File No. 2-95595
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. 15 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 15 [X]
(Check appropriate box or boxes.)
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
(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)
----
X on July 14, 1995 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its [common
stock][beneficial interest] 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 March 31, 1995 was filed on May 26, 1995.
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 5
5 Management of the Fund 10
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 20
7 Purchase of Securities Being Offered 11
8 Redemption or Repurchase 16
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-24
13 Investment Objectives and Policies B-2
14 Management of the Fund B-12
15 Control Persons and Principal B-12
Holders of Securities
16 Investment Advisory and Other B-13
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-23
18 Capital Stock and Other Securities B-24
19 Purchase, Redemption and Pricing B-15; B-16;
of Securities Being Offered B-21
20 Tax Status *
21 Underwriters B-15
22 Calculations of Performance Data B-22
23 Financial Statements B-41
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-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
- ----------------------------------------------------------------------------
PROSPECTUS JULY 14, 1995
DREYFUS CALIFORNIA TAX EXEMPT
MONEY MARKET FUND
- ----------------------------------------------------------------------------
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND (THE "FUND") IS AN
OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MONEY MARKET
MUTUAL FUND. ITS GOAL IS TO PROVIDE YOU WITH AS HIGH A LEVEL OF CURRENT
INCOME EXEMPT FROM FEDERAL AND STATE OF CALIFORNIA INCOME TAXES AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.
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.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED JULY 14, 1995, 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 144.
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.
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses.................... 3
Condensed Financial Information................... 4
Yield Information................................. 4
Description of the Fund........................... 5
Management of the Fund............................ 10
How to Buy Fund Shares............................ 11
Shareholder Services.............................. 13
How to Redeem Fund Shares......................... 16
Shareholder Services Plan......................... 19
Dividends, Distributions and Taxes................ 19
General Information............................... 20
- ----------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------
This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fees ............................................................................. .50%
Other Expenses............................................................................... .14%
Total Fund Operating Expenses................................................................ .64%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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 $20 $36 $80
</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 the Fund's
distributor; 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."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, 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 beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------------------------------------------------------
1986(1) 1987 1988 1989 1990 1991 1992 1993 1994 1995
------- ----- ---- ----- ----- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PERSHAREDATA:
Net asset value,
beginning of year..... $1.0000 $1.0001 $1.0000 $.9996 $.9996 $.9996 $.9994 $.9993 $.9996 $.9994
------- ------- ------- ------ ------ ------- ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS:
Investment income_net..... .0108 .0386 .0419 .0493 .0551 .0492 .0352 .0235 .0192 .0257
Net realized and unrealized
gain (loss) on investments.... .0001 (.0001) (.0004) - - (.0002) (.0001) .0003 (.0002) -
------- ------- ------- ------ ------ ------- ------ ------ ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.... .0109 .0385 .0415 .0493 .0551 .0490 .0351 .0238 .0190 .0257
------- ------- ------- ------ ------ ------- ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income_net....... (.0108) (.0386) (.0419) (.0493) (.0551) (.0492) (.0352) (.0235) (.0192) (.0257)
------- ------- ------- ------ ------ ------- ------ ------ ------ ------
Net asset value,
end of year....... $1.0001 $1.0000 $.9996 $.9996 $.9996 $.9994 $.9993 $.9996 $.9994 $.9994
======== ======= ====== ======= ======= ======= ======= ======= ======= ======
TOTALINVESTMENT
RETURN............ 5.38%(2) 3.93% 4.27% 5.04% 5.65% 5.04% 3.58% 2.38% 1.94% 2.60%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets..... .01%(2) .53% .60% .61% .60% .61% .66% .65% .65% .64%
Ratio of net investment income to
average net assets..... 4.91%(2) 3.77% 4.20% 4.94% 5.50% 4.93% 3.53% 2.34% 1.92% 2.56%
Decrease reflected in above
ratios due to undertakings by
The Dreyfus Corporation...... 1.54%(2) .14% - - - - - - - -
Net assets, end of year
(000's Omitted)..... $32,060 $214,730 $352,396 $369,832 $407,438 $351,643 $322,255 $316,344 $319,627 $281,764
- ------------------
(1) From January 17, 1986 (commencement of operations) to March 31, 1986.
(2) Annualized basis.
</TABLE>
YIELD INFORMATION
From time to time, the Fund advertises its yield and effective yield.
Both yield figures are based on historical earnings and are not intended to
indicate future performance. It can be expected that these yields will
fluctuate substantially. The yield of the Fund refers to the income generated
by an investment in the Fund over a seven-day period (which period will be
stated in the advertisement). This income is then annualized. That is, the
amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The Fund's
yield and effective yield
Page 4
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
yield or effective yield calculated as described above.
Yield information is useful in reviewing the Fund's performance, but
because yields will fluctuate, such information under certain conditions may
not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitortrademark, N. Palm Beach, Fla.
33408, IBC/Donoghue's Money Fund ReportRegistration Mark, Morningstar, Inc.
and other industry publications.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE _ The Fund's goal is to provide you with as high a
level of current income exempt from Federal and State of California income
taxes as is consistent with the preservation of capital and the maintenance
of liquidity. 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. Securities
in which the Fund invests may not earn as high a level of current income as
long-term or lower quality securities which generally have less liquidity,
greater market risk and more fluctuation in market value.
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 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.
MANAGEMENT POLICIES _ It is a fundamental policy of the Fund that it will
invest at least 80% of the value of its net assets in Municipal Obligations
and at least 65% of the value of its net assets in California Municipal
Obligations, except in both instances when the Fund is maintaining a
temporary defensive posi-
Page 5
tion. The remainder of the Fund's net assets may be invested in securities
that are not California Municipal Obligations and therefore may be subject
to State of California income taxes. See "Risk Factors_Investing in California
Municipal Obligations" below, and "Dividends, Distributions and Taxes."
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method
of valuing its securities pursuant to Rule 2a-7 under the Investment Company
Act of 1940, certain requirements of which are summarized as follows. In
accordance with Rule 2a-7, the Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 13 months or less and invest only in U.S. dollar
denominated securities determined in accordance with procedures established
by the Board of Trustees to present minimal credit risks and which are rated
in one of the two highest rating categories for debt obligations by at least
two nationally recognized statistical rating organizations (or one rating
organization if the instrument was rated only by one such organization) or,
if unrated, are of comparable quality as determined in accordance with
procedures established by the Board of Trustees. Moreover, the Fund will
purchase commercial paper, or other instruments having only commercial paper
ratings, only if the security is rated in the highest rating category by at
least one nationally recognized statistical rating organization or, if
unrated, of comparable quality as determined in accordance with procedures
established by the Board of Trustees. The nationally recognized statistical
rating organizations currently rating instruments of the type the Fund may
purchase are Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch") and their
rating criteria are described in Appendix B to the Fund's Statement of
Additional Information. For further information regarding the amortized cost
method of valuing securities, see "Determination of Net Asset Value" in the
Fund's Statement of Additional Information. There can be no assurance that
the Fund will be able to maintain a stable net asset value of $1.00 per
share.
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, which
are tax exempt obligations ordinarily having stated maturities in excess of
13 months, but which permit the holder to demand payment of principal at any
time or at specified intervals not exceeding 13 months, in each case upon not
more than 30 days' notice. Variable rate demand notes include master demand
notes which are obligations that permit the Fund to invest fluctuating
amounts at varying rates of interest pursuant to direct arrangements between
the Fund, as lender, and the borrower. These notes permit daily changes in
the
Page 6
amounts borrowed. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks. Use of letters
of credit or other credit support arrangements will not adversely affect the
tax exempt status of these obligations. Because these notes 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 notes, although they are redeemable at
face value. Accordingly, where these notes 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 note 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
notes in the Fund's portfolio.
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, with remaining maturities of 13 months or less. If the
participation interest is unrated, or has been given a rating below that
which otherwise is permissible for purchase by the Fund, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank that the Trustees have 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 the Fund's
investment portfolio.
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 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 issuer 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 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
Page 7
of the seller to make payment on demand. The Fund will acquire stand-by
commitments solely to facilitate its 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. Gains realized in connection
with stand-by commitments will be taxable.
The Fund may invest up to 10% 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 the Fund deems representative of their value, the value of the Fund's
net assets could be adversely affected.
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. If the Fund purchases Taxable Investments, it will value them
using the amortized cost method and comply with the provisions of Rule 2a-7
relating to purchases of taxable instruments. When the Fund has adopted a
temporary defensive position, including 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
State of California income taxes. Under normal market conditions, the Fund
anticipates that not more than 5% 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)
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 Fund's total assets, the Fund will not make any additional
investments; (ii) invest up to 5% of its total assets in the obligations of
any issuer, except that up to 25% of the value of the Fund's total assets may
be invested (subject to the provisions of Rule 2a-7), and obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities may
be purchased, without regard to any such limitation; and (iii) invest up to
25% of its total assets in the securities of issuers in any industry,
provided that there is no such limitation on investments in Municipal
Obligations and, for temporary defensive purposes, in 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
Page 8
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, to the extent
necessary to secure permitted borrowings; and (ii) invest up to 10% 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. From mid-1990 to late
1993, the State suffered a recession with the worst economic, fiscal and
budget conditions since the 1930s. As a result, the State has experienced
recurring budget deficits for four of the last five fiscal years ended
1991-92. The State had an operating surplus of approximately $109 million in
1992-93 and $836 million in 1993-94. However, at June 30, 1994, according to
California's Department of Finance, the State's Special Fund for Economic
Uncertainties had an accumulated deficit, on a budget basis, of approximately
$1.8 billion. A further consequence of the large budget imbalances 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. To meet its cash flow
needs in the 1994-95 fiscal year, the State issued, in July and August 1994,
$4.0 billion of revenue anticipation warrants and $3.0 billion of revenue
anticipation notes. As a result of the deterioration in the State's budget
and cash situation between October 1991 and July 1994, the rating on the
State's general obligation bonds was reduced by S&P from AAA to A, by Moody's
from Aaa to A1 and by Fitch from AAA 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 principal of, such California
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.
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. The values
of fixed-income securities also may be affected by changes in the credit
rating or financial condition of the issuing entities.
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 Fund's net assets would be so committed.
Page 9
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.
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-appropriation" 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 Municipal Obligations available for purchase by the Fund and thus
reduce 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.
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.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of May 31, 1995, The Dreyfus Corporation managed or administered
approximately $76 billion in assets for more than 1.8 million investor
accounts nationwide.
