File No. 2-84105
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16 [X]
(Check appropriate box or boxes.)
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b) of Rule 485
----
x on July 25, 1994 pursuant to paragraph (b) of Rule 485
----
60 days after filing pursuant to paragraph (a) of Rule 485
----
on (date) pursuant to paragraph (a) of Rule 485
----
Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended May 31, 1994 was filed on or about July 12, 1994.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 2
3 Condensed Financial Information 2
4 General Description of Registrant 3
5 Management of the Fund 11
6 Capital Stock and Other Securities 21
7 Purchase of Securities Being Offered 12
8 Redemption or Repurchase 16
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History B-24
13 Investment Objectives and Policies B-2
14 Management of the Fund B-9
15 Control Persons and Principal B-11
Holders of Securities
16 Investment Advisory and Other B-13
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-21
18 Capital Stock and Other Securities B-24
19 Purchase, Redemption and Pricing B-15, B-16
of Securities Being Offered
20 Tax Status *
21 Underwriters B-15
22 Calculations of Performance Data B-23
23 Financial Statements B-47
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-29
30 Location of Accounts and Records C-38
31 Management Services C-38
32 Undertakings C-38
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
FOR USE BY BANKS ONLY
July 25, 1994
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
SUPPLEMENT TO PROSPECTUS DATED JULY 25, 1994
All mutual fund shares involve certain investment risks, including the
possible loss of principal.
928/stkr072594IST
July 25, 1994
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
SUPPLEMENT TO PROSPECTUS DATED JULY 25, 1994
The following information supplements and should be read in
conjunction with the section of the Fund's Prospectus entitled
"Management of the Fund."
The Fund's manager, The Dreyfus Corporation ("Dreyfus"), has entered
into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Dreyfus with a subsidiary of Mellon Bank Corporation
("Mellon").
Following the merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including receipt of certain regulatory approvals
and approvals of the stockholders of Dreyfus and of Mellon. The merger is
expected to occur in August 1994, but could occur significantly later.
As a result of regulatory requirements and the terms of the Merger
Agreement, Dreyfus will seek various approvals from the Fund's
shareholders before completion of the merger. Proxy materials, approved
by the Fund's Board, recently have been mailed to Fund shareholders.
The following information supplements and should be read in
conjunction with the section of the Fund's Prospectus entitled
"Performance Information."
From time to time advertising materials for the Fund also may refer to
Value Line Mutual Fund Survey company ratings and related analyses
supporting the rating.
928/stkr072594
- --------------------------------------------------------------------------
PROSPECTUS JULY 25, 1994
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
- ---------------------------------------------------------------------------
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC. (THE "FUND") IS AN
OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN
AS A MUNICIPAL BOND FUND. ITS GOAL IS TO PROVIDE YOU WITH THE
MAXIMUM AMOUNT OF CURRENT INCOME EXEMPT FROM FEDERAL AND STATE
OF CALIFORNIA INCOME TAXES AS IS CONSISTENT WITH THE PRESERVATION
OF CAPITAL.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO
EARN INCOME ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN
PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S
PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE
FUND THAT YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL INFORMATION),
DATED JULY 25, 1994, WHICH MAY BE REVISED FROM TIME TO TIME,
PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN THIS PROSPECTUS
AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE
FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-
0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR
666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. THE NET ASSET VALUE OF FUNDS
OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
- ------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.......................... 2
CONDENSED FINANCIAL INFORMATION......................... 2
DESCRIPTION OF THE FUND................................. 3
MANAGEMENT OF THE FUND.................................. 11
HOW TO BUY FUND SHARES.................................. 12
SHAREHOLDER SERVICES.................................... 14
HOW TO REDEEM FUND SHARES............................... 16
SHAREHOLDER SERVICES PLAN............................... 19
DIVIDENDS, DISTRIBUTIONS AND TAXES...................... 19
PERFORMANCE INFORMATION................................. 20
GENERAL INFORMATION..................................... 21
- -----------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- ------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees...................................... .60%
Other Expenses....................................... .10%
Total Fund Operating Expenses........................ .70%
<TABLE>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $7 $22 $39 $87
</TABLE>
- -------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
- -------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. You can purchase Fund shares without charge directly from Dreyfus
Service Corporation; you may be charged a nominal fee if you effect
transactions in Fund shares through a securities dealer, bank or other
financial institution. See "Management of the Fund" and "Shareholder
Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and
related notes are included in the Statement of Additional Information,
available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
FISCAL YEAR ENDED MAY 31,
----------------------------------------------------------------------------------------
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
----- ------ ----- ------- ----- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year.. $12.54 $13.87 $14.70 $14.45 $14.15 $14.60 $14.43 $14.66 $14.82 $15.34
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net............ 1.15 1.12 1.08 1.07 1.05 1.03 .99 .93 .89 .84
Net realized and unrealized gain
(loss) on investments.............. 1.33 .83 (.25) (.30) .45 (.17) .23 .20 .66 (.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS... 2.48 1.95 .83 .77 1.50 .86 1.22 1.13 1.55 .27
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net.................. (1.15) (1.12) (1.08) (1.07) (1.05) (1.03) (.99) (.93) (.88) (.85)
Dividends from net realized
gain on investment........... __ __ __ __ __ __ __ (.04) (.15) (.17)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.......... (1.15) (1.12) (1.08) (1.07) (1.05) (1.03) (.99) (.97) (1.03) (1.02)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year... $13.87 $14.70 $14.45 $14.15 $14.60 $14.43 $14.66 $14.82 $15.34 $14.59
====== ====== ====== ====== ======= ======= ====== ====== ======= ======
TOTAL INVESTMENT RETURN 20.73% 14.63% 5.42% 5.53% 1 0.99% 6.10% 8.75% 7.90% 10.89% 1.58%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets................... .75% .72% .70% .71% .70% .69% .69% .68% .69% .70%
Ratio of net investment income to average
net assets................... 8.75% 7.85% 7.08% 7.37% 7.32% 7.10% 6.82% 6.32% 5.88% 5.46%
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation ........ .01% __ __ __ __ __ __ __ __ __
Portfolio Turnover Rate.......... 27.11% 19.49% 31.60% 60.34% 40.47% 35.44% 55.82% 45.58% 41.40% 28.14%
Net Assets, end of year
(000's omitted) $529,156 $973,403 $1,175,026 $1,175,059 $1,385,455 $1,497,552 $1,629,837 $1,175,880 $1,834,956 $1,658,782
</TABLE>
Page 2
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE - The Fund's goal is to provide you with the
maximum amount of current income exempt from Federal and State of
California income taxes as is consistent with the preservation of capital.
To accomplish this goal, the Fund invests primarily in the debt securities
of the State of California, its political subdivisions, authorities and
corporations, the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal and State of California personal income
taxes (collectively, "California Municipal Obligations"). To the extent
acceptable California Municipal Obligations are at any time unavailable
for investment by the Fund, the Fund will invest temporarily in other debt
securities the interest from which is, in the opinion of bond counsel to the
issuer, exempt from Federal, but not State of California, income tax. The
Fund's investment objective cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940)
of the Fund's outstanding voting shares. There can be no assurance that the
Fund's investment objective will be achieved.
MUNICIPAL OBLIGATIONS - Debt securities the interest from which is, in
the opinion of bond counsel to the issuer, exempt from Federal income tax
("Municipal Obligations") generally include debt obligations issued to
obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
Obligations are classified as general obligation bonds, revenue bonds and
notes. General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that generally do not carry the pledge of the credit of the
issuing municipality, but generally are guaranteed by the corporate entity
on whose behalf they are issued. Notes are short-term instruments which
are obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for
property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest, which are determined in some
instances by formulas under which the Municipal Obligation's interest rate
will change directly or inversely to changes in interest rates or an index,
or multiples thereof, in many cases subject to a maximum and minimum.
Certain Municipal Obligations are subject to redemption at a date earlier
than their stated maturity pursuant to call options, which may be
separated from the related Municipal Obligation and purchased and sold
separately.
MANAGEMENT POLICIES - It is a fundamental policy of the Fund that it will
invest at least 80% of the value of its net assets (except when
maintaining a temporary defensive position) in Municipal Obligations. At
least 65% of the value of the Fund's net assets (except when maintaining a
temporary defensive position) will be invested in bonds and debentures.
Under normal circumstances, at least 65% of the Fund's net assets will be
invested in California Municipal Obligations and the remainder may be
invested in securities that are not California Municipal Obligations and
therefore may be subject to California income taxes. See "Risk Factors-
Investing in California Municipal Obligations" below, and "Dividends,
Distributions and Taxes."
Page 3
At least 80% of the value of the Fund's net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than
Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's Corporation ("S&P") or Fitch Investors Service, Inc. ("Fitch"). The
Fund may invest up to 20% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by
Moody's and BBB by S&P and Fitch and as low as the lowest rating assigned
by Moody's, S&P or Fitch, but it currently is the intention of the Fund that
this portion of the Fund's portfolio be invested primarily in Municipal
Obligations rated no lower than Baa by Moody's or BBB by S&P or Fitch. The
Fund may invest in short-term Municipal Obligations which are rated in
the two highest rating categories by Moody's, S&P or Fitch. See "Appendix
B" in the Statement of Additional Information. Municipal Obligations rated
BBB by S&P or Fitch or Baa by Moody's are considered investment grade
obligations; those rated BBB by S&P and Fitch are regarded as having an
adequate capacity to pay principal and interest, while those rated Baa by
Moody's are considered medium grade obligations which lack outstanding
investment characteristics and have speculative characteristics.
Investments rated Ba or lower by Moody's and BB or lower by S&P and
Fitch ordinarily provide higher yields but involve greater risk because of
their speculative characteristics. The Fund may invest in Municipal
Obligations rated C by Moody's or D by S&P or Fitch, which is such rating
organizations' lowest rating and indicates that the Municipal Obligation is
in default and interest and/or repayment of principal is in arrears. See
"Risk Factors -Lower Rated Bonds" below for a further discussion of
certain risks. The Fund also may invest in securities which, while not
rated, are determined by The Dreyfus Corporation to be of comparable
quality to the rated securities in which the Fund may invest; for purposes
of the 80% requirement described above, such unrated securities shall be
deemed to have the rating so determined. The Fund also may invest in
Taxable Investments of the quality described below.
The Fund may invest more than 25% of the value of its total assets in
Municipal Obligations which are related in such a way that an economic,
business or political development or change affecting one such security
also would affect the other securities; for example, securities the
interest upon which is paid from revenues of similar types of projects. As
a result, the Fund may be subject to greater risk as compared to a fund
that does not follow this practice.
From time to time, the Fund may invest more than 25% of the value of
its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified
private activity bonds, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such
interest, a proportionate share of any exempt-interest dividend paid by
the investment company may be treated as such a preference item to
shareholders. The Fund will invest no more than 20% of the value of its net
assets in Municipal Obligations the interest from which gives rise to a
preference item for the purpose of the alternative minimum tax and,
except for temporary defensive purposes, in other investments subject to
Federal income tax.
The Fund may purchase floating and variable rate demand notes and
bonds, which are tax exempt obligations ordinarily having stated
maturities in excess of one year, but which permit the holder to demand
payment of principal at any time, or at specified intervals. Variable rate
demand notes include master demand notes which are obligations that
permit the Fund to invest fluctuating amounts, which may change daily
without penalty, pursuant to direct arrangements between the Fund, as
lender, and the borrower. The interest rates on these obligations fluctuate
from time to time. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks. Use
Page 4
of
letters of credit or other credit support arrangements will not adversely
affect the tax exempt status of these obligations. Because these
obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be
traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value. Accordingly,
where these obligations are not secured by letters of credit or other
credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Each
obligation purchased by the Fund will meet the quality criteria
established for the purchase of Municipal Obligations. The Dreyfus
Corporation, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuers of the floating and variable rate demand
obligations in the Fund's portfolio. The Fund will not invest more than 15%
of the value of its net assets in floating or variable rate demand
obligations as to which the Fund cannot exercise the demand feature on
not more than seven days' notice if there is no secondary market available
for these obligations, and in other illiquid securities.
The Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds
and municipal lease/purchase agreements). A participation interest gives
the Fund an undivided interest in the Municipal Obligation in the proportion
that the Fund's participation interest bears to the total principal amount
of the Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest. If the participation interest is unrated, it will
be backed by an irrevocable letter of credit or guarantee of a bank that the
Board of Directors has determined meets the prescribed quality standards
for banks set forth below, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more
than seven days' notice, for all or any part of the Fund's participation
interest in the Municipal Obligation, plus accrued interest. As to these
instruments, the Fund intends to exercise its right to demand payment
only upon a default under the terms of the Municipal Obligation, as needed
to provide liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio. The Fund will not invest more than
15% of the value of its net assets in participation interests that do not
have this demand feature if there is no secondary market available for
these instruments, and in other illiquid securities.
The Fund may purchase custodial receipts representing the right to
receive certain future principal and interest payments on Municipal
Obligations which underlie the custodial receipts. A number of different
arrangements are possible. In a typical custodial receipt arrangement, an
issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial
receipts. The two classes have different characteristics, but, in each
case, payments on the two classes are based on payments received on the
underlying Municipal Obligations. One class has the characteristics of a
typical auction rate security, where at specified intervals its interest
rate is adjusted, and ownership changes, based on an auction mechanism.
This class's interest rate generally is expected to be below the coupon
rate of the underlying Municipal Obligations and generally is at a level
comparable to that of a Municipal Obligation of similar quality and having
a maturity equal to the period between interest rate adjustments. The
second class bears interest at a rate that exceeds the interest rate
typically borne by a security of comparable quality and maturity; this rate
also is adjusted, but in this case inversely to changes in the rate of
interest of the first class. If the interest rate on the first class exceeds
the coupon rate of the underlying Municipal Obligations, its interest rate
will exceed the rate paid on the second class. In no event will the
aggregate interest paid with respect to the two classes exceed the
interest paid by the underlying Municipal Obligations. The value of the
second class and similar securities should be expected to fluctuate more
than the value of a Municipal Obligation of com-
Page 5
parable quality and
maturity and their purchase by the Fund should increase the volatility of
its net asset value and, thus, its price per share. These custodial receipts
are sold in private placements. The Fund also may purchase directly from
issuers, and not in a private placement, Municipal Obligations having
characteristics similar to custodial receipts. These securities may be
issued as part of a multi-class offering and the interest rate on certain
classes may be subject to a cap or floor.
The Fund may invest up to 15% of the value of its net assets in
securities as to which a liquid trading market does not exist, provided
such investments are consistent with the Fund's investment objective.
Such securities may include securities that are not readily marketable,
such as certain securities that are subject to legal or contractual
restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities,
the Fund is subject to a risk that should the Fund desire to sell them when
a ready buyer is not available at a price that the Fund deems
representative of their value, the value of the Fund's net assets could be
adversely affected. However, if a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain of these securities held by the Fund,
the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board of Directors.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Fund's Board
of Directors has directed The Dreyfus Corporation to monitor carefully the
Fund's investments in such securities with particular regard to trading
activity, availability of reliable price information and other relevant
information. To the extent that for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to
Rule 144A, the Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio during such
period.
The Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment,
the Fund obligates a broker, dealer or bank to repurchase, at the Fund's
option, specified securities at a specified price and, in this respect,
stand-by commitments are comparable to put options. The exercise of a
stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. The Fund will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to exercise its
rights thereunder for trading purposes. The Fund may pay for stand-by
commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly
decreasing such security's yield to investors. The Fund also may acquire
call options on specific Municipal Obligations. The Fund generally would
purchase these call options to protect the Fund from the issuer of the
related Municipal Obligation redeeming, or other holder of the call option
from calling away, the Municipal Obligation before maturity. The sale by
the Fund of a call option that it owns on a specific Municipal Obligation
could result in the receipt of taxable income by the Fund.
The Fund may purchase tender option bonds. A tender option bond is a
Municipal Obligation (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed rate
substantially higher than prevailing short-term tax exempt rates, that has
been coupled with the agreement of a third party, such as a bank, broker-
dealer or other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to tender
their securities to the institution and receive the face value thereof. As
consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal Obligation's
fixed coupon rate and the rate, as determined by a remarketing or similar
agent at or near the commencement of such period, that would cause the
securities, coupled with the tender option, to trade at par on the date of
such determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation
Page 6
that bears interest at the prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of the
Fund, will consider on an ongoing basis the creditworthiness of the
issuers of the underlying Municipal Obligation, of any custodian and of the
third party provider of the tender option. In certain instances and for
certain tender option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying Municipal
Obligations and for other reasons. The Fund will not invest more than 15%
of the value of its net assets in securities that are illiquid, which would
include tender option bonds as to which it cannot exercise the tender
feature on not more than seven days' notice if there is no secondary
market available for these obligations.
The Fund may invest in zero coupon securities which are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). The amount of the discount varies
depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of
debt securities that have been stripped of their unmatured interest
coupons, the coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons. The market prices
of zero coupon securities generally are more volatile than the market
prices of interest-bearing securities and are likely to respond to a greater
degree to changes in interest rates than interest-bearing securities
having similar maturities and credit qualities. The Fund may invest up to
5% of its assets in zero coupon bonds which are rated below investment
grade. See "Risk Factors-Lower Rated Bonds" and "Other Investment
Considerations" below, and "Investment Objective and Management
Policies-Risk Factors-Lower Rated Bonds" and "Dividends, Distributions
and Taxes" in the Statement of Additional Information.
From time to time, the Fund may lend securities from its portfolio to
brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. Such loans may not exceed
331/3% of the Fund's total assets. In connection with such loans, the Fund
will receive collateral consisting of cash, U.S. Government securities or
irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. The Fund can increase its income through the investment of
such collateral. The Fund continues to be entitled to payments in amounts
equal to the interest or other distributions payable on the loaned security
and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. The Fund might experience
risk of loss if the institutions with which it has engaged in a portfolio
loan transaction breaches its agreement with the Fund.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of the Fund's net
assets) or for temporary defensive purposes, the Fund may invest in
taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within
the two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
Government, its agencies or instrumentalities; commercial paper rated
not lower than P-l by Moody's, A-l by S&P or F-l by Fitch; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic
banks, with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase
agreements in respect of any of the foregoing. Dividends paid by the Fund
that are attributable to income earned by the Fund from Taxable
Investments will be taxable to investors. See "Dividends, Distributions
and Taxes." Except for temporary defensive purposes, at no time will more
than 20% of the value of the Fund's net assets be invested in Taxable
Investments and Municipal Obligations the interest from which gives rise
to a preference item for the purpose of the alternative minimum tax. When
the Fund has adopted a temporary defensive position, includ-
Page 7
ing when
acceptable California Municipal Obligations are unavailable for investment
by the Fund, in excess of 35% of the Fund's net assets may be invested in
securities that are not exempt from California income taxes. Under normal
market conditions, the Fund anticipates that not more than 5% of the value
of its total assets will be invested in any one category of Taxable
Investments. Taxable Investments are more fully described in the
Statement of Additional Information, to which reference hereby is made.
CERTAIN FUNDAMENTAL POLICIES - The Fund may (i) borrow money from
banks, but only for temporary or emergency (not leveraging) purposes, in
an amount up to 15% of the value of the Fund's total assets (including the
amount borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is made.
While borrowings exceed 5% of the value of the Fund's total assets, the
Fund will not make any additional investments; and (ii) invest up to 25% of
its assets in the securities of issuers in any single industry, provided that
there is no such limitation on the purchase of Municipal Obligations and,
for temporary defensive purposes, securities issued by banks and
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. This paragraph describes fundamental policies that
cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding
voting shares. See "Investment Objective and Management Policies-
Investment Restrictions" in the Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES - The Fund may (i)
pledge, hypothecate, mortgage or otherwise encumber its assets, but only
to secure borrowings for temporary or emergency purposes; and (ii) invest
up to 15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice and in other
illiquid securities (which securities could include participation interests
(including municipal lease/purchase agreements) that are not subject to
the demand feature described above, and floating and variable rate demand
obligations as to which the Fund cannot exercise the related demand
feature described above and as to which there is no secondary market).
See "Investment Objective and Management Policies-Investment
Restrictions" in the Statement of Additional Information.
RISK FACTORS
INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS - You should consider
carefully the special risks inherent in the Fund's investment in California
Municipal Obligations. These risks result from certain amendments to the
California Constitution and other statutes that limit the taxing and
spending authority of California governmental entities, as well as from
the general financial condition of the State of California. Since the start
of the State's 1990-91 fiscal year, the State has experienced the worst
economic, fiscal and budget conditions since the 1930s. As a result, the
State has experienced recurring budget deficits for four of the five fiscal
years ended June 30, 1992. Revenues and expenditures were essentially
equal in the 1992-93 fiscal year, but the original budget for that fiscal
year projected revenues exceeding expenditures by $2.6 billion. By June
30, 1993, according to California's Department of Finance, the State's
Reserve for Economic Uncertainties had a deficit, on a budget basis, of
approximately $2.8 billion. A further consequence of the large budget
imbalances over the last three fiscal years has been that the State
depleted its available cash resources and has had to use a series of
external borrowings to meet its cash needs. The Governor's budget
proposal for 1994-95 released January 7, 1994, projected General Fund
revenues and transfers in the 1993-94 fiscal year of $39.7 billion (a
reduction of $900 million from the original 1993-94 Budget Act) and
expenditures of $39.3 billion (an increase of $800 million over the
original 1993-94 Budget Act). As a result of the deterioration in the
State's budget and cash situation in fiscal years 1991-92 and 1992-93,
between November 1991 and October 1992 the rating on the State's
general obligation bonds was reduced by S&P from AAA to A+, by Moody's
Page 8
from Aaa to Aa and by Fitch from AAA to AA. In July 1994, Moody's lowered its
rating on the State's general obligation bonds to A. These and other factors
may have the effect of impairing the ability of the issuers of California
Municipal Obligations to pay interest on, or repay the principal of, such
Municipal Obligations. You should obtain and review a copy of the
Statement of Additional Information which more fully sets forth these
and other risk factors.
LOWER RATED BONDS - You should carefully consider the relative risks of
investing in the higher yielding (and, therefore, higher risk) debt
securities in which the Fund may invest up to 20% of the value of its net
assets. These are bonds such as those rated Ba by Moody's or BB by S&P or
Fitch or as low as the lowest rating assigned by Moody's, S&P or Fitch.
