Dreyfus
California Tax Exempt
Bond Fund, Inc.
ANNUAL REPORT May 31, 2000
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Financial Highlights
18 Notes to Financial Statements
22 Report of Independent Auditors
23 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus California
Tax Exempt Bond Fund, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus California Tax Exempt
Bond Fund, Inc., covering the 12-month period from June 1, 1999 through May 31,
2000. Inside you' ll find valuable information about how the fund was managed
during the reporting period, including a discussion with the fund's portfolio
manager, Joseph Darcy.
When the reporting period began, evidence had emerged that the U.S. economy was
growing strongly in an environment characterized by high levels of consumer
spending and low levels of unemployment. Concerns that inflationary pressures
might reemerge caused the Federal Reserve Board to raise short-term interest
rates six times during the reporting period, for a total increase of 1.75
percentage points. Despite an encouraging rally during the first quarter of
2000, higher interest rates generally led to an erosion of municipal bond
prices.
We appreciate your confidence over the past year and we look forward to your
continued participation in Dreyfus California Tax Exempt Bond Fund, Inc
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
June 15, 2000
DISCUSSION OF FUND PERFORMANCE
Joseph Darcy, Portfolio Manager
How did Dreyfus California Tax Exempt Bond Fund, Inc. perform during the
reporting period?
For the 12-month reporting period ended May 31, 2000, Dreyfus California Tax
Exempt Bond Fund, Inc. achieved a -2.04% total return.(1) In comparison, the
fund' s peer group, as measured by the Lipper California Municipal Debt Funds
category average, achieved a -3.27% total return for the same period.(2)
We attribute the fund's negative return to a difficult investment environment.
More specifically, the fund was adversely affected by higher interest rates when
the Federal Reserve Board (the "Fed") tightened monetary policy six times during
the reporting period in an attempt to relieve inflationary pressures.
What is the fund's investment approach?
Our goal is to seek as high a level of federal and California state tax-exempt
income as is practical from a diversified portfolio of municipal bonds. To
achieve this objective, we employ two primary strategies. First, we attempt to
add value by evaluating interest-rate trends and supply and demand factors.
Based on that assessment, we select the individual tax-exempt bonds that we
believe are most likely to provide the highest returns with the least risk. We
look at such criteria as the bond's yield, price, age, creditworthiness of its
issuer, and any provisions for early redemption.
Second, we actively manage the portfolio's average duration in anticipation of
temporary supply and demand changes. If we expect the supply of newly issued
bonds to increase temporarily, we may reduce the portfolio's average duration to
make cash available for the purchase of higher yielding securities. Conversely,
if we expect demand for municipal bonds to surge at a time when we anticipate
little issuance, The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
we may increase the portfolio's average duration to maintain current yields for
as long as practical. At other times, we try to maintain a "neutral" average
duration of about seven years.
What other factors influenced the fund's performance?
As mentioned earlier, the fund was influenced by the changing market conditions
over the past year. Although the first quarter of 2000 experienced an
encouraging municipal bond market rally, the end of 1999 and the two months
following the first quarter rally of 2000 saw more difficult investment
environments.
When the reporting period began on June 1, 1999, investors had become concerned
that strong economic growth might rekindle long-dormant inflationary pressures,
especially wages in a tight job market. In an attempt to ease these pressures
and forestall a reacceleration of inflation, the Fed raised short-term interest
rates six times during the reporting period, causing most bond prices to fall,
including the fund's holdings. These interest-rate hikes accounted for a total
increase of 1.75 percentage points since mid-1999.
In addition, municipal bond prices fell because of adverse supply and demand
influences. For a variety of reasons, institutional investors such as insurance
companies and mutual funds have recently participated less in the tax-exempt
bond market. Despite strong demand from individual investors, the absence of
institutional buyers helped reduce overall demand and as a result, drove
municipal bond prices down.
