DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance of the Dreyfus Premier Limited Term
California Municipal Fund for its annual reporting period ended June 30, 1998 as
shown in the following table:
<TABLE>
Approximate
Total Return* Income Dividends** Distribution Rate***
___________ _____________________ _________________
<S> <C> <C> <C>
Class A 6.23% $0.580 4.22%
Class B 5.68% $0.511 3.83%
Class C 5.67% $0.511 3.83%
Class R 6.50% $0.613 4.60%
</TABLE>
The Fund' s Board of Trustees has approved an Agreement and Plan of
Reorganization (the "Plan") providing for the transfer of assets and liabilities
of the Fund to Dreyfus Premier Limited Term Municipal Fund (the "Municipal
Fund") in a tax-free exchange for shares of the Municipal Fund, the distribution
of such shares to Fund shareholders, and the subsequent termination of the Fund
(the "Reorganization" ). Fund shareholders will be asked to consider approving
the Plan at a special meeting of shareholders to be held on or about September
15, 1998. If the Plan is approved, the Reorganization will become effective
shortly thereafter.
THE ECONOMY
In recent testimony to Congress, Federal Reserve Board Chairman Alan Greenspan
proclaimed the economy to be " as impressive as any I have witnessed." Indeed,
the performance of the economy has been tremendous, with solid,
noninflationary economic growth and a robust rate of new job creation.
Accordingly, the unemployment rate hovers near its 28-year low. Not
surprisingly, consumers brim with confidence: new home sales were recently at
record levels, and retail sales have surged since January. The enthusiastic
spending of consumers has, so far, offset the adverse effects of the economic
problems in Asia. In fact, the financial crisis in the Far East has proved a
boon to consumers, since lower import prices have further subdued
domestic price pressures and helped keep interest rates low. Remarkably, despite
the strengthening economy since the beginning of this year, inflation has waned
further. With inflation under control and the economy just beginning to
experience a reduction in foreign demand, the Federal Reserve has been reluctant
to raise interest rates for fear of further roiling Asian financial markets. The
last increase in short-term rates came in March 1997 when the Federal Reserve
Board Open Market Committee (the policy-making arm of The Fed) hiked the target
rate for Federal Funds by one quarter of a percent to 5.5%.
Even with the booming job market, wage gains have had little inflationary
effect, since business spending in productivity-enhancing capital equipment has
been strong throughout the economic expansion. The one soft spot in the job
market has been in manufacturing: industrial production has slowed--a clear sign
that Asian economic woes are being felt here--and inventories of domestic
manufacturers have risen due to the reduction in foreign demand. It is widely
expected that the growing trade deficit will retard economic growth and possibly
serve as a drag over the foreseeable future. This reduction in foreign demand
could further moderate the rate of domestic production and consequently ease the
demand for labor, thus lessening inflationary pressure resulting from wage
increases. Cheaper imports have also weakened the pricing environment for U.S.
manufacturers and, in consequence, acted as an additional curb to inflation. All
this has been part of what Chairman Greenspan called our economy's "virtuous
cycle" where even so-called crises have proven economically beneficial. As a
further example, the economic upheavals in Asia and Russia have caused nervous
foreign investors to seek refuge in the U.S. bond market, causing a demand surge
that has helped maintain our low interest rate environment. Yet we, along with
Chairman Greenspan, are skeptical that our economy has somehow moved "beyond
history," and we share his vigilance regarding signs of inflationary imbalances
MARKET ENVIRONMENT/PORTFOLIO ACTIVITY
By the end of the reporting period, bond prices had continued to climb,
pushing yields to their lowest levels in recent memory. The turmoil surrounding
the financial crisis in the Asian markets and the benign inflationary pressures
in the domestic economy were the catalysts for the increased demand for
fixed-income securities.
Municipal bond prices continued to lag the advances in the taxable bond market
during the reporting period. The total return on the 10-year Treasury was
approximately 13.17% compared to just 8.48% for the Lehman Brothers 10-year
Municipal Bond Index. Heavy new issue volume has hampered the investment
performance of municipal bonds since supply is over 50% greater than last year
as of June 30, 1998. Total new issue volume was $146 billion for the first two
quarters of 1998 compared to $97 billion for the first two quarters of 1997. The
estimates for annual volume for 1998 have been revised higher to near $290
billion compared to approximately $218 billion during 1997. Consequently, the
relative yield ratios between AAA-rated municipal bonds and Treasury securities
ended the reporting period near recent highs. This is most dramatically apparent
in the 20- to 30-year maturity range where relative yield ratios ended the
reporting period near 90%.