Page 10
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 Trustees in accordance with
Massachusetts law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest holding companies in the
United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association, Mel
lon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a number
of companies known as Mellon Financial Services Corporations. Through its
subsidiaries, including The Dreyfus Corporation, Mellon managed approximately
$200 billion in assets as of March 31, 1995, including approximately $72
billion in mutual fund assets. As of March 31, 1995, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for approximately $680 billion in assets, including
$67 billion in mutual fund assets.
For the fiscal year ended March 31, 1995, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .50 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 the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers or others in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston,Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of FDI Distribution Services,
Inc., a provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDIHoldings,Inc., the parent company of which is
Boston Institutional Group, Inc.
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, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
GENERAL _ Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution. Share 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
Page 11
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 further vary the
initial and subsequent investment minimum requirements at any time.
Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-Automatic Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant
to the Dreyfus Step Program described under "Shareholder Services." These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You should
be aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss of a declining market.
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 investments, 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 subseq
uent 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 #8900052058/ Dreyfus
California Tax Exempt Money Market Fund, 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 redemptions 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 and Federal Funds (monies
of member banks within the Federal Reserve System which are held on deposit
at a Federal Reserve Bank) are received by the Transfer Agent. If you do not
remit Federal Funds, your payment must be converted into Federal Funds. This
usually occurs within one business day of receipt of a bank wire and within
two business days of receipt of a check drawn on a
Page 12
member bank of the Federal Reserve System. Checks drawn on banks which are
not members of the Federal Reserve System may take considerably longer to
convert into Federal Funds. Prior to receipt of Federal Funds, your money will
not be invested.
The Fund's net asset value per share is determined as of 12:00 Noon,
New York time, on each day that 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. See "Determination of Net Asset Value" in
the Fund's Statement of Additional Information.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, by the Transfer Agent, you will receive the
dividend declared that day. If your payments are received in or converted
into Federal Funds after 12:00 Noon, New York time, by the Transfer Agent,
you will begin to accrue dividends on the following business day.
Qualified institutions may telephone orders for purchase of Fund
shares. These orders will become effective at the price determined at 12:00
Noon, New York time, and the shares purchased will receive the dividend on
Fund shares declared on that day if the telephone order is placed by 12:00
Noon, New York time, and Federal Funds are received by 4:00 p.m., New York
time, on that day.
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 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 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.
PROCEDURES FOR MULTIPLE ACCOUNTS _ Special procedures have been designed for
banks and other institutions that wish to open multiple accounts. The
institution may open a single master account by filing one application with
the Transfer Agent, and may open individual sub-accounts at the same time or
at some later date. For further information, please refer to the Statement of
Additional Information.
Page 13
SHAREHOLDER SERVICES
FUND EXCHANGES _ You may 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 service, please call
1-800-645-6561 to determine if it is available and whether any conditions are
imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing, or by telephone. 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 by calling
1-800-645-6561. 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. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by all
shareholders on the account or by a separate signed Shareholder Services Form
also available by calling 1-800-645-6561. If you 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." 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: Telephone 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 an investor is exchanging into a fund that charges
a sales load, the investor may qualify for share prices which do not include
a sales load or which reflect a reduced sales load, if the shares of the Fund
from which the investor is 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 an
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 availability of Fund Exchanges 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.
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 certain 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
Page 14
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 Registration Mark _ Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum
$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 by calling 1-800-645-6561.
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 this
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
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 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 by calling 1-800-645-6561.
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 the Distributor, 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.
DREYFUS STEP PROGRAM _ Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step
Program account, you must supply the necessary information on the Fund's
Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request
the necessary authorization form(s), please call toll free 1-800-782-6620.
You may terminate your participation in this Program at any time by
discontinuing your participation in
Page 15
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege
or Dreyfus Payroll Savings Plan, as the case may be, as provided under the
terms of such Privilege(s). The Fund may modify or terminate this Program at
any time.
DREYFUS DIVIDEND OPTIONS _ Dreyfus Dividend Sweep enables you to invest
automatically dividend 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 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 may 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 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 by calling
1-800-645-6561. There is a service charge of 50cents 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. Securities
dealers, banks or 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 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, YOUR
REDEMPTION WILL BE EFFECTIVE AND THE REDEMPTION PROCEEDS WILL BE TRANSMITTED
TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PUR-
Page 16
CHASE 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 30 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 TeleTr
ansfer Privilege. The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities.
You may redeem 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
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), 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 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.
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 Exchange Medallion Signature Program, the Securities Transfer
Agent 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."
Page 17
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. 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 C
heck because of 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 not more than $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 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.
Page 18
Holders of jointly registered Fund or bank accounts may redeem through the
Dreyfus TELETRANSFER Privilege for transfer to their bank account not more
than $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, a wholly-owned subsidiary of
The Dreyfus Corporation, an amount not to exceed an annual rate of .25 of l%
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 net investment income on
each day the New York Stock Exchange is open for business. Dividends usually
are paid on the last calendar day of each month, and automatically reinvested
in additional Fund shares at net asset value or, at your option, are paid in
cash. The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. If you redeem all shares in your
account at any time during the month, all 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 c
omply 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 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 income tax, and that a substantial portion of its dividends will not
be subject to State of California personal income tax. 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 generally 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 dividend 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 and
distributions from net realized securities gains of the Fund 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 in
terest 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 March 31, 1995 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.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated October 8, 1985, and
commenced operations on January 17, 1986. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.01 per share.
Each share has one vote.
Page 20
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Fund or a Trustee. The Trust Agreement provides for indemnification from the
Fund's property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Fund. The
Trustees intend to conduct the operations of the Fund in such a way so as to
avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund. As discussed under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Transfer Agent maintains a record of your ownership and sends
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 21
[This Page Intentionally Left Blank]
Page 22
[This Page Intentionally Left Blank]
Page 23
DREYFUS
California
Tax Exempt
Money Market Fund
(LION LOGO)
Prospectus
Copy Rights 1995 Dreyfus Service Corporation 357p12071495
__________________________________________________________________________
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JULY 14, 1995
__________________________________________________________________________
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 Money Market Fund (the "Fund"), dated
July 14, 1995, as it may be 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.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS Page
Investment Objective and Management Policies . . . . . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . B-8
Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . B-12
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-21
Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . B-23
Tax Information. . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
Information About the Fund . . . . . . . . . . . . . . . . . . . . . B-24
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . B-24
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-37
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-41
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . B-50
INVESTMENT OBJECTIVE 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."
The distribution of investments (at value) in Municipal Obligations
by ratings for the fiscal year ended March 31, 1995, computed on a monthly
basis, was as follows:
<TABLE>
<CAPTION>
Fitch Investors Moody's Investors Standard & Poor's
Service, Inc. Service, Inc. Corporation Percentage
("Fitch") and/or ("Moody's") and/or ("S&P") of Value
- --------------- ------------------ ------------------ ----------
<S> <C> <C> <C>
VMIG 1\MIG 1 SP-1+\SP-1
F-1+\F-1 P-1 A1+\A1 92.6%
F-2 MIG 2 SP-2 2.0
AAA\AA Aaa\Aa AAA\AA 3.4
Not Rated Not Rated Not Rated 2.0
------
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.
Floating and variable rate demand notes are tax exempt obligations
ordinarily having stated maturities in excess of 13 months, but which
permit the holder to demand payment of principal at any time, or at
specified intervals not exceeding 13 months, in each case upon not more
than 30 days' notice. The issuer of such notes ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the note plus accrued interest upon a
specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand note 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 demand note is adjusted
automatically at specified intervals.
For the purpose of diversification under the Investment Company Act
of 1940 (the "Act"), the identification of the issuer of Municipal
Obligations depends on the terms and conditions of the security. When the
assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating
the subdivision and the security is backed only by the assets and revenues
of the subdivision, such subdivision would be deemed to be the sole is-
suer. Similarly, in the case of an industrial development bond, if that
bond is backed only by the assets and revenues of the non-governmental
user, then such non-governmental user would be deemed to be the sole
issuer. If, however, in either case, the creating government or some
other entity guarantees a security, such a guaranty would be considered a
separate security and will be treated as an issue of such government or
other entity.
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 Fund will
seek to minimize these risks by investing only in those lease obligations
that (1) are rated in one of the two highest rating categories for debt
obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the lease obligation was
rated by only one such organization), or (2) if unrated, are purchased
principally from the issuer or domestic banks or other responsible third
parties, in each case only if the seller shall have entered into an
agreement with the Fund providing that the seller or other responsible
third party will either remarket or repurchase the lease obligation within
a short period after demand by the Fund. The staff of the Securities and
Exchange Commission currently considers certain lease obligations to be
illiquid. Accordingly, not more than 10% 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. 12" below.
The Fund will not purchase tender option bonds unless (a) the demand
feature applicable thereto is exercisable by the Fund within 13 months of
the date of such purchase upon no more than 30 days' notice and thereafter
is exercisable by the Fund no less frequently than annually upon no more
than 30 days' notice and (b) at the time of such purchase, the Manager
reasonably expects (i) based upon its assessment of current and historical
interest rate trends, that prevailing short-term tax exempt rates will not
exceed the stated interest rate on the underlying Municipal Obligations at
the time of the next tender fee adjustment and (ii) that the circumstances
which might entitle the grantor of a tender option to terminate the tender
option would not occur prior to the time of the next tender opportunity.
At the time of each tender opportunity, the Fund will exercise the tender
option with respect to any tender option bonds unless the Manager
reasonably expects, (x) based upon its assessment of current and
historical interest rate trends, that prevailing short-term tax exempt
rates will not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment, and (y) that
the circumstances which might entitle the grantor of a tender option to
terminate the tender option would not occur prior to the time of the next
tender opportunity. The Fund will exercise the tender feature with
respect to tender option bonds, or otherwise dispose of its tender option
bonds, prior to the time the tender option is scheduled to expire pursuant
to the terms of the agreement under which the tender option is granted.
The Fund otherwise will comply with the provisions of Rule 2a-7 in
connection with the purchase of tender option bonds, including, without
limitation, the requisite determination by the Board of Trustees that the
tender option bonds in question meet the quality standards described in
Rule 2a-7, which, in the case of a tender option bond subject to a
conditional demand feature, would include a determination that the
security has received both the required short-term and long-term quality
rating or is determined to be of comparable quality. In the event of a
default of the Municipal Obligation underlying a tender option bond, or
the termination of the tender option agreement, the Fund would look to the
maturity date of the underlying security for purposes of compliance with
Rule 2a-7 and, if its remaining maturity was greater than 13 months, the
Fund would sell the security as soon as would be practicable. 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 it is valued at fair value.