During the first few months of 2000, issuance of municipal bonds nationally
declined sharply compared to the same period one year ago. Although California
is considered a high issuance state, the supply of newly issued bonds has
declined there as well. Some California municipalities that refinanced bond
issues during the low interest-rate environment over the past several years are
expected to be absent from this year's municipal bond marketplace. We believe
that California bonds are currently trading at attractive levels as a result of
their refinancing.
What is the fund's current strategy?
After adopting a relatively defensive posture for most of the reporting period
as interest rates rose, we have recently adopted a somewhat more aggressive
strategy. This is due to the fact that we believe that current California
municipal bond prices already reflect investors' expectations that the Fed is
likely to raise interest rates at least one more time. Accordingly, we extended
the fund' s average duration -- a measure of sensitivity to changing interest
rates -- to approximately ten years as of May 31, 2000, which is modestly longer
than most other California tax-exempt bond funds. This duration management
strategy is designed to help us lock in prevailing yields and participate in the
potential for future capital appreciation.
In terms of our security selection strategy, we have focused on bonds with high
levels of credit quality. Given the relatively small differences in yields
between high quality and lower quality bonds in the current market environment,
we do not believe that we would be adequately compensated for the greater risks
that lower quality bonds usually entail.
June 15, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL
TAXES FOR NON-CALIFORNIA RESIDENTS, AND SOME INCOME MAY BE SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF
ANY, ARE FULLY TAXABLE.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus California Tax
Exempt Bond Fund, Inc. and the Lehman Brothers Municipal Bond Index
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 5/31/00
1 Year 5 Years 10 Years
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FUND (2.04)% 3.90% 5.42%
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS CALIFORNIA TAX
EXEMPT BOND FUND, INC. ON 5/31/90 TO A $10,000 INVESTMENT MADE IN THE LEHMAN
BROTHERS MUNICIPAL BOND INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS ARE REINVESTED.
THE FUND INVESTS PRIMARILY IN CALIFORNIA MUNICIPAL SECURITIES AND ITS
PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT FEES AND EXPENSES. THE
LEHMAN BROTHERS MUNICIPAL BOND INDEX IS NOT LIMITED TO INVESTMENTS PRINCIPALLY
IN CALIFORNIA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES
AND OTHER EXPENSES. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX, UNLIKE THE FUND,
IS AN UNMANAGED TOTAL RETURN PERFORMANCE BENCHMARK FOR THE LONG-TERM,
INVESTMENT-GRADE, GEOGRAPHICALLY UNRESTRICTED TAX-EXEMPT BOND MARKET, CALCULATED
BY USING MUNICIPAL BONDS SELECTED TO BE REPRESENTATIVE OF THE MUNICIPAL MARKET
OVERALL. THESE FACTORS CAN CONTRIBUTE TO THE INDEX POTENTIALLY OUTPERFORMING OR
UNDERPERFORMING THE FUND. FURTHER INFORMATION RELATING TO FUND PERFORMANCE,
INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL
HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
May 31, 2000
Principal
LONG-TERM MUNICIPAL INVESTMENTS--96.0% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--94.7%
Alameda Corridor Transportation Authority, Revenue:
<S> <C> <C>
4.75%, 10/1/2025 (Insured; MBIA) 10,725,000 8,886,521
5%, 10/1/2029 (Insured; MBIA) 39,800,000 34,164,320
Zero Coupon, 10/1/2030 (Insured; MBIA) 15,000,000 2,336,400
Zero Coupon, 10/1/2031 (Insured; MBIA) 22,500,000 3,292,200
Zero Coupon, 10/1/2032 (Insured; MBIA) 38,380,000 5,273,412
Zero Coupon, 10/1/2033 (Insured; MBIA) 22,600,000 2,919,242
Zero Coupon, 10/1/2034 (Insured; MBIA) 39,095,000 4,738,314
Zero Coupon, 10/1/2035 (Insured; MBIA) 16,000,000 1,817,280
Zero Coupon, 10/1/2036 (Insured; MBIA) 39,940,000 4,250,814
Zero Coupon, 10/1/2037 (Insured; MBIA) 40,340,000 4,021,898
Alameda County, COP:
7.25%, 12/1/2014 (Insured; BIGI) (Prerefunded 12/1/2000) 5,980,000 (a) 6,184,157
7.25%, 12/1/2015 (Insured; BIGI) (Prerefunded 12/1/2000) 4,045,000 (a) 4,183,096
Anaheim Public Finance Authority, Tax Allocation Revenue,
6.45%, 12/28/2018 (Insured; MBIA) 20,000,000 21,104,800
Berkeley, Health Facilities Revenue
(Alta Bates Medical Center) 6.55%, 12/1/2022
(Prerefunded 12/1/2002) 17,000,000 (a) 18,088,340
Beverly Hills Finance Authority, LR
(Capital Improvements Project) 5.25%, 6/1/2028 15,150,000 13,557,886
Brea Public Finance Authority, Revenue, Tax Allocation
(Redevelopment Project):
6.75%, 8/1/2022 (Insured; MBIA) (Prerefunded 8/1/2001) 4,625,000 (a) 4,837,426
6.75%, 8/1/2022 (Insured; MBIA) 1,775,000 1,845,521
California:
4.25%, 10/1/2026 (Insured; MBIA) 17,000,000 12,821,230
4.75%, 2/1/2029 (Insured; FGIC) 10,000,000 8,187,200
California Department of Transportation, COP
5.25%, 3/1/2016 (Insured; MBIA) 13,270,000 12,673,381
California Educational Facilities Authority, Revenue:
(California Institute of Technology) 4.25%, 10/1/2028 50,565,000 37,834,756
(Claremont Colleges Pooled Facilities)
6.375%, 5/1/2022 (Prerefunded 5/1/2002) 3,655,000 (a) 3,844,512
(Standford Hospital):
5.25%, 12/1/2013 5,590,000 5,587,317
5.125%,1/1/2031 11,000,000 9,651,400
California Health Facilities Financing Authority, Revenue:
(Adventist Health System-West):
6.40%, 3/1/2002 (Insured; MBIA) 1,955,000 2,010,190
6.50%, 3/1/2003 (Insured; MBIA) 2,140,000 2,208,480
(Cedars-Sinai Medical Center) 6.125%, 12/1/2030 23,250,000 22,594,350
(Kaiser Permanente) 5.25%, 6/1/2012 (Insured; FSA) 2,780,000 2,766,545
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
California Health Facilities Financing Authority, Revenue (continued):
(Saint Joseph's Health System)
6.75%, 7/1/2021 (Prerefunded 7/1/2001) 8,500,000 (a) 8,874,085
(San Diego Hospital Association)
6.125%, 8/1/2022 (Insured; MBIA) 4,250,000 4,274,352
(Stanford University):
6.50%, 11/1/2020 (Prerefunded 11/1/2000) 8,975,000 (a) 9,231,685
6.50%, 11/1/2020 (Prerefunded 11/1/2002) 1,025,000 (a) 1,069,608
California Housing Finance Agency:
Home Mortage Revenue:
6.30%, 2/1/2008 2,155,000 2,179,955
6.35%, 2/1/2009 2,295,000 2,321,530
6.40%, 2/1/2010 2,420,000 2,447,927
6.70%, 8/1/2025 (Insured; FHA) 5,600,000 5,677,280
7.125%, 2/1/2026 900,000 916,992
6.40%, 8/1/2027 (Insured; MBIA) 18,220,000 18,425,522
MFHR 6.30%, 8/1/2026 (Insured; AMBAC) 7,150,000 7,196,690
Multi-Unit Rental Housing Revenue 6.85%, 8/1/2015 3,140,000 3,242,584
Revenue:
8.337%, 8/1/2026 5,610,000 (b) 5,778,300
7.537%, 8/1/2027 5,000,000 (b) 4,979,750
Single Family Mortgage:
6.25%, 8/1/2014 (Insured; AMBAC) 2,745,000 2,702,453
6.30%, 8/1/2024 7,330,000 7,314,754
6.45%, 8/1/2025 12,405,000 12,486,501
California Pollution Control Financing Authority:
PCR:
6.991%, 6/1/2014 24,165,000 (b) 26,668,494
(Pacific Gas & Electric Co.)