The weighted average maturity of the Fund was opportunistically extended
throughout the reporting period as heavy new issue supply kept rates in a narrow
range. The weighted average maturity began the reporting period at 7.92 years
and ended at 8.22 years.
California' s economy continued to expand over the reporting period, recording
its best year since the early 1980s and outpacing the national average. The
expansion broadened with the southern portion of the State actually growing
faster than the San Francisco valley region. The unemployment rate (5.7%) was
the lowest since 1990. Although Asia represented over one-half of the State's
sales, exports still increased 6.1% over the previous fiscal year. This was
primarily due to the sharp increase in trade with Mexico.
The robust economy has resulted in balanced operating budgets for the State
over the last two fiscal years despite the rise in mandated educational
spending. Year-to-date figures indicate that the State will meet or exceed
revenue projections for this fiscal-year 1998. Additional projections anticipate
that the State will eliminate its $3.6 billion Unreserved Fund Deficit by
fiscal-year 2000. Nevertheless, the State still suffers from a structural
imbalance of revenues versus expenditures as a result of its high mandated
spending and limited taxation power. This imbalance could offset the positive
trend now underway. Overall, we believe that the State's financial outlook is
positive and, if current fiscal trends continue, credit upgrades may follow. For
now, we expect the State's credit rating to remain at the mid-A level.
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,
[Collette O'Brien signature logo]
Collette O'Brien
Portfolio Manager
July 15, 1998
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid,
and does not take into consideration the maximum initial sales charge in the
case of Class A shares or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
**Income dividends per share were exempt from Federal and State of California
personal income taxes. Some income may be subject to the Federal Alternative
Minimum Tax (AMT) for certain shareholders.
*** Distribution rate per share is based upon dividends per share paid from net
investment income during the period, divided by the maximum offering price per
share at the end of the reporting period in the case of Class A shares, or the
net asset value per share in the case of Class B, Class C and Class R shares,
adjusted for capital gain distributions.
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND JUNE 30, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER LIMITED
TERM CALIFORNIA MUNICIPAL FUND CLASS A SHARES WITH THE LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX AND THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX
Dollars
$22,079
Lehman Brothers 10-Year Municipal Bond Index*
$20,415
Lehman Brothers 7-Year Municipal Bond Index*
$19,111
Dreyfus Premier Limited Term California Municipal Fund (Class A Shares)
*Source: Lehman Brothers
Average Annual Total Returns
- -----------------------------------------------------------------------------
Class A Shares Class B Shares
_______________________________________________________ _________________________________________________________
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Period Ended 6/30/98 Sales Charge Sales Charge (3.0%) Period Ended 6/30/98 Redemption Redemption*
___________________ ____________ ________________ ________________ __________ _________________
<S> <C> <C> <C> <C> <C>
1 Year 6.23% 3.00% 1 Year 5.68% 2.68%
5 Year 5.35 4.71 From Inception (12/28/94) 6.69 6.21
10 Year 7.02 6.69
Class C Shares Class R Shares
_______________________________________________________ _________________________________________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
Period Ended 6/30/98 No Redemption Redemption** Period Ended 6/30/98
___________________ ____________ __________________ ________________
1 Year 5.67% 4.92% 1 Year 6.50%
From Inception (12/28/94) 6.77 6.77 5 Year 5.57
From Inception (2/1/93) 6.16
- ------------------------
Past performance is not predictive of future performance.
</TABLE>
The above graph compares a $10,000 investment made in the Fund's Class A shares
on 6/30/88 to a $10,000 investment made on that date in the Lehman Brothers
10-Year Municipal Bond Index (the "Lehman 10-Year Index"), as well as to an
investment in the Lehman Brothers 7-Year Municipal Bond Index (the "Lehman
7-Year Index" ) which are described below. The Lehman 7-Year Index began in
January of 1990. This investment assumes a beginning value of $11,179 which is
equal to the value of the $10,000 investment in the Fund at the starting point
of this Index, without taking into account the Fund's maximum initial sales
charge on Class A shares. All dividends and capital gain distributions are
reinvested. Performance for Class B, Class C and Class R shares will vary from
the performance of Class A shares shown above due to differences in charges and
expenses.
The Fund invests primarily in California investment-grade municipal bonds with
intermediate maturities and expects to maintain an average maturity of less than
10 years. The Fund's performance shown in the line graph takes into account the
maximum initial sales charge on Class A shares and all other applicable fees and
expenses. Unlike the Fund, the Lehman 10-Year Index is an unmanaged total return
performance benchmark for the investment-grade, geographically unrestricted
10-year tax exempt bond market, consisting of municipal bonds with maturities of
9-12 years. The Lehman 7-Year Index consists of bonds with similar
characteristics with maturities of 6-8 years. The Indices do not take into
account charges, fees and other expenses and are not limited to investments
principally in California municipal obligations. These factors can contribute to
the Indices potentially outperforming the Fund. Further information relating to
Fund performance, including expense reimbursements, if applicable, is contained
in the Financial Highlights section of the Prospectus and elsewhere in this
report.