Ratings of Municipal Obligations. If, subsequent to its purchase by
the Fund, (a) an issue of rated Municipal Obligations ceases to be rated
in the highest rating category by at least two rating organizations (or
one rating organization if the instrument was rated by only one such
organization) or the Fund's Board determines that it is no longer of
comparable quality or (b) the Manager becomes aware that any portfolio
security not so highly rated or any unrated security has been given a
rating by any rating organization below the rating organization's second
highest rating category, the Fund's Board will reassess promptly whether
such security presents minimal credit risk and will cause the Fund to take
such action as it determines is in the best interest of the Fund and its
shareholders; provided that the reassessment required by clause (b) is not
required if the portfolio security is disposed of or matures within five
business days of the Manager becoming aware of the new rating and the
Fund's Board is subsequently notified of the Manager's actions.
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
and the creditworthiness of the issuers of such securities.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted 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. 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 has
directed the Manager 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 illiqudity in the Fund's portfolio during such period.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include Treasury
securities, which differ in their interest rates, maturities and times of
issuance. 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. 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 face
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 subcustodian 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 by the Fund 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.
Risk Factors -- Investing in California Municipal Obligations.
Investors 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. From mid-1990 to late 1993, the State suffered a recession
with the worst economic, fiscal and budget conditions since the 1930s. As
a result, the State has experienced recurring budget deficits for four of
the last five fiscal years ended 1991-92. The State had an operating
surplus of approximately $109 million in 1992-93 and $836 million in 1993-
94. However, at June 30, 1994, according to California's Department of
Finance, the State's Special Fund for Economic Uncertainties had an
accumulated deficit, on a budget basis, of approximately $1.8 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.
To meet its cash flow needs in the 1994-95 fiscal year, the State issued,
in July and August 1994, $4.0 billion of revenue anticipation warrants and
$3.0 billion of revenue anticipation notes. As a result of the
deterioration in the State's budget and cash situation between October
1991 and July 1994, the rating on the State's general obligation bonds was
reduced by S&P from AAA to A, by Moody's from Aaa to A1 and by Fitch from
AAA 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 principal of, such California Municipal Obligations.
Investors should review Appendix A which sets forth additional information
relating to investing in California Municipal Obligations.
Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 10 as fundamental policies. Fundamental
policies cannot be changed without approval by the holders of a majority
(as defined in the Act) of the Fund's outstanding voting shares.
Investment restrictions numbered 11 and 12 are not fundamental policies
and may be changed by a vote of a majority of the Fund's Trustees at any
time. The Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Fund's Prospectus.
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.
3. Sell securities short or purchase securities on margin.
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.
5. Purchase or sell real estate, real estate investment trust
securities, 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.
6. Make loans to others, except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to
above and in the Fund's Prospectus.
7. Invest more than 15% of its assets in the obligations of any one
bank for temporary defensive purposes, or invest more than 5% of its
assets in the obligations of any other issuer, except that up to 25% of
the value of the Fund's total assets may be invested, and securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities may be purchased, without regard to any such
limitations. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Fund will not invest
more than 5% of its assets in the obligations of any one bank, except that
up to 25% of the value of the Fund's total assets may be invested without
regard to such limitation.
8. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be 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.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
11. Pledge, mortgage, hypothecate or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
12. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid if, in the aggregate, more than 10% of the value of the Fund's
net assets would be so invested.
For purposes of Investment Restriction No. 8, 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 or decrease 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
Trustees 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 Trustee who is an "interested person" of the Fund,
as defined in the Act, is indicated by an asterisk.
Trustees of the Fund
*DAVID W. BURKE, Trustee. Consultant to the Manager since August 1994.
From October 1990 to August, 1994, Vice President and Chief
Administrative Officer of 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. Mr. Burke is also a Board member of 52
other funds in the Dreyfus Family of Funds. He is 58 years old and
his address is 200 Park Avenue, New York, New York 10166.
HODDING CARTER, III, Trustee. President of MainStreet, a television
production company. Since 1991, a syndicated columnist for United
Media - NEA. From 1985 to 1986, he was editor and chief
correspondent of "Capitol Journal," a weekly Public Broadcasting
System ("PBS") series on Congress. From 1981 to 1984, he was
anchorman and chief correspondent for the PBS's "Inside Story," a
regularly scheduled half-hour critique of press performance. From
1977 to July 1, 1980, Mr. Carter served as Assistant Secretary of
State for public affairs and as Department of State spokesman. Mr.
Carter is also a Board member of seven other funds in the Dreyfus
Family of Funds. He is 59 years old and his address is c/o
MainStreet, 918 Sixteenth Street, N.W., Washington, D.C. 20006.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, and, until
August 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is Chairman of the Board of Noel Group, Inc., a venture capital
company; a trustee of Bucknell University; a director of the Muscular
Dystrophy Association; HealthPlan Services Corporation, Belding
Heminway, Inc., a manufacturer and marketer of industrial threads,
specialty yarns, home furnishings, and fabrics; Curtis Industries.
Inc., a national distributor of security products, chemicals and
automotive and other hardware, Simmons Outdoor Corporation and
Staffing Resources, Inc. Mr. DiMartino is also a Board member of 93
other funds in the Dreyfus Family of Funds. He is 51 years old and
his address is 200 Park Avenue, New York, New York 10166.
EHUD HOUMINER, Trustee. Since July 1991, Professor and Executive-in-
Residence at the Columbia Business School, Columbia University. From
1992 to 1995, he was a consultant to Bear, Stearns & Co. Inc.,
investment bankers. He was President and Chief Executive Officer of
Philip Morris USA, manufacturers of consumer products, from December
1988 until September 1990. He also is a director of Avnet Inc. Mr.
Houminer is also a Board member of 11 other funds in the Dreyfus
Family of Funds. He is 54 years old and his address is c/o Columbia
Business School, Columbia University, Uris Hall, Room 526, New York,
New York 10027.
RICHARD C. LEONE, Trustee. President of The Twentieth Century Fund, Inc.,
a tax exempt research foundation engaged in economic, political and
social policy studies. From April 1990 to March 1994, Chairman, and
from April 1988 to March 1994, a Commissioner of The Port Authority
of New York and New Jersey. A member in 1985, and from January 1986
to January 1989, Managing Director of Dillon, Read & Co. Inc. Mr.
Leone is also a director of Resource Mortgage Capital, Inc. Mr.
Leone is also a Board member of seven other funds in the Dreyfus
Family of Funds. He is 54 years old and his address is 41 East 70th
Street, New York, New York 10021.
HANS C. MAUTNER, Trustee. Chairman, Trustee and Chief Executive Officer
of Corporate Property Investors, a real estate investment company.
Since January 1986, a Director of Julius Baer Investment Management,
Inc., a wholly-owned subsidiary of Julius Baer, Securities Inc. Mr.
Mautner is also a Board member of seven other funds in the Dreyfus
Family of Funds. He is 57 years old and his address is 305 East 47th
Street, New York, New York 10017.
ROBIN A, SMITH, Trustee. Since 1993, Vice President, and from March 1992
to October 1993, Executive Director, of One to One Partnership, Inc.,
a national non-profit organization that seeks to promote mentoring
and economic empowerment for at-risk youths. From June 1986 to
February 1992, she was an investment banker with Goldman, Sachs, &
Co. She is also a Trustee of Westover School and a Board member of
the Jacobs A. Riis Settlement House and the High/Slop Education
Research Foundation. Miss Smith is also a Board member of seven
other Funds in the Dreyfus Family of Funds. She is 31 years old and
her address is 280 Park Avenue, New York, New York 10010.
JOHN E. ZUCCOTTI, Trustee. President and Chief Executive Officer of
Olympia & York Companies (U.S.A.) and a member of its Board of
Directors since the inception of a Board on July 27, 1993. From 1986
to 1990, he was a partner in the law firm of Brown & Wood and from
1978 to 1986, a partner in the law firm of Tufo & Zuccotti. First
Deputy Mayor of the City of New York from December 1975 to June 1977,
and Chairman of the City Planning Commission for the City of New York
from 1973 to 1975. Mr. Zuccotti is also a Director of Starret
Housing Corporation; a construction development and real estate
management corporation. Mr. Zuccotti is also a Board member of seven
other funds in the Dreyfus Family of Funds. He is 57 years old and
his address is 237 Park Avenue, New York, New York 10017.
Ordinarily, no meetings of shareholders will be held for the purpose
of electing Trustees unless and until such time as less than a majority of
the Trustees holding office have been elected by shareholders, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of not less
than two-thirds of the outstanding shares of the Fund may remove a Trustee
through a declaration in writing or by vote cast in person or by proxy at
a meeting called for that purpose. The Trustees are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
For so long as the plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the
Fund who are not "interested persons' (as defined in the Act) will be
selected and nominated by the Board members who are not "interested
persons" of the Fund.
The Fund typically pays its Trustees an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation, for the fiscal year
ended March 31, 1995. The aggregate amount of compensation paid to each
Trustee by the Fund, and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member for the year ended December 31,
1994, was as follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
-------------- ------------------ -------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
David W. Burke $1,757 none none $ 27,898
Hodding Carter, III $3,500 none none $ 33,625
Joseph S. DiMartino $4,375** none none $445,000***
Ehud Houminer $3,250 none none $ 25,701
Richard C. Leone $3,500 none none $ 33,125
Hans C. Mautner $3,250 none none $ 33,625
Robin A. Smith $3,500** none none $ 35,000***
John E. Zuccotti $3,500 none none $ 33,625
</TABLE>
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $427 for all Trustees as a group.
** Estimated amount for the current fiscal year ending March 31, 1996.
*** Estimated amount for the year ending December 31, 1995.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent company of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray, and prior to August 1990,
he was employed as an Associate at Sidley & Austin. He is 30 years
old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September
1992 to August 1994, he was an attorney with the Board of Governors
of the Federal Reserve System. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to
August 1994, he was manager of the High Performance Fabric Division
of Springs Industries Inc. He is 33 years old.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager. He is 59 years old.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1992 to July 1994, he was
a Senior Legal Product Manager and, from January 1990 to January
1992, he was mutual fund accountant, for The Boston Company Advisors,
Inc. He is 28 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was
Compliance Officer for The Manager's Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on June 23, 1995.
The following entities are known by the Fund to own, of record or
beneficially, 5% or more of the Fund's outstanding voting securities as of
June 23, 1995: Virginia & Co. First Interstate Bank of Los Angeles,
California -- 18.0167%; and Sanwa Bank California -- 7.1208%.