6.35%, 6/1/2009 (Insured; MBIA) 5,000,000 5,227,150
(Southern California Edison Co.)
6.40%, 12/1/2024 12,600,000 12,636,540
SWDR (Browning--Ferris Industries)
5.80%, 12/1/2016 16,560,000 13,989,391
California Public Works Board, LR:
(Department of Corrections, California State Prison, Susanville)
5.25%, 6/1/2015 (Insured; FSA) 5,455,000 5,303,351
(Department of Corrections, Calipatria State Prison,
Imperial County)
6.50%, 9/1/2017 (Insured; MBIA) 13,000,000 14,289,600
(Various University of California Projects):
5.50%, 6/1/2014 5,000,000 5,041,350
6.375%, 10/1/2019 (Prerefunded 10/1/2004) 7,775,000 (a) 8,376,552
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
California Statewide Community Development Authority, Revenue:
COP (Saint Joseph Health System)
6.50%, 7/1/2015 (Prerefunded 7/1/2004) 7,000,000 (a) 7,563,710
(Sherman Oaks Project) 5%, 8/1/2018 (Insured; AMBAC) 12,000,000 10,712,760
Central Coast Water Authority, Revenue (State Water Project)
5%, 10/1/2016 (Insured; AMBAC) 10,200,000 9,380,634
Chico Public Financing Authority, Revenue
(Southeast Chico Redevelopment Project)
6.625%, 4/1/2021 (Insured; FGIC) 2,000,000 2,051,080
Contra Costa County, COP (Merrithew Memorial Hospital)
6.60%, 11/1/2012 (Prerefunded 11/1/2002) 9,000,000 (a) 9,581,940
Delano, COP (Delano Regional Medical Center)
5.25%, 1/1/2018 10,000,000 7,903,600
East Bay Municipal Utility District,
Water System Revenue (Insured; MBIA) 4.75%, 6/1/2034 52,000,000 41,927,600
Emeryville Public Financing Authority, Revenue
(Shellmound Park Redevelopment Project)
6.80%, 5/1/2024 (Prerefunded 5/1/2004) 2,365,000 (a) 2,575,651
Fontana, Special Tax
5.25%, 9/1/2017 (Insured; MBIA) 14,000,000 13,217,260
Foothill Eastern Transportation Corridor Agency,
Toll Road Revenue:
5%, 1/15/2016 (Insured; MBIA) 5,000,000 4,623,800
5.75%, 1/15/2040 20,000,000 18,171,400
Fresno, Sewer Revenue 5.25%, 9/1/2019 (Insured; AMBAC) 9,400,000 8,851,040
Hesperia Water District, COP
(Water Facilities Improvement Project) 7.15%, 6/1/2026
(Insured; FGIC) (Prerefunded 6/1/2001) 4,500,000 (a) 4,752,135
Inglewood, HR (Daniel Freeman Hospital, Inc.)