* The maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
**The maximum contingent deferred sales charge for Class C shares is .75% for
shares redeemed within one year of the date of purchase.
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1998
Principal
Long-Term Municipal Investments--96.3% Amount Value
- ------------------------------------------------------- ____________ ___________
California--82.3%
State of California:
<S> <C> <C>
6.80%, 10/1/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 700,000 $ 808,416
6.60%, 10/1/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,000 598,021
California Educational Facilities Authority, College and University Revenue,
Refunding (Los Angeles College Chiropractic) 5.75%, 11/1/2006 . . . . . . . . . . . . . 780,000 832,018
California Health Facilities Finance Authority, Lease Revenue, Refunding
(Presbyterian Hospital) 5.50%, 5/1/2007 (Insured; MBIA) . . . . . . . . . . . . . . . . 500,000 538,925
California Housing Finance Agency, Home Mortgage Revenue:
5.65%, 8/1/2006 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655,000 691,516
5.65%, 8/1/2017 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 414,320
California Public Works Board, Lease Revenue:
High Technology Facilities (Berkeley Campus) 7.20%, 3/1/2001 . . . . . . . . . . . . . . 150,000 153,013
Refunding (California State University) 5.50%, 10/1/2007 . . . . . . . . . . . . . . . . 500,000 539,230
California Rural Home Mortgage Finance Authority, SFMR
5.75%, 8/1/2009 (Guaranteed; FNMA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 525,000 547,003
Elk Grove Unified School District, Special Tax Revenue, Refunding
(Community Facilities District No. 1) 6.50%, 12/1/2006 (Insured; AMBAC) . . . . . . . . 400,000 461,748
Franklin-McKinley School District, Refunding 5.20%, 7/1/2004 (Insured; MBIA) . . . . . . . 375,000 395,224
Kern High School District, Refunding 6.40%, 2/1/2012 (Insured; MBIA) . . . . . . . . . . . 750,000 875,640
Los Angeles, Wastewater System Revenue 7.10%, 11/1/1998. . . . . . . . . . . . . . . . . . 150,000 151,737
Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue
8%, 7/1/2000 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 538,975
Los Angeles County Transportation Commission, Sales Tax Revenue, Refunding
6.80%, 7/1/1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 154,672
Metropolitan Water District of Southern California, Waterworks Revenue 6.375%, 7/1/2002. . 835,000 904,305
Modesto, Wastewater Treatment Facilities Revenue 6%, 11/1/2009 (Insured; MBIA) . . . . . . 500,000 566,705
Northern California, Transmission Revenue, Refunding (Project No. 1)
6.25%, 8/15/2000 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,000 369,385
Redding JT Powers Financing Authority, Electrical Systems Revenue
5.25%, 6/1/2015 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670,000 683,735
Rio Linda Unified School District, Refunding
6%, 8/1/2007 (Insured; FSA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 447,968
Riverside County Transportation Commission, Sales Tax Revenue:
6.50%, 6/1/2001 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520,000 556,130
Refunding, 6%, 6/1/2009 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . 500,000 564,815
Sacramento Municipal Utilities District, Electrical Revenue
6.30%, 9/1/2001 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 534,570
San Diego County Regional Transportation Commission, Sales Tax Revenue
6%, 4/1/2004 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 818,903
San Francisco Bay Area Rapid Transit District, Sales Tax Revenue, Refunding
6.70%, 7/1/2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 527,165
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- ____________ ___________
California (continued)
San Francisco City and County Airport Commission, International Airport Revenue
5.625%, 5/1/2006 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000 $ 538,990
San Francisco City and County Public Utilities Commission, Water Revenue,
Refunding:
6%, 11/1/2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 816,690
6.375%, 11/1/2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 551,435
San Jose Redevelopment Agency, Tax Allocation
(Merged Area Redevelopment Project) 6%, 8/1/2009 (Insured; MBIA) . . . . . . . . . . . . 625,000 706,975
Santa Margarita-Dana Point Authority, Revenue, Refunding
7.25%, 8/1/2007 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 606,170
Santa Rosa, Wastewater Revenue
6.20%, 9/1/2003 (Prerefunded 9/1/2002) (Insured; FGIC) (a) . . . . . . . . . . . . . . . 350,000 383,800
Simi Valley Unified School District, Refunding 6.25%, 8/1/2004 (Insured; FGIC) . . . . . . 700,000 775,341
Southern California Public Power Authority, Power Project Revenue, Refunding
(Hydroelectric-Hoover Uprating Project) 6.30%, 10/1/2002 . . . . . . . . . . . . . . . . 420,000 455,671
Tri-City Hospital District, Revenue, Refunding 6%, 2/15/2005 (Insured; MBIA) . . . . . . . 500,000 549,280
Westside Unified School District, Refunding 6%, 8/1/2014 (Insured; AMBAC). . . . . . . . . 385,000 436,817
U.S. Related--14.0%
Commonwealth of Puerto Rico, Refunding 6.25%, 7/1/2011 (Insured; MBIA) . . . . . . . . . . 750,000 869,692
Puerto Rico Electric Power Authority, Power Revenue, Refunding
6.50%, 7/1/2006 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625,000 716,587
Puerto Rico Public Buildings Authority, Government Guaranteed Facilities