They generally are not meant for short-term investing and may be subject
to certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Bonds rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Bonds
rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face major
ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. Bonds rated BB by Fitch are
considered speculative and the payment of principal and interest may be
affected at any time by adverse economic changes. Bonds rated C by
Moody's are regarded as having extremely poor prospects of ever attaining
any real investment standing. Bonds rated D by S&P are in default and the
payment of interest and/or repayment of principal is in arrears. Bonds
rated DDD, DD or D by Fitch are in actual or imminent default, are
extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the issuer; DDD
represents the highest potential for recovery of such bonds; and D
represents the lowest potential for recovery. Such bonds, though high
yielding, are characterized by great risk. See "Appendix B" in the
Statement of Additional Information for a general description of Moody's,
S&P and Fitch ratings of Municipal Obligations. The ratings of Moody's,
S&P and Fitch represent their opinions as to the quality of the Municipal
Obligations which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and, although ratings
may be useful in evaluating the safety of interest and principal payments,
they do not evaluate the market value risk of these bonds. Therefore,
although these ratings may be an initial criterion for selection of
portfolio investments, The Dreyfus Corporation also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal. The Fund's ability to achieve its investment objective may
be more dependent on The Dreyfus Corporation's credit analysis than might
be the case for a fund that invested in higher rated securities. Once the
rating of a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold
the security.
The market price and yield of bonds rated Ba or lower by Moody's and BB
or lower by S&P and Fitch are more volatile than those of higher rated
bonds. Factors adversely affecting the market price and yield of these
securities will adversely affect the Fund's net asset value. In addition,
the retail secondary market for these bonds may be less liquid than that
of higher rated bonds; adverse market conditions could make it difficult at
times for the Fund to sell certain securities or could result in lower
prices than those used in calculating the Fund's net asset value.
The Fund may invest up to 5% of the value of its net assets in zero
coupon securities and pay-in-kind bonds (bonds which pay interest through
the issuance of additional bonds) rated Ba or lower by Moody's and BB or
lower by S&P and Fitch. These securities may be subject to greater
fluctuations in value due to changes in interest rates than interest-
bearing securities and thus may be considered more
Page 9
speculative than comparably rated interest-bearing securities.
See "Other Investment Considerations"
below, and "Investment Objective and Management
Policies- Risk Factors-Lower Rated Bonds" and "Dividends, Distributions
and Taxes" in the Statement of Additional Information.
OTHER INVESTMENT CONSIDERATIONS - Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price fluctuations.
Certain securities that may be purchased by the Fund, such as those with
interest rates that fluctuate directly or indirectly based on multiples of a
stated index, are designed to be highly sensitive to changes in interest
rates and can subject the holders thereof to extreme reductions of yield
and possibly loss of principal. The values of fixed-income securities also
may be affected by changes in the credit rating or financial condition of
the issuing entities. The Fund's net asset value generally will not be
stable and should fluctuate based upon changes in the value of the Fund's
portfolio securities. Securities in which the Fund invests may earn a
higher level of current income than certain shorter-term or higher quality
securities which generally have greater liquidity, less market risk and
less fluctuation in market value.
New issues of Municipal Obligations usually are offered on a when-
issued basis, which means that delivery and payment for such Municipal
Obligations ordinarily take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate
that will be received on the Municipal Obligations are fixed at the time
the Fund enters into the commitment. The Fund will make commitments to
purchase such Municipal Obligations only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable, although any gain realized on
such sale would be taxable. The Fund will not accrue income in respect of
a when-issued security prior to its stated delivery date. No additional
when-issued commitments will be made if more than 20% of the value of
the Fund's net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the
securities held in the Fund's portfolio are subject to changes in value
(both generally changing in the same way, i.e., appreciating when interest
rates decline and depreciating when interest rates rise) based upon the
public's perception of the creditworthiness of the issuer and changes, real
or anticipated, in the level of interest rates. Municipal Obligations
purchased on a when-issued basis may expose the Fund to risk because
they may experience such fluctuations prior to their actual delivery.
Purchasing Municipal Obligations on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction
itself. A segregated account of the Fund consisting of cash, cash
equivalents or U.S. Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the when-issued
commitments will be established and maintained at the Fund's custodian
bank. Purchasing Municipal Obligations on a when-issued basis when the
Fund is fully or almost fully invested may result in greater potential
fluctuation in the value of the Fund's net assets and its net asset value
per share.
Federal income tax law requires the holder of a zero coupon security or
of certain pay-in-kind bonds to accrue income with respect to these
securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income
accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropria-
Page 10
tion" lease/purchase obligations are secured by the leased
property, disposition of the leased property in
the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for
the leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Fund
and thus reduce the available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in the
Fund. Proposals that may restrict or eliminate the income tax exemption
for interest on Municipal Obligations may be introduced in the future. If
any such proposal were enacted that would reduce the availability of
Municipal Obligations for investment by the Fund so as to adversely affect
Fund shareholders, the Fund would reevaluate its investment objective and
policies and submit possible changes in the Fund's structure to
shareholders for their consideration. If legislation were enacted that
would treat a type of Municipal Obligation as taxable, the Fund would treat
such security as a permissible Taxable Investment within the applicable
limits set forth herein.
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act
of 1940. A "diversified" investment company is required by the
Investment Company Act of 1940 generally to invest, with respect to 75%
of its total assets, not more than 5% of such assets in the securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Code
which requires that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of the Fund's total assets be invested in
cash, U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of
any one issuer limited for the purposes of this calculation to an amount
not greater than 5% of the value of the Fund's total assets, and (ii) not
more than 25% of the value of its total assets be invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies). Since a relatively
high percentage of the Fund's assets may be invested in the obligations of
a limited number of issuers, the Fund's portfolio securities may be more
susceptible to any single economic, political or regulatory occurrence
than the portfolio securities of a diversified investment company.
Investment decisions for the Fund are made independently from those of
other investment companies advised by The Dreyfus Corporation. However,
if such other investment companies are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time
as the Fund, available investments or opportunities for sales will be
allocated equitably to each investment company. In some cases, this
procedure may adversely affect the size of the position obtained for or
disposed of by the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment
adviser. As of June 30, 1994, The Dreyfus Corporation managed or
administered approximately $71 billion in assets for more than 1.9
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. The Fund's primary investment officer is L.
Lawrence
Page 11
Troutman. He has held that position since January 1986, and has
been employed by The Dreyfus
Corporation since October 1985. The Fund's
other investment officers are identified under "Management of the Fund"
in the Fund's Statement of Additional Information. The Dreyfus
Corporation also provides research services for the Fund as well as for
other funds advised by The Dreyfus Corporation through a professional
staff of portfolio managers and security analysts.
For the fiscal year ended May 31, 1994, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily
assume certain expenses of the Fund, which would have the effect of
lowering the overall expense ratio of the Fund and increasing yield to
investors at the time such amounts are waived or assumed, as the case
may be. The Fund will not pay The Dreyfus Corporation at a later time for
any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume.
The Dreyfus Corporation may pay Dreyfus Service Corporation for
shareholder and distribution services from The Dreyfus Corporation's own
assets, including past profits but not including the management fee paid
by the Fund. Dreyfus Service Corporation may use part or all of such
payments to pay securities dealers or others in respect of these services.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is
the Fund's Custodian.
HOW TO BUY FUND SHARES
The Fund's distributor is Dreyfus Service Corporation, a wholly-owned
subsidiary of The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166. The shares it distributes are not deposits or
obligations of The Dreyfus Security Savings Bank, F.S.B. and therefore are
not insured by the Federal Deposit Insurance Corporation.
You can purchase Fund shares without a sales charge directly through
Dreyfus Service Corporation; you may be charged a nominal fee if you
effect transactions in Fund shares through a securities dealer, bank or
other financial institution. Stock certificates are issued only upon your
written request. No certificates are issued for fractional shares. It is not
recommended that the Fund be used as a vehicle for Keogh, IRA or other
qualified plans. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client
of a securities dealer, bank or other financial institution which has made
an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. The initial investment
must be accompanied by the Fund's Account Application. For full-time or
part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a
fund advised by The Dreyfus Corporation, including members of the Fund's
Board, or the spouse or minor child of any of the foregoing, the minimum
initial investment is $1,000. For full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries who elect to
have a portion of their pay directly deposited into their Fund account, the
minimum initial investment is $50. The Fund reserves the right to vary
further the initial and subsequent investment minimum requirements at
any time.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds." Payments to open new accounts which
are mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application. For subsequent invest-
Page 12
ments, your Fund account number should
appear on the check and an investment slip should be
enclosed and sent to
The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-
0105. Neither initial nor subsequent investments should be made by third
party check. Purchase orders may be delivered in person only to a Dreyfus
Financial Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the
nearest Dreyfus Financial Center, please call the telephone number listed
under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank
having a correspondent bank in New York City. Immediately available funds
may be transmitted by wire to The Bank of New York, DDA
#8900052384/Dreyfus California Tax Exempt Bond Fund, Inc., for purchase
of Fund shares in your name. The wire must include your Fund account
number (for new accounts, your Taxpayer Identification Number ("TIN")
should be included instead), account registration and dealer number, if
applicable. If your initial purchase of Fund shares is by wire, please call
1-800-645-6561 after completing your wire payment to obtain your Fund
account number. Please include your Fund account number on the Fund's
Account Application and promptly mail the Account Application to the
Fund, as no redemption will be permitted until the Account Application is
received. You may obtain further information about remitting funds in this
manner from your bank. All payments should be made in U.S. dollars and, to
avoid fees and delays, should be drawn only on U.S. banks. A charge will be
imposed if any check used for investment in your account does not clear.
The Fund makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct
the institution to transmit immediately available funds through the
Automated Clearing House to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and your Fund account number PRECEDED BY THE DIGITS
"1111."
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent. Net asset value per share is determined as of the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m.,
New York time), on each day the New York Stock Exchange is open for
business. Net asset value per share is computed by dividing the value of
the Fund's net assets (i.e., the value of its assets less liabilities) by the
total number of shares outstanding. The Fund's investments are valued by
an independent pricing service approved by the Board of Directors and are
valued at fair value as determined by the pricing service. The pricing
service's procedures are reviewed under the general supervision of the
Board of Directors. For further information regarding the methods
employed in valuing Fund investments, see "Determination of Net Asset
Value" in the Fund's Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes"
and the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject
you to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE - You may purchase Fund shares
(minimum $500, maximum $150,000 per day) by telephone if you have
checked the appropriate box and supplied the necessary information on the
Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. The proceeds will be transferred between the bank
account designated in one of these documents and your Fund account. Only
such a bank account maintained in a domestic financial institution which
is an Automated Clearing House member may be so designated. The Fund
may modify or
Page 13
terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-
3306.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE - The Exchange Privilege enables you to purchase, in
exchange for shares of the Fund, shares of certain other funds managed or
administered by The Dreyfus Corporation, to the extent such shares are
offered for sale in your state of residence. These funds have different
investment objectives which may be of interest to you. If you desire to
use this Privilege, you should consult Dreyfus Service Corporation to
determine if it is available and whether any conditions are imposed on its
use.
To use this Privilege, you must give exchange instructions to the
Transfer Agent in writing, by wire or by telephone. If you previously have
established the Telephone Exchange Privilege, you may telephone exchange
instructions by calling 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306. See "How to Redeem Fund Shares-
Procedures." Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained from Dreyfus Service
Corporation. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $500; furthermore,
when establishing a new account by exchange, the shares being exchanged
must have a value of at least the minimum initial investment required for
the fund into which the exchange is being made. Telephone exchanges may
be made only if the appropriate "YES" box has been checked on the Account
Application, or a separate signed Shareholder Services Form is on file
with the Transfer Agent. Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is made: Exchange Privilege, Check Redemption Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TELETRANSFER Privilege, and the dividend/capital gain distribution option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased with a sales load, (b)
acquired by a previous exchange from shares purchased with a sales load,
or (c) acquired through reinvestment of dividends or distributions paid
with respect to the foregoing categories of shares. To qualify, at the time
of your exchange you must notify the Transfer Agent. Any such
qualification is subject to confirmation of your holdings through a check
of appropriate records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the
right, upon not less than 60 days' written notice, to charge shareholders a
nominal fee in accordance with rules promulgated by the Securities and
Exchange Commission. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege may be modified or
terminated at any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Page 14
DREYFUS AUTO-EXCHANGE PRIVILEGE - Dreyfus Auto-Exchange Privilege
enables you to invest regularly (on a semi-monthly, monthly, quarterly or
annual basis), in exchange for shares of the Fund, in shares of other funds
in the Dreyfus Family of Funds of which you are currently an investor. The
amount you designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth of the month according to the
schedule you have selected. Shares will be exchanged at the then-current
net asset value; however, a sales load may be charged with respect to
exchanges into funds sold with a sales load. See "Shareholder Services" in
the Statement of Additional Information. The right to exercise this
Privilege may be modified or cancelled by the Fund or the Transfer Agent.
You may modify or cancel your exercise of this Privilege at any time by
writing to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. The Fund may charge a service fee for the use of this
Privilege. No such fee currently is contemplated. The exchange of shares
of one fund for shares of another is treated for Federal income tax
purposes as a sale of the shares given in exchange by the shareholder and,
therefore, an exchanging shareholder may realize a taxable gain or loss.
For more information concerning this Privilege and the funds in the
Dreyfus Family of Funds eligible to participate in this Privilege, or to
obtain a Dreyfus Auto-Exchange Authorization Form, please call toll free
1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER - Dreyfus-AUTOMATIC Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund
shares are purchased by transferring funds from the bank account
designated by you. At your option, the bank account designated by you will
be debited in the specified amount, and Fund shares will be purchased,
once a month, on either the first or fifteenth day, or twice a month, on
both days. Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form from Dreyfus Service Corporation. You may cancel your
participation in this Privilege or change the amount of purchase at any
time by mailing written notification to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671, and the notification will
be effective three business days following receipt. The Fund may modify
or terminate this Privilege at any time or charge a service fee. No such
fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE - Dreyfus Government
Direct Deposit Privilege enables you to purchase Fund shares (minimum of
$100 and maximum of $50,000 per transaction) by having Federal salary,
Social Security, or certain veterans', military or other payments from the
Federal government automatically deposited into your Fund account. You
may deposit as much of such payments as you elect. To enroll in Dreyfus
Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in the Privilege. The appropriate form may be obtained
from Dreyfus Service Corporation. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time
to terminate your participation by notifying in writing the appropriate
Federal agency. Further, the Fund may terminate your participation upon
30 days' notice to you.
DREYFUS DIVIDEND OPTIONS - Dreyfus Dividend Sweep enables you to
invest automatically dividends or dividends and capital gain distributions,
if any, paid by the Fund in shares of another fund in the Dreyfus Family of
Funds of which you are a shareholder. Shares of the other fund will be
purchased at the then-current net asset value; however, a sales load may
be charged with respect to investments in shares of a fund sold with a
sales load. If you
Page 15
are investing in a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which
reflect a reduced sales load. If you are investing in a fund that charges a
contingent deferred sales charge, the shares purchased will be subject on
redemption to the contingent deferred sales charge, if any, applicable to
the purchased shares. See "Shareholder Services" in the Statement of
Additional Information. Dreyfus Dividend ACH permits you to transfer
electronically on the payment date dividends or dividends and capital gain
distributions, if any, from the Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Banks may
charge a fee for this service.
For more information concerning these privileges, or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To
select a new fund after cancellation, you must submit a new Dividend
Options Form. Enrollment in or cancellation of these privileges is
effective three business days following receipt. These privileges are
available only for existing accounts and may not be used to open new
accounts. Minimum subsequent investments do not apply for Dreyfus
Dividend Sweep. The Fund may modify or terminate these privileges at any
time or charge a service fee. No such fee currently is contemplated.
DREYFUS PAYROLL SAVINGS PLAN - Dreyfus Payroll Savings Plan permits
you to purchase Fund shares (minimum of $100 per transaction)
automatically on a regular basis. Depending upon your employer's direct
deposit program, you may have part or all of your paycheck transferred to
your existing Dreyfus account electronically through the Automated
Clearing House system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse
side of the form and return it to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form from Dreyfus Service Corporation. You may change the
amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your
employer, not Dreyfus Service Corporation, The Dreyfus Corporation, the
Fund, the Transfer Agent or any other person, to arrange for transactions
under the Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this Privilege at any time or charge a service fee. No such fee currently is
contemplated.
AUTOMATIC WITHDRAWAL PLAN - The Automatic Withdrawal Plan permits
you to request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis if you have a $5,000 minimum
account. An application for the Automatic Withdrawal Plan can be obtained
from Dreyfus Service Corporation. There is a service charge of 50 cents for
each withdrawal check. The Automatic Withdrawal Plan may be ended at
any time by you, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
HOW TO REDEEM FUND SHARES
GENERAL - You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value.
The Fund imposes no charges when shares are redeemed directly through
Dreyfus Service Corporation. Securities dealers, banks and other financial
institutions may charge a nominal fee for effecting redemptions of Fund
shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed
may be more or less than their original cost, depending upon the Fund's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the
Page 16
Securities and
Exchange Commission. However, if you have purchased Fund shares by
check, by Dreyfus TeleTransfer Privilege or through Dreyfus-AUTOMATIC
Asset Builder and subsequently submit a written redemption request to
the Transfer Agent, the redemption proceeds will be transmitted to you
promptly upon bank clearance of your purchase check, Dreyfus
TeleTransfer purchase or Dreyfus-AUTOMATIC Asset Builder order, which
may take up to eight business days or more. In addition, the Fund will not
honor Redemption Checks under the Check Redemption Privilege, and will
reject requests to redeem shares by wire or telephone or pursuant to the
Dreyfus TeleTransfer Privilege, for a period of eight business days after
receipt by the Transfer Agent of the purchase check, the Dreyfus
TeleTransfer purchase or the Dreyfus-AUTOMATIC Asset Builder order
against which such redemption is requested. These procedures will not
apply if your shares were purchased by wire payment, or if you otherwise
have a sufficient collected balance in your account to cover the
redemption request. Prior to the time any redemption is effective,
dividends on such shares will accrue and be payable, and you will be
entitled to exercise all other rights of beneficial ownership. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES - You may redeem shares by using the regular redemption
procedure through the Transfer Agent, the Check Redemption Privilege, the
Wire Redemption Privilege, the Telephone Redemption Privilege or the
Dreyfus TeleTransfer Privilege. The Fund makes available to certain large
institutions the ability to issue redemption instructions through
compatible computer facilities.
You may redeem or exchange Fund shares by telephone if you have
checked the appropriate box on the Fund's Account Application or have
filed a Shareholder Services Form with the Transfer Agent. If you select a
telephone redemption or exchange privilege, you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, and reasonably believed by the Transfer
Agent to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification,
to confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of
these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
REGULAR REDEMPTION - Under the regular redemption procedure, you may
redeem shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption requests
may be delivered in person only to a Dreyfus Financial Center. THESE
REQUESTS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus Financial Center,
please call the telephone number listed under "General Information."
Redemption requests must be signed by each shareholder, including each
owner of a joint account, and each signature must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
PAGE 17
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
If you have any questions with respect to signature-guarantees, please
call the telephone number listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE - You may request on the Account
Application, Shareholder Services Form or by later written request that
the Fund provide Redemption Checks drawn on the Fund's account.
Redemption Checks may be made payable to the order of any person in the
amount of $500 or more. Potential fluctuation in the net asset value of
Fund shares should be considered in determining the amount of the check.
Redemption Checks should not be used to close your account. Redemption
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Redemption Check upon your request or if the Transfer Agent
cannot honor the Redemption Check due to insufficient funds or other valid
reason. You should date your Redemption Checks with the current date
when you write them. Please do not postdate your Redemption Checks. If
you do, the Transfer Agent will honor, upon presentment, even if presented
before the date of the check, all postdated Redemption Checks which are
dated within six months of presentment for payment, if they are
otherwise in good order. Shares for which certificates have been issued
may not be redeemed by Redemption Check. This Privilege may be modified
or terminated at any time by the Fund or the Transfer Agent upon notice to
shareholders.
WIRE REDEMPTION PRIVILEGE - You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank
if your bank is not a member. To establish the Wire Redemption Privilege,
you must check the appropriate box and supply the necessary information
on the Fund's Account Application or file a Shareholder Services Form
with the Transfer Agent. You may direct that redemption proceeds be paid
by check (maximum $150,000 per day) made out to the owners of record
and mailed to your address. Redemption proceeds of less than $1,000 will
be paid automatically by check. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of only up to $250,000 wired
within any 30-day period. You may telephone redemption requests by
calling 1-800-221-4060 or, if you are calling from overseas, call 1-401-
455-3306. The Fund reserves the right to refuse any redemption request,
including requests made shortly after a change of address, and may limit
the amount involved or the number of such requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund. The
Fund's Statement of Additional Information sets forth instructions for
transmitting redemption requests by wire. Shares for which certificates
have been issued are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE __ You may redeem Fund shares
(maximum $150,000 per day) by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The redemption
proceeds will be paid by check and mailed to your address. You may
telephone redemption instructions by calling 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306. The Fund reserves the
right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or
the number of telephone redemption requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund.
Shares for which certificates have been issued are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE - You may redeem Fund shares (minimum
$500 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between your Fund account and the bank
account designated in one of these documents. Only such an account
maintained in a domestic financial institution which is an Automated
Page 18
Clearing House member may be so designated. Redemption proceeds will be
on deposit in your account at an Automated Clearing House member bank
ordinarily two days after receipt of the redemption request or, at your
request, paid by check (maximum $150,000 per day) and mailed to your
address. Holders of jointly registered Fund or bank accounts may redeem
through the Dreyfus TELETRANSFER Privilege for transfer to their bank
account only up to $250,000 within any 30-day period. The Fund reserves
the right to refuse any request made by telephone, including requests
made shortly after a change of address, and may limit the amount involved
or the number of such requests. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders.
No such fee currently is contemplated.
If you have selected the Dreyfus TeleTransfer Privilege, you may
request a Dreyfus TeleTransfer redemption of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-
3306. Shares issued in certificate form are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which the
Fund reimburses Dreyfus Service Corporation an amount not to exceed an
annual rate of .25 of 1% of the value of the Fund's average daily net assets
for 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange is open for business. Fund shares
begin earning income dividends on the day following the date of purchase.