6.75%, 5/1/2013 (Prerefunded 5/1/2001) 6,300,000 (a) 6,550,173
Los Angeles Community Redevelopment Agency, Tax Allocation
(Hollywood Redevelopment Project) 6.10%, 7/1/2022
(Insured; MBIA) (Prerefunded 7/1/2002) 4,900,000 (a) 5,139,855
Los Angeles Department Water and Power,
Waterworks Revenue:
4.50%, 10/15/2024 23,300,000 18,389,059
6.40%, 5/15/2028 2,435,000 2,491,857
6.375%, 7/1/2034 (Insured; MBIA) 9,000,000 9,610,740
Los Angeles Harbor Department, Revenue:
6%, 8/1/2012 8,900,000 9,218,887
6.625%, 8/1/2019 (Insured; AMBAC) 6,000,000 6,272,940
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
Los Angeles Harbor Department, Revenue (continued):
6.625%, 8/1/2025 18,280,000 19,052,330
Los Angeles Municipal Improvement Corporation, LR
(Central Library Project):
6.30%, 6/1/2016 3,500,000 3,562,790
6.30%, 6/1/2018 4,250,000 4,305,122
6.35%, 6/1/2020 7,700,000 7,799,792
Merced Union High School District:
Zero Coupon, 8/1/2021 (Insured; FGIC) 2,390,000 663,775
Zero Coupon, 8/1/2022 (Insured; FGIC) 2,445,000 633,695
Zero Coupon, 8/1/2023 (Insured; FGIC) 2,500,000 606,925
Zero Coupon, 8/1/2024 (Insured; FGIC) 2,555,000 582,131
Metropolitan Water District of Southern California,
Waterworks Revenue
6.75%, 7/1/2018 (Prerefunded 7/1/2001) 9,250,000 (a) 9,657,093
Modesto, Multi-Family Housing Mortage Revenue,
6.40%, 6/1/2029 7,723,000 7,785,093
Mount Diablo Hospital District, Revenue
6.125%, 12/1/2020 (Insured; AMBAC)
(Prerefunded 12/1/2000) 5,000,000 (a) 5,142,400
Mount Diablo Unified School District, Community Facilities District,
Special Tax
7.05%, 8/1/2020 (Insured; FGIC) (Prerefunded 8/1/2000) 3,500,000 (a) 3,585,435
M-S-R Public Power Agency, Revenue (San Juan Project)
5.90%, 7/1/2020 5,685,000 5,555,950
Northern California Power Agency, Revenue:
(Hydroelectric Project No. 1):
7%, 7/1/2016 (Insured; AMBAC) (Prerefunded 1/1/2016) 670,000 (a) 765,488
7.50%, 7/1/2023 (Insured; AMBAC)
(Prerefunded 7/1/2021) 375,000 (a) 444,787
5%, 7/1/2028 (Insured; MBIA) 10,000,000 8,599,000
(Multiple Capital Facilities) 5%, 8/1/2025 (Insured; AMBAC) 17,000,000 14,775,550
Pasadena Community Development Commission, MFHR
(Civic Center) 6.45%, 12/1/2021 (Insured; FSA) 13,185,000 13,271,757
Port of Oakland, Special Facilities Revenue
(Mitsui O.S.K. Lines Ltd.)
6.80%, 1/1/2019 (LOC; Industrial Bank of Japan) 2,000,000 2,002,660
Sacramento County, Airport System Revenue
6%, 7/1/2017 (Insured; MBIA) 5,850,000 5,914,935
Sacramento Municipal Utility District, Electric Revenue:
6.50%, 9/1/2013 (Insured; MBIA) 6,930,000 7,731,316
5.125%, 7/1/2015 (Insured; MBIA) 8,270,000 7,868,988
5.20%, 7/1/2017 (Insured; MBIA) 4,000,000 3,761,200
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
San Bernardino County, COP:
(Capital Facilities Project)
6.875%, 8/1/2024 5,000,000 5,623,000
(West Valley Detention Center)
5.90%, 11/1/2001 (Insured; MBIA) 1,565,000 1,597,067
San Diego County Water Authority, Water Revenue, COP
4.75%, 5/1/2028 (Insured; FGIC) 25,000,000 20,465,250
San Diego Unified School District:
Zero Coupon, 7/1/2020 (Insured; FGIC) 12,000,000 3,593,400
Zero Coupon, 7/1/2022 (Insured; FGIC) 10,000,000 2,616,200
Zero Coupon, 7/1/2023 (Insured; FGIC) 10,000,000 2,451,000
San Francisco Bay Area Rapid Transit District,
Sales Tax Revenue
5.50%, 7/1/2034 (Insured; FGIC) 3,000,000 2,807,820
San Francisco City and County, SFMR
(FNMA/GNMA Mortgage Backed Securities Program)
7.45%, 1/1/2024 220,000 223,738
San Francisco City and County Airports Commission,
International Airport Revenue:
6.10%, 5/1/2003 (Insured; AMBAC) 3,000,000 3,114,330
4.50%, 5/1/2012 (Insured; MBIA) 2,000,000 1,825,940
5%, 5/1/2016 (Insured; FGIC) 3,365,000 3,102,294
4.50%, Issue 20 5/1/2026) 8,750,000 6,885,725
4.50%, Issue 21 5/1/2026 (Insured; MBIA) 10,670,000 8,396,650
4.50%, 5/1/2028 (Insured; MBIA) 10,000,000 7,797,900
4.50%, 5/1/2029 (Insured: MBIA) 15,410,000 11,966,481
San Francisco City and County Public Utilities Commission,
Water Revenue
6.50%, 11/1/2017 (Prerefunded 11/1/2001) 3,500,000 (a) 3,665,445
San Francisco State Building Authority, LR
(San Francisco Civic Center Complex)
5.25%, 12/1/2016 (Insured; AMBAC) 30,375,000 28,972,586