6.25%, 7/1/2010 (Insured; AMBAC) (Guaranteed; Commonwealth of Puerto Rico) . . . . . . . 750,000 867,300
University of Puerto Rico, University Revenue, Refunding
6.25%, 6/1/2008 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 860,205
____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $21,517,452) . . . . . . . . . . . . . . . . . $22,809,092
____________
Short-Term Municipal Investments--2.1%
- -------------------------------------------------------
California:
California State Economic Development Finance Authority, Revenue, VRDN
(California Independent System Project)
3.45% (LOC; Bank of America) (b,c) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 200,000
Los Angeles Regional Airports Improvement Corp., Lease Revenue, VRDN
(American Airlines Inc.-Los Angeles International Airport)
4% (LOC; Societe Generale) (b,c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 300,000
____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $500,000) . . . . . . . . . . . . . . . . . . $ 500,000
____________
TOTAL INVESTMENTS (cost $22,017,452) . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.4% $23,309,092
_______ ____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6% $ 375,305
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $23,684,397
_______ ____________
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
Summary of Abbreviations
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
LOC Letter of Credit SFMR Single Family Mortgage Revenue
FNMA Federal National Mortgage Association VRDN Variable Rate Demand Notes
FSA Financial Security Assurance
Summary of Combined Ratings (Unaudited)
- -----------------------------------------------------------------------------
Fitch (d) or Moody's or Standard & Poor's Percentage of Value
_______ ________ _________________ ___________________
AAA Aaa AAA 70.0%
AA Aa AA 14.6
A A A 9.7
BBB Baa BBB 3.6
F1 MIGI SP1 2.1
_______
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) Secured by letters of credit.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest rates.
(d) Fitch currently provides creditworthiness information for a limited number
of investments.
(e) At June 30, 1998, 39.6% of the Fund's net assets are insured by MBIA.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998
Cost Value
____________ ____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $22,017,452 $23,309,092
Interest receivable . . . . . . . . . . . . . . . . . . . 413,701
Other assets . . . . . . . . . . . . . . . . . . . . . . 15,311
____________
23,738,104
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 11,946
Due to Distributor . . . . . . . . . . . . . . . . . . . 737
Cash overdraft due to Custodian . . . . . . . . . . . . . 20,720
Other liabilities . . . . . . . . . . . . . . . . . . . . 20,304
____________
53,707
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,684,397
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $22,378,409
Accumulated net realized gain (loss) on investments . . . 14,348
Accumulated gross unrealized appreciation
on investments . . . . . . . . . . . . . . . . . . . . 1,291,640
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,684,397
____________
NET ASSET VALUE PER SHARE
_____________________________
Class A Class B Class C Class R
____________ ____________ ____________ ____________
Net Assets . . . . . . . . . . . . . . . . . . . . . . $7,481,809 $917,374 $294,914 $14,990,300
Shares Outstanding . . . . . . . . . . . . . . . . . . 564,353 69,171 22,187 1,130,784
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . $13.26 $13.26 $13.29 $13.26
_______ _______ _______ _______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income . . . . . . . . . . . . . . . . . . . . . $1,275,680
EXPENSES: Management fee--Note 2(a) . . . . . . . . . . . . . . . . $ 124,002
Distribution and service fees--Note 2(b) . . . . . . . . 24,989
Merger expenses--Note 5 . . . . . . . . . . . . . . . . . 4,993
Loan commitment fees--Note 4 . . . . . . . . . . . . . . 180
___________
Total Expenses . . . . . . . . . . . . . . . . . . 154,164
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,121,516
___________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 3:
Net realized gain (loss) on investments . . . . . . . . . $ 136,182
Net realized gain (loss) on financial futures . . . . . . (30,781)
___________
Net Realized Gain (Loss) . . . . . . . . . . . . . 105,401
Net unrealized appreciation (depreciation) on investments . . 298,728
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 404,129
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $1,525,645
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
June 30, 1998 June 30, 1997
_____________ _____________
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,121,516 $ 1,076,568
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . 105,401 127,545
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . 298,728 308,282
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . 1,525,645 1,512,395
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (351,774) (357,294)
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,626) (5,490)
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,173) (1,019)
Class R shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (744,943) (712,615)
Net realized gain on investments:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43,807) (20,500)
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,684) (342)
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (439) (68)