The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the next business day. Dividends usually are paid on the last
business day of each month and are automatically reinvested in additional
Fund shares at net asset value or, at your option, paid in cash. If you
redeem all shares in your account at any time during the month, the
dividends to which you are entitled will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities
gains, if any, generally are declared and paid once a year, but the Fund may
make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner consistent
with the provisions of the Investment Company Act of 1940. The Fund will
not make distributions from net realized securities gains unless capital
loss carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional Fund
shares at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the Fund will not be subject to
Federal or California personal income taxes. To the extent that you are
obligated to pay state or local taxes outside of the State of California,
dividends earned by an investment in the Fund may represent taxable
income. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains and all or
a portion of any gains realized from the sale or other disposition of
certain market discount bonds, are subject to Federal income tax as
ordinary income whether or not reinvested. No dividend paid by the Fund
will qualify for the dividends received deduction allowable to certain U.S.
corporations. Distributions from net realized long-term securities gains
of the Fund are taxable as long-term capital gains for Federal income tax
purposes if you are a citizen or resident of the United States. The Code
provides that the net capital gain of an individual generally will not be
subject to Federal income tax at a rate in excess of 28%. Under the
Page 19
Code, interest on indebtedness incurred or continued to purchase or carry Fund
shares which is deemed to relate to exempt-interest dividends is not
deductible.
Although all or a substantial portion of the dividends paid by the Fund
may be excluded by shareholders of the Fund from their gross income for
Federal income tax purposes, the Fund may purchase specified private
activity bonds, the interest from which may be (i) a preference item for
purposes of the alternative minimum tax, (ii) a component of the
"adjusted current earnings" preference item for purposes of the corporate
alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to
which a shareholder's Social Security benefits are taxable. If the Fund
purchases such securities, the portion of the Fund's dividends related
thereto will not necessarily be tax exempt to an investor who is subject
to the alternative minimum tax and/or tax on Social Security benefits and
may cause an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions
from securities gains, if any, paid during the year. These statements set
forth the dollar amount of income exempt from Federal tax and the dollar
amount, if any, subject to Federal tax. These dollar amounts will vary
depending on the size and length of time of your investment in the Fund. If
the Fund pays dividends derived from taxable income, it intends to
designate as taxable the same percentage of the day's dividends as the
actual taxable income earned on that day bears to total income earned on
that day. Thus, the percentage of the dividend designated as taxable, if
any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify either
that the TIN furnished in connection with opening an account is correct, or
that such shareholder has not received notice from the IRS of being
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding
if the IRS determines a shareholder's TIN is incorrect or if a shareholder
has failed to properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended May 31, 1994 as a "regulated investment company"
under the Code. The Fund intends to continue to so qualify if such
qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income tax to
the extent its earnings are distributed in accordance with applicable
provisions of the Code. The Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, tax equivalent yield, average annual total
return and/or total return.
Current yield refers to the Fund's annualized net investment income per
share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of cal-
Page 20
culating
current yield, the amount of net investment income per share during that
30-day period, computed in accordance with regulatory requirements, is
compounded by assuming that it is reinvested at a constant rate over a
six-month period. An identical result is then assumed to have occurred
during a second six-month period which, when added to the result for the
first six months, provides an "annualized" yield for an entire one-year
period. Calculations of the Fund's current yield may reflect absorbed
expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield calculated as described above.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased
with an initial payment of $1,000 and that the investment was redeemed
at the end of a stated period of time, after giving effect to the
reinvestment of dividends and distributions during the period. The return
is expressed as a percentage rate which, if applied on a compounded
annual basis, would result in the redeemable value of the investment at
the end of the period. Advertisements of the Fund's performance will
include the Fund's average annual total return for one, five and ten year
periods.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the net
asset value per share at the beginning of the period. Advertisements may
include the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type
and quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from CDA
Investment Technologies, Inc., Lipper Analytical Services, Inc., Moody's
Bond Survey Bond Index, Lehman Brothers Municipal Bond Index,
Morningstar, Inc. and other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on May 3, 1983, and
commenced operations on July 26, 1983. The Fund is authorized to issue
300 million shares of Common Stock, par value $.01 per share. Each share
has one vote.
Unless otherwise required by the Investment Company Act of 1940,
ordinarily it will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each year
the election of Directors or the appointment of auditors. However,
pursuant to the Fund's By-Laws, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special
meeting of shareholders for purposes of removing a Director from office
and the holders of at least 25% of such shares may require the Fund to
hold a special meeting of shareholders for any other purpose. Fund
shareholders may remove a Director by the affirmative vote of a majority
of the Fund's outstanding voting shares. In addition, the Board of Directors
will call a meeting of shareholders for the purpose of electing Directors
if, at any time, less than a majority of the Directors then holding office
have been elected by shareholders.
Page 21
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll
free 1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IN THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 22
DREYFUS
CALIFORNIA
TAX EXEMPT
BOND FUND, INC.
PROSPECTUS
(DRYFUS LION LOGO)
(COPYRIGHT LOGO) DREYFUS SERVICE CORPORATION, 1994
DISTRIBUTOR
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JULY 25, 1994
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus of Dreyfus California Tax Exempt Bond Fund, Inc. (the "Fund"), dated
July 25, 1994, as it may be further revised from time to time. To obtain a
copy of the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call toll free 1-800-645-6561.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . . . . . .B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . .B-9
Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .B-13
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . .B-14
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . .B-15
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . .B-16
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . . .B-18
Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . . .B-20
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . .B-21
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . . . .B-21
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . .B-23
Information About the Fund. . . . . . . . . . . . . . . . . . . . . . . .B-24
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . .B-25
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-26
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-38
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . .B-47
Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . . .B-61
INVESTMENT OBJE CTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description of
the Fund."
Portfolio Securities
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended May 31,
1994, as computed on a monthly basis, was as follows:
<TABLE>
Fitch Investors Moody's Investors Standard & Poor's
Service, Inc. Service, Inc. Corporation Percent of
("Fitch") or ("Moody's") or (" S&P") Value
<S> <C> <C> <C>
AAA Aaa AAA 45.2%
AA Aa AA 22.2
A A A 14.3
BBB Baa BBB 1.3
F-1 VMIG 1/MIG 1/P-1(1) SP-1/A-1(1) 3.5
Not Rated Not Rated Not Rated 13.5(2)
----
100.0%
======
</TABLE>
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated housing
facilities, sports facilities, convention or trade show facilities, airport,
mass transit, industrial, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal; the interest paid on such
obligations may be exempt from Federal income tax, although current tax laws
place substantial limitations on the size of such issues. Such obligations
are considered to be Municipal Obligations if the interest paid thereon
qualifies as exempt from Federal income tax in the opinion of bond counsel
to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
- ------------------
(1) Included in these categories are tax exempt notes rated within the two
highest grades by Fitch, Moody's or S&P. Therefore, these securities,
together with Municipal Obligations rated Baa or better by Moody's or
BBB or better by S&P or Fitch, are taken into account at the time of a
purchase to ensure that the Fund"s portfolio meets the 80% minimum
quality standard discussed in the Fund's Prospectus.
(2) Included in the Not Rated category are securities comprising 13.5% of
the Fund's market value which, while not rated, have been determined
by the Manager to be of comparable quality to securities in the following
ratings categories: Aaa/AAA (.3%), A (.7%), Baa/BBB (11.0%), Ba/BB (.2%),
B/B (1.2%) and F-1/VMIG1, MIG1, P-1/SP-1, A1 (.1%).
Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders thereof. The interest rate
on a floating rate demand obligation is based on a known lending rate, such
as a bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand obligation is
adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, will have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the event
of foreclosure might prove difficult. The staff of the Securities and
Exchange Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Fund's Board. Pursuant to
such guidelines, the Board has directed the Manager to monitor carefully the
Fund's investment in such securities with particular regard to (1) the
frequency of trades and quotes for the lease obligation; (2) the number of
dealers willing to purchase or sell the lease obligation and the number of
the potential buyers; (3) the willingness of dealers to undertake to make a
market in the lease obligation; (4) the nature of the marketplace trades
including the time needed to dispose of the mechanics of transfer; and (5)
such other factors concerning the trading market for the lease obligation as
the Manager may deem relevant. In addition, in evaluating the liquidity and
credit quality of a lease obligation that is unrated, the Fund's Board has
directed the Manager to consider (a) whether the lease can be cancelled; (b)
what assurance there is that the assets represented by the lease can be
sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics ); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. Accordingly, not more than 15% of the value of
the Fund's net assets will be invested in lease obligations that are
illiquid and in other illiquid securities. See "Investment Restriction No.
13" below.
The Fund will purchase tender option bonds only when it is
satisfied that the custodial and tender option arrangements, including the fee
payment arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will
not have the effect of creating taxable income for the Fund. Based on the
tender option bond agreement, the Fund expects to be able to value the
tender option bond at par; however, the value of the instrument will be
monitored to assure that is valued at fair value.
Ratings of Municipal Obligations. Subsequent to its purchase by
the Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent that
the ratings given by Moody's, S&P or Fitch for Municipal Obligations may
change as a result of changes in such organizations or their rating systems,
the Fund will attempt to use comparable ratings as standards for its
investments in accordance with the investment policies contained in the
Fund's Prospectus and this Statement of Additional Information. The ratings
of Moody's, S&P and Fitch represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and are not
absolute standards of quality. Although these ratings may be an initial
criterion for selection of portfolio investments, the Manager also will
evaluate these securities.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks, by the
right of the issuer to borrow from the U.S. Treasury; others, such as those
issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the
agency or instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates of
interest. Principal and interest may fluctuate based on generally
recognized reference rates or the relationship of rates. While the U.S.
Government provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it will always
do so, since it is not so obligated by law. The Fund will invest in such
securities only when it is satisfied that the credit risk with respect to
the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing
the obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by the Fund will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay the
full amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price, usually
not more than one week after its purchase. The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by the Fund under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Fund will enter into
repurchase agreements only with domestic banks with total assets in excess
of one billion dollars or primary government securities dealers reporting to
the Federal Reserve Bank of New York, with respect to securities of the type
in which the Fund may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. The Manager will monitor on an ongoing basis the value
of the collateral to assure that it always equals or exceeds the repurchase
price. Certain costs may be incurred by the Fund in connection with the
sale of the securities if the seller does not repurchase them in accordance
with the repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on the
securities may be delayed or limited. The Fund will consider on an ongoing
basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
Lending Portfolio Securities. To a limited extent, the Fund may
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund can
increase its income through the investment of the cash collateral. For
purposes of this policy, the Fund considers collateral consisting of U.S.
Government securities or irrevocable letters of credit issued by banks whose
securities meet the standards for investment by the Fund to be the
equivalent of cash. Such loans may not exceed 33 1/3% of the value of the
Fund's total assets. From time to time, the Fund may return to the borrower
or a third party which is unaffiliated with the Fund, and which is acting as
a "placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in connection
with the loan. These conditions may be subject to future modification.
Risk Factors
Investing in California Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
California Municipal Obligations. Constitutional limits on the State of
California's appropriations, Proposition 98 and other existing State
legislation, as well as the general financial condition of the State of
California, have significantly altered the State's budget process which
could adversely affect the ability of issuers of California Municipal
Obligations to pay interest and principal on such Municipal Obligations.
Since the start of the State's 1990-91 fiscal year, the State has
experienced the worst economic, fiscal and budget conditions since the
1930s. As a result, the State has experienced recurring budget deficits for
four of the five fiscal years ended June 30, 1992. Revenues and
expenditures were essentially equal in the 1992-93 fiscal year, but the
original budget for that fiscal year projected revenues succeeding
expenditures by $2.6 billion. By June 30, 1993, according to California's
Department of Finance, the State's Reserve for Economic Uncertainties had a
deficit, on a budget basis, of approximately $2.8 billion. A further
consequence of the large budget imbalances over the last three fiscal years
has been that the State depleted its available cash resources and has had to
use a series of external borrowings to meet its cash needs. The Governor's
budget proposal for 1994-95 released January 7, 1994, projected General Fund
revenues and transfers in the 1993-94 fiscal year of $39.7 billion (a
reduction of $900 million from the original 1993-94 Budget Act) and
expenditures of $39.3 billion (an increase of $800 million over the original
1993-94 Budget Act). As a result of the deterioration in the State's budget
and cash situation in fiscal years 1991-92 and 1992-93, between November
1991 and October 1992 the rating on the State's general obligation bonds was
reduced by S&P from AAA to A+, by Moody's from Aaa to Aa and by Fitch from
AAA to AA. In July 1994, Moody's lowered its rating on the State's general
obligations bonds to A. Investors should review Appendix A which sets forth
additional information relating to investing in California Municipal
Obligations.
Lower Rated Bonds. The Fund is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See in the Prospectus
"Description of the Fund--Risk Factors--Lower Rated Bonds" for a discussion
of certain risks and "Appendix B" for a general description of Moody's, S&P
and Fitch ratings of Municipal Obligations. Although ratings may be useful
in evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these bonds. The Fund will rely on the
Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond in
the Fund's portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether the Fund should
continue to hold the bond.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher rated
securities. These bonds are considered by S&P, Moody's and Fitch, on
balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market price
and yield and the Fund's ability to dispose of particular issues when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also
may make it more difficult for the Fund to obtain accurate market quotations
for purposes of valuing the Fund's portfolio and calculating its net asset
value. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of these
securities. In such cases, judgment may play a greater role in valuation
because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturn.
It is likely that any economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with the Distributor or any other persons concerning the
acquisition of such securities, and the Manager will review carefully the
credit and other characteristics pertinent to such new issues.
Lower rated zero coupon securities, in which the Fund may invest up
to 5% of its net assets, involve special considerations. The credit risk
factors pertaining to lower rated securities also apply to lower rated zero
coupon bonds. Such zero coupon bonds carry an additional risk in that,
unlike bonds which pay interest throughout the period to maturity, the Fund
will realize no cash until the cash payment date unless a portion of such
securities are sold and, if the issuer defaults, the Fund may obtain no
return at all on its investment. See "Dividends, Distributions and Taxes."
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 7
as fundamental policies. These restrictions cannot be changed without approval
by the holders of a majority (as defined in the Investment Company Act of
1940, as amended (the "Act")) of the Fund's outstanding voting shares.
Investment restrictions numbered 8 through 12 are non-fundamental policies
and may be changed by a vote of a majority of the Fund's Directors at any
time. The Fund may not:
1. Invest more than 25% of its assets in the securities of
issuers in any single industry; provided that there shall be no limitation
on the purchase of Municipal Obligations and, for temporary defensive purposes,
securities issued by banks and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Borrow money, except from banks for temporary or emergency
(not leveraging) purposes in an amount up to 15% of the
value of the Fund's total assets (including the amount borrowed) based on the
lesser of cost or market, less liabilities (not including the amount borrowed)
at the time the borrowing is made. While borrowings exceed 5% of the value of
the Fund's total assets, the Fund will not make any additional investments.
For purposes of this investment restriction, the entry into options,
forward contracts, futures contracts, including those relating to indexes, and
options on futures contracts or indexes shall not constitute borrowing.
3. Purchase or sell real estate, commodities or commodity
contracts, or oil and gas interests, but this shall not prevent the Fund
from investing in Municipal Obligations secured by real estate or interests
therein, or prevent the Fund from purchasing and selling options, forward
contracts, futures contracts, including those relating to indexes, and options
on futures contracts or indexes.
4. Underwrite the securities of other issuers, except
that the Fund may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of
debt obligations and the entry into repurchase agreements; however, the Fund
may lend its portfolio securities in an amount not to exceed 33 1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange Commission
and the Fund's Board of Directors.
6. Issue any senior security (as such term is defined in
Section 18(f) of the Act), except to the extent that the activities permitted in
Investment Restrictions numbered 2, 3 and 10 may be deemed to give rise to a
senior security.
7. Sell securities short or purchase securities on
margin, but the Fund may make margin deposits in connection with transactions in
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
8. Purchase securities other than Municipal Obligations
and Taxable Investments and those arising out of transactions in futures and
options or as otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies,
except to the extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber
its assets, except to the extent necessary to secure borrowings for temporary or
emergency purposes and to the extent related to the deposit of assets in
escrow in connection with the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or variation margin
arrangements with respect to options, futures contracts, including those related
to indexes, and options on futures contracts or indexes.
11. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase securities which are
illiquid (which securities could include participation interests (including
municipal lease/purchase agreements) that are not subject to the demand feature
described in the Fund's Prospectus, floating and variable rate demand
obligations as to which the Fund cannot exercise the demand feature described in
the Fund's Prospectus on less than seven days' notice and as to which there is
no secondary market) if, in the aggregate, more than 15% of its net assets would
be so invested.
12. Invest in companies for the purpose of exercising
control.
For purposes of Investment Restriction No. 1, industrial
development bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry." If a percentage restriction is adhered to at the time of
investment, a later increase in percentage resulting from a change in values
or assets will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Fund shares in certain
states. Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors and Officers of the Fund.
*DAVID W. BURKE, Director. Vice President and Chief Administrative Officer
of the Manager since October 1990 and a director or trustee of
other investment companies advised or administered by the Manager.
From 1977 to 1990, Mr. Burke was involved in the management of
national television news, as Vice President and Executive Vice
President of ABC News, and subsequently as President of CBS News.
His address is 200 Park Avenue, New York, New York 10166.
SAMUEL CHASE, Director. Since 1982, President of Samuel Chase & Company,
Ltd., an economic consulting firm. From 1983 to 1989, Chairman of
Chase, Brown & Blaxall, Inc., an economic consulting firm. His
address is 4410 Massachusetts Avenue, N.W., Suite 408, Washington,
D.C. 20016.
JONI EVANS, Director. Senior Vice President of the William Morris Agency.
From September 1987 to May 1993, Executive Vice President of Random
House, Inc. and, from January 1991 to May 1993, President and
Publisher of Turtle Bay Books; from January 1987 to December 1990,
publisher of Random House Adult Trade Division; and from September
1985 to September 1987, President of Simon & Schuster - Trade
Division. Her address is 1350 Avenue of the Americas, New York,
New York 10022.
*LAWRENCE M. GREENE, Director. Legal Consultant to and a director of the
Manager, Executive Vice President and a director of the Distributor
and an officer, director or trustee of other investment companies
advised or administered by the Manager. His address is 200 Park
Avenue, New York, New York 10166.
ARNOLD S. HIATT, Director. Chairman of The Stride Rite Foundation. From
1969 to June 1992, Chairman of the Board, President or Chief
Executive Officer of The Stride Rite Corporation, a multi-
divisional footwear manufacturing company. Mr. Hiatt is also a
director of The Cabot Corporation. His address is 400 Atlantic
Avenue, Boston, Massachusetts 02110.
DAVID J. MAHONEY, Director. President of David Mahoney Ventures since 1983.
From 1968 to 1983, he was Chairman and Chief Executive Officer of
Norton Simon Inc., a producer of consumer products and services.
Mr. Mahoney is also a director of National Health Laboratories
Inc., Bionaire Inc. and Good Samaritan Health Systems, Inc. His
address is 745 Fifth Avenue, Suite 700, New York, New York 10151.
*RICHARD J. MOYNIHAN, Director, President and Investment Officer. An
employee of the Manager and an officer, director or trustee of
other investment companies advised or administered by the Manager.
His address is 200 Park Avenue, New York, New York 10166.
BURTON N. WALLACK, Director. President and co-owner of Wallack Management
Company, a real estate management company managing real estate in
the New York City area. His address is 18 East 64th Street, Suite
3D, New York, New York 10021.
Each of the "non-interested" Directors is also a director of
Dreyfus BASIC Municipal Fund, Dreyfus Connecticut Municipal Money Market Fund,
Inc., Dreyfus GNMA Fund, Inc., Dreyfus Intermediate Municipal Bond Fund, Inc.,
Dreyfus Michigan Municipal Money Market Fund, Inc., Dreyfus New Jersey
Municipal Money Market Fund, Inc., Dreyfus New York Tax Exempt Bond Fund,
Inc. and Dreyfus Ohio Municipal Money Market Fund, Inc., and a trustee of
Dreyfus Massachusetts Municipal Money Market Fund, Dreyfus Massachusetts Tax
Exempt Bond Fund, Dreyfus New York Tax Exempt Intermediate Bond Fund,
Dreyfus New York Tax Exempt Money Market Fund and Dreyfus Pennsylvania
Municipal Money Market Fund.
For so long as the Fund's plan described in the section
"Shareholder Services Plan" remains in effect, the Directors of the Fund who are
not "interested persons" of the Fund, as defined in the Act, will be selected
and nominated by the Directors who are not "interested persons" of the Fund.
The Fund does not pay any remuneration to its officers and
Directors other than fees and expenses to Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Manager, which totalled $30,735 for the fiscal year ended May
31, 1994 for all such Directors as a group.
Officers of the Fund Not Listed Above.
A. PAUL DISDIER, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
KAREN M. HAND, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
STEPHEN C. KRIS, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
JILL C. SHAFFRO, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
L. LAWRENCE TROUTMAN, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised
and administered by the Manager.
SAMUEL J. WEINSTOCK, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised
and administered by the Manager.
MONICA S. WIEBOLDT, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised
and administered by the Manager.
DANIEL C. MACLEAN, Vice President. Vice President and General Counsel of
the Manager, Secretary of the Distributor and an officer of other
investment companies advised or administered by the Manager.
JEFFREY N. NACHMAN, Vice President--Financial. Vice President--Mutual Fund
Accounting of the Manager and an officer of other investment
companies advised or administered by the Manager.
JOHN J. PYBURN, Treasurer. Assistant Vice President of the Manager and an
officer of other investment companies advised or administered by
the Manager.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
GREGORY S. GRUBER, Controller. Senior Accounting Manager in the Fund
Accounting Department of the Manager and an officer of other
investment companies advised or administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the Manager,
the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer of the Fund is 200 Park Avenue, New
York, New York 10166.
Directors and officers of the Fund, as a group, owned less than 1%
of the Fund's Common Stock outstanding on July 5, 1994.
The following persons are also officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive Officer;
Julian M. Smerling, Vice Chairman of the Board of Directors; Joseph S.
DiMartino, President, Chief Operating Officer and a director; Alan M.