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 August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Trustees 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 Trustees 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 on August 4, 1994, and was last
approved by the Fund's Board of Trustees, including a majority of the
Trustees who are not "interested persons" of any party to the Agreement,
at a meeting held on October 24, 1994. The Agreement is terminable
without penalty, on not more than 60 days' notice, by the Fund's Board of
Trustees or by vote of the holders of a majority of the Fund's shares, or,
on 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 following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Phillip L. Toia, Vice Chairman--Operations
and Administration; Paul H. Snyder, Vice President--Finance and Chief
Financial Officer; Daniel C. Maclean, Vice President and General Counsel;
Henry D. Gottmann, Vice President--Retail Sales and Services; Barbara E.
Casey, Vice President--Retirement Services; Diane M. Coffey, Vice
President--Corporate Communications; Elie M. Genadry, Vice President--
Institutional Sales; William F. Glavin, Jr., Vice President--Product
Management; Andrew S. Wasser, Vice President--Information Services;
Jeffrey N. Nachman, Vice President--Mutual Fund Accounting; Katherine C.
Wickham, Vice President--Human Resources; Mark N. Jacobs, Vice President--
Fund Legal and Secretary; Maurice Bendrihem, Controller; Elvira Oslapas,
Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E.
Friedman, Lawrence M. Greene, Julian M. Smerling and David B. Truman,
directors.
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 Trustees. The Manager is responsible for investment
decisions, and provides the Fund with portfolio managers who are
authorized by the Board of Trustees to execute purchases and sales of
securities. The Fund's portfolio managers 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 the Trustees' 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 Trustees 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
maintaining the Fund's existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports and
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 maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. 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 .50 of 1% of the value of
the Fund's average daily net assets. The management fees paid for the
fiscal years ended March 31, 1993, 1994 and 1995 amounted to $1,586,657,
$1,527,915 and $1,488,567, respectively. All fees and expenses are
accrued daily and deducted before declaration of dividends to investors.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, 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 March 31, 1995, no expense reimbursements
were made pursuant to such limitation.
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 Dreyfus Service Corporation 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.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Trustees, and by
the Trustees who are not "interested persons" (as defined in the Act) of
the Fund or the Manager 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 Trustees cast in person at a meeting
called for the purpose of voting on the Plan. The Plan is terminable at
any time by vote of a majority of the Trustees who are not "interested
persons" and have no direct or indirect financial interest in the
operation of the Plan.
For the fiscal year ended March 31, 1995, $88,801 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.
Using Federal Funds. The Shareholder Services Group, Inc., the
Fund's transfer and dividend disbursing agent (the "Transfer Agent"), or
the Fund may attempt to notify the investor upon receipt of checks drawn
on banks that are not members of the Federal Reserve System as to the
possible delay in conversion into Federal Funds and may attempt to arrange
for a better means of transmitting the money. If the investor is a
customer of a securities dealer, bank or other financial institution and
his order to purchase Fund shares is paid for other than in Federal Funds,
the securities dealer, bank or other financial institution, acting on
behalf of its customer, will complete the conversion into, or itself
advance, Federal Funds generally on the business day following receipt of
the customer order. The order is effective only when so converted and
received by the Transfer Agent. An order for the purchase of Fund shares
placed by an investor with sufficient Federal Funds or cash balance in his
brokerage account with a securities dealer, bank or other financial
institution will become effective on the day that the order, including
Federal Funds, is received by the Transfer Agent.
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 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 the 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."
Procedures for Multiple Accounts. The Transfer Agent will provide
each institution with a written confirmation for each transaction in a
sub-account at no additional charge. Upon receipt of funds for investment
by interbank wire, the Transfer Agent promptly will confirm the receipt of
the investment by telephone or return wire to the transmitting bank, if
the investor so requests.
The Transfer Agent also will provide each institution with a monthly
statement setting forth, for each sub-account, the share balance, income
earned for the month, income earned for the year to date and the total
current value of the account.
Service Charges. There are no sales or service charges by the Fund
or the Distributor, although investment dealers, banks and other financial
institutions may make reasonable charges to investors for their services.
The services provided and fees therefor are established by each
institution acting independently of the Fund. The Fund has been given to
understand that fees may be charged for customer services including, but
not limited to, same-day investment of client funds; same-day access to
client funds; advice to customers about the status of their accounts,
yield currently being paid, or income earned to date; provision of
periodic account statements showing security positions; other services
available from the dealer, bank or financial institution; and assistance
with inquiries related to their investment. Any such fees will be
deducted monthly from dividends, 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 also
may require an investor to invest more than the minimum stated investment;
not take physical delivery of share certificates; not require that
redemption checks be issued in his name; 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 Fund
without imposition of any maintenance or service charges other than those
already described herein. In some states, banks or other institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
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 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 same business day if the Transfer Agent receives the
redemption request in proper form prior to 12:00 Noon, New York time, on
such day; otherwise, the Fund will initiate payment on the next business
day. 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 and 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 transmissions:
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 "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they also have 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."
Share 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 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 prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Trustees reserves the right to make payments in whole
or in part in securities or other assets 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 Fund's portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
Suspension of Redemption. 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."
Fund Exchanges. 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 request an exchange an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "NO" box on the
account application, indicating that the investor specifically refuses
this Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic 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.
Dreyfus 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 "Fund
Exchanges." 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.
Fund Exchanges and the 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 by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service 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. 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, paid by 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."
Amortized Cost Pricing. The valuation of the Fund's portfolio
securities is based upon their amortized cost, which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument.
The Board of Trustees has established, as a particular responsibility
within the overall duty of care owed to the Fund's investors, procedures
reasonably designed to stabilize the Fund's price per share as computed
for the purpose of sales and redemptions at $1.00. Such procedures
include review of the Fund's portfolio holdings by the Board of Trustees,
at such intervals as it deems appropriate, to determine whether the Fund's
net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market
quotations and market equivalents used in such review are obtained from an
independent pricing service (the "Service") approved by the Board of
Trustees. The service values the Fund's investments based on methods
which include consideration of: yields or prices of municipal bonds of
comparable quality, coupon, maturity and type; indications of values from
dealers; and general market conditions. The Service also may employ
electronic data processing techniques and/or a matrix system to determine
valuations.
The extent of any deviation between the Fund's net asset value based
upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by the Board of Trustees. If
such deviation exceeds 1/2 of 1%, the Trustees promptly will consider what
action, if any, will be initiated. In the event the Board of Trustees
determines that a deviation exists which may result in material dilution
or other unfair results to investors or existing shareholders, it has
agreed to take such corrective action as it regards as necessary and
appropriate, including: selling portfolio instruments prior to maturity
to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends or paying distributions from capital or
capital gains; redeeming shares in kind; or establishing a net asset value
per share by using available market quotations or market equivalents.
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.
YIELD INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Yield
Information."
For the seven-day period ended March 31, 1995, the Fund's yield was
3.30% and effective yield was 3.35%. Yield is computed in accordance with
a standardized method which involves determining the net change in the
value of a hypothetical pre-existing Fund account having a balance of one
share at the beginning of a seven calendar day period for which yield is
to be quoted, dividing the net change by the value of the account at the
beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of additional shares
purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by adding 1 to
the base period return (calculated as described above), raising that sum
to a power equal to 365 divided by 7, and subtracting 1 from the result.
Based upon a combined 1995 Federal and California effective tax rate
of 46.24%, which reflects the Federal deduction for the California tax,
the Fund's tax equivalent yield for the seven-day period ended March 31,
1995 was 6.14%. Tax equivalent yield is computed by dividing that portion
of the yield or effective 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 noted above represents the application of
the highest Federal and State of California marginal personal income tax
rates presently in effect. For Federal income tax purposes, a 39.6% tax
rate has been used. For California income tax purposes, a 11.0% tax rate
for individuals, trust and estates 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 yields. 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.
Yields will fluctuate and are not necessarily representative of
future results. Each investor should remember that yield is a function of
the type and quality of the instruments in the portfolio, portfolio
maturity and operating expenses. An investor's principal in the Fund is
not guaranteed. See "Determination of Net Asset Value" for a discussion
of the manner in which the Fund's price per share is determined.
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 indicative of the
Fund's past or future performance.
Advertising materials for the Fund also may refer to or discuss then-
current or past economic conditions, developments and/or events, including
those relating to actual or proposed tax legislation. From time to time,
advertising materials for the Fund may also refer to statistical or other
information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company
Institute.
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, although 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 portfolio
managers 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.
TAX INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain or loss. However, all or a portion of any
gains realized from the sale or other disposition of certain market
discount bonds will be treated as ordinary income under Section 1276 of
the Internal Revenue Code of 1986, as amended.
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 the 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 distributed by the Fund 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.
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
non-assessable. 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.
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, 90 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 beneficial interest being sold pursuant to the Fund's
Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS - INVESTING
IN CALIFORNIA MUNICIPAL OBLIGATIONS
Certain California (the "State") constitutional amendments,
legislative measures, executive orders, civil actions and voter
initiatives, as well as the general financial condition of the State,
could adversely affect the ability of issuers of California Municipal
Obligations to pay interest and principal on such 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. From mid-1990 to late 1993, the State suffered
a recession with the worst economic, fiscal and budget conditions since
the 1930s. Construction, manufacturing (especially aerospace), exports
and financial services, among others, were all severely affected. Job
losses were the worst of any post-war recession. Unemployment reached
10.1% in January 1994, but fell sharply to 7.7% in October and November
1994. According to the State's Department of Finance, recovery from the
recession in California began in 1994.
The recession seriously affected State tax revenues, which basically
mirror economic conditions. It also caused increased expenditures for
health and welfare programs. The State has also 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 State General Fund. As a result, the
State experienced recurring budget deficits in the late 1980s and early
1990s. The State Controller reported that expenditures exceeded revenues
for four of the five fiscal years ending with 1991-92. The State had an
operating surplus of approximately $109 million in 1992-93 and $836
million in 1993-94. However, at June 30, 1994, according to the
Department of Finance, the State's Special Fund for Economic Uncertainties
("SFEU") still had a deficit, on a budget basis, of approximately $1.8
billion.
The accumulated budget deficits over the past several years, together
with expenditures for school funding which have not been reflected in the
budget, and reduction of available internal borrowable funds, have
combined to significantly deplete the State's cash resources to pay its
ongoing expenses. In order to meet its cash needs, the State has had to
rely for several years on a series of external borrowings, including
borrowings past the end of a fiscal year. Such borrowings are expected to
continue in future fiscal years. To meet its cash flow needs in the 1994-
95 fiscal year the State issued, in July and August 1994, $4.0 billion of
revenue anticipation warrants which mature on April 25, 1996, and $3.0
billion of revenue anticipation notes which matured on June 28, 1995.
As a result of the deterioration in the State's budget and cash
situation, the rating agencies reduced the State's credit ratings.
Between October 1991 and July 1994, the rating on the State's general
obligation bonds was reduced by S&P from "AAA" to "A," by Moody's from
"Aaa" to "A1" and by Fitch from "AAA" to "A."
