,791,133
NET ASSETS 100.0% 146,661,244
</TABLE>
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
FGIC Financial Guaranty
Insurance Company
FHA Federal Housing Administration
FSA Financial Security Assurance
LOC Letter of Credit
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
MFHR Multi-Family Housing Revenue
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA Aaa AAA 62.8
AA Aa AA 11.7
A A A 9.1
BBB Baa BBB 7.2
F1 MIGI/PI SP1/A1 1.3
Not Rated(c) Not Rated(c) Not Rated(c) 7.9
100.0
</TABLE>
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES
WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE
MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE.
(B) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODOC
CHANGE.
(C) SECURITES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
(D) AT NOVEMBER 30, 1999, 28.90% OF THE FUND'S NET ASSETS ARE INSURED BY MBIA.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
The Fund
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 145,670,733 143,870,111
Cash 258,264
Interest receivable 2,625,149
Prepaid expenses 10,969
146,764,493
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 84,100
Payable for shares of Beneficial Interest redeemed 1,668
Accrued expenses 17,481
103,249
- -------------------------------------------------------------------------------
NET ASSETS ($) 146,661,244
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 148,843,852
Accumulated net realized gain (loss) on investments (381,986)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (1,800,622)
- --------------------------------------------------------------------------------
NET ASSETS ($) 146,661,244
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.01 par value shares of Beneficial Interest authorized)
9,353,530
NET ASSET VALUE, offering and redemption price per share--Note 3(d) ($) 15.68
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended November 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,575,013
EXPENSES:
Management fee--Note 3(a) 462,208
Shareholder servicing costs--Note 3(b) 120,499
Professional fees 32,200
Trustees' fees and expenses--Note 3(c) 11,775
Prospectus and shareholders' reports 8,165
Custodian fees 7,879
Registration fees 5,749
Loan commitment fees--Note 2 977
Miscellaneous 5,802
TOTAL EXPENSES 655,254
INVESTMENT INCOME--NET 3,919,759
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (712,907)
Net unrealized appreciation (depreciation) on investments (9,285,259)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (9,998,166)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (6,078,407)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
November 30, 1999 Year Ended
(Unaudited) May 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,919,759 7,841,732
Net realized gain (loss) on investments (712,907) 886,268
Net unrealized appreciation (depreciation)
on investments (9,285,259) (2,603,874)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (6,078,407) 6,124,126
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (3,984,795) (7,819,249)
Net realized gain on investments -- (1,105,107)
TOTAL DIVIDENDS (3,984,795) (8,924,356)
- -------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 19,674,504 32,759,644
Dividends reinvested 2,926,744 6,642,484
Cost of shares redeemed (26,458,836) (36,238,109)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (3,857,588) 3,164,019
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,920,790) 363,789
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 160,582,034 160,218,245
END OF PERIOD 146,661,244 160,582,034
Undistributed investment income--net -- 65,036
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,225,417 1,917,574
Shares issued for dividends reinvested 183,149 389,221
Shares redeemed (1,654,262) (2,127,071)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (245,696) 179,724
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Six Months Ended
November 30, 1999 Year Ended May 31,
-----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning
<S> <C> <C> <C> <C> <C> <C>
of period 16.73 17.01 16.31 15.86 16.25 16.03
Investment Operations:
Investment income--net .42 .82 .83 .85 .88 .91
Net realized and unrealized gain
(loss) on investments (1.05) (.17) .70 .45 (.39) .22
Total from Investment Operations (.63) .65 1.53 1.30 .49 1.13
Distributions:
Dividends from
investment income--net (.42) (.82) (.83) (.85) (.88) (.91)
Dividends from net
realized gain on investments -- (.11) -- -- -- --
Total Distributions (.42) (.93) (.83) (.85) (.88) (.91)
Net asset value, end of period 15.68 16.73 17.01 16.31 15.86 16.25
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (7.50)(a) 3.87 9.52 8.37 3.06 7.39
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .85(a) .82 .81 .79 .79 .80
Ratio of net investment income
to average net assets 5.09(a) 4.82 4.97 5.27 5.43 5.77
Portfolio Turnover Rate 7.33(b) 19.47 28.53 38.29 60.67 38.34
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 146,661 160,582 160,218 151,379 151,722 160,750
A ANNUALIZED.
</TABLE>
B NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The 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., which is a wholly-owned
subsidiary of Mellon Financial Corporation. 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 dis
counts 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 $5,805 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.
(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 $500 million
redemption credit facility (the "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 The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
at the time of borrowings. During the period ended November 30, 1999, 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, 1999, the fund was charged $73,480 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, 1999, the fund was charged $31,281 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 shares redeemed
within fifteen days following the date of issuance, including redemptions made
through the use of the fund' s Exchange previlige. During the period ended
November 30, 1999, redemption fees retained by the fund amounted to $23.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended November 30, 1999, amounted to
$10,896,210 and $17,378,948, respectively.
At November 30, 1999, accumulated net unrealized depreciation on investments was
$1,800,622, consisting of $3,322,345 gross unrealized appreciation and
$5,122,967 gross unrealized depreciation.
At November 30, 1999, 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).
The Fund
For More Information
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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 267SA9911