San Joaquin Hills Transportation Corridor Agency,
Toll Road Revenue
Zero Coupon, 1/15/2031 (Insured; MBIA) 115,240,000 17,582,167
San Jose Redevelopment Agency, Tax Allocation Revenue
(Merged Area Redevelopment Project)
4.75%, 8/1/2030 (Insured; AMBAC) 10,000,000 8,153,200
San Marcos Public Facilities Authority, Tax Allocation Revenue
6%, 1/1/2006 (Prerefunded 1/1/2002) 9,500,000 (a) 9,891,305
San Mateo County, COP (Capital Projects Program)
6.50%, 7/1/2017 (Insured; MBIA) (Prerefunded 7/1/2001) 6,000,000 (a) 6,250,320
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
Santa Barbara, COP (Water System Improvement Project)
6.70%, 4/1/2027 (Insured; AMBAC) 4,000,000 4,165,000
Santa Cruz County, COP (Capital Facilities Project)
6.70%, 9/1/2020 (Insured; MBIA) (Prerefunded 9/1/2001) 5,000,000 (a) 5,234,600
Santa Cruz County Public Financing Authority, Revenue
7.10%, 9/1/2021 (Insured; MBIA) 6,500,000 6,664,450
Stockton, Revenue, COP (Wastewater System Project)
5.125%, 9/1/2016 (Insured; MBIA) 2,900,000 2,717,271
Southern California Rapid Transportation District, COP
(Workers Compensation Fund)
6.50%, 7/1/2007 (Insured; MBIA) 21,900,000 22,675,260
West Basin Municipal Water District, COP
6.85%, 8/1/2016 (Insured; AMBAC) (Prerefunded 8/1/2000) 6,000,000 (a) 6,144,480
U.S. RELATED--1.3%
Commonwealth of Puerto Rico Infrastructure Financing Authority,
Special Tax Revenue 5%, 7/1/2014 (Insured; AMBAC) 15,000,000 14,109,599
TOTAL LONG--TERM MUNICIPAL INVESTMENTS
(cost $1,033,940,769) 1,004,080,195
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--1.4%
------------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, PCR, VRDN
(Pacific Gas & Electric Co.):
4.50% (LOC; Kredietbank, N.V.) 5,000,000 (c) 5,000,000
4.20% (LOC; Morgan Guaranty Trust Co.) 9,850,000 (c) 9,850,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $14,850,000) 14,850,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $1,048,790,769) 97.4% 1,018,930,195
CASH AND RECEIVABLES (NET) 2.6% 27,062,650
NET ASSETS 100.0% 1,045,992,845
</TABLE>
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
BIGI Bond Investors Guaranty
Insurance
COP Certificate of Participation
FGIC Financial Guaranty Insurance
Company
FHA Federal Housing Administration
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
HR Hospital Revenue
LOC Letter of Credit
LR Lease Revenue
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
SWDR Solid Waste Disposal Revenue
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA Aaa AAA 74.1
AA Aa AA 10.9
A A AA 8.5
BBB Baa BBB 3.0
BB Ba BB 1.4
F1 MIG1/P1 SP1/A1 1.5
Not Rated(d) Not Rated(d) Not Rated(d) .6
100.0
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(B) INVERSE FLOATER SECURITY-THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(C) SECURITIES PAYABLE ON DEMAND.VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
(D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
(E) AT MAY 31, 2000, 35.6% OF THE FUND'S NET ASSETS ARE INSURED BY MBIA.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 1,048,790,769 1,018,930,19
Interest receivable 19,310,140
Receivable for investment securities sold 11,540,520
Prepaid expenses 10,586
1,049,791,441
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 587,771
Cash overdraft due to Custodian 984,351
Payable for investment securities purchased 2,015,376
Payable for shares of Common Stock redeemed 87,626
Accrued expenses 123,472
3,798,596
--------------------------------------------------------------------------------
NET ASSETS ($) 1,045,992,84
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,085,526,31
Accumulated net realized gain (loss) on investments (9,672,895)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (29,860,574)
--------------------------------------------------------------------------------
NET ASSETS ($) 1,045,992,845
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized) 76,628,233
NET ASSET VALUE, offering and redemption price per share--Note 3(d) ($)
13.65
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended May 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 64,514,484
EXPENSES:
Management fee--Note 3(a) 6,719,146
Shareholder servicing costs--Note 3(b) 1,162,204