The 1994-95 Fiscal Year Budget (as updated in the January 10, 1995
Governor's Budget) is projected to have $42.4 billion of General Fund
revenues and transfers and $41.7 billion of budgeted expenditures. In
addition, the 1994-95 Budget Act anticipates deferring retirement of about
$1 billion of the accumulated budget deficit to the 1995-96 fiscal year
when it is intended to be fully retired by June 30, 1996.
The Governor's Budget for 1995-96 proposes General Fund revenues and
transfers of $42.5 billion and expenditures of $41.7 billion, which would
leave a balance of approximately $92 million in the budget reserve, the
SFEU, at June 30, 1996 after repayment of the accumulated budget deficits.
The Budget proposal is based on a number of assumptions, including receipt
of $830 million from the Federal government to offset costs of
undocumented and refugee immigrants.
On December 6, 1994, Orange County, California (the "County"),
together with its pooled investment funds (the "Funds") filed for
protection under Chapter 9 of the Federal Bankruptcy Code, after reports
that the Funds had suffered significant market losses in their
investments, causing a liquidity crisis for the Funds and the County.
More than 180 other public entities, most of which, but not all, are
located in the County, were also depositors in the Funds. As of mid-
January 1995, following a restructuring of most of the Funds' assets to
increase their liquidity and reduce their exposure to interest rate
increases, the County estimated the Funds' loss at about $1.69 billion, or
about 23% of their initial deposits of approximately $7.5 billion. Many
of the entities which deposited monies in the Funds, including the County,
are facing cash flow difficulties because of the bankruptcy filing and may
be required to reduce programs or capital projects. This also may effect
their ability to meet their outstanding obligations.
The State has no existing obligation with respect to any outstanding
obligations or securities of the County or any of the other participating
entities. However, in the event the County is unable to maintain county
administered State programs because of insufficient resources, it may be
necessary for the State to intervene, but the State cannot presently
predict what, if any, action may occur.
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. Although some individuals
and businesses suffered losses totaling in the billions of dollars, the
overall effect of the earthquake on the regional and State economy is not
expected to be serious.
State Finances. State moneys are segregated into the General Fund
and approximately 600 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, 1994, the General Fund had outstanding loans in the aggregate
principal amount of $5.2 billion, which consisted of $4.0 billion of
internal loans to the General Fund from the SFEU and other Special Funds
and $1.2 billion of external loans represented by the 1994 revenue
anticipation warrants.
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 $7.53 billion under the limit.
The limit for the 1993-94 fiscal year was $36.60 billion, and the
appropriations subject to limitation were $6.55 billion under the limit.
The estimated limit for the 1994-95 fiscal year is $37.55 billion, and the
appropriations subject to limitations are estimated to be $6.05 billion
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 $18.4 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 the 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 of $4,217 per
pupil. The 1993-94 Governor's Budget subsequently proposed deficiency
funding of $121 million for school apportionments and special education,
increasing funding per pupil in 1992-93 to $4,244. 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 and
community colleges. Chapter 66 also adjusted the "Test 1" percentage to
35% to reflect the property tax shift among local government agencies.
The 1994-95 Budget Act appropriated $14.4 billion of Proposition 98
funds for K14 schools based on Test 2. This exceeds the minimum
Proposition 98 guarantee by $8 million to maintain K-12 funding per pupil
at $4,217. Based upon updated State revenues, growth rates and inflation
factors, the 1994-95 Budget Act appropriated an additional $286 million
within Proposition 98 for the 1993-94 fiscal year, to reflect a need in
appropriations for school districts and county offices of education, as
well as an anticipated deficiency in special education fundings. These
and other minor appropriation adjustments increase the 1993-94 Proposition
98 guarantee to $13.8 billion, which exceeds the minimum guarantee in that
year by $272 million and provides per pupil funding of $4,225.
The 1995-96 Governor's Budget adjusts the 1993-94 minimum guarantee
to reflect changes in enrollment and inflation, and 1993-94 Proposition 98
appropriations were increased to $14.1 billion, primarily to reflect
changes in the statutory continuous appropriation for apportionments. The
revised appropriations now exceed the minimum guarantee by $32 million.
This appropriation level still provides per-pupil funding of $4,225.
The 1994-95 Proposition 98 minimum guarantee also has been adjusted
for changes in factors described above, and is now calculated to be $14.9
billion. Within the minimum guarantee, the dollars per pupil have been
maintained at the prior year's level; consequently, the 1994-95 minimum
guarantee now includes a loan repayment of $135 million, and the per-pupil
funding increases to $4,231.
The 1995-96 Governor's Budget proposes to appropriate $15.9 billion
of Proposition 98 funds to K-14 to meet the guarantee level. Included
within the guarantee is a loan repayment of $379 million for the combined
outstanding loans of $1.76 billion. Funding per pupil is estimated to
increase by $61 over 1994-95 to $4,292.
Sources of Tax Revenue. The California personal income tax, which in
1993-94 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 35% of General
Fund revenue in 1993-94. Bank and corporation tax revenues comprised
about 12% of General Fund revenue in 1993-94. 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. In the years following
enactment of the Federal Tax Reform Act of 1986, and conforming changes to
the State's tax laws, taxpayer behavior became more difficult to predict,
and the State experienced a series of fiscal years in which revenue came
in significantly higher or lower than original estimates. The 1989-90
fiscal year ended with revenues below estimates and the SFEU was fully
depleted by June 30, 1990. This date essentially coincided with the date
of the most recent recession, and the State subsequently accumulated a
budget deficit in the SFEU approaching $2.8 billion at its peak. The
State's budget problems in recent years also have been caused by a
structural imbalance which has been identified by the current and previous
Administrations. The largest General Fund programs -- K-14 education,
health, welfare and corrections -- were increasing faster than the revenue
base, driven by the State's rapid population increases.
Starting in the 1990-91 fiscal year, each budget required
multibillion dollar actions to bring projected revenues and expenditures
into balance and to close large "budget gaps" which were identified. The
Legislature and Governor eventually agreed on significant cuts in program
expenditures, some transfers of program responsibilities and funding from
the State to local governments, revenue increases (particularly in the
1991-92 fiscal year budget), and various one-time adjustments and
accounting changes. However, as the recession took hold and deepened
after the summer of 1990, revenues dropped sharply and expenditures for
health and welfare programs increased as job losses mounted, so that the
State ended each of the 1990-91 and 1991-92 fiscal years with an
unanticipated deficit in the budget reserve, the SFEU, as compared to
projected positive balances.
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 a 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.
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 a
balance in the SFEU of $28 million on June 30, 1993.
The $7.9 billion budget gap was closed primarily through cuts in the
program expenditures (principally for health and welfare programs, aid to
schools and support for higher education), together with some increases in
revenues from accelerated collections and changes in tax laws to confirm
to Federal law changes, and a variety of on-time inter-fund transfers and
deferrals. The other major component of the budget compromise was a law
requiring local governments to transfer a total of $1.3 billion to K-12
school and community college districts, thereby reducing by that amount
General Fund support for those districts under Proposition 98.
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. The 1993-94
fiscal year represented the third consecutive year the Governor and the
Legislature were faced with a very difficult budget environment, requiring
revenue actions and expenditure cuts totaling billions of dollars to
produce a balanced budget. 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 that matured 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.
Administration reports during the course of the 1993-94 fiscal year
indicated that while economic recovery appeared to have started in the
second half of the fiscal year, recessionary conditions continued longer
than had been anticipated when the 1993-94 Budget Act was adopted.
Overall, revenues for the 1993-94 fiscal year were about $800 million
lower than original projections, and expenditures were about $780 million
higher, primarily because of higher health and welfare caseloads, lower
property taxes which require greater State support for K-14 education to
make up to shortfall, and lower than anticipated Federal government
payments for immigration-related costs. The reports in May and June 1994,
indicated that revenues in the second half of the 1993-94 fiscal year were
very close to the projections made in the Governor's Budget of January 10,
1994, which was consistent with a slow turn around in the economy.
The Department of Finance's July 1994 Bulletin, which included final
June receipts, reported that June revenues were $114 million (2.5%) above
projection, with final end-of-year results at $377 million (about 1%)
above the May Revision projections. Part of this result was due to the
end-of-year adjustments and reconciliations. Personal income tax and
sales tax continued to track projections. The largest factor in the
higher than anticipated revenues was from bank and corporation taxes,
which were $140 million (18.4%) above projection in June.
During the 1993-94 fiscal year, the State implemented the Deficit
Retirement Plan, which was part of the 1993-94 Budget Act, by issuing $1.2
billion of revenue anticipation warrants in February 1994 that matured
December 21, 1994. This borrowing reduced the cash deficit at the end of
the 1993-94 fiscal year. Nevertheless, because of the $1.5 billion
variance from the original 1993-94 Budget Act assumptions, the General
Fund ended the fiscal year at June 30, 1994 carrying forward an
accumulated deficit of approximately $1.8 billion.
Because of the revenue shortfall and the State's reduced internal
borrowable cash resources, in addition to the $1.2 billion of revenue
anticipation warrants issued as part of the Deficit Retirement Plan, the
State issued an additional $2.0 billion of revenue anticipation warrants
that matured July 26, 1994, which were needed to fund the State's
obligations and expenses through the end of the 1993-94 fiscal year.
The 1994-95 fiscal year represented the fourth consecutive year the
Governor and Legislature were faced with a very difficult budget
environment to produce a balanced budget. Many program cost and budgetary
adjustments had already been made in the last three years. The Governor's
Budget Proposal, as updated in May and June 1994, recognized that the
accumulated deficit could not be repaid in one year, and proposed a two-
year solution. The budget proposal set forth revenue and expenditure
forecasts and revenue and expenditure proposals which estimated operating
surpluses for the budget for both 1994-95 and 1995-96, and lead to the
elimination of the accumulated budget deficit, estimated at about $1.8
billion at June 30, 1994, by June 30, 1996.
The 1994-95 Budget Act, signed by the Governor on July 8, 1994,
projected revenues and transfers of $41.9 billion, $2.1 billion higher
than revenues in 1993-94. This reflected the Administration's forecast of
an improving economy. Also included in this figure was the projected
receipt of about $360 million from the Federal government to reimburse the
State's cost of incarcerating undocumented immigrants, most of which
eventually was not received.
The 1994-95 Budget Act projected Special Fund revenues of $12.1
billion, a decrease of 2.4% from 1993-94 estimated revenues.
The 1994-95 Budget Act projected General Fund expenditures of $40.9
billion, an increase of $1.6 billion over the 1993-94 fiscal year. The
1994-95 Budget Act also projected Special Fund expenditures of $13.7
billion, a 5.4% increase over 1993-94 fiscal year estimated expenditures.