Class R shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84,604) (40,475)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,252,050) (1,137,803)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565,213 593,180
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650,085 188,135
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,000 --
Class R shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,103,973 13,259,127
Dividends reinvested:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,583 252,279
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,329 1,455
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,599 --
Class R shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493,662 461,303
Cost of shares redeemed:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,454,287) (720,697)
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (14,494)
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166) --
Class R shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,064,022) (10,055,228)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . . . . (1,160,031) 3,965,060
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . (886,436) 4,339,652
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,570,833 20,231,181
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,684,397 $24,570,833
_____________ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
___________________________________
Year Ended Year Ended
June 30, 1998 June 30, 1997
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Class A
________
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,612 45,900
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . 20,024 19,392
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (109,585) (55,449)
_________ _________
Net Increase (Decrease) in Shares Outstanding . . . . . (46,949) 9,843
_________ _________
Class B
________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,870 14,492
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . 779 112
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (1,116)
_________ _________
Net Increase (Decrease) in Shares Outstanding . . . . . 49,649 13,488
_________ _________
Class C
________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,918 --
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . 346 --
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) --
_________ _________
Net Increase (Decrease) in Shares Outstanding . . . . . 20,252 --
_________ _________
Class R
________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309,541 1,016,693
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . 37,227 35,453
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (458,072) (771,795)
_________ _________
Net Increase (Decrease) in Shares Outstanding . . . . . (111,304) 280,351
_________ _________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL 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.
Class A Shares
_______________________________________________
_________________
Period Ended Period Ended
Year Ended June 30, June 30, November 30,
__________________________________________
PER SHARE DATA: 1998 1997 1996 1995(1,2) 1994(1,2,3) 1993(1)
______ ______ ______ ______ ____________ _____________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . $13.11 $12.88 $12.80 $12.61 $13.07 $12.81
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .58 .59 .60 .59 .34(4) .67(4)
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . .22 .26 .10 .21 (.46) .66
______ ______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . .80 .85 .70 .80 (.12) 1.33
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . (.58) (.59) (.60) (.60) (.34) (.67)
Dividends from net realized gain
on investments . . . . . . . . . . . . . . . (.07) (.03) (.02) (.01) (.00)(5) (.40)
______ ______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . (.65) (.62) (.62) (.61) (.34) (1.07)
______ ______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . $13.26 $13.11 $12.88 $12.80 $12.61 $13.07
______ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN(6) . . . . . . . . . . . . . 6.23% 6.79% 5.43% 6.48% (.95%) 10.58%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . .77% .75% .75% .75% .58%(7,8) .45%(8,9)
Ratio of net investment income
to average net assets . . . . . . . . . . . . 4.38% 4.54% 4.59% 4.71% 4.51%(7) 5.09%
Portfolio Turnover Rate . . . . . . . . . . . . . 16.71% 25.92% 39.09% 49.00% 5.00%(10) 38.00%
Net Assets, end of period (000's Omitted) . . . . $7,482 $8,012 $7,745 $8,506 $10,143 $10,971
- ------------------------
(1) On February 1, 1993 existing shares of the Fund were designated the Retail
Class and the Fund began offering the Institutional Class and Investment
Class of shares. Effective April 4, 1994, the Retail and Institutional
Classes were reclassified as a single class of shares known as Investor
shares. Effective October 17, 1994, the Investor Class was redesignated
Class A. The Financial Highlights for the year ended June 30, 1995 and
subsequent years are based upon a Class A share (formerly Investor shares)
outstanding. The amounts shown for the period ended June 30, 1994 were
calculated using the performance of a Retail share outstanding from December
1, 1993 to April 3, 1994 and the performance of an Investor share
outstanding from April 4, 1994 to June 30, 1994. The Financial Highlights for
the year ended November 30, 1993 and prior years are based upon a Retail
share outstanding.