Eisner, Vice President and Chief Financial Officer; Robert F. Dubuss, Vice
President; Elie M. Genadry, Vice President--Institutional Sales; Peter A.
Santoriello, Vice President; Kirk V. Stumpp, Vice President--New Product
Development; Philip L. Toia, Vice President--Fixed-Income Research;
Katherine C. Wickham, Assistant Vice President--Human Resources; Maurice
Bendrihem, Controller; and Mandell L. Berman, Alvin E. Friedman, Abigail Q.
McCarthy and David B. Truman, directors.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management of
the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated June 15, 1983 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Directors or (ii) vote
of a majority (as defined in the Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is approved
by a majority of the Directors who are not "interested persons" (as defined
in the Act) of the Fund or the Manager, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Agreement was
approved by shareholders at a meeting of shareholders held on September 18,
1984, and was last approved by the Fund's Board of Directors, including a
majority of the Directors who are not "interested persons" of any party to
the Agreement, at a meeting held on April 6, 1994. The Agreement is
terminable without penalty, on not more than 60 days' notice, by the Fund's
Board of Directors or by vote of the holders of a majority of the Fund's
outstanding voting shares, or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the Act).
The Manager manages the Fund's portfolio of investments in
accordance with the stated policies of the Fund, subject to the approval of the
Fund's Board of Directors. The Manager is responsible for investment decisions
and provides the Fund with Investment Officers who are authorized by the Board
of Directors to execute purchases and sales of securities. The Fund's
Investment Officers are: A. Paul Disdier, Karen M. Hand, Stephen C. Kris,
Richard J. Moynihan, Jill C. Shaffro, L. Lawrence Troutman, Samuel J.
Weinstock and Monica S. Wieboldt. The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Fund as well as for other
funds advised by the Manager. All purchases and sales are reported for
Directors' review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining corporate existence, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and corporate
meetings, costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to
existing shareholders and any extraordinary expenses.
The Manager pays the salaries of all officers and employees
employed by both it and the Fund, maintains office facilities, and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing and certain other required services. The
Manager also may make such advertising and promotional expenditures, using its
own resources, as it from time to time deems appropriate.
As compensation for the Manager's services, the Fund pays the
Manager a monthly management fee at the annual rate of .60 of 1% of the value of
the Fund's average daily net assets. The management fees paid to the Manager
for the fiscal years ended May 31, 1992, 1993 and 1994 amounted to
$10,173,556, $10,779,964 and $10,861,852, respectively.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage fees, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the management
fee, exceed 1 1/2% of the value of the Fund's average net assets for the fiscal
year, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense. Such
deduction or payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis. During the fiscal
year ended May 31, 1994, no expense reimbursements were made pursuant to
such limitations.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan")
pursuant to which the Fund reimburses the Distributor 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 an answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Directors, and by
the Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in the operation
of the Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan is subject to annual approval by such
vote of the Directors. The Plan is terminable at any time by vote of a
majority of the Directors who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
For the period July 1, 1993 (effective date of the Plan) through
May 31, 1994, $431,660 was chargeable to the Fund under the Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy Fund
Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Service Charges. There is no sales or service charge by the Fund
or the Distributor although investment dealers, banks and other institutions
may make reasonable charges to investors for their services. The services
provided and the applicable fees are established by each dealer or other
institution acting independently of the Fund. The Fund has been given to
understand that these fees may be charged for customer services including,
but not limited to: same day investment of client funds; same day access to
client funds; advising customers about the status of their accounts, yield
currently being paid, or income earned to date; providing periodic account
statements showing security and money market positions; other services
available from the dealer, bank or other institution; and assistance with
inquiries related to client investments. Any such fees will be deducted
monthly from the client's account, which on smaller accounts could
constitute a substantial portion of distributions. Small, inactive
long-term accounts involving monthly service charges may not be in the best
interest of an investor. In addition, some securities dealers may require
an investor to invest more than the minimum stated investment; not purchase
fractional shares; take monthly income distributions in cash; or other
conditions. Investors should be aware that they may purchase Fund shares
directly from the Distributor without imposition of any maintenance or
service charges, other than those already described. In some states, banks
or other institutions effecting transactions in Fund shares may be required
to register as dealers pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase
orders may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time,
on any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to use
the Dreyfus TeleTransfer Privilege, the initial payment for purchase of Fund
shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to
an account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Fund Shares--Dreyfus TeleTransfer
Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Redeem
Fund Shares."
Check Redemption Privilege. An investor may indicate on the
Account Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Account Application or later written request must be manually signed by
the registered owner(s). Checks may be made payable to the order of any
person in an amount of $500 or more. When a Check is presented to the
Transfer Agent for payment, the Transfer Agent, as the investor's agent,
will cause the Fund to redeem a sufficient number of full or fractional
shares in the investor's account to cover the amount of the Check.
Dividends are earned until the Check clears. After clearance, a copy of the
Check will be returned to the investor. Investors generally will be subject
to the same rules and regulations that apply to checking accounts, although
election of this Privilege creates only a shareholder-transfer agent
relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares
in an investor's account, the Check will be returned marked insufficient funds.
Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer Agent
receives the redemption request in proper form. Redemption proceeds will be
transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder Services
Form. Redemption proceeds, if wired, must be in the amount of $1,000 or
more and will be wired to the investor's account at the bank of record
designated in the investor's file at the Transfer Agent, if the investor's
bank is a member of the Federal Reserve System, or to a correspondent bank
if the investor's bank is not a member. Fees ordinarily are imposed by such
bank usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment
may have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have also selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor, and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call the telephone number listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in
cash all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the proper approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Directors reserves the right to make payments in whole
or in part in securities or other assets of the Fund in case of an emergency
or any time a cash distribution would impair the liquidity of the Fund to
the detriment of the existing shareholders. In such event, the securities
would be valued in the same manner as the portfolio of the Fund is valued.
If the recipient sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the New
York Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or determination
of its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Exchange Privilege. Shares of other funds purchased by exchange
will be purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without
a sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of other funds sold without a sales
load.
D. Shares of funds purchased with a sales load, shares of
funds acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to herein as "Purchased
Shares") may be exchanged for shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load that could have
been imposed in connection with the Purchased Shares (at the time the
Purchased Shares were acquired), without giving effect to any reduced loads,
the difference will be deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and their
account number.
To use this Privilege, an investor must give exchange instructions
to the Transfer Agent in writing, by wire or by telephone. Telephone exchanges
may be made only if the appropriate "YES" box has been checked on the
Account Application, or a separate signed Shareholder Services Form is on
file with the Transfer Agent. By using this Privilege, the investor
authorizes the Transfer Agent to act on telephonic, telegraphic or written
exchange instructions from any person representing himself or herself to be
the investor, and reasonably believed by the Transfer Agent to be genuine.
Telephone exchanges may be subject to limitations as to the amount involved
or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. For
Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value of
at least $100.
Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
an investor to purchase, in exchange for shares of the Fund, shares of another
fund in the Dreyfus Family of Funds. This Privilege is available only for
existing accounts. Shares will be exchanged on the basis of relative net
asset value as described above under "Exchange Privilege." Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor. An investor will be notified
if his account falls below the amount designated to be exchanged under this
Privilege. In this case, an investor's account will fall to zero unless
additional investments are made in excess of the designated amount prior to
the next Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA accounts,
but not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
The Exchange Privilege and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may
be obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. The Fund reserves the right to reject any exchange request
in whole or in part. The Exchange Privilege or Dreyfus Auto-Exchange
Privilege may be modified or terminated at any time upon notice to
shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits
an investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. An Automatic Withdrawal Plan may be established by completing the
appropriate application available from the Distributor. There is a service
charge of $.50 for each withdrawal check. Automatic Withdrawal may be
terminated at any time by the investor, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does
not charge a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which
charges a sales load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load charged by the
fund from which dividends or distributions are being swept, without
giving effect to any reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a contingent deferred sales charge
("CDSC") and the applicable CDSC, if any, will be imposed upon
redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy Fund
Shares."
Valuation of Portfolio Securities. The Fund's investments are
valued each business day by an independent pricing service (the "Service")
approved by the Board of Directors. When, in the judgment of the Service,
quoted bid prices for investments are readily available and are representative
of the bid side of the market, these investments 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 bonds of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. The Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures
are reviewed by the Fund's officers under the general supervision of the
Board of Directors. Expenses and fees, including the management fee
(reduced by the expense limitation, if any), are accrued daily and are taken
into account for the purpose of determining the net asset value of Fund
shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other purchases
and sales usually are placed with those dealers from which it appears that
the best price or execution will be obtained. Usually no brokerage
commissions, as such, are paid by the Fund for such purchases and sales, al-
though the price paid usually includes an undisclosed compensation to the
dealer acting as agent. The prices paid to underwriters of newly-issued
securities usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's
Investment Officers in their best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund
effects securities transactions may be used by the Manager in advising other
funds it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses of
its research department.
The Fund anticipates that its annual portfolio turnover rate
generally will not exceed 100%, but the turnover rate will not be a limiting
factor when the Fund deems it desirable to sell or purchase securities.
Therefore, depending upon market conditions, the Fund's annual portfolio
turnover rate may exceed 100% in particular years.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management believes that the Fund has qualified as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), for the fiscal year ended May 31, 1994 and the Fund intends to
continue to so qualify, if such qualification is in the best interests of
its shareholders. To qualify as a regulated investment company, the Fund
must distribute at least 90% of its net income (consisting of net investment
income from tax exempt obligations and net short-term capital gains) to its
shareholders, must derive less than 30% of its annual gross income from gain
on the sale of securities held for less than three months, and must meet
certain asset diversification and other requirements. Accordingly, the Fund
may be restricted in the selling of securities held for less than three
months. The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
The Code provides that if a shareholder has not held his shares for
more than six months (or such shorter period as the Internal Revenue Service
may prescribe by regulation) and has received an exempt-interest dividend
with respect to such shares, any loss incurred on the sale of such shares
will be disallowed to the extent of the exempt-interest dividend received.
In addition, any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of his shares
below the cost of his investment. Such a distribution would be a return on
investment in an economic sense although taxable as stated in "Dividends,
Distributions and Taxes" in the Prospectus.
If, at the close of each quarter of its taxable year, at least 50%
of the value of the Fund's total assets consists of Federal tax exempt
obligations, the Fund may designate and pay Federal exempt-interest
dividends from interest earned on all such tax exempt obligations. Such
exempt-interest dividends may be excluded by shareholders of the Fund from
their gross income for Federal income tax purposes. Dividends derived from
taxable investments, together with distributions from any net realized
short-term securities gains, generally are taxable as ordinary income for
Federal income tax purposes whether or not reinvested. Distributions from
net realized long-term securities gains generally are taxable as long-term
capital gains to a shareholder who is a citizen or resident of the United
States, whether or not reinvested and regardless of the length of time the
shareholder has held his shares.
If, at the close of each quarter of its taxable year, at least 50%
of the value of the Fund's total assets consists of obligations which, when
held by an individual, the interest therefrom is exempt from California
personal income tax, and if the Fund qualifies as a management company under
the California Revenue and Taxation Code, then the Fund will be qualified to
pay dividends to its shareholders that are exempt from California personal
income tax (but not from California franchise tax). However, the total
amount of California exempt-interest dividends paid by the Fund to a
non-corporate shareholder with respect to any taxable year cannot exceed
such shareholder's pro rata share of interest received by the Fund during
such year that is exempt from California taxation less any expenses and
expenditures deemed to have been paid from such interest.
For shareholders subject to California personal income tax, exempt-
interest dividends derived from California Municipal Obligations will not be
subject to the California personal income tax. Distributions from net
realized short-term capital gains to California resident shareholders will
be subject to the California personal income tax as ordinary income.
Distributions from net realized long-term capital gains may constitute long-
term capital gains for individual California resident shareholders. Unlike
under Federal tax law, the Fund's shareholders will not be subject to
California personal income tax, or receive a credit for California taxes
paid by the Fund, on undistributed capital gains. In addition, California
tax law does not consider any portion of the exempt-interest dividends paid
an item of tax preference for the purposes of computing the California
alternative minimum tax.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be
treated as ordinary income under Section 1276 of the Code.
Investment by the Fund in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount, timing
and character of distributions to shareholders. For example, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such
portion in order to maintain its qualification as a regulated investment
company. In such case, the Fund may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's current yield for the 30-day period ended May 31, 1994
was 5.21%. Current yield is computed pursuant to a formula which operates as
follows: The amount of the Fund's expenses accrued for the 30-day period is
subtracted from the amount of the dividends and interest earned (computed in
accordance with regulatory requirements) by the Fund during the period.
That result is then divided by the product of: (a) the average daily number
of shares outstanding during the period that were entitled to receive
dividends and distributions, and (b) the net asset value per share on the
last day of the period less any undistributed earned income per share
reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying
the result by 2.
Based upon a combined 1994 Federal and California personal income
tax rate of 46.24%, the Fund's tax equivalent yield for the 30-day period ended
May 31, 1994 was 9.69%. Tax equivalent yield is computed by dividing that
portion of the current yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to that portion,
if any, of the yield of the Fund that is not tax exempt.
The tax equivalent yield quoted above represents the application of
the highest Federal and State of California marginal personal income tax rates
presently in effect. For Federal personal income tax purposes, a 39.6% tax
rate has been used. For California personal income tax purposes, an 11%
tax rate has been used. The tax equivalent figure, however, does not
include the potential effect of any local (including, but not limited to,
county, district or city) taxes, including applicable surcharges. In
addition, there may be pending legislation which could affect such stated
tax rates or yield. Each investor should consult its tax adviser, and
consider its own factual circumstances and applicable tax laws, in order to
ascertain the relevant tax equivalent yield.
The Fund's average annual total return for the 1, 5 and 10 year
periods ended May 31, 1994 was 1.58%, 6.99% and 9.13%, respectively. Average
annual total return is calculated by determining the ending redeemable value of
an investment purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period)
and subtracting 1 from the result.
The Fund's total return for the period July 26, 1983 to May 31,
1994 was 140.05%. Total return is calculated by subtracting the amount of the
Fund's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the period), and
dividing the result by the net asset value per share at the beginning of the
period.
From time to time, the Fund may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts will
be used for illustrative purposes only and are not representative of the Fund's
past or future performance.
From time to time, advertising materials for the Fund may refer to
or discuss then-current or past economic conditions, developments and/or
events, and actual or proposed tax legislation. From time to time,
advertising materials for the Fund also may refer to statistical or other
information concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company Institute. From
time to time, advertising materials for the Fund also may refer to
Morningstar ratings and related analyses supporting the rating.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and nonassessable.
Fund shares are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights
and are freely transferable.
On September 15, 1987, shareholders approved changes in the Fund's
fundamental policies and investment restrictions to permit it to operate as
a "non-diversified" investment company.
On November 23, 1992, the Fund's shareholders approved a proposal
to change certain of the Fund's fundamental policies and investment
restrictions, among other things, to (i) permit the Fund to lend its
portfolio securities in an amount not to exceed 33 1/3% of the value of its
total assets, (ii) increase from 10% to 15% the amount of the Fund's assets
which the Fund may borrow from banks for temporary or emergency purposes,
and (iii) increase from 10% to 15% the amount of the Fund's assets which may
be invested in illiquid securities and make such policy non-fundamental.
The Fund sends annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode Island
02940-9671, is the Fund's transfer and dividend disbursing agent. Neither
The Bank of New York nor The Shareholder Services Group, Inc. has any part
in determining the investment policies of the Fund or which portfolio
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of Common Stock being sold pursuant to the Fund's Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the
Fund.
APPENDIX A
RISK FACTORS - INVESTING
IN CALIFORNIA MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn from
official statements relating to securities offerings of the State of
California (the "State") and various local agencies, available as of the
date of this Statement of Additional Information. While the Fund has not
independently verified such information, it has no reason to believe that
such information is not correct in all material respects.
Recent Developments. Since the start of the State's 1990-91 fiscal
year, the State has faced the worst economic, fiscal and budget conditions
since the 1930s. Construction, manufacturing (especially aerospace),
exports and financial services, among others, have all been severely
affected. Job losses have been the worst of any post-war recession. Unem-
ployment reached 9.2% for 1993 and is expected to remain well above the
National average through 1994. According to the State's Department of
Finance, recovery from the recession in California is not expected in
meaningful terms until 1994, notwithstanding signs of recovery elsewhere in
the nation.
The recession has seriously affected State tax revenues, which
basically mirror economic conditions. It also has caused increased
expenditures for health and welfare programs. The State also has been
facing a structural imbalance in its budget with the largest programs
supported by the General Fund (K-12 schools and community colleges, health
and welfare, and corrections) growing at rates higher than the growth rates
for the principal revenue sources of the General Fund. As a result, the
State has experienced recurring budget deficits. The Controller reported
that expenditures exceeded revenues for four of the five fiscal years ending
with 1991-92. Revenues and expenditures were essentially equal in 1992-93,
but the original budget for that year projected revenues exceeding
expenditures by $2.6 billion. By June 30, 1993, according to the Department
of Finance, the State's Reserve for Economic Uncertainties had a deficit, on
a budget basis, of approximately $2.8 billion.
A further consequence of the large budget imbalances over the last
three fiscal years has been that the State depleted its available cash
resources and has had to use a series of external borrowings to meet its
cash needs.
The Governor's Budget Proposal for 1994-95 released January 7, 1994,
projected General Fund revenues and transfers in the 1993-94 fiscal year of
$39.7 billion (a reduction of $900 million from the original 1993-94 Budget
Act) and expenditures of $39.3 billion (an increase of $800 million over the
original 1993-94 Budget Act). The Governor's Budget proposed General Fund
revenues and transfers of $41.3 billion (including $2.0 billion from the
Federal government) and expenditures of $38.8 billion in the 1994-95 fiscal
year, which would leave a balance of approximately $260 million in the
budget reserve, the Special Fund for Economic Uncertainties (the "SFEU"), at
June 30, 1995 after repayment of the accumulated 1992-93 budget deficit of
$2.8 billion.
On January 17, 1994, an earthquake of the magnitude of an estimated 6.8
on the Richter Scale struck Los Angeles causing significant damage to public
and private structures and facilities. The full impact of the earthquake on
Los Angeles and surrounding areas and on the State's finances has not been
determined.
As a result of the deterioration in the State's budget and cash
situation in fiscal years 1991-92 and 1992-93, the rating agencies reduced
the State's credit ratings. Between October 1991 and October 1992 the
rating on the State's general obligation bonds was reduced by S&P from "AAA"
to "A+," by Moody's from "Aaa" to "Aa" and by Fitch from "AAA" to "AA."
State Finances. State moneys are segregated into the General Fund and
approximately 400 Special Funds. The General Fund consists of the revenues
received into the State Treasury and earnings from State investments, which
are not required by law to be credited to any other fund. The General Fund
is the principal operating fund for the majority of governmental activities
and is the depository of most major State revenue sources.
The SFEU is funded with General Fund revenues and was established to
protect the State from unforeseen reduced levels of revenues and/or
unanticipated expenditure increases. Amounts in the SFEU may be transferred
by the Controller as necessary to meet cash needs of the General Fund. The
Controller is required to return moneys so transferred without payment of
interest as soon as there are sufficient moneys in the General Fund. For
budgeting and accounting purposes, any appropriation made from the SFEU is
deemed an appropriation from the General Fund. For year-end reporting
purposes, the Controller is required to add the balance in the SFEU to the
balance in the General Fund so as to show the total monies then available
for General Fund purposes.
Inter-fund borrowing has been used for many years to meet temporary
imbalances of receipts and disbursements in the General Fund. As of June
30, 1993, there were outstanding loans in the aggregate principal amount of
$43 million to the General Fund from the SFEU and outstanding loans in the
aggregate principal amount of $3.016 billion to the General Fund from the
Special Funds. On June 30, 1993, the General Fund also had been
supplemented with the proceeds of the sale of $2.0 billion of revenue
anticipation warrants on June 23, 1993, which matured on December 23, 1993.
Articles XIIIA and XIIIB to the State Constitution and Other Revenue
Law Changes. Prior to 1977, revenues of the State government experienced
significant growth primarily as a result of inflation and continuous
expansion of the tax base of the State. In 1978, State voters approved an
amendment to the State Constitution known as Proposition 13, which added
Article XIIIA to the State Constitution, reducing ad valorem local property
taxes by more than 50%. In addition, Article XIIIA provides that additional
taxes may be levied by cities, counties and special districts only upon
approval of not less than a two-thirds vote of the "qualified electors" of
such district, and requires not less than a two-thirds vote of each of the
two houses of the State Legislature to enact any changes in State taxes for
the purpose of increasing revenues, whether by increased rate or changes in
methods of computation.
Primarily as a result of the reductions in local property tax revenues
received by local governments following the passage of Proposition 13, the
Legislature undertook to provide assistance to such governments by
substantially increasing expenditures from the General Fund for that purpose
beginning in the 1978-79 fiscal year. In recent years, in addition to such
increased expenditures, the indexing of personal income tax rates (to adjust
such rates for the effects of inflation), the elimination of certain
inheritance and gift taxes and the increase of exemption levels for certain
other such taxes had a moderating impact on the growth in State revenues.
In addition, the State has increased expenditures by providing a variety of
tax credits, including renters' and senior citizens' credits and energy
credits.
The State is subject to an annual "appropriations limit" imposed by
Article XIIIB of the State Constitution adopted in 1979. Article XIIIB
prohibits the State from spending "appropriations subject to limitation" in
excess of the appropriations limit imposed. "Appropriations subject to
limitations" are authorizations to spend "proceeds of taxes," which consist
of tax revenues, and certain other funds, including proceeds from regulatory
licenses, user charges or other fees to the extent that such proceeds exceed
"the cost reasonably borne by such entity in providing the regulation,
product or service." One of the exclusions from these limitations is "debt
service" (defined as "appropriations required to pay the cost of interest
and redemption charges, including the funding of any reserve or sinking fund
required in connection therewith, on indebtedness existing or legally
authorized as of January 1, 1979 or on bonded indebtedness thereafter
approved" by the voters). In addition, appropriations required to comply
with mandates of courts or the Federal government and, pursuant to
Proposition 111 enacted in June 1990, appropriations for qualified capital
outlay projects and appropriations of revenues derived from any increase in
gasoline taxes and motor vehicle weight fees above January 1, 1990 levels
are not included as appropriations subject to limitation. In addition, a
number of recent initiatives were structured or proposed to create new tax
revenues dedicated to certain specific uses, with such new taxes expressly
exempted from the Article XIIIB limits (e.g., increased cigarette and
tobacco taxes enacted by Proposition 99 in 1988). The appropriations limit
also may be exceeded in cases of emergency. However, unless the emergency
arises from civil disturbance or natural disaster declared by the Governor,
and the appropriations are approved by two-thirds of the Legislature, the
appropriations limit for the next three years must be reduced by the amount
of the excess.