The 1994-95 Budget Act contained no tax increases. Under legislation
enacted for the 1993-94 Budget Act, the renters' tax credit was suspended
for two years (1993 and 1994). A ballot proposition to permanently
restore the renters' tax credit after 1995 failed at the June 1994
election. The Legislature enacted a further one-year suspension of the
renters' tax credit, for 1995, saving about $390 million in the 1995-96
fiscal year.
The 1994-95 Budget Act assumed that the State would use a cash flow
borrowing program in 1994-95 which combines one-year notes and two-year
warrants, which were issued. Issuance of the warrants allows the State
to defer repayment of approximately $1.0 billion of its accumulated budget
deficit into the 1995-96 fiscal year. The Budget Adjustment Law enacted
along with the 1994-95 Budget Act is designed to ensure that the warrants
will be repaid in the 1995-96 fiscal year.
The Department of Finance Bulletin for April 1995 reported that
General Fund revenues for March 1995 were $28 million, or 1.1%, below
forecast, and that year-to-date General Fund revenues were $110 million,
or 0.4%, below forecast.
Initial analysis of the Federal fiscal year 1995 budget by the
Department of Finance indicates that about $98 million was appropriated
for California to offset costs of incarceration of undocumented and
refugee immigrants, less than the $356 million which was assumed in the
State's 1994-95 Budget Act.
For the first time in four years, the State enters the upcoming 1995-
96 fiscal year with strengthening revenues based on an improving economy.
On January 10, 1995, the Governor presented his 1995-96 Fiscal Year Budget
Proposal (the "Proposed Budget"). The Proposed Budget estimates General
Fund revenues and transfers of $42.5 billion (an increase of 0.2% over
1994-95). This nominal increase from 1994-95 fiscal year reflects the
Governor's realignment proposal and the first year of his tax cut
proposal. Without these two proposals, General Fund revenues would be
projected at approximately $43.8 billion, or an increase of 3.3% over
1994-95. Expenditures are estimated at $41.7 billion (essentially
unchanged from 1994-95). Special Fund revenues are estimated at $13.5
billion (10.7% higher than 1994-95) and Special Fund expenditures are
estimated at $13.8 billion (12.2% higher than 1994-95). The Proposed
Budget projects that the General Fund will end the fiscal year at June 30,
1996 with a budget surplus in SFEU of about $92 million, or less than 1%
of General Fund expenditures, and will have repaid all of the accumulated
budget deficits.
Recent Economic Trends. Revised employment data indicate that
California's recession ended in 1993, and following a period of stability,
a solid recovery is now underway. The State's unemployment rate fell
sharply last year, from 10.1% in January to 7.7% in October and November
1994. The gap between the national and California jobless rates narrowed
from 3.4 percentage points at the beginning of 1994 to an average of 2
percentage points in October and November 1994. The number of unemployed
Californians fell by nearly 400,000 during the year, while civilian
employment increased more than 300,000 in 1994.
Other indicators, including retail sales, homebuilding activity,
existing home sales and bank lending volume all confirm the State's
recovery.
Personal income was severely affected by the Northridge Earthquake,
which reduced the first quarter 1994 figure by $22 billion at an annual
rate, reflecting the uninsured damage to residences and unincorporated
businesses. As a result, personal income growth for all of 1994 was about
4.2%. However, excluding the Northridge effects, growth would have been
in excess of 5%. Personal income is expected to grow 6.6% for 1995.
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 of 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. The AA rating may be modified by the addition of a plus or minus
sign to show relative standing within the 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 (+)
designation.
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. Bonds in the Aa category which
Moody's believes possess the strongest investment attributes are
designated by the symbol Aa1.
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 run.
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. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the 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 designation 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 wide range of financial
markets and assured sources of alternate liquidity.
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 issuer, 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 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.
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 satisfactory
degree of assurance for timely payments, but the margin of safety is not
as great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
STATEMENT OF INVESTMENTS MARCH 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS-100.0% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
City of Alameda, TRAN 4.35%, 7/5/95......................................... $ 7,200,000 $ 7,210,655
Alameda County, MFMR, Refunding, VRDN (Quail Run Apartments)
4%, Series A (LOC; Federal National Mortgage Association) (a,b)......... 2,900,000 2,900,000
Burbank Redevelopment Agency, MFHR, VRDN
4.05%, Series A (LOC; Coast Savings and Loan Association) (a,b)......... 10,400,000 10,400,000
California Department of Water, Water Systems Resource Revenue, VRDN (Central
Valley
Project) 3.45%, Series N-V (LOC; Canadian Imperial Bank of Commerce) (a,b) 7,000,000 7,000,000
California Health Facilities Financing Authority, Revenue, VRDN:
(Catholic Health Care) 3.95%, Series B (Insured; MBIA) (a).............. 7,600,000 7,600,000
(Pooled Loan Program) 4.20%, Series A (LOC; Sanwa Bank) (a,b)........... 6,600,000 6,600,000
(Pooled Program) 4.20% (LOC; Swiss Bank Corp.) (a,b).................... 1,100,000 1,100,000
(Scripps Memorial Hospital) 4.15%, Series A
(Insured; MBIA and LOC; Morgan Guaranty Trust Co.) (a,b).............. 10,400,000 10,400,000
California Housing Finance Agency, Home Mortgage Revenue:
4.30%, Series F-3, 10/2/95 (GIC; Goldman, Sachs and Co.)................ 5,350,000 5,350,000
4.60%, Series E, 2/1/96 (GIC; FGIC Capital Markets)..................... 7,000,000 7,000,000
California Pollution Control Financing Authority, VRDN:
PCR (Wadhan Energy) 4.15% (LOC; Banque Paribas) (a,b)................... 1,500,000 1,500,000
RRR:
(Delano Project) 4.25% (LOC; ABN-Amro Bank) (a,b)..................... 11,600,000 11,600,000
Refunding (Ultrapower-Malaga):
4.30%, Series A (LOC; Bank of America) (a,b)...................... 2,400,000 2,400,000
4.30%, Series B (LOC; Bank of America) (a,b)...................... 5,600,000 5,600,000
California Statewide Communities Development Authority, Revenue,
TRAN 4.44%, Series A, 7/17/95........................................... 16,165,000 16,201,194
City of Fontana, MFMR, VRDN (Oakrest Apartments Project)
4% (Corporate Guaranty; Federal National Mortgage Association) (a)...... 8,000,000 8,000,000
Garden Grove Housing Authority, MFHR, VRDN (Valley View-Senior Villas
Project)
4.35%, Series A (LOC; Wells Fargo Bank) (a,b)........................... 1,600,000 1,600,000
City of Irvine, Apartment Development Revenue, VRDN (San Rafael Apartments
Project)
4.35%, Series A (LOC; Sumitomo Bank) (a,b).............................. 4,800,000 4,800,000
Kern County, COP, VRDN (Public Facilities Project)
3.95% (LOC; Sanwa Bank) (a,b)........................................... 13,355,000 13,355,000
City of Livermore, MFMR, VRDN (Paseo Apartments Project)
4%, Series A (Corporate Guaranty; Federal National Mortgage Association) (a) 9,800,000 9,800,000
City of Los Angeles, Multi-Family Revenue, VRDN (Museum Terrace Apartments
Project)
3.90%, Series H (LOC; Bank of America) (a,b)............................ 7,800,000 7,800,000
Los Angeles County, TRAN 4.50%, Series A, 6/30/95........................... 9,350,000 9,353,177
Los Angeles County Housing Authority, MFHR, VRDN:
(Canyon Country Villas Project) 4.10%, Series H (LOC; Industrial Bank of Japan) (a,b) 8,500,000 8,500,000
(River Parks Apartments Project) 4.10%, Series D (LOC; Dai-Ichi Kangyo Bank) (a,b) 5,000,000 5,000,000
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
Los Angeles County Industrial Development Authority, IDR, Refunding, VRDN
(Kransco Project) 4.25% (LOC; Harris Trust and Savings Bank) (a,b)...... $ 1,725,000 $ 1,725,000
Los Angeles County Local Educational Agencies, COP, TRAN 4.50%, 7/6/95...... 7,000,000 7,013,292
Los Angeles County Metropolitan Transportation Authority,
Sales Tax Revenue, Refunding, VRDN (Prop C-Second Series)
4%, Series A (Insured; MBIA and SBPA; Industrial Bank of Japan) (a)..... 13,000,000 13,000,000
Los Angeles Unified School District, TRAN 4.50%, 7/10/95.................... 12,000,000 12,028,540
City of Oceanside, MFMR, VRDN (Riverview Springs Apartments)
4.45%, Series A (LOC; Bank of Tokyo) (a,b).............................. 3,300,000 3,300,000
City of Pleasant Hill, MFMR, VRDN (Brookside Apartments Project)
4%, Series A (Corporate Guaranty; Federal National Mortgage Association) (a) 5,600,000 5,600,000
City of Richmond, VRDN 4.10% (BPA; Societe Generale) (a).................... 11,400,000 11,400,000
Riverside County, TRAN 4.25%, 6/30/95....................................... 10,000,000 10,015,453
Sacramento County, MFHR, VRDN 4.20%, Series A (LOC; Dai-Ichi Kangyo Bank) (a,b) 7,900,000 7,900,000
Sacramento County Housing Authority, MFHR, VRDN (Stone Creek Apartments
Project)
4.25%, Series L (LOC; First Interstate Bank of California) (a,b)........ 2,400,000 2,400,000
San Bernardino County, Multi-Family Revenue, VRDN (Woodview Apartments
Project)
4%, Series I (LOC; Bank of America) (a,b)............................... 5,300,000 5,300,000
San Diego Housing Authority, MFHR, VRDN (Market Street Square Project)
4.45%, Series G (LOC; Mitsubishi Bank) (a,b)............................ 1,000,000 1,000,000
San Diego Regional Transportation Commission, Sales Tax Revenue, VRDN (Second
Series)
3.90%, Series A (Insured; FGIC) (a)..................................... 5,600,000 5,600,000
San Joaquin County, TRAN 4.75%, 10/18/95.................................... 5,000,000 5,015,781
City of San Jose, MFHR, VRDN (Fox Chase) 4%, Series B (Insured; FGIC) (a)... 7,600,000 7,600,000
City of Santa Clara, Electric Revenue, VRDN
4%, Series B (LOC; National Westminster Bank) (a,b)..................... 3,305,000 3,305,000
Simi Valley, MFHR, Refunding, VRDN (Creekside Village)
4%, Series A (LOC; Bank of America) (a,b)............................... 4,900,000 4,900,000
--------------
TOTAL INVESTMENTS (cost $278,173,092)....................................... $278,173,092
===============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
BPA Bond Purchase Agreement MFHR Multi-Family Housing Revenue
COP Certificate of Participation MFMR Multi-Family Mortgage Revenue
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
GIC Guaranteed Investment Contract RRR Resources Recovery Revenue
IDR Industrial Development Revenue SBPA Standby Bond Purchase Agreement
LOC Letter of Credit TRAN Tax and Revenue Anticipation Notes
MBIA Municipal Bond Investors Assurance Insurance Corporation VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1 SP1+/SP1 95.8%
Not Rated (d) Not Rated (d) Not Rated (d) 4.2
--------
100.0%
=========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) 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.