(2) Effective October 17, 1994, The Dreyfus Corporation began serving as the
Fund' s investment manager. From April 4, 1994 through October 16, 1994,
Mellon Bank, N.A. served as the Fund's investment manager. Prior to April
4, 1994, The Boston Company Advisors, Inc. served as the Fund's investment
manager.
(3) The Fund changed its fiscal year end to June 30. Prior to this, the Fund's
fiscal year end was November 30.
(4) Net investment income per share before waiver of fees and reimbursement of
expenses by the investment manager and/or custodian and/or transfer agent
for the period ended June 30, 1994 and for the year ended November 30, 1993
were $.31 and $.67, respectively.
(5) Amount represents less than $.01 per share.
(6) Exclusive of sales load.
(7) Annualized.
(8) Annualized expense ratios before voluntary waiver of fees and reimbursement
of expenses by the investment manager and/or custodian and/or transfer
agent for the period ended June 30, 1994 and for the year ended
November 30, 1993 were .95% and 1.10%, respectively.
(9) The operating expense ratio excludes interest expense. The operating
expense ratio including interest expense was .46% for the year ended
November 30, 1993.
(10) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class B Shares
___________________________________________________
Period Ended
Year Ended June 30, June 30,
____________________________________
PER SHARE DATA: 1998 1997 1996 1995(1)
______ ______ ______ ____________
<S> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . $13.11 $12.88 $12.80 $12.28
______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . .51 .52 .53 .27
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . .22 .26 .10 .53
______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . . . . .73 .78 .63 .80
______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . (.51) (.52) (.53) (.28)
Dividends from net realized gain
on investments . . . . . . . . . . . . . . . . . . . . . . (.07) (.03) (.02) --
______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . . . . . . . . (.58) (.55) (.55) (.28)
______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . . . . $13.26 $13.11 $12.88 $12.80
______ ______ ______ ______
TOTAL INVESTMENT RETURN(2) . . . . . . . . . . . . . . . . . . . . 5.68% 6.25% 4.89% 6.51%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . 1.28% 1.25% 1.25% 1.25%(3)
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . . . . 3.81% 4.00% 4.08% 4.20%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 16.71% 25.92% 39.09% 49.00%
Net Assets, end of period (000's Omitted) . . . . . . . . . . . $917 $256 $78 $9
- -----------------------------
(1) The Fund commenced selling Class B shares on December 28, 1994.
(2) Exclusive of sales load.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class C Shares
___________________________________________________
Period Ended
Year Ended June 30, June 30,
____________________________________
PER SHARE DATA: 1998 1997 1996 1995(1)
______ ______ ______ ____________
Net asset value, beginning of period . . . . . . . . . . . . . $13.14 $12.91 $12.80 $12.28
______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . .51 .53 .53 .28
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . .22 .26 .13 .52
______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . . . . .73 .79 .66 .80
______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . (.51) (.53) (.53) (.28)
Dividends from net realized gain
on investments . . . . . . . . . . . . . . . . . . . . . . (.07) (.03) (.02) --
______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . . . . . . . . (.58) (.56) (.55) (.28)
______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . . . . $13.29 $13.14 $12.91 $12.80
______ ______ ______ ______
TOTAL INVESTMENT RETURN(2) . . . . . . . . . . . . . . . . . . . . 5.67% 6.25% 5.14% 6.51%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . 1.28% 1.25% 1.25% 1.25%(3)
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . . . . 3.76% 4.04% 4.06% 4.22%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 16.71% 25.92% 39.09% 49.00%
Net Assets, end of period (000's Omitted) . . . . . . . . . . . $295 $25 $25 $25
- -----------------------------
(1) The Fund commenced selling Class C shares on December 28, 1994.