The State's appropriations limit in each year is based on the limit for
the prior year, adjusted annually for changes in California per capita
personal income and changes in population, and adjusted, when applicable,
for any transfer of financial responsibility of providing services to or
from another unit of government. The measurement of change in population is
a blended average of statewide overall population growth, and change in
attendance at local school and community college ("K-14") districts. As
amended by Proposition 111, the appropriations limit is tested over
consecutive two-year periods. Any excess of the aggregate "proceeds of
taxes" received over such two-year periods above the combined appropriations
limits for those two years is divided equally between transfers to
K-14 districts and refunds to taxpayers.
As originally enacted in 1979, the State's appropriations limit was
based on its 1978-79 fiscal year authorizations to expend proceeds of taxes
and was adjusted annually to reflect changes in cost of living and
population (using different definitions, which were modified by Proposition
111). Commencing with the 1991-92 fiscal year, the State's appropriations
limit is adjusted annually based on the actual 1986-87 limit, and as if
Proposition 111 had been in effect. The State Legislature has enacted
legislation to implement Article XIIIB which defines certain terms used in
Article XIIIB and sets forth the methods for determining the State's
appropriations limit. Government Code Section 7912 requires an estimate of
the State's appropriations limit to be included in the Governor's Budget,
and thereafter to be subject to the budget process and established in the
Budget Act.
For the 1990-91 fiscal year, the State appropriations limit was $32.7
billion, and appropriations subject to limitation were $7.51 billion under
the limit. The limit for the 1991-92 fiscal year was $34.2 billion, and
appropriations subject to limitations were $3.8 billion under the limit.
The limit for the 1992-93 fiscal year was $35.01 billion, and the
appropriations subject to limitation were $4.2 billion under the limit. The
estimated limits for the 1993-94 and 1994-95 fiscal years is $36.0 billion
and $36.61 billion, respectively, and the estimated appropriations subject
to limitation are $3.77 billion and $5.49 billion, respectively, under the
limit.
In November 1988, State voters approved Proposition 98, which changed
State funding of public education below the university level and the
operation of the State's appropriations limit, primarily by guaranteeing K-
14 schools a minimum share of General Fund revenues. Under Proposition 98
(as modified by Proposition 111, which was enacted in June 1990), K-14
schools are guaranteed the greater of (a) 40.3% of General Fund revenues
("Test 1"), (b) the amount appropriated to K-14 schools in the prior year,
adjusted for changes in the cost of living (measured as in Article XIIIB by
reference to California per capita personal income) and enrollment ("Test
2"), or (c) a third test, which would replace the second test in any year
when the percentage growth in per capita General Fund revenues from the
prior year plus .5% is less than the percentage growth in California per
capita personal income ("Test 3"). Under "Test 3," schools would receive
the amount appropriated in the prior year adjusted for changes in enrollment
and per capita General Fund revenues, plus an additional small adjustment
factor. If "Test 3" is used in any year, the difference between "Test 3"
and "Test 2" would become a "credit" to schools which would be the basis of
payments in future years when per capita General Fund revenue growth exceeds
per capita personal income growth.
Proposition 98 permits the Legislature by two-thirds vote of both
houses, with the Governor's concurrence, to suspend the K-14 schools'
minimum funding formula for a one-year period. In the fall of 1989, the
Legislature and the Governor utilized this provision to avoid having 40.3%
of revenues generated by a special supplemental sales tax enacted for
earthquake relief go to K-14 schools. Proposition 98 also contains
provisions transferring certain State tax revenues in excess of the Article
XIIIB limit to K-14 schools.
The 1991-92 Budget Act, applying "Test 2" of Proposition 98,
appropriated approximately $18.5 billion for K-14 schools pursuant to
Proposition 98. During the course of the fiscal year, revenues proved to be
substantially below expectations. By the time the Governor's Budget was
introduced in January 1992, it became clear that per capita growth in
General Fund revenues for 1991-92 would be far smaller than the growth in
California per capita personal income and the Governor's Budget therefore
reflected a reduction in Proposition 98 funding in 1991-92 by applying "Test
3" rather than "Test 2."
In response to the changing revenue situation and to fully fund the
Proposition 98 guarantee in both the 1991-92 and 1992-93 fiscal years
without exceeding it, the Legislature enacted several bills as part of the
1992-93 budget package which responded to the fiscal crisis in education
funding. Fiscal year 1991-92 Proposition 98 appropriations for K-14 schools
were reduced by $1.083 billion. In order to not adversely impact cash
received by school districts, however, a short-term loan was appropriated
from the non-Proposition 98 State General Fund. The Legislature then
appropriated $16.6 billion to K-14 schools for 1992-93 (the minimum
guaranteed by Proposition 98), but designated $1.083 billion of this amount
to "repay" the prior year loan, thereby reducing cash outlays in 1992-93 by
that amount.
In addition to reducing the 1991-92 fiscal year appropriations for K-14
schools by $1.083 billion and converting the amount to a loan (the "inter-
year adjustment"), Chapter 703, Statutes of 1992 also made an adjustment to
"Test 1," based on the additional $1.2 billion of local property taxes that
were shifted to schools and community colleges. The "Test 1" percentage
changed from 40% to 37%. Additionally, Chapter 703 contained a provision
that if an appellate court should determine that the "Test 1" recalculation
or the inter-year adjustment is unconstitutional, unenforceable or invalid,
Proposition 98 would be suspended for the 1992-93 fiscal year, with the
result that K-14 schools would receive the amount intended by the 1992-93
Budget Act compromise.
The State Controller stated in October 1992 that, because of a drafting
error in Chapter 703, he could not implement the $1.083 billion reduction of
the 1991-92 school funding appropriation, which was part of the inter-year
adjustment. The Legislature untimely enacted corrective legislation as part
of the 1993-94 Budget package to implement the $1.083 billion inter-year
adjustment as originally intended.
In the 1992-93 Budget Act, a new loan of $732 million was made to K-12
schools in order to maintain per-average daily attendance ("ADA") funding at
the same level as 1991-92, at $4,187. An additional loan of $241 million
was made to community college districts. These loans are to be repaid from
future Proposition 98 entitlements. (The teachers' organization lawsuit
discussed above also seeks to declare invalid the provision making the $732
million a loan "repayable" from future years' Proposition 98 funds.
Including both State and local funds, and adjusting for the loans and
repayments, on a cash basis, total Proposition 98 K-12 funding in 1992-93
increased to $21.5 billion, 2.4% more than the amount in 1992-93 ($21.0
billion).
Based on revised State tax revenues and estimated decreased reported
pupil enrollment, the 1993-94 Budget Act projected that the 1992-93
Proposition 98 Budget Act appropriations of $16.6 billion exceeded a revised
minimum guarantee by $313 million. As a result, the 1993-94 Budget Act
reverted $25 million in 1992-93 appropriations to the General Fund.
Limiting the reversion to this amount ensures that per ADA funding for
general purposes will remain at the prior year level. The 1994-95
Governor's Budget subsequently proposed deficiency funding of $121 million
for school apportionments and special educator, increasing funding per pupil
in 1992-93 to $4,245. The 1993-94 Budget Act also designated $98 million in
1992-93 appropriations toward satisfying prior years' guarantee levels, an
obligation that resulted primarily from updating State tax revenues for
1991-92, and designates $190 million as a loan repayable from 1993-94
funding.
The 1993-94 Budget Act projected the Proposition 98 minimum funding
level at $13.5 billion based on the "Test 3" calculation where the guarantee
is determined by the change in per capita growth in General Fund revenues,
which are projected to decrease on a year-over-year basis. This amount also
takes into account increased property taxes transferred to school districts
from other local governments.
Legislation accompanying the 1993-94 Budget Act (Chapter 66/93)
provided a new loan of $609 million to K-12 schools in order to maintain per
ADA funding at $4,217 and a loan of $178 million to community colleges.
These loans have been combined with the K-14 1992-93 loans into one loan
totalling $1.760 billion. Repayment of this loan would be from future
years' Proposition 98 entitlements, and would be conditioned on maintaining
current funding levels per pupil for K-12 schools. Chapter 66 also reduced
the "Test 1" percentage to 34% to reflect the property tax shift among local
government agencies.
Sources of Tax Revenue. The California personal income tax, which in
1992-93 contributed about 44% of General Fund revenues, is closely modeled
after the Federal income tax law. It is imposed on net taxable income
(gross income less exclusions and deductions). The tax is progressive with
rates ranging from 1% to 11%. Personal, dependent, and other credits are
allowed against the gross tax liability. In addition, taxpayers may be
subject to an alternative minimum tax ("AMT") which is much like the Federal
AMT. This is designed to ensure that excessive use of tax preferences does
not reduce taxpayers' liabilities below some minimum level. Legislation
enacted in July 1991 added two new marginal tax rates, at 10% and 11%,
effective for tax years 1991 through 1995. After 1995, the maximum personal
income tax rate is scheduled to return to 9.3%, and the AMT rate is
scheduled to drop from 8.5% to 7%.
The personal income tax is adjusted annually by the change in the
consumer price index to prevent taxpayers from being pushed into higher tax
brackets without a real increase in income.
The sales tax is imposed upon retailers for the privilege of selling
tangible personal property in California. Most retail sales and leases are
subject to the tax. However, exemptions have been provided for certain
essentials such as food for home consumption, prescription drugs, gas,
electricity and water. Sales tax accounted for about 38% of General Fund
revenue in 1992-93. Bank and corporation tax revenues comprised about 11%
of General Fund revenue in 1992-93. In 1989, Proposition 99 added a 25
cents per pack excise tax on cigarettes, and a new equivalent excise tax on
other tobacco products. Legislation enacted in 1993 added an additional 2
cents per pack for the purpose of funding breast cancer research.
General Financial Condition of the State. Revenues in the most recent
fiscal years have been unusually difficult to forecast with a high degree of
accuracy due in major part to the volatility in the personal income tax.
The 1986-87 through 1989-90 fiscal years were affected by both the Federal
Tax Reform Act of 1986 and subsequent conforming State legislation. The
difficulty with recent forecasts has occurred because taxpayers have changed
their behavior as a result of these events. Capital gains are now fully
taxed. This revenue component is subject to taxpayer discretion and is very
sensitive to change in tax law, market conditions and individual
circumstances. Capital gains have always been a volatile item and since it
is contributing a greater percentage of total revenue, it makes these
collections subject to greater variance.
The State entered the 1988-89 fiscal year with essentially no budget
reserve. The 1988-89 Budget Act called for significant spending cuts to
balance expected revenues and expenditures and to provide an estimated
balance of approximately $600 million in the SFEU at year-end.
Revenues for the 1989-90 fiscal year were approximately $517.7 million
less than presented in the Governor's Budget in January 1990 and $1.021
billion less than estimated in July 1989, primarily owing to lower than
estimated receipts from individual and corporate taxes. The shortfall in
revenues was made up through the transfer of moneys from the SFEU and a
variety of expenditure reduction actions initiated by the Administration.
As a result, the SFEU was fully depleted by June 30, 1990.
The California State Controller reported that the State's General
Fund ended the 1990-91 fiscal year with a negative budgetary basis balance
of $1.316 billion. In order to pay necessary cash expenses through June
1991, including payment of $4.1 billion of 1990 Revenue Anticipation Notes
which were due June 28, 1991, the General Fund borrowed $1.390 billion from
the SFEU and $3.266 billion from other Special Funds as of the end of the
fiscal year. Data on General Fund revenues for the 1990-91 fiscal year show
that revenues in all major categories (except insurance taxes) were lower
than receipts in 1989-90, the first time this has happened on a year-over-
year basis since the 1930s.
The 1991-92 Budget Act projected General Fund expenditures of $43.4
billion and Special Fund expenditures of $10.6 billion. The Department of
Finance estimated that there would be a balance in the SFEU on June 30, 1992
of $1.2 billion. An estimated $14.3 billion "budget gap" was closed
through a combination of temporary and permanent changes in laws and one-
time budget adjustments. The major features of the budget compromise were:
program funding reductions totaling $5.1 billion; a total of $5.1 billion of
increased State tax revenues; savings of $2.1 billion by returning certain
health and welfare programs to counties; and additional miscellaneous
savings or revenue gains and one-time accounting charges totaling $2.0
billion.
The 1991-92 Budget Act was based on economic forecasts showing recovery
from the recession would begin in summer or fall of 1991, but revenues
lagged behind projections from the start of the 1991-92 fiscal year. By the
time the Governor's Budget for 1992-93 was prepared in late 1991, it was
evident that the recession had been much more severe in the State than was
thought earlier, and that it was continuing longer than anticipated. As a
result, revenues for the 1991-92 fiscal year were much lower than originally
estimated and expenditures were higher, particularly in health and welfare
programs.
As a result of the revenue shortfalls accumulating for the previous two
fiscal years, the Controller in April 1992 indicated that cash resources
(including borrowing from Special Funds) would not be sufficient to meet all
General Fund obligations due on June 30 and July 1, 1992. On June 25, 1992,
the Controller issued $475 million of 1992 Revenue Anticipation Warrants
(the "1992 Warrants") in order to provide funds to cover all necessary
payments from the General Fund at the end of the 1991-92 fiscal year and on
July 1, 1992. The 1992 Warrants were paid on July 24, 1992. In addition to
the 1992 Warrants the Controller reported that as of June 30, 1992, the
General Fund had borrowed $1.336 billion from the SFEU and $4.699 billion
from other Special Funds, using all but about $183 million of borrowable
cash resources.
To balance the 1992-93 Governor's Budget, program reductions totalling
$4.365 billion and revenue and transfer increase of $872 million were
proposed for the 1991-92 and 1992-93 fiscal years. Economic performance in
the State continued to be sluggish after the 1992-93 Governor's Budget was
prepared. By the time of the "May Revision," issued on May 20, 1992, the
Administration estimated that the 1992-93 Budget needed to address a gap of
about $7.9 billion, much of which was needed to repay the accumulated budget
deficits of the previous two years.
In early 1992, the Director of Finance acknowledged that actual
economic conditions were worse than the projections in the Governor's
Budget. Because the State had accumulated a significant budget deficit over
two consecutive years, and the continuing recession depressed revenue
estimates for the coming year, the State faced a major challenge to enact a
balanced budget. The State also began the 1992-93 fiscal year with
essentially no cash reserves. By June 1992, it was estimated that
approximately $7.9 billion of budget actions would be required to end the
1992-93 fiscal year without a budget deficit. The severity of the budget
actions needed led to a long delay in adopting the budget.
With the failure to enact a budget by July 1, 1992, the State had no
legal authority to pay many of its vendors until the budget was passed.
Starting on July 1, 1992, the Controller was required to issue "registered
warrants" in lieu of normal warrants backed by cash to pay many State
obligations. Available cash was used to pay constitutionally mandated and
priority obligations, such as debt service on bonds and revenue anticipation
warrants. Between July 1 and September 4, 1992, the Controller issued an
aggregate of approximately $3.8 billion of registered warrants payable from
the General Fund, all of which were called for redemption by September 4,
1992 following enactment of the 1992-93 Budget Act and issuance by the State
of $3.3 billion of interim notes.
The Legislature enacted the 1992-93 Budget Bill on August 29, 1992,
and it was signed by the Governor on September 2, 1992. The 1992-93 Budget
Act provided for expenditures of $57.4 billion and consisted of General Fund
expenditures of $40.8 billion and Special Fund and Bond Fund expenditures of
$16.6 billion. The Department of Finance estimated there would be a balance
in the SFEU of $28 million on June 30, 1993.
The $7.9 billion budget gap was closed through a combination of
increased revenues and transfers and expenditure cuts such as:
1. General Fund savings in health and welfare programs totaling
$1.6 billion.
2. General Fund reductions of $1.9 billion for K-12 schools and
community colleges. This was accomplished by requiring schools to repay
$1.1 billion in excess appropriations from 1991-92.
3. Redirecting property taxes from cities ($200 million) and
counties ($525 million) to schools. These shifts are permanent and will
reduce the State General Funds obligation for schools. The State will also
redirect property taxes from special districts ($375 million) and redevel-
opment agencies ($200 million) to schools. The shift from redevelopment
agencies is a one-time shift.
4. Program cuts for higher education totaling $415 million
($246 million for The University of California, $143 million for California
State University, and $26 million for the Student Aid Commission). These
reductions are partially offset by $141 million in increased student fees.
5. A total of $1.6 billion of transfers and accelerated
collections of State revenues by conforming State schedules for estimated
payments for personal income and bank and corporate taxes with federal
schedules ($105 million), accelerating settlement of outstanding tax
disputes ($300 million), reaching an agreement with the Federal government
to repay federal contractors over a ten-year period beginning in 1992-93,
rather than making a lump sum payment in 1992-93 ($580 million), accelerat-
ing liquidation of unclaimed properties through the sale of all unclaimed
securities received prior to July 1, 1992, rather than maintaining them for
three years ($70 million), transfers from Special Funds ($423 million), and
other miscellaneous actions ($122 million).
6. Approximately $1.0 billion from various additional program
reductions.
In May 1993, the Department of Finance projected that the General Fund
would end the fiscal year on June 30, 1993 with an accumulated budget
deficit of about $2.8 billion, and a negative fund balance of about $2.2
billion (the difference being certain reserves for encumbrances and school
funding costs). As a result, the State issued $5 billion of revenue
anticipation notes and warrants.
The Governor's 1993-94 Budget, introduced on January 8, 1993, proposed
General Fund expenditures of $37.3 billion, with projected revenues of $39.9
billion. It also proposed Special Fund expenditures of $12.4 billion and
Special Fund revenues of $12.1 billion. To balance the budget in the face
of declining revenues, the Governor proposed a series of revenue shifts from
local government, reliance on increased Federal aid and reductions in state
spending.
The "May Revision" of the Governor's Budget, released on May 20, 1993,
indicated that the revenue projections of the January Budget Proposal were
tracking well, with the full year 1992-93 about $80 million higher than the
January projection. Personal income tax revenue was higher than projected,
sales tax was close to target, and bank and corporation taxes were lagging
behind projections. The May Revision projected the State would have an
accumulated deficit of about $2.75 billion by June 30, 1993. The Governor
proposed to eliminate this deficit over an 18-month period. He also agreed
to retain the 0.5% sales tax scheduled to expire June 30 for a six-month
period, dedicated to local public safety purposes, with a November election
to determine a permanent extension. Unlike previous years, the Governor's
Budget and May Revision did not calculate a "gap" to be closed, but rather
set forth revenue and expenditure forecasts and proposals designed to
produce a balanced budget.
The 1993-94 Budget Act was signed by the Governor on June 30, 1993,
along with implementing legislation. The Governor vetoed about $71 million
in spending. With enactment of the Budget Act, the State carried out its
regular cash flow borrowing program for the fiscal year, which included the
issuance of approximately $2 billion of revenue anticipation notes maturing
on June 28, 1994.
The 1993-94 Budget Act was predicated on General Fund revenues and
transfers estimated at $40.6 billion, about $700 million higher than the
January Governor's Budget, but still about $400 million below 1992-93 (and
the second consecutive year of actual decline). The principal reasons for
declining revenues were the continued weak economy and the expiration (or
repeal) of three fiscal steps taken in 1991--a half cent temporary sales
tax, a deferral of operating loss carry forwards, and repeal by initiative
of a sales tax on candy and snack foods.
The 1993-94 Budget Act also assumed Special Fund revenues of $11.9
billion, an increase of 2.9% over 1992-93.
The 1993-94 Budget Act included General Fund expenditures of $38.5
billion (a 6.3% reduction from projected 1992-93 expenditures of $41.1
billion), in order to keep a balanced budget within the available revenues.
The Budget also included Special Fund expenditures of $12.1 billion, a 4.2%
increase.
The 1993-94 Budget Act contained no General Fund tax/revenue increases
other than a two year suspension of the renters' tax credit.
The 1994-95 Governor's Budget released January 7, 1994 indicated that
the continued sluggish performance of the State's economy will have an
adverse effect on results for the 1993-94 fiscal year. Revenues were
projected to be $39.7 billion, about $900 million less than the 1993-94
Budget Act, even though revenues in the first half of the fiscal year were
very close to original projections.
In March 1994, expenditures for the 1993-94 fiscal year were projected
in the 1994-95 Governor's Budget to be $39.3 billion, about $800 million
above the original 1993-94 Budget Act. The main reasons for this change are
increased health and welfare caseloads, lower local property taxes (which
require State support for K-14 education to make up the shortfall), and
lower than expected federal government payments for immigration-related
costs. The 1994-95 Governor's Budget does not reflect possible additional
General Fund costs in the 1993-94 fiscal year for earthquake relief.
The Department of Finance's April Bulletin reported that revenues in
March were $294 million above forecast, bringing the year to date total to
$57 million above forecast. Sales use tax receipts in March were slightly
above forecast, but stayed very close to projections. Personal income tax
receipts were far above projections; refunds were lower than anticipated.
Withholding remained at or above forecast. Corporate taxes were $68 million
below forecast, indicating that corporate profits in 1993 were lower than
expected. Weakness also was shown in insurance tax receipts.
The 1994-95 fiscal year will represent the fourth consecutive year the
Governor and Legislature will be faced with a very difficult budget
environment to produce a balanced budget. Many program cuts and budgetary
adjustments have already been made in the last three years. The Governor's
Budget once again does not calculate a "gap" which must be "closed;" rather
it sets forth revenue and expenditure forecasts and revenue and expenditure
proposals which result in a balanced budget, including elimination of the
accumulated 1992-93 budget deficit of $2.8 billion.
The Governor's Budget projects General Fund revenues and transfer in
1994-95 of $41.3 billion $1.4 billion above 1993-94. Included in these
projections are receipt of $2.0 billion in new federal aid to reimburse the
State for the cost of educating and incarcerating undocumented foreign
immigrants, the transfer of 0.5% of the State sales tax to counties, and tax
relief of about $95 million proposed by the Governor for low and moderate
income tax payers.