(b) Secured by letters of credit. At March 31, 1995, 43.8% of the Fund's
net assets are backed by letters of credit issued by domestic banks,
foreign banks and Government Agencies.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Trustees to be of
comparable quality to those rated securities in which the Fund may
invest.
(e) At March 31, 1995, the Fund had $109,150,000 (38.7% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from housing projects.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)........................... $278,173,092
Cash.................................................................... 940,076
Interest receivable..................................................... 2,838,025
Prepaid expenses........................................................ 21,395
--------------
281,972,588
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $117,070
Accrued expenses........................................................ 91,949 209,019
---------- --------------
NET ASSETS ................................................................ $281,763,569
=============
REPRESENTED BY:
Paid-in capital......................................................... $281,929,810
Accumulated net realized (loss) on investments.......................... (166,241)
--------------
NET ASSETS at value applicable to 281,929,810 shares outstanding
(unlimited number of $.01 par value shares of Beneficial
Interest authorized).................................................... $281,763,569
===============
NET ASSET VALUE, offering and redemption price per share
($281,763,569 / 281,929,810 shares)..................................... $1.00
=========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $9,518,720
EXPENSES:
Management fee-Note 2(a).............................................. $1,488,567
Shareholder servicing costs-Note 2(b)................................. 247,323
Professional fees..................................................... 71,865
Custodian fees........................................................ 29,659
Trustees' fees and expenses-Note 2(c)................................. 19,105
Prospectus and shareholders' reports.................................. 16,034
Registration fees..................................................... 11,754
Miscellaneous......................................................... 12,520
------------
TOTAL EXPENSES.................................................... 1,896,827
------------
INVESTMENT INCOME-NET....................................................... 7,621,893
NET REALIZED GAIN ON INVESTMENTS-Note 1(b).................................. 23,305
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,645,198
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MARCH 31,
--------------------------------
1994 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 5,862,761 $ 7,621,893
Net realized gain (loss) on investments................................. (50,573) 23,305
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 5,812,188 7,645,198
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (5,862,761) (7,621,893)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 682,605,559 594,800,158
Dividends reinvested.................................................... 4,434,981 4,899,842
Cost of shares redeemed................................................. (683,706,786) (637,586,541)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS.................................. 3,333,754 (37,886,541)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 3,283,181 (37,863,236)
NET ASSETS:
Beginning of year....................................................... 316,343,624 319,626,805
-------------- --------------
End of year............................................................. $319,626,805 $281,763,569
============= ================
See notes to financial statements.
</TABLE>
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Prospectus dated July 14, 1995.
See notes to financial statements.
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Trustees to represent the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date 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. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
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, 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 and
excise taxes.
The Fund has an unused capital loss carryover of approximately $166,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to March 31, 1995. If not
applied, $2,000 of the carryover expires in fiscal 1996, $44,000 expires in
fiscal 1998, $7,000 expires in fiscal 1999, $65,000 expires in fiscal 2000,
$21,000 expires in fiscal 2002 and $27,000 expires in fiscal 2003.
At March 31, 1995, 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 MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 .50 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, brokerage, interest
on borrowings, 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 March 31, 1995.
(B) Pursuant to the Fund's Shareholder Services Plan, 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 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
March 31, 1995, the Fund was charged an aggregate of $88,801 pursuant to the
Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $2,500 and an attendance fee of $250 per meeting.
The Chairman of the Board receives an additional 25% of such compensation and
each director emeritus receives 50% of such compensation.
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus California Tax Exempt Money Market Fund, including the statement of
investments, as of March 31, 1995, 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 March 31, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus California Tax Exempt Money Market Fund at March 31,
1995, 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.
New York, New York
May 2, 1995
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
PART C. OTHER INFORMATION
__________________________
Item 24. Financial Statements and Exhibits
________ _________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period January 17,
1986 (commencement of operations) to March 31, 1986 and for
each of the nine years in the period ended March 31, 1995.
Included in Part B of the Registration Statement:
Statement of Investments--March 31, 1995.
Statement of Assets and Liabilities--March 31, 1995.
Statement of Operations--year ended March
31, 1995.
Statement of Changes in Net Assets--for each of the
two years ended March 31, 1995.
Notes to Financial Statements.
Report of Ernst & Young LLP, Independent Auditors,
dated May 2, 1995.
All schedules and other financial statement information, for which
provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either included herein or omitted
because 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) Registrant's Declaration of Trust is incorporated by
reference to Exhibit (1) of Post-Effective Amendment No. 13
to the Registration Statement on Form N-1A, filed on July
15, 1994.
(2) Registrant's By-Laws are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A, filed on July 15,
1994.
(5) Management Agreement.
(6)(a) Distribution Agreement.
(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. 2 to the Registration
Statement on Form N-1A, filed on July 26, 1990.
(8)(b) Form of Subcustodian Agreements are incorporated by
reference to Exhibit (8) of Post-Effective Amendment No. 13
to the Registration Statement on Form N-1A, filed on July
15, 1994.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's Counsel.
(11) Consent of Independent Auditors.
(16) Schedules of Computation of Performance Data are
incorporated by reference to Exhibit (16) of Post-Effective
Amendment No. 13 to the Registration Statement on Form
N-1A, filed on July 15, 1994.
Item 24. Financial Statements and Exhibits - List
________ ________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(b) Registrant's Certificate of Secretary is incorporated by
reference to Other Exhibits (b) of Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A, filed on
July 29, 1988.
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 June 23, 1995
Shares of beneficial interest, 4,258
par value $.01
Item 27. Indemnification
________ _______________
The statement as to the general effect of any contract,
arrangements or statute under which a trustee, officer,
underwriter or affiliated person of the Registrant is indemnified
is incorporated by reference to Item 27 of Part C of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on October 24, 1985.
Item 28. Business and Other Connections of Investment Adviser
________ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial services 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 company for which
Dreyfus acts as investment advisor, sub-investment adviser and
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.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
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.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
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;
DAVID B. TRUMAN Former Director:
(cont'd) 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:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
ROBERT E. RILEY Director:
President, Chief Dreyfus Service Corporation
Operating Officer,
and a Director
STEPHEN E. CANTER
Vice Chairman and
Chief Investment Officer
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++'
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company+++;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization*;
The Truepenny Corporation*;
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
PAUL H. SNYDER Director:
Vice President-Finance Pennsylvania Economy League
and Chief Financial Philadelphia, Pennsylvania;
Officer Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Dreyfus Service Corporation*
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President-
Corporate Communications
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.*;
Vice President:
The Dreyfus Trust Company++;
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals*;
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*;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President:
Vice President-Corporate The Boston Company Advisors, Inc.
Development 53 State Street
Exchange Place
Boston, Massachusetts 02109
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-Fund Lion Management, Inc.*;
Legal and Compliance, Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
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
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation;
Dreyfus Management, Inc.;
Dreyfus Acquisition Corporation, Inc.;
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 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, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
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/Laurel Funds, Inc.
36) The Dreyfus/Laurel Funds Trust
37) The Dreyfus/Laurel Tax-Free Municipal Funds
38) The Dreyfus/Laurel Investment Series
39) The Dreyfus Leverage Fund, Inc.
40) Dreyfus Life and Annuity Index Fund, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus Michigan Municipal Money Market Fund, Inc.
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus Ohio Municipal Money Market Fund, Inc.
60) Dreyfus 100% U.S. Treasury Intermediate Term Fund
61) Dreyfus 100% U.S. Treasury Long Term Fund
62) Dreyfus 100% U.S. Treasury Money Market Fund
63) Dreyfus 100% U.S. Treasury Short Term Fund
64) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
65) Dreyfus Pennsylvania Municipal Money Market Fund
66) Dreyfus Short-Intermediate Government Fund
67) Dreyfus Short-Intermediate Municipal Bond Fund
68) Dreyfus Short-Term Income Fund, Inc.
69) The Dreyfus Socially Responsible Growth Fund, Inc.
70) Dreyfus Strategic Growth, L.P.
71) Dreyfus Strategic Income
72) Dreyfus Strategic Investing
73) Dreyfus Tax Exempt Cash Management
74) Dreyfus Treasury Cash Management
75) Dreyfus Treasury Prime Cash Management
76) Dreyfus Variable Investment Fund
77) Dreyfus-Wilshire Target Funds, Inc.
78) Dreyfus Worldwide Dollar Money Market Fund, Inc.
79) General California Municipal Bond Fund, Inc.
80) General California Municipal Money Market Fund
81) General Government Securities Money Market Fund, Inc.
82) General Money Market Fund, Inc.
83) General Municipal Bond Fund, Inc.
84) General Municipal Money Market Fund, Inc.
85) General New York Municipal Bond Fund, Inc.
86) General New York Municipal Money Market Fund
87) Pacifica Funds Trust -
Pacific American Money Market Portfolio
Pacific American U.S. Treasury Portfolio
88) Peoples Index Fund, Inc.
89) Peoples S&P MidCap Index Fund, Inc.
90) Premier Insured Municipal Bond Fund
91) Premier California Municipal Bond Fund
92) Premier GNMA Fund
93) Premier Growth Fund, Inc.
94) Premier Municipal Bond Fund
95) Premier New York Municipal Bond Fund
96) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Ruth D. Leibert++ Assistant Vice President Assistant
Secretary
Paul D. Furcinito++ Assistant Vice President Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
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
90 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
________ ____________
To call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when requested in
writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest 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.
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 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 14th day of July, 1995.