(2) Exclusive of sales load.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
Class R Shares
________________________________________________________________
Period Ended Period Ended
Year Ended June 30, June 30, November 30,
_________________________________
PER SHARE DATA: 1998 1997 1996 1995(1) 1994(1,2) 1993(3)
______ ______ ______ ______ ____________ _____________
Net asset value, beginning of period . . . . . . $13.11 $12.88 $12.80 $12.61 $13.07 $12.96
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .61 .62 .63 .63 .35(4) .55(4)
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . .22 .26 .10 .20 (.46) .52
______ ______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . .83 .88 .73 .83 (.11) 1.07
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . (.61) (.62) (.63) (.63) (.35) (.56)
Dividends from net realized gain
on investments . . . . . . . . . . . . . . . (.07) (.03) (.02) (.01) (.00)(5) (.40)
______ ______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . (.68) (.65) (.65) (.64) (.35) (.96)
______ ______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . $13.26 $13.11 $12.88 $12.80 $12.61 $13.07
______ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN(6) . . . . . . . . . . . . . 6.50% 7.04% 5.68% 6.75% (.87%)(8) 8.32%(8)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . .52% .50% .50% .50% .42%(7,9) .40%(7,9,10)
Ratio of net investment income
to average net assets . . . . . . . . . . . . 4.62% 4.79% 4.84% 4.96% 4.68%(7) 5.04%(7)
Portfolio Turnover Rate . . . . . . . . . . . . . 16.71% 25.92% 39.09% 49.00% 5.00%(8) 38.00%
Net Assets, end of period (000's Omitted) . . . . $14,990 $16,278 $12,384 $8,813 $12,235 $8,291
- ------------------------
(1) Effective October 17, 1994, The Dreyfus Corporation began serving as the
Fund' s investment manager. From April 4, 1994 through October 16, 1994,
Mellon Bank, N.A. served as the Fund's investment manager. Prior to April
4, 1994, The Boston Company Advisors, Inc. served as the Fund's investment
manager.
(2) The Fund changed its fiscal year end to June 30. Prior to this, the Fund's
fiscal year end was November 30.
(3) The Fund commenced selling Investment Class shares on February 1, 1993.
Effective April 4, 1994, the Investment Class was reclassified as the
Trust shares. Effective October 17, 1994, Trust shares were redesignated
Class R shares. The table above is based upon an Investment share
outstanding from February 1, 1993 to April 3, 1994 and a Trust share
outstanding from April 4, 1994 to October 16, 1994.
(4) Net investment income per share before waiver of fees and reimbursement of
expenses by the investment manager and/or custodian and/or transfer agent
for the periods ended June 30, 1994 and November 30, 1993 were $.32
and $.49, respectively.
(5) Amount represents less than $.01 per share.
(6) Exclusive of sales load.
(7) Annualized.
(8) Not annualized.
(9) Annualized expense ratios before voluntary waiver of fees and reimbursement
of expenses by the investment manager and/or custodian and/or transfer agent
for the periods ended June 30, 1994 and November 30, 1993 were .79%
and 1.06%, respectively.
(10)The operating expense ratio excludes interest expense. The operating
expense ratio including interest expense was .41% for the period ended
November 30, 1993.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier Limited Term California Municipal Fund (the "Fund") is a
separate non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds
(the "Trust" ) which is registered under the Investment Company Act of 1940
(" Act" ) as an open-end management investment company and operates as a series
company currently offering seven series including the Fund. The Fund' s
investment objective is to maximize current income exempt from Federal income
taxes and state personal income taxes for resident shareholders of California
consistent with the prudent risk of capital by investing in municipal securities
which are of investment-grade quality and intermediate maturities. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager is
a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares. The Fund is authorized to issue an unlimited number of shares
of Beneficial Interest in the following classes of shares: Class A, Class B,
Class C and Class R. Class A, Class B and Class C shares are sold primarily to
retail investors through financial intermediaries and bear a distribution fee
and/or service fee. Class A shares are sold with a front-end sales charge, while
Class B and Class C shares are subject to a contingent deferred sales charge
("CDSC") and distribution and service fees. Class R shares are sold primarily to
bank trust departments and other financial service providers (including Mellon
Bank and its affiliates) acting on behalf of customers having a qualified trust
or investment account or relationship at such institution, and bear no
distribution or service fees. Class R shares are offered without a front-end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution and service fees and voting rights on
matters affecting a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
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 (excluding options and
financial futures on municipal and U.S. treasury 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. Options and financial futures on municipal and U.S. treasury
securities are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market on each business day. Investments not listed on an
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(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.
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) FINANCIAL FUTURES: The Fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The Fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the Fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the Fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. At June 30, 1998, there
were no financial futures contracts outstanding.
(D) CONCENTRATION OF RISK: 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.
(E) DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code. To the extent
that net realized capital gain can be offset by capital loss carryovers, if any,
it is the policy of the Fund not to distribute such gain.
(F) 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.
NOTE 2--INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the Fund. The Manager also directs
the investments of the Fund in accordance with its investment objective,
policies and limitations. For these services, the Fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .50% of the value of the Fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the Fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
service fees, fees and expenses of non-interested Trustees (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the Fund's allocable portion of fees and expenses
of the non-interested Trustees (including counsel) . Each trustee receives
$27,000 per year, $1,000 for each Board meeting attended and $750 for each Audit
Committee meeting attended and is reimbursed for travel and out-of-pocket
expenses. The Chairman of the Board receives an additional annual fee of $25,000
per year. These fees pertain to the following funds: The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds and The Dreyfus/Laurel Funds
Trust. (The $1,000 attendance fee and reimbursement of meeting expenses are also
borne pro rata by Dreyfus High Yield Strategies Fund). These fees and expenses
are allocated to each series based on net assets. Amounts required to be paid by
the Trust directly to the non-interested Trustees, that would be applied to
offset a portion of the management fee payable to the Manager, are in fact paid
directly by the Manager to the non-interested Trustees.