The Governor's Budget Special Funds revenue of $13.7 billion, an
increase of 9.6% over 1993-94 (in part reflecting the tax shift to
counties).
The Governor's Budget projects General Funds expenditures of $38.8
billion to keep a balanced budget which pays off the accumulated deficit
within the available revenues. The Governor's Budget also proposes Special
Fund expenditures of $13.7 billion, a 5.4% increase.
The Governor's Budget proposes no tax/revenue increases. Therefore, if
the health and welfare proposals are not adopted or if the federal aid will
not be forthcoming as proposed, additional program cut of budget adjustments
will have to be made in the 1994-95 fiscal year to keep the budget in
balance. The Governor's Budget projects the June 30, 1995 ending balance
of the budget reserve, the SFEU to be about $260 million, or less than 0.5%
of General Fund revenues.
The Governor's Budget assumes the State's regular cash flow borrowing
program in 1994-95, and assumes the budget will be adopted on time. Cash
resources at the start of the 1994-95 fiscal year are projected to be
insufficient to meet all obligations without external borrowing, such as
revenue anticipation notes, reimbursement or refunding warrants or
registered warrants as occurred in 1992.
Recent Economic Trends. California is experiencing its deepest
recession since the 1930s. The State's tax revenue experience clearly
reflects sharp declines in employment, income and retail sales on a scale
not seen in over 50 years. However, economic signals remain mixed, and
recovery is still an expectation rather than a reality.
The State's tax revenue experience clearly reflects sharp declines in
employment, income and retail sales on a scale not seen in over 50 years.
The 1994-95 Governor's Budget, released January 7, 1994, assumes the State
will remain in recessionary conditions through 1994, with a modest upturn
beginning late in 1994 or 1995, a year later than predicted in the May 1993
Department of Finance economic projection. pre-recession job levels are not
expected to be reached until 1998.
California has yet to share in the national economic upturn.
Throughout 1993, nonagricultural wage and salary employment--the broadest,
most currently available measure of regional economic activity--continued to
decline. Since reaching a peak in the Spring of 1990, California has lost
over 850,000 payroll jobs, making this by far the longest and deepest
downturn of the post-World War II era. By contrast, in both the 1969-70 and
1981-82 recessions, the State had recovered its job losses by two years
after the start of the recession.
Major cuts in federal defense spending are now recognized as the main
source of the recession and the largest obstacle to recovery. This year and
for the next several years to come, the principal question in the California
outlook is when and whether other elements in the State's economy can muster
sufficient strength to overcome the continuing drag to defense cuts.
This forecast does not contemplate a significant recovery in 1994, but
anticipates stabilization of the economy and a modest recovery in 1995.
This pattern produces an annual average decline in nonfarm employment of
0.6%, an improvement from last year's 1.4% drop and the similar 1.5% decline
in 1992. Next year, employment is forecast to increase a modest 0.7%.
Personal income growth in 1993 was held below 1% due to tax-driven
bonus activity which artificially boosted income in 1992. Following
President Clinton's election, bonus and stock option payments added $5 to $6
billion to fourth quarter 1992 personal income, as individuals shifted
income to avoid promised Federal tax increase. With income having fallen
sharply in the first quarter, it is clear that this surge was "borrowed"
from 1993.
Personal income is expected to increase 4% this year and 5% in 1995,
reflecting a more normal relationship between employment and income.
California--along with other areas of the nation--continues to
experience the effects of corporate downsizing. By 1995, it is expected
that a substantial portion of this restructuring will have run its course.
A more stable situation in finance, the utilities and air transportation,
for example, should allow modest gains in total employment by next year.
The rate of decline in defense-related aerospace is forecast to
moderate slowly over the next several years, from a 17% plunge last year, to
14% in 1994 and 11% in 1995.
Finally, the Department of Finance noted that California would be hit
hard by the latest round of Federal military base closings and force
realignments, which will be implemented over the remaining years of the
decade. California was estimated to have 22% of the nation's defense
spending, but might suffer 25-30% of the defense spending cuts over the next
five years. The Department also estimates that the recent Federal Budget
Reconciliation Act will have a disproportionate and negative impact on
California. California would suffer 19.5% of the outlay reductions, which
rely heavily on defense budget cuts, and the State, with many high income
taxpayers, will pay nearly 14.5% of the tax increases, compared to 12% of
the nation's population.
APPENDIX B
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable, and will include:
(1) likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature and provisions of the obligation; and
(3) protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" rating is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among the
factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC
Debt rated BB, B, CCC or CC is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to
meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to
pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C typically is applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA (Prime Grade) category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) sign designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
Commercial Paper Ratings
The rating A is the highest rating and is assigned by S&P to issues
that are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2 and 3 to
indicate the relative degree of safety. Paper rated A-1 indicates that the
degree of safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign designation.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings recognize
the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short-term. A short-term rating may also be assigned on an issue having
a demand feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity with no or limited legal
recourse to the issuer in the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This description denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to
other obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of interest
and/or principal payments. Such bonds are extremely speculative and should
be valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36 months
or the DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and
F-1 categories.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS--93.7% AMOUNT VALUE
--------------- -------------
<S> <C> <C>
Alameda County, COP:
7.25%, 12/1/2014 (Insured; BIGI)........................................ $ 5,980,000 $ 6,815,765
7.25%, 12/1/2015 (Insured; BIGI)........................................ 4,045,000 4,610,329
Zero Coupon, 6/15/2018 (Insured; MBIA).................................. 1,200,000 238,800
Anaheim, COP (Anaheim Memorial Hospital Association)
7.25%, 5/15/2020 (Insured; AMBAC)....................................... 6,000,000 6,750,720
Anaheim Electric System, COP 6.75%, 10/1/2022 (Insured; AMBAC).............. 1,500,000 1,661,940
Anaheim Public Finance Authority, Tax Allocation Revenue
9.60%, 12/28/2018 (Insured; MBIA) (a)................................... 3,000,000 3,097,500
Atwater Community Facilities District, Special Tax 7.75%, 8/1/2015.......... 16,040,000 14,756,800
Bellflower, COP, Refunding
(Bellflower Civic Center) 7.20%, 10/1/2019 (Insured; MBIA).............. 1,475,000 1,615,066
Big Independent Cities Excess Pool Joint Power Authority, Insurance Program Revenue
8.25%, 3/1/2009......................................................... 5,750,000 6,116,275
Brea and Olinda Unified School District, COP 7.70%, 8/1/2018................ 2,950,000 3,082,543
Brea Public Finance Authority, Revenue, Tax Allocation (Redevelopment Project):
6.75%, 8/1/2022 (Insured; MBIA)......................................... 4,625,000 5,151,232
6.75%, 8/1/2022 (Insured; MBIA)......................................... 1,775,000 1,841,030
California:
6.42%, 4/1/2003 (a,b)................................................... 12,700,000 12,128,500
6.20%, 9/1/2006......................................................... 8,500,000 8,939,110
5.75%, 10/1/2010........................................................ 1,830,000 1,777,040
5.50%, 3/1/2011......................................................... 10,350,000 9,723,618
5.50%, 4/1/2013......................................................... 10,000,000 9,290,400
7.866%, 4/1/2023 (a,b).................................................. 10,000,000 9,087,500
California Alternative Energy Source Financing Authority, Cogeneration Revenue
(SRI International Project) 9.75%, 12/1/2005............................ 3,250,000 1,625,000
California Department of Transportation, COP (East Bay State Building)
6.50%, 3/1/2016......................................................... 15,975,000 15,994,010
California Department of Veteran Affairs, Home Purchase Revenue 8.30%, 8/1/2019 1,000,000 1,024,160
California Department of Water Resources
(Central Valley Project) Water System Revenue:
6.125%, Series J-2, 12/1/2013......................................... 3,000,000 3,002,940
6.60%, 12/1/2019...................................................... 3,000,000 3,281,250
6.90%, 12/1/2025...................................................... 5,070,000 5,609,448
California Educational Facilities Authority, Revenue:
(National University) 7.15%, 5/1/2021................................... 7,500,000 8,437,800
(University of San Francisco) 6.40%, 10/1/2017.......................... 6,300,000 6,239,016
California Health Facilities Authority, HR
(Saint Joseph's Health System) 9.875%, 7/1/2014......................... 400,000 429,632
California Health Facilities Financing Authority, Revenue:
(Adventist Health System-West):
6.40%, 3/1/2002 (Insured; MBIA)....................................... 1,955,000 2,090,012
6.50%, 3/1/2003 (Insured; MBIA)....................................... 2,140,000 2,301,313
(Catholic Health Facilities) 5%, 7/1/2008 (Insured; MBIA)............... 5,000,000 4,577,800
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
California Health Facilities Financing Authority, Revenue (continued):
(Downey Community Hospital):
5.625%, 5/15/2008..................................................... $ 2,500,000 $ 2,357,325
5.75%, 5/15/2015...................................................... 2,750,000 2,445,135
(Episcopal Homes Foundation) 7.75%, 7/1/2018............................ 4,270,000 4,496,822
(Health Facilities-Sisters of Providence) 7.50%, 10/1/2010 ............. 4,545,000 4,919,235
(Kaiser Permanente):
7%, 10/1/2018......................................................... 10,520,000 11,122,796
5.60%, 5/1/2033....................................................... 4,250,000 3,699,412
(Mills-Peninsula Hospital) 7.50%, 1/15/2000............................. 800,000 861,104
(Robert F. Kennedy Medical Center) 7.75%, 3/1/2014...................... 1,500,000 1,623,555
(Saint Joseph's Health System) 6.75%, 7/1/2021.......................... 8,500,000 9,440,100
(San Diego Children's Hospital) 6.50%, 7/1/2020 (Insured; MBIA)......... 7,500,000 7,640,775
(Stanford University):
6.50%, 11/1/2020...................................................... 8,975,000 9,851,229
6.50%, 11/1/2020...................................................... 1,025,000 1,032,175
(Unihealth America):
7.625%, 10/1/2015 (Insured; AMBAC).................................... 9,690,000 10,906,386
7.625%, 10/1/2015 (Insured; AMBAC).................................... 55,000 61,058
California Housing Finance Agency,
Home Mortage Revenue:
6.30%, 2/1/2008....................................................... 2,790,000 2,770,777
6.35%, 2/1/2009....................................................... 2,970,000 2,952,863
6.40%, 2/1/2010....................................................... 3,135,000 3,116,253
8.20%, 8/1/2017....................................................... 115,000 119,870
8.30%, 8/1/2019....................................................... 285,000 295,901
6.55%, 8/1/2026....................................................... 8,000,000 8,012,320
Revenue 9.621%, 8/1/2023 (a)............................................ 10,000,000 10,062,500
California Pollution Control Financing Authority:
PCR:
(Pacific Gas & Electric Co.):
8.75%, 1/1/2007................................................... 8,000,000 8,996,240
6.35%, 6/1/2009................................................... 10,000,000 10,068,500
5.85%, 12/1/2023 (Insured; MBIA) ................................. 15,000,000 14,100,450
(Southern California Edison Co.):
6.40% 12/1/2024................................................... 28,000,000 27,888,280
6.40% 12/1/2024................................................... 10,000,000 10,091,200
RRR (Waste Management Inc.) 7.15%, 2/1/2011............................. 17,500,000 18,562,600
SWDR (North County Recycling Center) 6.75%, 7/1/2017
(LOC; Union Bank of Switzerland) (c).................................. 10,000,000 10,241,400
California Public Works Board, LR:
(California State University Library Project) 6.25%, 9/1/2016........... 11,900,000 11,633,083
(Department of Corrections) 6.50%, 9/1/2019............................. 2,270,000 2,496,228
(Department of Corrections, Madera State Prison):
6%, 6/1/2007.......................................................... 6,090,000 6,144,749
6%, 6/1/2009.......................................................... 7,870,000 7,793,346
(Regents of the University of California) 7%, 9/1/2010.................. 2,500,000 2,806,325
(Various University of California Projects):
Refunding 5.50%, 6/1/2010............................................. 6,950,000 6,420,896
5.25%, 12/1/2013...................................................... 7,500,000 6,747,150
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
California Public Works Board, LR (continued):
(Various University of California Projects)(continued):
5.50%, 6/1/2014....................................................... $ 6,750,000 $ 6,062,985
5.50%, 12/1/2018...................................................... 4,750,000 4,198,050
Refunding 5.50%, 6/1/2021............................................. 21,700,000 19,004,643
6.60%, 12/1/2022...................................................... 13,000,000 14,424,670
California Statewide Community Development Authority:
(Pacific Homes) 6%, 4/1/2017............................................ 7,500,000 6,991,650
Revenue:
COP (Motion Picture and TV Fund) 7.97%, 1/1/2017 (Insured; AMBAC) (a). 6,300,000 4,603,725
(Insured Health Facilities, Unihealth) 5.50%, 10/1/2014 (Insured; AMBAC) 8,750,000 8,018,325
(Oakland Convention Center Project) 5.50%, 10/1/2014 (Insured; AMBAC). 12,000,000 11,035,440
Calleguas Municipal Water District, COP
6.25%, 7/1/2017 (Insured; AMBAC)........................................ 15,000,000 16,289,400
Carlsbad Housing and Redevelopment Agency, Tax Allocation
(Village Redevelopment Project) 7.80%, 4/1/2011 (Insured; AMBAC)........ 2,000,000 2,203,160
Castaic Lake Water Agency, COP
(Water System Improvement Project) 7.125%, 8/1/2016 (Insured; MBIA)..... 5,000,000 5,360,600
Central Basin Municipal Water District, COP
(Century Reclamation Program):
6.875%, 2/1/2011 (Insured; FGIC)...................................... 3,400,000 3,756,966
6.875%, 2/1/2016 (Insured; FGIC)...................................... 2,935,000 3,243,146
Central Coast Water Authority, Revenue
(State Water Project Regional Facilities) 6.60%, 10/1/2022 (Insured; AMBAC) 4,000,000 4,117,200
Chico Public Financing Authority, Revenue
(Southeast Chico Redevelopment Project) 6.625%, 4/1/2021 (Insured; FGIC) 10,000,000 10,352,900
Chula Vista, IDR (San Diego Gas and Electric) 6.40%, 12/1/2027.............. 20,600,000 20,347,856
Compton Community Redevelopment Agency, Refunding
(Walnut Industrial Park Project):
7.50%, 8/1/2013 (Insured; AMBAC)...................................... 3,000,000 3,338,910
8.10%, 8/1/2013....................................................... 14,000,000 15,151,360
Contra Costa County, COP (Merrithew Memorial Hospital) 6.60%, 11/1/2012..... 10,000,000 10,119,300
Corona Community Facilities District, Special Tax, Refunding:
7.60%, 9/1/2013......................................................... 5,755,000 5,826,535
7.60%, 9/1/2017......................................................... 3,000,000 2,974,920
7.70%, 9/1/2019......................................................... 2,000,000 1,978,520
Costa Mesa City Hall and Public Safety Facilities Inc., LR
(Victoria Street) 7.60%, 10/1/2018...................................... 4,600,000 5,023,016
Dos Palos Public Financing Authority, Local Agency Revenue 7.90%, 10/1/2020. 8,880,000 9,187,337
East Bay Municipal Utilities District, Revenue:
Wastewater Treatment System:
7.20%, 6/1/2020 (Insured; AMBAC)...................................... 3,325,000 3,755,155
8.37%, 6/1/2020 (a)................................................... 15,000,000 12,093,750
Water System 6.375%, 6/1/2021 (Insured; AMBAC).......................... 22,000,000 24,060,520
Eastern Municipal Water District, Water and Sewer Revenue, COP
6.50%, 7/1/2020 (Insured; FGIC)......................................... 10,000,000 10,981,800
Fairfield, COP, Home Mortgage Revenue 11%, 7/1/2017......................... 110,000 111,085
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
Fairfield Public Financing Authority, Revenue (Fairfield Redevelopment Projects)
5.50%, 8/1/2023 (Insured; Capital Guaranty)............................. $ 9,000,000 $ 8,076,420
Folsom, Special Tax (Community Facilities District Number 3) 7.80%, 12/1/2015 1,900,000 1,981,719
Folsom Public Financing Authority, Local Agency Revenue:
7.90%, 10/1/2019........................................................ 3,780,000 4,197,728
7.90%, 10/1/2019........................................................ 19,595,000 20,379,192
Fontana, Special Tax (Community Facilities District Number 3):
8.60%, 10/1/2010........................................................ 7,500,000 7,971,450
8.70%, 10/1/2015........................................................ 11,500,000 12,069,020
Galt Community Facilities District, Special Tax 7.70%, 9/1/2019............. 10,950,000 11,241,708
Glendale Redevelopment Agency, Tax Allocation Revenue
(Central Glendale Redevelopment Project):
7%, 12/1/2011 (Insured; AMBAC)........................................ 4,600,000 5,095,328
7.10%, 12/1/2020 (Insured; AMBAC)..................................... 4,700,000 5,224,943
Hesperia Water District, COP, Refunding
(Water Facilities Improvement Project) 7.15%, 6/1/2026 (Insured; FGIC).. 4,500,000 4,819,860
Industry Urban Development Agency, Refunding (Civic Recreational Project):
7.375%, 5/1/2015........................................................ 765,000 836,581
7.375%, 5/1/2015........................................................ 235,000 247,236
Inglewood, HR (Daniel Freeman Hospital, Inc.) 6.75%, 5/1/2013............... 6,300,000 6,474,195
Irvine Ranch Water District Joint Powers Agency, Local Pool Revenue
8.25%, 8/15/2023........................................................ 950,000 1,006,592
La Verne Community Facilities District, Special Tax
(Koll Business Center) 7.875%, 3/1/2014................................. 3,625,000 3,787,472
Lake Elsinore Public Financing Authority, Revenue:
Local Agency:
7.50%, 10/1/2010...................................................... 2,600,000 2,652,260
8%, 10/1/2020......................................................... 12,970,000 13,260,139
7.75%, 10/1/2021...................................................... 5,000,000 5,123,150
Tax Allocation (Lake Elsinore Redevelopment Project)
6.25%, 2/1/2019 (Insured; FGIC)....................................... 4,500,000 4,507,650
Local Government Finance Authority, Revenue, Refunding
(San Francisco Redevelopment Agency) 6.80%, 8/1/2019 (Insured; MBIA).... 5,000,000 5,150,500
Loma Linda, HR (Loma Linda University Medical Center Project):
7%, 12/1/2022........................................................... 23,870,000 26,880,484
Refunding 7%, 12/1/2015 (Insured; AMBAC)................................ 12,355,000 13,237,147
Long Beach, COP (Airport Improvements Project) 6.95%, 6/1/2016 (Insured; MBIA) 4,000,000 4,411,280
Los Angeles:
COP (Woodbury University Project) 8%, 6/1/2018 (LOC; Tokai Bank) (c).... 2,500,000 2,620,850
Home Mortgage Revenue 9.875%, 12/1/2004................................. 85,000 87,617
Wastewater System Revenue:
Refunding 7%, 6/1/2011 (Insured; AMBAC)............................... 2,830,000 3,033,392
Refunding 6%, 12/1/2018 (Insured; FGIC)............................... 14,600,000 14,270,478
6.80%, 8/1/1998....................................................... 1,050,000 1,146,841
7%, 2/1/2020 (Insured; FGIC).......................................... 6,000,000 6,650,820
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
Los Angeles Community Redevelopment Agency, Tax Allocation:
(Bunker Hill Project):
6.80%, 12/1/2007 (Insured; MBIA)...................................... $ 5,000,000 $ 5,572,900
5.625%, 12/1/2023 (Insured; FSA)...................................... 9,290,000 8,523,761
5.60%, 12/1/2028 (Insured; FSA)....................................... 14,000,000 12,736,360
(Hollywood Redevelopment Project) 6.10%, 7/1/2022 (Insured; MBIA)....... 4,900,000 4,847,717
Los Angeles Convention and Exhibition Center Authority, COP, Refunding:
7%, 8/15/2020........................................................... 1,835,000 2,038,538
7%, 8/15/2021 (Insured; AMBAC).......................................... 2,750,000 3,085,225
Los Angeles County, COP:
(Correctional Facilities Project) 6.50%, 9/1/2013 (Insured; MBIA)....... 24,600,000 25,211,310
(Disney Parking Project) 6.50%, 3/1/2023............................... 5,800,000 5,791,706
(Edmund D. Edelman Childrens' Court) 6%, 4/1/2012 (Insured; AMBAC)...... 9,000,000 8,960,130
(Van Nuys Courthouse Project) 9%, 6/1/2015.............................. 225,000 250,119
Los Angeles County Capital Asset Leasing Corp., Leasehold Revenue, Refunding
5.75%, 12/1/2004 (Insured; AMBAC)....................................... 3,000,000 3,068,820
Los Angeles County Health Facilities Authority, LR, Refunding
(Olive View Medical Center) 7.50%, 3/1/2008............................. 1,980,000 2,194,414
Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue, Refunding
5.50%, 7/1/2013......................................................... 4,750,000 4,405,672
Los Angeles County Public Works Financing Authority, Revenue, Refunding
5%, 3/1/2011............................................................ 3,000,000 2,644,980
Los Angeles County Sanitation Districts Financing Authority, Revenue
(Capital Projects) 5.375%, 10/1/2013.................................... 4,000,000 3,651,840
Los Angeles County Transport Commission, Sales Tax Revenue:
Refunding 5.75%, 7/1/2018............................................... 2,150,000 2,014,400
6.75%, 7/1/2018 (Insured; FGIC)......................................... 25,150,000 27,989,435
Los Angeles Department Airports, Airport Revenue, Refunding 7.40%, 5/1/2010. 3,700,000 3,973,837
Los Angeles Department Water and Power, Revenue:
Electric Plant:
7.10%, 1/15/2031...................................................... 2,160,000 2,408,983
6.625%, 10/1/2031..................................................... 21,000,000 22,997,100
9.055%, 1/15/2033 (a,b)............................................... 4,500,000 4,106,250
Waterworks, Refunding 6.40%, 5/15/2028.................................. 2,435,000 2,453,555
Los Angeles Municipal Improvement Corp., LR, Refunding
(Central Library Project):
5.375%, 6/1/2011...................................................... 3,725,000 3,347,062
6.30%, 6/1/2016....................................................... 3,500,000 3,495,835
6.30%, 6/1/2018....................................................... 4,250,000 4,218,805
Marin Municipal Water District, COP, Revenue
6.60%, 7/1/2016 (Insured; FGIC)......................................... 4,955,000 5,380,882
Mesa Consolidated Water District, COP
(Mesa Consolidated Water Improvement Co. - Capital Improvement)
7.625%, 3/15/2008 (Insured; AMBAC)...................................... 1,500,000 1,653,060
Metropolitan Water District of Southern California:
Crossover Refunding 5.50%, 3/1/2010..................................... 7,000,000 6,714,610
Waterworks Revenue 6.75%, 7/1/2018...................................... 4,750,000 5,285,088
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
M-S-R Public Power Agency, Revenue (San Juan Project):
6.625%, 7/1/2013 (Insured; BIGI)........................................ $ 10,000,000 $ 10,230,500
6.50%, 7/1/2017 (Insured; MBIA)......................................... 3,200,000 3,261,216
6.875%, 7/1/2019 (Insured; AMBAC)....................................... 5,200,000 5,350,280
Modesto:
COP, (Modesto Community Center Project) 8%, 11/1/2006................... 2,000,000 2,246,180
Multi-Family Housing Mortage Revenue, Refunding 6.40%, 6/1/2029......... 7,723,000 7,649,245
Modesto Irrigation District, Electric Revenue
9.625%, 1/1/2011........................................................ 8,780,000 12,516,329
Moreno Valley Unified School District,
Community Facilities District, Special Tax:
7.65%, 8/15/2009...................................................... 5,000,000 5,097,700
7.70%, 8/15/2014...................................................... 9,000,000 9,190,800
Moulton Niguel Water District (Improvement District Number 6)
7.25%, 4/1/2016 (Insured; AMBAC)........................................ 5,000,000 5,621,350
Mount Diablo Hospital District, Revenue
6.125%, 12/1/2020 (Insured; AMBAC)...................................... 5,000,000 5,410,450
Mount Diablo Unified School District, Community Facilities District Special Tax
7.05%, 8/1/2020 (Insured; FGIC)......................................... 3,500,000 3,765,370
Northern California, Transmission Revenue
(California-Oregon Transmission Project):
6.50%, 5/1/2016 (Insured; MBIA)....................................... 2,250,000 2,314,395
6%, 5/1/2024 (Insured; MBIA).......................................... 5,000,000 4,870,950
Northern California Power Agency, Power Revenue
(Hydroelectric Project) 7%, 1/1/2016 (Insured; AMBAC)................... 670,000 753,067
Refunding:
7.50%, 7/1/2023 (Insured; AMBAC)...................................... 375,000 446,389
(Geothermal Project) 5.50%, 7/1/2005.................................. 5,000,000 4,948,700
Oceanside Community Development Commission, LR
(Oceanside Civic Center Project) 8%, 8/1/2019........................... 1,000,000 1,097,200
Orange County Local Transportation Authority, Sales Tax Revenue
5.70%, 2/15/2003........................................................ 7,500,000 7,695,825
7.50%, 2/15/2010 (Insured; FGIC) (a).................................... 6,100,000 4,845,352
7.55%, 2/15/2011 (Insured; FGIC) (a).................................... 6,900,000 5,459,625
Pasadena, COP, Refunding (Capital Project) 5.75%, 1/1/2013.................. 1,500,000 1,410,300
Pittsburg Redevelopment Agency, Tax Allocation
(Los Medanos Community Development Project) 7.75%, 8/1/2015............. 1,500,000 1,632,660
Port of Oakland, Revenue:
Port:
6.50%, 11/1/2016 (Insured; MBIA)...................................... 8,500,000 8,666,770
6.40%, 11/1/2022 (Insured; MBIA)...................................... 10,000,000 10,143,400
Special Facilities
(Mitsui O.S.K. Lines Ltd.) 6.80%, 1/1/2019 (LOC; Industrial Bank of Japan) (c) 2,000,000 2,033,360
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
Rancho Cucamonga Redevelopment Agency, Tax Allocation
(Rancho Cucamonga Redevelopment Project):
Refunding 6.75%, 9/1/1999 (Insured; MBIA)............................. $ 1,835,000 $ 2,016,959
Refunding 7.125%, 9/1/1999............................................ 2,545,000 2,853,607
7.125%, 9/1/2019 (Insured; MBIA)...................................... 2,455,000 2,682,014
6.75%, 9/1/2020 (Insured; MBIA)....................................... 1,665,000 1,728,420
Redding, Electric System Revenue, COP
9.297%, 7/1/2022 (Insured; MBIA)(a)..................................... 3,650,000 3,791,438
Redlands, COP, 7%, 12/1/2022 (Insured; MBIA)................................ 2,600,000 2,910,960
Rialto, COP (Wastewater Treatment Facilities Project) 7.30%, 11/1/2008...... 5,260,000 5,862,796
Riverside County
COP, Refunding (Public Financing Project):
7.75%, Type 1, 12/1/2003.............................................. 1,500,000 1,647,645
7.75%, Type 2, 12/1/2003.............................................. 1,500,000 1,643,895
7.875%, Type 1, 12/1/2015............................................. 2,000,000 2,185,740
Riverside County Asset Leasing Corp., Leasehold Revenue
(Riverside County Hospital Project):
7.20%, 6/1/2010 (Insured; BIGI)....................................... 4,450,000 4,985,735
6.25%, 6/1/2019....................................................... 7,500,000 7,260,825
Riverside County Community Facilities District, Special Tax:
7.80%, 9/1/2015......................................................... 7,000,000 6,739,250
8.25%, 9/1/2016......................................................... 4,730,000 4,795,132
8.60%, 9/1/2020......................................................... 4,000,000 3,600,000
Sacramento, COP (Refunding-Public Facilities Project) 6%, 7/1/2012.......... 6,000,000 5,769,420
Sacramento County, COP (Cherry Island Golf Course Project) 8.125%, 12/1/2018 1,500,000 1,736,085
Sacramento City Financing Authority, Revenue
6.80%, 11/1/2020........................................................ 2,800,000 3,133,928
Saddleback Community College District, COP
7%, 8/1/2019 (Insured; BIGI)............................................ 2,875,000 3,072,254
San Bernardino, Special Tax
(Community Facilities District Number 995):
8.45%, 9/1/2010....................................................... 1,750,000 945,000
8.50%, 9/1/2015....................................................... 3,325,000 1,795,500
San Bernardino County, COP:
(Capital Facilities Project)
6.875%, 8/1/2024...................................................... 5,000,000 5,593,300
(West Valley Detention Center)
5.90%, 11/1/2001 (Insured; MBIA)...................................... 1,565,000 1,635,535
San Buenaventura, SFMR
(FNMA Mortgage Backed Security Program) 7%, 12/1/2024................... 3,000,000 3,054,060
San Elijo Joint Powers Authority, Revenue
(San Elijo Water Pollution Control Project) 7%, 3/1/2020 (Insured; FGIC) 5,500,000 6,108,520
San Francisco City and County:
COP (25 Van Ness Avenue Project) 6%, 9/1/2016........................... 2,350,000 2,236,330
Sewer Revenue:
Refunding 5.90%, 10/1/2007 (Insured; AMBAC)........................... 10,000,000 10,169,200
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
San Francisco City and County (continued):
Sewer revenue (continued):
Refunding 5.90%, 10/1/2008 (Insured; AMBAC)........................... $ 15,000,000 $ 15,113,850
6.50%, 10/1/2011 (Insured; AMBAC)..................................... 5,900,000 6,434,776
6.50%, 10/1/2012 (Insured; AMBAC)..................................... 6,500,000 7,089,160
6.50%, 10/1/2016 (Insured; AMBAC)..................................... 6,075,000 6,643,681
6.50%, 10/1/2021 (Insured; AMBAC)..................................... 500,000 542,370
SFMR, (FNMA/GNMA Mortgage Backed Securities Program) 7.45%, 1/1/2024.... 275,000 284,991
San Francisco City and County Airports Commission, International Airport Revenue,
Refunding:
6.10%, 5/1/2003 (Insured; AMBAC)...................................... 3,000,000 3,155,550
6.20%, 5/1/2004 (Insured; AMBAC)...................................... 2,500,000 2,640,075
6.20%, 5/1/2008 (Insured; AMBAC)...................................... 7,500,000 7,792,125
6.50%, 5/1/2013 (Insured; AMBAC)...................................... 2,250,000 2,327,918
San Francisco City and County Public Utilities Commission, Water Revenue
6.50%, 11/1/2017........................................................ 3,500,000 3,583,825
San Jacinto Community Facilities District, Special Tax 7.75%, 9/1/2005...... 1,100,000 1,148,972
San Marcos Public Facilities Authority, Revenue,
Tax Allocation 6%, 1/1/2006............................................. 13,000,000 13,871,000
San Marcos Special Tax Community Facilities District 88-1
7.625%, 9/1/2019........................................................ 4,475,000 4,463,499
San Mateo County, COP (Capital Projects Program)
6.50%, 7/1/2017 (Insured; MBIA)......................................... 6,000,000 6,589,080
San Mateo County Transportation District, Sales Tax Revenue
6.50%, 6/1/2020 (Insured; MBIA)......................................... 7,250,000 7,769,753
Santa Barbara, COP, Refunding (Water System Improvement Project)
6.70%, 4/1/2027 (Insured; AMBAC)........................................ 4,000,000 4,158,680
Santa Barbara County, Retirement Facility Revenue, COP
(Montecito Retirement Project) 7.80%, 4/1/2018.......................... 5,000,000 5,514,000
Santa Clara County, COP (Capital Project)
6.25%, 10/1/2016 (Insured; AMBAC)....................................... 10,000,000 10,056,900
Santa Cruz County, COP (Capital Facilities Project)
6.70%, 9/1/2020 (Insured; MBIA)......................................... 5,000,000 5,195,600
Santa Cruz County Public Financing Authority, Revenue, Refunding
7.10%, 9/1/2021 (Insured; MBIA)......................................... 6,500,000 7,006,480
Santa Rosa, Mortgage Revenue, Refunding
(Redwood Park Apartments Projects) 5.625%, 1/1/2026..................... 3,310,000 2,896,449
Southern California Public Power Authority, Revenue:
Power Project (Multiple Projects):
5.50%, 7/1/2020....................................................... 675,000 594,520
Refunding 5.50%, 7/1/2000............................................. 1,015,000 1,052,048
Transmission Project (Refunding - Southern Transmission Project):
6.125%, 7/1/2018...................................................... 25,000,000 24,734,500
5.75%, 7/1/2021....................................................... 10,000,000 9,313,500
Southern California Rapid Transportation District, COP (Workers Compensation Fund)
6.50%, 7/1/2007 (Insured; MBIA)......................................... 22,900,000 24,222,933
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
--------------- -------------
Stanislaus County, COP, Refunding 7.55%, 4/1/2018........................... $ 12,455,000 $ 13,102,660
Stockton, COP (Recreational District 2074) 8.15%, 8/1/2013.................. 5,240,000 6,044,759
Tehachapi Community Facilities District, Special Tax 7.40%, 10/1/2014....... 6,345,000 3,172,500
University of California:
COP (UCLA Central Chiller/Cogeneration):
6.25%, 11/1/2009...................................................... 3,000,000 3,244,830
5.50%, 11/1/2017...................................................... 7,000,000 6,318,620
7%, 11/1/2018......................................................... 8,650,000 9,602,365
Revenue (Multiple Purpose Projects):
6.10%, 9/1/2010 (Insured; MBIA)....................................... 5,000,000 5,010,750
5.125%, 9/1/2013 (Insured; AMBAC)..................................... 4,845,000 4,273,678
6.375%, 9/1/2024 (Insured; MBIA)...................................... 4,000,000 4,006,920
Wasco Public Finance Authority, Local Agency Revenue:
7.75%, 10/1/2019........................................................ 19,050,000 19,390,233
8%, 10/1/2019........................................................... 7,280,000 7,462,582
West Basin Municipal Water District, COP
6.85%, 8/1/2016 (Insured; AMBAC)........................................ 6,000,000 6,660,600
West Sacramento Financing Authority, Water System Revenue
(Improvement Project) 5.50%, 8/1/2015 (Insured; FGIC)................... 4,500,000 4,131,000
--------------
TOTAL MUNICIPAL BONDS
(cost $1,500,847,698)................................................... $1,536,380,650
==============
SHORT-TERM MUNICIPAL INVESTMENTS--6.3%
California, RAN:
3.50%, 6/28/1994........................................................ $ 20,000,000 $ 20,000,400
3.50%, 7/26/1994........................................................ 30,230,000 30,241,790
California Pollution Control Financing Authority, VRDN:
PCR (Wadham Energy Project) 3.10% (LOC; Banque Paribas) (c,d)........... 1,500,000 1,500,000
RRR (Delano Project) 3.25% (d).......................................... 3,300,000 3,300,000
Los Angeles, TRAN 3%, 6/30/1994............................................. 6,050,000 6,047,761
Los Angeles County, Metropolitian Transportation Authority,
Sales Tax Revenue, Refunding, VRDN
2.55% (LOC; Industrial Bank of Japan) (Insured; MBIA) (c,d)............. 11,500,000 11,500,000
Orange County, TRAN 3%, 6/30/1994........................................... 23,000,000 22,990,570
Southern California Public Power Authority, Transmission Project Revenue,
Refunding, VRDN (Southern Transmission) 2.70% (LOC; Swiss Bank
Corporation) (c,d).......................................................... 8,400,000 8,400,000
--------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $104,029,314)..................................................... $ 103,980,521
==============
TOTAL INVESTMENTS--100.0%
(cost $1,604,877,012)................................................... $1,640,361,171
==============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
BIGI Bond Investors Guaranty Insurance MBIA Municipal Bond Insurance Association
COP Certificate of Participation PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Corporation RAN Revenue Anticipation Notes
FNMA Federal National Mortgage Association RRR Resources Recovery Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
GNMA Government National Mortgage Association SWDR Solid Waste Disposal Revenue
HR Hospital Revenue TRAN Tax and Revenue Anticipation Notes
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 47.9%
AA Aa AA 19.9
A A A 11.9
BBB Baa BB 1.5
F1 MIG1/P1 SP1/A1 6.3
Not Rated (f) Not Rated (f) Not Rated (f) 12.5
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Residual Interest Security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31,
1994, these securities amounted to $25,322,250 or 1.5% of net assets.
(c) Secured by letters of credit.
(d) 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.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $1,604,877,012)_see statement................................... $1,640,361,171
Interest receivable..................................................... 33,656,675
Prepaid expenses........................................................ 81,091
--------------
1,674,098,937
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 890,076
Payable for investment securities purchased............................. 1,004,240
Payable for Common Stock redeemed....................................... 453
Accrued expenses and other liabilities.................................. 13,421,901 15,316,670
------------- --------------
NET ASSETS ................................................................ $1,658,782,267
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,618,290,592
Accumulated undistributed net realized gain on investments.............. 5,007,516
Accumulated net unrealized appreciation on investments_Note 3........... 35,484,159
--------------
NET ASSETS at value applicable to 113,657,467 shares outstanding
(300 million shares of $.01 par value Common Stock authorized).......... $1,658,782,267
==============
NET ASSET VALUE, offering and redemption price per share
($1,658,782,267 / 113,657,467 shares)................................... $14.59
=======
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1994
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 111,462,867
EXPENSES:
Management fee--Note 2(a)............................................. $10,861,852
Shareholder servicing costs_Note 2(b)................................. 1,252,457
Professional fees..................................................... 125,510
Custodian fees........................................................ 117,745
Prospectus and shareholders' reports.................................. 61,423
Directors' fees and expenses_Note 2(c)................................ 30,735
Registration fees..................................................... 17,262
Miscellaneous......................................................... 135,107
-------------
TOTAL EXPENSES.................................................... 12,602,091
--------------
INVESTMENT INCOME--NET............................................ 98,860,776
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments--Note 3................................ $14,715,643
Net unrealized (depreciation) on investments............................ (79,157,377)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS..................... (64,441,734)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 34,419,042
==============
See notes to financial statements.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
---------------------------------
1993 1994
--------------- -------------
OPERATIONS:
Investment income--net............................................... $ 105,708,639 $ 98,860,776
Net realized gain on investments..................................... 17,936,064 14,715,643
Net unrealized appreciation (depreciation) on investments for the year 62,130,572 (79,157,377)
--------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 185,775,275 34,419,042
--------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net............................................... (105,459,362) (99,704,852)
Net realized gain on investments..................................... (18,322,945) (19,722,025)
--------------- -------------
TOTAL DIVIDENDS.................................................... (123,782,307) (119,426,877)
--------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 303,997,072 620,929,689
Dividends reinvested................................................. 82,358,046 78,107,135
Cost of shares redeemed.............................................. (365,272,142) (790,202,833)
--------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.. 21,082,976 (91,166,009)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ 83,075,944 (176,173,844)
NET ASSETS:
Beginning of year.................................................... 1,751,880,167 1,834,956,111
-------------- --------------
End of year (including undistributed investment income_net; $844,076 in 1993) $1,834,956,111 $1,658,782,267
============== ==============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 20,197,863 42,109,715
Shares issued for dividends reinvested............................... 5,487,607 5,084,822
Shares redeemed...................................................... (24,249,863) (53,152,760)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING...................... 1,435,607 (5,958,223)
============== ==============
See notes to financial statements.
</TABLE>
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 2 of the Prospectus dated July 25, 1994.
See notes to financial statements.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the exclusive distributor of the Fund's
shares, which are sold to the public without a sales charge. The Distributor
is a wholly-owned subsidiary of The Dreyfus Corporation ("Manager").
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Directors. 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, when appropriate,
discounts on investments, is earned from settlement date and recognized on
the accrual basis. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, 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 Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage
commissions and extraordinary expenses, exceed 1 1/2% of the average value of
the Fund's net assets for any full fiscal year. There was no expense
reimbursement for the year ended May 31, 1994.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
the Distributor an amount not to exceed an annual rate of .25 of 1% of the
value of the Fund's average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts. During the year ended May 31, 1994, the
Fund was charged an aggregate of $431,660 pursuant to the Shareholder
Services Plan.
(C) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each director
who is not an "affiliated person" receives an annual fee of $4,500 and an
attendance fee of $500 per meeting.
(D) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Manager
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in August 1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's
shareholders before completion of the merger. Proxy materials, approved by
the Fund's Board, recently have been mailed to Fund shareholders.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $1,006,300,476 and
$1,114,926,466, respectively, for the year ended May 31, 1994, and consisted
entirely of municipal bonds and short-term municipal investments.
At May 31, 1994, accumulated net unrealized appreciation on investments
was $35,484,159, consisting of $71,718,125 gross unrealized appreciation and
$36,233,966 gross unrealized depreciation.
At May 31, 1994, 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 CALIFORNIA TAX EXEMPT BOND FUND, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus California Tax Exempt Bond Fund, Inc., including the statement of
investments, as of May 31, 1994, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1994 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus California Tax Exempt Bond Fund, Inc. at May 31, 1994,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
(Ernst & Young Signature Logo)
New York, New York
June 30, 1994
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the ten fiscal years
ended May 31, 1994.
Included in Part B of the Registration Statement:
Statement of Investments-- May 31, 1994.
Statement of Assets and Liabilities-- May 31, 1994.
Statement of Operations--year ended May 31, 1994.
Statement of Changes in Net Assets--for each of the
years ended May 31, 1993 and 1994.
Notes to Financial Statements
Report of Ernst & Young, Independent Auditors, dated
June 30, 1994.
Schedules No. I through VII and other financial statement information, for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted becaus
they are not required under the related instructions, they are inapplicable,
or the required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1)(a) Registrant's Articles of Incorporation and Articles of Amendment are
incorporated by reference to Exhibit (1) of the Registration Statement on Form
N-1, filed on May 27, 1983 and Exhibit (1) of Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1, filed on July 15, 1983.
(1)(b) Registrant's Articles of Amendment are incorporated by reference to
Exhibit (1)(b) of Post- Effective Amendment No. 15 to the Registration Statement
on Form N-1A, filed on September 28, 1993.
(2) Registrant's By-Laws, as amended October 18, 1989, are incorporated
by reference to Exhibit (2) of Post-Effective Amendment No. 12 to the
Registration Statement on Form N-1A, filed on September 28, 1990.
(4) Specimen certificate for the Registrant's securities is
incorporated by reference to Exhibit (4) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1, filed
on July 15, 1983.
(5) Management Agreement is incorporated by reference to Exhibit (5) of
the Registration Statement on Form N-1, filed on May 27, 1983 and Exhibit (5) of
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1, filed
on July 15, 1983.
(6)(a) Distribution Agreement is incorporated by reference to Exhibit (6) of
the Registration Statement on Form N-1, filed on May 27, 1983 and Exhibit (6) of
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1, filed
on July 15, 1983.
(8)(a) Amended and Restated Custody Agreement dated as of August 18, 1989 is
incorporated by reference to Exhibit 8(a) of Post-Effective Amendment No. 12 to
the Registration Statement on Form N-1A, filed on September 28, 1990.
(8)(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
8(b) of Post-Effective Amendment No. 7 to the Registration Statement on Form N-
1A, filed on September 26, 1986 and Exhibits (8)(c) and (d) of Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A, filed on
September 24, 1988.
(9) Shareholder Services Plan dated July 14, 1993, is incorporated by
reference to Exhibit (9) of Post-Effective Amendment no. 15 to the Registration
Statement on Form N-1A, filed on September 28, 1993.
(10) Opinion and consent of Registrant's Counsel is incorporated by
reference to Exhibit (10) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1, filed on July 15, 1983.
(11) Consent of Independent Auditors.
(16) Schedules of Calculation of Performance Data.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Registrant's Powers of Attorney are incorporated by
reference to the Signature Page of Post-Effective Amendment
No. 10 to the Registration Statement on Form N-1A, filed on
September 24, 1988, and other Exhibit of Post-Effective
Amendment Nos. 13 and 14 to the Registration Statement on
Form N-1A, filed on August 5, 1991 and September 25, 1992,
respectively.
(b) Registrant's Certificate of Corporate Secretary is
incorporated by reference to Post-Effective Amendment No.