Custodian fees 80,660
Professional fees 68,347
Directors' fees and expenses--Note 3(c) 56,317
Prospectus and shareholders' reports 28,263
Registration fees 23,480
Loan commitment fees--Note 2 11,841
Miscellaneous 35,757
TOTAL EXPENSES 8,186,015
INVESTMENT INCOME--NET 56,328,469
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (9,707,296)
Net unrealized appreciation (depreciation) on investments (73,920,290)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (83,627,586)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (27,299,117)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended May 31,
----------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 56,328,469 58,695,267
Net realized gain (loss) on investments (9,707,296) 16,110,687
Net unrealized appreciation (depreciation)
on investments (73,920,290) (25,520,707)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (27,299,117) 49,285,247
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (56,804,508) (58,553,571)
Net realized gain on investments (3,839,881) (3,795,431)
TOTAL DIVIDENDS (60,644,389) (62,349,002)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 52,432,225 123,029,082
Dividends reinvested 39,160,523 40,028,943
Cost of shares redeemed (192,512,283) (225,277,667)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (100,919,535) (62,219,642)
TOTAL INCREASE (DECREASE) IN NET ASSETS (188,863,041) (75,283,397)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,234,855,886 1,310,139,283
END OF PERIOD 1,045,992,845 1,234,855,886
Undistributed investment income--net -- 476,039
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 3,771,052 8,226,298
Shares issued for dividends reinvested 2,818,161 2,673,961
Shares redeemed (13,859,981) (15,071,208)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (7,270,768) (4,170,949)
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Year Ended May 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
<S> <C> <C> <C> <C> <C>
beginning of period 14.72 14.88 14.32 14.00 14.54
Investment Operations:
Investment income--net .70 .68 .70 .73 .77
Net realized and unrealized
gain (loss) on investments (1.01) (.12) .56 .32 (.54)
Total from Investment Operations (.31) .56 1.26 1.05 .23
Distributions:
Dividends from investment income--net (.71) (.68) (.70) (.73) (.77)
Dividends from net realized
gain on investments (.05) (.04) -- -- --
Total Distributions (.76) (.72) (.70) (.73) (.77)
Net asset value, end of period 13.65 14.72 14.88 14.32 14.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (2.04) 3.81 8.89 7.61 1.58
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .73 .72 .71 .73 .69
Ratio of net investment income
to average net assets 5.03 4.56 4.77 5.11 5.37
Portfolio Turnover Rate 34.09 58.49 64.67 60.56 56.12
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,045,993 1,234,856 1,310,139 1,369,058 1,371,274
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus California Tax Exempt Bond Fund, Inc. (the "fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified
open-end management investment company. The fund's investment objective is to
provide investors with the maximum amount of current income exempt from Federal
and State of California income taxes as is consistent with the preservation of
capital. The Dreyfus Corporation (the "Manager") serves as the fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22,
2000, Dreyfus Service Corporation (" DSC"), a wholly-owned subsidiary of the
Manager, became the distributor of the fund's shares, which are sold to the
public without a sales charge. Prior to March 22, 2000, Premier Mutual Fund
Services, Inc. was the distributor.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued each business day
by an independent pricing service (" Service" ) approved by the Board of
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 original issue discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date. Under the terms of the custody
agreement, the fund received net earnings credits of $29,419 based on available
cash balances left on deposit. Income earned under this arrangement is included
in interest income.
The fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the fund.
(c) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net. Such dividends are paid monthly. Dividends
from net realized capital gain are normally declared and paid annually, but the
fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
" Code" ). To the extent that net realized capital gain can be offset by capital
loss carryovers, it is the policy of the fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the fund to continue to qualify as
a regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
The fund has an unused capital loss carryover of approximately $4,133,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to May The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
31, 2000. This amount is calculated based on Federal income tax regulations
which may differ from financial reporting in accordance with generally accepted
accounting principles. If not applied, the carryover expires in fiscal 2008.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended May
31, 2000, the fund did not borrow under the Facility.
NOTE 3--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 value of the
fund' s average daily net assets and is payable monthly. The Agreement provides
that if in any full fiscal year the aggregate expenses of the fund, exclusive of
taxes, brokerage fees, interest on borrowings, commitment fees and extraordinary
expenses, exceed 11_2% of the value of the fund's average net assets, the fund
may deduct from the payments to be made to the Manager, or the Manager will bear
such excess expense. During the period ended May 31, 2000, there was no expense
reimbursement pursuant to the Agreement.
(b) Under the Shareholder Services Plan, the fund reimburses DSC an amount not
to exceed an annual rate of .25 of 1% of the value of the fund's average daily
net assets for certain allocated expenses of providing personal services and/or
maintaining shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the fund and providing reports and other information, and
services related to
the maintenance of shareholder accounts. During the period ended May 31, 2000,
the fund was charged $660,147 pursuant to the Shareholder Services Plan.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the fund. During the period
ended May 31, 2000, the fund was charged $325,238 pursuant to the transfer
agency agreement.
(c) Each director who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $4,500 and an attendance fee of $500 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
(d) A .10% redemption fee is charged and retained by the fund on shares redeemed
within fifteen days following the date of issuance, including redemptions made
through the use of the fund's exchange privilege. During the period ended May
31, 2000, redemption fees charged and retained by the fund amounted to $1,354.
Effective June 1, 2000, this fee will be chargeable within thirty days following
the date of issuance of such shares.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended May 31, 2000, amounted to
$368,196,401 and $486,670,682, respectively.
At May 31, 2000, accumulated net unrealized depreciation on investments was
$29,860,574, consisting of $17,552,382 gross unrealized appreciation and
$47,412,956 gross unrealized depreciation.
At May 31, 2000, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Fund
REPORT OF 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, 2000, 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of May 31, 2000 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, 2000, 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 accounting principles generally
accepted in the United States.
New York, New York
July 5, 2000
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby makes the following
designations regarding its fiscal year ended May 31, 2000:
--all the dividends paid from investment income-net are "exempt-interest
dividends" (not subject to regular Federal and, for individuals who are
California residents, California personal income taxes).
--the fund hereby designates $.0111 per share as a long-term capital gain
distribution of the $.0476 per share paid on December 9, 1999.
As required by Federal tax law rules, shareholders will receive notification of
their portion of the fund' s taxable ordinary dividends (if any) and capital
gains distributions (if any) paid for the 2000 calendar year on Form 1099-DIV
which will be mailed by January 31, 2001.
The Fund
NOTES
For More Information
Dreyfus California Tax Exempt Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 928AR005