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) DISTRIBUTION AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of its average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares may pay the Distributor for distributing shares at an
aggregate annual rate of .50% of the value of the average daily net assets of
Class B and Class C shares. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, under which Class B and Class C
shares pay Dreyfus Service Corporation or the Distributor for providing certain
services to the holders of Class B and Class C shares a fee at the annual rate
of .25% of the value of the average daily net assets of Class B and Class C
shares. Class R shares bear no distribution or service fee. During the period
ended June 30, 1998, Class A, Class B, and Class C shares were charged $20,094,
$2,443 and $820, respectively, pursuant to the Plan. During the period ended
June 30, 1998, Class B and Class C shares were charged $1,222 and $410,
respectively, pursuant to the service plan.
Under its terms, the Plan shall remain in effect from year to year, provided
such continuance is approved annually by a vote of majority of those Trustees
who are not "interested persons" of the Investment Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended June 30, 1998, amounted
to $3,998,046 and $4,263,732, respectively.
At June 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).
NOTE 4--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 June
30, 1998, the Fund did not borrow under the Facility.
NOTE 5--SUBSEQUENT EVENT:
On September 15, 1998, shareholders of Dreyfus Premier Limited Term California
Municipal Fund and Dreyfus Premier Limited Term New York Municipal Fund will
vote on a proposed merger into Dreyfus Premier Limited Term Municipal Fund,
another series of the Trust. If approved, the merger will be effective shortly
thereafter and the Trust will offer five series.
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
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INDEPENDENT AUDITORS' REPORT
THE BOARD OF TRUSTEES AND SHAREHOLDERS
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier Limited Term
California Municipal Fund of the The Dreyfus/Laurel Tax-Free Municipal Funds as
of June 30, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
or periods in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the year
ended November 30, 1993 were audited by other auditors whose report thereon,
dated January 18, 1994, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1998, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier Limited Term California Municipal Fund of The Dreyfus/Laurel
Tax-Free Municipal Funds as of June 30, 1998, and the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended and its financial highlights for each of the
years or periods in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
August 13, 1998
DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
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IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended June 30, 1998:
--all the dividends paid from investment income-net are "exempt-interest
dividends" (not subject to regular Federal and, for individuals who are
California residents, California personal income taxes), and
--the Fund hereby designates $.0717 per share as a long-term capital gain
distribution (of which 71.41% is subject to the 20% maximum Federal tax rate)
paid on December 4, 1997.
As required by Federal tax law rules, shareholders will receive notification
of their portion of the Fund's taxable ordinary dividends (if any) and capital
gain distributions (if any) paid for the 1998 calendar year on Form 1099-DIV
which will be mailed by January 31, 1999.
DREYFUS PREMIER LIMITED TERM
CALIFORNIA MUNICIPAL FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 343/643AR986
ANNUAL REPORT
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DREYFUS PREMIER
LIMITED TERM
CALIFORNIA MUNICIPAL FUND
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JUNE 30, 1998
(reg.tm)
[reg.tm signature logo]
[reg.tm, signature logo]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS PREMIER LIMITED TERM CALIFORNIA MUNICIPAL FUND
CLASS A SHARES WITH THE LEHMAN BROTHERS 10-YEAR MUNICIPAL
BOND INDEX AND THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX
EXHIBIT A:
DREYFUS
PREMIER
LIMITED
TERM LEHMAN LEHMAN
CALIFORNIA BROTHERS BROTHERS
MUNICIPAL 10-YEAR 7-YEAR
FUND MUNICIPAL MUNICIPAL
PERIOD (CLASS A BOND BOND
SHARES) INDEX* INDEX*
6/30/88 9,700 10,000 -
6/30/89 10,508 10,962 -
12/31/89 - - 11,179
6/30/90 11,091 11,741 11,485
6/30/91 12,082 12,827 12,506
6/30/92 13,309 14,279 13,873
6/30/93 14,729 16,075 15,363
6/30/94 14,995 16,234 15,558
6/30/95 15,979 17,659 16,839
6/30/96 16,847 18,787 17,770
6/30/97 17,990 20,353 19,019
6/30/98 19,111 22,079 20,415
*Source: Lehman Brothers