11 to the Registration Statement on Form N-1A, filed on
August 29, 1989.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of July 5, 1994
______________ _____________________________
Common Stock
(Par value $.01) 30,364
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract, arrangements or
statute under which a director, officer, underwriter or affiliated person of the
Registrant is insured or indemnified in any manner against any liability which
may be incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection, is
incorporated by reference to Item 4 of the Registration Statement on Form N-1,
filed on May 27, 1983 and Exhibit (4) of Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A, filed on July 15, 1983.
Reference is also made to the Management Agreement and to the
Distribution Agreement, incorporated by reference to Exhibits (5) and (6) to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1, filed
on July 15, 1983.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as distributor of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
ABIGAIL Q. McCARTHY Author, lecturer, columnist and educational
Director consultant
2126 Connecticut Avenue
Washington, D.C. 20008
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board, President and Investment
Chairman of the Board and Officer:
Chief Executive Officer Dreyfus Capital Growth Fund (A Premier
Fund)++;
Chairman of the Board and Investment Officer:
The Dreyfus Fund Incorporated++;
Dreyfus New Leaders Fund, Inc.++;
The Dreyfus Socially Responsible Growth
Fund, Inc. ++;
The Dreyfus Third Century Fund, Inc.++;
Chairman of the Board:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund++++;
The Dreyfus Consumer Credit Corporation*;
HOWARD STEIN Dreyfus Land Development Corporation*;
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
President, Managing General Partner and
Investment Officer:
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Strategic Growth, L.P. ++;
Director, President and Investment Officer:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Focus Funds, Inc.++;
Dreyfus Global Investing++;
Dreyfus Growth Opportunity Fund, Inc.++;
Premier Growth Fund, Inc.++;
Dreyfus Growth Allocation Fund, Inc.++
Director and Investment Officer:
Dreyfus Growth and Income Fund, Inc.++;
Director:
Avnet, Inc.**;
Comstock Partners Strategy Fund, Inc.***;
Dreyfus A Bonds Plus, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
The Dreyfus Fund International
Limited++++++;
Dreyfus Global Bond Fund, Inc.++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
Dreyfus Strategic Governments Income,
Inc.++;
The Dreyfus Trust Company++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
HOWARD STEIN Seven Six Seven Agency, Inc.*;
(cont'd) World Balanced Fund++++;
Trustee and Investment Officer:
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Strategic Investing++;
Dreyfus Variable Investment Fund++;
Trustee:
Corporate Property Investors
New York, New York;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Institutional Short Term Treasury
Fund++;
Dreyfus Investors GNMA Fund++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Strategic Income++
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, Chief Operating The Dreyfus Trust Company++;
Officer and Director Director, President and Investment Officer:
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Global Bond Fund, Inc.++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
JOSEPH S. DiMARTINO Dreyfus Edison Electric Index Fund,
(cont'd) Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Trustee, President and Investment Officer:
Dreyfus Cash Management++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Premier GNMA Fund++;
Trustee and President:
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
Trustee, Vice President and Investment Officer:
Dreyfus Institutional Short Term
Treasury Fund++;
Trustee and Investment Officer:
Premier GNMA Fund++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director, Vice President and Investment
Officer:
Dreyfus Balanced Fund, Inc.++;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
Director and Investment Officer:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Short-Term Income Fund, Inc.++;
Premier Growth Fund, Inc.++;
Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
JOSEPH S. DiMARTINO Trustee:
(cont'd) Bucknell University
Lewisburg, Pennsylvania 17837;
President and Investment Officer:
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
Investment Officer:
The Dreyfus Fund Incorporated++;
Dreyfus Investors GNMA Fund++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus America Fund++++;
Dreyfus BASIC Municipal Fund ++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
LAWRENCE M. GREENE Dreyfus New Leaders Fund, Inc.++;
(cont'd) Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
Vice President:
Dreyfus Growth Opportunity Fund, Inc.++;
Trustee:
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Investment Officer:
The Dreyfus Fund Incorporated++
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Assistant Treasurer:
The Dreyfus Fund Incorporated++;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ALAN M. EISNER Director and President:
Vice President and Chief The Truepenny Corporation*;
Financial Officer Vice President and Chief Financial Officer:
Dreyfus Acquisition Corporation*;
Treasurer:
Dreyfus Realty Advisors, Inc.+++;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
Dreyfus Thrift & Commerce****;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*
DAVID W. BURKE Vice President and Director:
Vice President and Chief The Dreyfus Trust Company++;
Administrative Officer Formerly, President:
CBS News, a division of CBS, Inc.
524 West 57th Street
New York, New York 10019
Director:
Dreyfus BASIC Municipal Fund++;
Dreyfus California Tax Exempt Bond
Fund, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus Intermediate Municipal Bond
Fund, Inc.++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New York Tax Exempt Bond
Fund, Inc.++;
Dreyfus Ohio Municipal Money Market
Fund, Inc.++;
Trustee:
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Tax Exempt Money
Market Fund++;
Dreyfus Cash Management++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt
Bond Fund++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
DAVID W. BURKE Dreyfus Pennsylvania Municipal Money
(cont'd) Market Fund++;
Dreyfus Short-Intermediate Government
Fund++
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Tax Exempt Cash Management++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++
ELIE M. GENADRY President:
Vice President - Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Senior Vice President:
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus Tax Exempt Cash Management++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus-Wilshire Target Funds, Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Vice President:
The Dreyfus Trust Company++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
Treasurer:
Pacific American Fund+++++
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
Dreyfus America Fund++++;
The Dreyfus Trust Company++;
Vice President:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus BASIC Municipal Fund++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus Focus Funds, Inc.++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
DANIEL C. MACLEAN Dreyfus New York Insured Tax Exempt Bond
(cont'd) Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
DANIEL C. MACLEAN Premier New York Municipal Bond Fund++;
(cont'd) Premier State Municipal Bond Fund++;
Secretary:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Acquisition Corporation*;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Florida Municipal Money Market
Fund++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Bond Fund, Inc.++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Global Investing++;
Dreyfus Growth Allocation Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
DANIEL C. MACLEAN Dreyfus Strategic Municipal Bond Fund,
(cont'd) Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General California Municipal Bond Fund,
Inc.++;
Seven Six Seven Agency, Inc.*;
Director and Assistant Secretary:
The Dreyfus Fund International
Limited++++++
JEFFREY N. NACHMAN Vice President-Financial:
Vice President - Mutual Dreyfus A Bonds Plus, Inc.++;
Fund Accounting Dreyfus Appreciation Fund, Inc.++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
JEFFREY N. NACHMAN Dreyfus New Jersey Municipal Bond Fund,
(cont'd) Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
JEFFREY N. NACHMAN General Government Securities Money Market
(cont'd) Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
Vice President and Treasurer:
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Fund++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus Florida Municipal Money Market
Fund++;
Dreyfus Focus Funds, Inc.++;
Dreyfus Global Bond Fund, Inc.++;
Dreyfus Global Investing++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Cash Management++;
First Prairie U.S. Government Income
Fund++;
JEFFREY N. NACHMAN First Prairie U.S. Treasury Securities
(Cont'd) Cash Management++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Growth Fund, Inc.++;
Premier Insured Municipal Bond Fund++;
Assistant Treasurer:
Pacific American Fund+++++
PETER A. SANTORIELLO Director, President and Investment
Vice President Officer:
Dreyfus Balanced Fund, Inc.++;
Director and President:
Dreyfus Management, Inc.*;
Vice President:
Dreyfus Personal Management, Inc.*
KIRK V. STUMPP Senior Vice President and
Vice President - Director of Marketing:
New Product Development Dreyfus Service Corporation*
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice President and Dreyfus Thrift & Commerce****;
Director of Fixed- Director:
Income Research The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Assistant Vice President - Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
JOHN J. PYBURN Treasurer and Assistant Secretary:
Assistant Vice President The Dreyfus Fund International
Limited++++++;
Treasurer:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
JOHN J. PYBURN Dreyfus California Tax Exempt Money Market
(cont'd) Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
JOHN J. PYBURN Dreyfus 100% U.S. Treasury Money Market
(cont'd) Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
MAURICE BENDRIHEM Controller:
(cont'd) Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Vice President:
Secretary and Deputy Dreyfus A Bonds Plus, Inc.++;
General Counsel Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Municipal Money Market
Fund++;
Dreyfus Focus Funds, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Bond Fund, Inc.++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Global Investing++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
MARK N. JACOBS Dreyfus 100% U.S. Treasury Money Market
(cont'd) Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Variable Investment Fund++;
Dreyfus-Wilshire Target Funds, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General California Municipal Bond Fund,
Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Director:
World Balanced Fund++++;
Secretary:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus BASIC Municipal Fund++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Management, Inc.*;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
MARK N. JACOBS Dreyfus Municipal Cash Management Plus++;
(cont'd) Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Pacific American Fund+++++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
MARK N. JACOBS Premier State Municipal Bond Fund++;
(cont'd) Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus A Bonds Plus, Inc.++;
Dreyfus Acquisition Corporation*;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Fund++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Capital Value Fund, (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Intermediate
Municipal Bond Fund++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus Florida Municipal Money Market
Fund++;
Dreyfus Focus Funds, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Bond Fund, Inc.++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Global Investing++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Growth and Income, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
CHRISTINE PAVALOS Dreyfus International Equity Fund, Inc.++;
(cont'd) Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Management, Inc.*;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Service Corporation*;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
CHRISTINE PAVALOS The Dreyfus Socially Responsible Growth
(cont'd) Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus-Wilshire Target Funds, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
First Prairie Municipal Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
The Truepenny Corporation*
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is 800 West Sixth Street,
Suite 1000, Los Angeles, California 90017.
++++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Capital Value Fund, Inc.
12) Dreyfus Cash Management
13) Dreyfus Cash Management Plus, Inc.
14) Dreyfus Connecticut Intermediate Municipal Bond Fund
15) Dreyfus Connecticut Municipal Money Market Fund, Inc.
16) The Dreyfus Convertible Securities Fund, Inc.
17) Dreyfus Edison Electric Index Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) Dreyfus Focus Funds, Inc.
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth, L.P. (A Strategic Fund)
24) Dreyfus Global Investing, Inc.
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus Leverage Fund, Inc.
36) Dreyfus Life and Annuity Index Fund, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus Michigan Municipal Money Market Fund, Inc.
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus Ohio Municipal Money Market Fund, Inc.
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) The Dreyfus Third Century Fund, Inc.
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Money Market Fund
80) First Prairie Tax Exempt Bond Fund, Inc.
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash Management
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
91) Pacific American Fund
92) Peoples Index Fund, Inc.
93) Peoples S&P MidCap Index Fund, Inc.
94) Premier Insured Municipal Bond Fund
95) Premier California Municipal Bond Fund
96) Premier GNMA Fund
97) Premier Growth Fund, Inc.
98) Premier Municipal Bond Fund
99) Premier New York Municipal Bond Fund
100) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address Dreyfus Service Corporation Registrant
__________________ ___________________________ _____________
Howard Stein* Chairman of the Board None
Robert H. Schmidt* President and Director None
Joseph S. DiMartino* Executive Vice President and Director None
Lawrence M. Greene* Executive Vice President and Director None
Julian M. Smerling* Executive Vice President and Director None
Elie M. Genadry* Executive Vice President Vice
President
Henry D. Gottmann* Executive Vice President None
Donald A. Nanfeldt* Executive Vice President Vice
President
Kevin Flood* Senior Vice President None
Roy Gross* Senior Vice President None
Irene Papadoulis** Senior Vice President None
Kirk Stumpp* Senior Vice President and None
Director of Marketing
Diane M. Coffey* Vice President None
Walter T. Harris* Vice President None
William Harvey* Vice President None
Adwick Pinnock** Vice President None
George Pirrone* Vice President/Trading None
Karen Rubin Waldmann* Vice President None
Peter D. Schwab* Vice President/New Products None
Michael Anderson* Assistant Vice President None
Carolyn Sobering* Assistant Vice President-Trading None
Daniel C. Maclean* Secretary Vice
President
Robert F. Dubuss* Treasurer None
Maurice Bendrihem* Controller None
Michael J. Dolitsky* Assistant Controller None
Susan Verbil Goldgraben* Assistant Treasurer None
Christine Pavalos* Assistant Secretary Assistant
Secretary
Broker-Dealer Division of Dreyfus Service Corporation
=====================================================
Positions and offices with Positions and
Name and principal Broker-Dealer Division of offices with
business address Dreyfus Service Corporation Registrant
__________________ ___________________________ _____________
Elie M. Genadry* President Vice
President
Craig E. Smith* Executive Vice President None
Peter Moeller* Vice President and Sales Manager None
Kristina Williams
Pomano Beach, FL Vice President-Administration None
James Barr
Newton, MA Regional Vice President None
Mary B. Brundage
Pasadena, CA Regional Vice President None
Edward Donley
Latham, NY Regional Vice President None
Thomas Ellis
Ranchero Murietta, CA Regional Vice President None
Glenn Farinacci* Regional Vice President None
Peter S. Ferrentino
San Francisco, CA Regional Vice President None
William Frey
Hoffman Estates, IL Regional Vice President None
Suzanne Haley
Tampa, FL Regional Vice President None
Philip Jochem
Warrington, PA Regional Vice President None
Richard P. Kundracik
Waterford, MI Regional Vice President None
Michael Lane
Beaver Falls, PA Regional Vice President None
Fred Lanier
Atlanta, GA Regional Vice President None
Beth Presson
Colchester, VT Regional Vice President None
Joseph Reaves
New Orleans, LA Regional Vice President None
Christian Renninger
Germantown, MD Regional Vice President None
Robert J. Richardson
Houston, TX Regional Vice President None
Kurt Wiessner
Minneapolis, MN Regional Vice President None
Institutional Services Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Institutional Services Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _______________________________ _____________
Elie M. Genadry* President Vice
President
Donald A. Nanfeldt* Executive Vice President Vice
President
Kathleen M. Lewis++ Vice President-Institutional None
Sales Manager
Charles Cardona** Senior Vice President- None
Institutional Services
Stacy Alexander* Vice President-Bank Wholesale None
James E. Baskin+++++++ Vice President-Institutional Sales None
Kenneth Bernstein
Boca Raton, FL Vice President-Bank Wholesale None
Stephen Burke* Vice President-Bank Wholesaler None
Sales Manager
Laurel A. Diedrick
Burrows*** Vice President-Bank Wholesale None
Gary F. Callahan
Somerville, NJ Vice President-Bank Wholesale None
Daniel L. Clawson++++ Vice President-Institutional Sales None
Anthony T. Corallo
San Francisco, CA Vice President-Institutional Sales None
Bonnie M. Cymbryla
Brewerton, NY Vice President-Bank Wholesale None
William Davis
Bellevue, WA Vice President None
William E. Findley**** Vice President None
Melinda Miller Gordon* Vice President None
Christina Haydt++ Vice President-Institutional Sales None
Carol Anne Kelty* Vice President-Institutional Sales None
Gwenn Kessler***** Vice President-Bank Wholesale None
Bradford Lange* Vice President-Bank Wholesale None
Eva Machek***** Vice President-Institutional Sales None
Bradley R. Maybury
Seattle, WA Vice President-Bank Wholesale None
Mary McCabe*** Vice President-Bank Wholesale None
James McNamara***** Vice President-Institutional Sales None
James Neiland* Vice President-Bank Wholesale- None
National Accounts Manager
Susan M. O'Connor* Vice President-Institutional
Seminars None
Andrew Pearson+++ Vice President-Institutional Sales None
Jean Heitzman Penny***** Vice President-Institutional Sales None
Dwight Pierce+ Vice President-Bank Wholesale None
Lorianne Pinto* Vice President-Bank Wholesale None
Douglas Rentschler
Grosse Point Park, MI Vice President-Bank Wholesale None
Leah Ryan**** Vice President-Institutional Sales None
Edward Sands* Vice President-Institutional
Administration None
William Schalda* Vice President-Institutional None
Administration
Sue Ann Seefeld++++ Vice President-Institutional Sales None
Brant Snavely
Charlotte, NC Vice President-Bank Wholesale None
Thomas Stallings
Richmond, VA Vice President-Institutional Sales None
Elizabeth Biordi Vice President-Institutional
Wieland* Administration None
Thomas Winnick
Malverne, PA Vice President-Bank Wholesale None
Jeanne Butler* Assistant Vice President-
Institutional Operations None
Roberta Hall***** Assistant Vice President-
Institutional Servicing None
Tracy Hopkins** Assistant Vice President-
Institutional Operations None
Lois Paterson* Assistant Vice President-
Institutional Operations None
Mary Rogers** Assistant Vice President-
Institutional Servicing None
Karen Markovic
Shpall++++++ Assistant Vice President None
Patrick Synan** Assistant Vice President-
Institutional Support None
Emilie Tongalson** Assistant Vice President-
Institutional Servicing None
Tonda Watson**** Assistant Vice President-
Institutional Sales None
Group Retirement Plans Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Group Retirement Plans Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _______________________________ _____________
Elie M. Genadry* President Vice
President
Robert W. Stone* Executive Vice President None
Leonard Larrabee* Vice President and Senior Counsel None
George Anastasakos* Vice President None
Bart Ballinger++ Vice President-Sales None
Paula Cleary* Vice President-Marketing None
Ellen S. Dinas* Vice President-Marketing/Communications None
William Gallagher* Vice President-Sales None
Jeffrey Lejune
Dallas, TX Vice President-Sales None
Samuel Mancino** Vice President-Installation None
Joanna Morris* Vice President-Sales None
Joseph Pickert++ Vice President-Sales None
Alison Saunders** Vice President-Enrollment None
Scott Zeleznik* Vice President-Sales None
Alana Zion* Vice President-Sales None
Jeffrey Blake* Assistant Vice President-Sales None
_____________________________________________________
* The address of the offices so indicated is 200 Park Avenue, New
York, New York 10166
** The address of the offices so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
*** The address of the offices so indicated is 580 California Street,
San Francisco, California 94104.
**** The address of the offices so indicated is 3384 Peachtree Road,
Suite 100, Atlanta, Georgia 30326-1106.
***** The address of the offices so indicated is 190 South LaSalle
Street, Suite 2850, Chicago, Illinois 60603.
+ The address of the offices so indicated is P.O. Box 1657, Duxbury,
Massachusetts 02331.
++ The address of the offices so indicated is 800 West Sixth Street,
Suite 1000, Los Angeles, California 90017.
+++ The address of the offices so indicated is 11 Berwick Lane,
Edgewood, Rhode Island 02905.
++++ The address of the offices so indicated is 1700 Lincoln Street,
Suite 3940, Denver, Colorado 80203.
+++++ The address of the offices so indicated is 6767 Forest Hill
Avenue, Richmond, Virginia 23225.
++++++ The address of the offices so indicated is 2117 Diamond Street,
San Diego, California 92109.
+++++++ The address of the offices so indicated is P.O. Box 757,
Holliston, Massachusetts 01746.
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing
to do so by the holders of at least 10% of the Registrant's outstanding
shares of common stock and in connection with such meeting to comply with
the provisions of Section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of its latest annual report to shareholders, upon request and without
charge.
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, and State of New York on the 18th day of July, 1994.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
BY: /s/Richard J. Moynihan*
RICHARD J. MOYNIHAN, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the
date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Richard J. Moynihan* President (Principal Executive 7/18/94
_____________________________ Officer) and Director
Richard J. Moynihan
/s/John J. Pyburn* Treasurer (Principal Financial 7/18/94
_____________________________ Officer)
John J. Pyburn
/s/Gregory S. Gruber* Controller (Principal Accounting 7/18/94
______________________________ Officer)
Gregory S. Gruber
/s/David W. Burke* Director 7/18/94
______________________________
David W. Burke
/s/Samuel Chase* Director 7/18/94
_____________________________
Samuel Chase
/s/Joni Evans* Director 7/18/94
_____________________________
Joni Evans
/s/Lawrence M. Greene* Director 7/18/94
_____________________________
Lawrence M. Greene
/s/Arnold S. Hiatt* Directors 7/18/94
_____________________________
Arnold S. Hiatt
/s/David J. Mahoney* Director 7/18/94
_____________________________
David J. Mahoney
/s/Burton N. Wallack* Director 7/18/94
_____________________________
Burton N. Wallack
BY: _________________________*
Mark A. Jacobs
Attorney-in-Fact
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
EXHIBIT INDEX
Exhibit No.
24(b)(11) Consent of Ernst & Young
24(b)(16) Schedule of Computation of Performance Data
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our report
dated June 30, 1994, in this Registration Statement (Form N-1A 2-84105)
of Dreyfus California Tax Exempt Bond Fund, Inc.
ERNST & YOUNG
New York, New York
July 19, 1994
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
TOTAL RETURN COMPUTATION
Total return computation from inception through 5/31/94
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 14.59 + ( 14.59 x 1.2212 ) ] - 13.50
--------------------------------------------
13.50
T = 140.05%
========
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
SEC 30 DAY YIELD CALCULATION
INCOME 5/2/94 - 5/31/94 $8,196,475.15
EXPENSES 5/2/94 - 5/31/94 $1,058,316.16
Average Shares Entitled to Dividend
5/2/94 - 5/31/94 113,896,087.545
NAV per share 5/31/94 $14.59
x = 8,196,475.15 - 1,058,316.16
------------------------------------------
113,896,087.545 x 14.59
x = 0.004296
6
30 Day yield = 2 [( 1 + x) -1]
6
30 Day yield = 2 [ ( 1 + 0.004296 ) -1]
30 Day yield = 5.21%
=================
TAX EQUIVALENT YIELD
Taxable portion of yield = 0.00%
Tax exempt portion of yield = 5.21%
----------------
Yield = 5.21%
================
Federal & State Tax Bracket = 46.24%
================
5.21
Tax Equivalent Yield = -------------------- = 9.69%
( 1 - 0.4624 ) ================
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from 5/31/93 through 5/31/94
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 5/31/94 of a $1,000
hypothetical investment made on 5/31/93
1.00
1000( 1 + T ) = 1,015.77
T = 1.58%
============
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from 5/31/84 through 5/31/94
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 5/31/94 of a $1,000
hypothetical investment made on 5/31/84
10.00
1000( 1 + T ) = 2,395.97
T = 9.13%
============
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from 5/31/89 through 5/31/94
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 5/31/94 of a $1,000
hypothetical investment made on 5/31/89
5.00
1000( 1 + T ) = 1,402.24
T = 6.99%
============