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
BY: /s/Marie E. Connolly*
___________________________________________
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ __________________________ _________
/s/Marie E. Connolly* President and Treasurer 7/14/95
______________________________ (Principal Executive Officer and
Marie E. Connolly Principal Financial Officer)
/s/Joseph F. Tower, III* Assistant Treasurer (Principal 7/14/95
______________________________ Accounting Officer)
Joseph F. Tower, III
/s/David W. Burke* Trustee 7/14/95
______________________________
David W. Burke
/s/Hodding Carter, III* Trustee 7/14/95
______________________________
Hodding Carter, III
/s/Joseph S. DiMartino* Trustee 7/14/95
______________________________
Joseph S. DiMartino
/s/Ehud Houminer* Trustee 7/14/95
______________________________
Ehud Houminer
/s/Richard C. Leone* Trustee 7/14/95
______________________________
Richard C. Leone
/s/Hans C. Mautner* Trustee 7/14/95
______________________________
Hans C. Mautner
/s/Robin A. Smith* Trustee 7/14/95
______________________________
Robin A. Smith
/s/John E. Zuccotti* Trustee 7/14/95
______________________________
John E. Zuccotti
*BY: Eric B. Fischman
__________________________
Eric B. Fischman,
Attorney-in-Fact
INDEX OF EXHIBITS
(5) Management Agreement
(6) Distribution Agreement
(9) Shareholder Services Plan
(10) Opinion and consent of Registrant's Counsel
(11) Consent of Ernst & Young, Independent Auditors
(24) (a) Powers of Attorney
MANAGEMENT AGREEMENT
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by in-
vesting and reinvesting the same in investments of the type
and in accordance with the limitations specified in its
charter documents and in its Prospectus and Statement of
Additional Information as from time to time in effect,
copies of which have been or will be submitted to you, and
in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ
you to act as its investment adviser.
In this connection it is understood that from time
to time you will employ or associate with yourself such
person or persons as you may believe to be particularly
fitted to assist you in the performance of this Agreement.
Such person or persons may be officers or employees who are
employed by both you and the Fund. The compensation of such
person or persons shall be paid by you and no obligation may
be incurred on the Fund's behalf in any such respect.
Subject to the supervision and approval of the
Fund's Board, you will provide investment management of the
Fund's portfolio in accordance with the Fund's investment
objectives and policies as stated in its Prospectus and
Statement of Additional Information as from time to time in
effect. In connection therewith, you will obtain and
provide investment research and will supervise the Fund's
investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the
Fund's assets. You will furnish to the Fund such
statistical information, with respect to the investments
which the Fund may hold or contemplate purchasing, as the
Fund may reasonably request. The Fund wishes to be informed
of important developments materially affecting its portfolio
and shall expect you, on your own initiative, to furnish to
the Fund from time to time such information as you may
believe appropriate for this purpose.
In addition, you will supply office facilities
(which may be in your own offices), data processing
services, clerical, accounting and bookkeeping services,
internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies;
prepare reports to the Fund's stockholders, tax returns,
reports to and filings with the Securities and Exchange
Commission and state Blue Sky authorities; calculate the net
asset value of the Fund's shares; and generally assist in
all aspects of the Fund's operations. You shall have the
right, at your expense, to engage other entities to assist
you in performing some or all of the obligations set forth
in this paragraph, provided each such entity enters into an
agreement with you in form and substance reasonably
satisfactory to the Fund. You agree to be liable for the
acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering
the services to be provided to the Fund hereunder and the
Fund agrees as an inducement to your undertaking the same
that you shall not be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by the
Fund, provided that nothing herein shall be deemed to
protect or purport to protect you against any liability to
the Fund or to its security holders to which you would
otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties
hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
In consideration of services rendered pursuant to
this Agreement, the Fund will pay you on the first business
day of each month a fee at the annual rate of .50 of 1% of
the value of the Fund's average daily net assets. Net asset
value shall be computed on such days and at such time or
times as described in the Fund's then-current Prospectus and
Statement of Additional Information. Upon any termination
of this Agreement before the end of any month, the fee for
such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of
this Agreement.
For the purpose of determining fees payable to
you, the value of the Fund's net assets shall be computed in
the manner specified in the Fund's charter documents for the
computation of the value of the Fund's net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All
other expenses to be incurred in the operation of the Fund
will be borne by the Fund, except to the extent specifically
assumed by you. The expenses to be borne by the Fund
include, without limitation, the following: organizational
costs, taxes, interest, loan commitment fees, interest and
distributions paid on securities sold short, brokerage fees
and commissions, if any, fees of Board members who are not
your officers, directors or employees or holders of 5% or
more of your outstanding voting securities, Securities and
Exchange Commission fees and 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 the Fund's existence, costs attributable to
investor services (including, without limitation, telephone
and personnel expenses), costs of preparing and printing
prospectuses and statements of additional information for
regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings,
and any extraordinary expenses.
If in any fiscal year the aggregate expenses of
the Fund (including fees pursuant to this Agreement, but
excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities
commissions, extraordinary expenses) exceed 1-1/2% of the
average value of the Fund's net assets for the fiscal year,
the Fund may deduct from the fees to be paid hereunder, or
you will bear, such excess expense. Your obligation
pursuant hereto will be limited to the amount of your fees
hereunder. 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.
The Fund understands that you now act, and that
from time to time hereafter you may act, as investment
adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Fund has no
objection to your so acting, provided that when the purchase
or sale of securities of the same issuer is suitable for the
investment objectives of two or more companies or accounts
managed by you which have available funds for investment,
the available securities will be allocated in a manner
believed by you to be equitable to each company or account.
It is recognized that in some cases this procedure may ad-
versely affect the price paid or received by the Fund or the
size of the position obtainable for or disposed of by the
Fund.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or
restrict your right or the right of any of your affiliates
to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
You shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad
faith or gross negligence on your part in the performance of
your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person,
even though also your officer, director, partner, employee
or agent, who may be or become an officer, Board member,
employee or agent of the Fund, shall be deemed, when
rendering services to the Fund or acting on any business of
the Fund, to be rendering such services to or acting solely
for the Fund and not as your officer, director, partner,
employee or agent or one under your control or direction
even though paid by you.
This Agreement shall continue until November 21,
1994, and thereafter shall continue automatically for
successive annual periods ending on November 21st of each
year, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940)
of the Fund's outstanding voting securities, provided that
in either event its continuance also is approved by a
majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is
terminable without penalty, on 60 days' notice, by the
Fund's Board or by vote of holders of a majority of the
Fund's shares or, upon not less than 90 days' notice, by
you. This Agreement also will terminate automatically in
the event of its assignment (as defined in said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other
entities (including other investment companies) and that
such other entities may include the name "Dreyfus" as part
of their name, and that your corporation or its affiliates
may enter into investment advisory or other agreements with
such other entities. If you cease to act as the Fund's
investment adviser, the Fund agrees that, at your request,
the Fund will take all necessary action to change the name
of the Fund to a name not including "Dreyfus" in any form or
combination of words.
This Agreement has been executed on behalf of the
Fund by the undersigned officer of the Fund in his capacity
as an officer of the Fund. The obligations of this
Agreement shall only be binding upon the assets and property
of the Fund and shall not be binding upon any Board member,
officer or shareholder of the Fund individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS CALIFORNIA TAX
EXEMPT
MONEY MARKET FUND
By:___________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
DISTRIBUTION AGREEMENT
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the
agreements hereinafter contained, the above-named
investment company (the "Fund") has agreed that you shall
be, for the period of this agreement, the distributor of
(a) shares of each Series of the Fund set forth on Exhibit
A hereto, as such Exhibit may be revised from time to time
(each, a "Series") or (b) if no Series are set forth on
such Exhibit, shares of the Fund. For purposes of this
agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall
mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Secu-
rities Act of 1933, as amended, and will transmit promptly
any orders received by you for purchase or redemption of
Shares to the Transfer and Dividend Disbursing Agent for
the Fund of which the Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you
will enter into sales or servicing agreements with
securities dealers, financial institutions and other
industry professionals, such as investment advisers,
accountants and estate planning firms, and in so doing you
will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations
made or adopted pursuant to the Investment Company Act of
1940, as amended, by the Securities and Exchange Commission
or any securities association registered under the Securi-
ties Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or
by abnormal circumstances of any kind, the Fund's officers
may decline to accept any orders for, or make any sales of,
any Shares until such time as they deem it advisable to
accept such orders and to make such sales and the Fund
shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses
in connection with the registration of Shares under the
Securities Act of 1933, as amended, and all expenses in
connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices
and other data to be furnished by the Fund hereunder, and
all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for
distribution to shareholders; provided however, that
nothing contained herein shall be deemed to require the
Fund to pay any of the costs of advertising the sale of
Shares.
1.6 The Fund agrees to execute any and all
documents and to furnish any and all information and
otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in con-
nection with the qualification of Shares for sale in such
states as you may designate to the Fund and the Fund may
approve, and the Fund agrees to pay all expenses which may
be incurred in connection with such qualification. You
shall pay all expenses connected with your own
qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this
agreement, all other expenses incurred by you in connection
with the sale of Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time,
for use in connection with the sale of Shares, such
information with respect to the Fund or any relevant Series
and the Shares as you may reasonably request, all of which
shall be signed by one or more of the Fund's duly
authorized officers; and the Fund warrants that the state-
ments contained in any such information, when so signed by
the Fund's officers, shall be true and correct. The Fund
also shall furnish you upon request with: (a) semi-annual
reports and annual audited reports of the Fund's books and
accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements
prepared by the Fund, (c) a monthly itemized list of the
securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time
to time such additional information regarding the Fund's
financial condition as you may reasonably request.
1.8 The Fund represents to you that all registra-
tion statements and prospectuses filed by the Fund with the
Securities and Exchange Commission under the Securities Act
of 1933, as amended, and under the Investment Company Act
of 1940, as amended, with respect to the Shares have been
carefully prepared in conformity with the requirements of
said Acts and rules and regulations of the Securities and
Exchange Commission thereunder. As used in this agreement
the terms "registration statement" and "prospectus" shall
mean any registration statement and prospectus, including
the statement of additional information incorporated by
reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which
at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registra-
tion statement and prospectus, when such registration
statement becomes effective, will contain all statements
required to be stated therein in conformity with said Acts
and the rules and regulations of said Commission; that all
statements of fact contained in any such registration
statement and prospectus will be true and correct when such
registration statement becomes effective; and that neither
any registration statement nor any prospectus when such
registration statement becomes effective will include an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading. The Fund may
but shall not be obligated to propose from time to time
such amendment or amendments to any registration statement
and such supplement or supplements to any prospectus as, in
the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund
shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt
by the Fund of a written request from you to do so, you
may, at your option, terminate this agreement or decline to
make offers of the Fund's securities until such amendments
are made. The Fund shall not file any amendment to any
registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as
the Fund may deem advisable, such right being in all
respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus
in the form furnished to you from time to time, in con-
nection with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers and
directors, and any person who controls you within the
meaning of Section 15 of the Securities Act of 1933, as
amended, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) which you, your officers and directors, or any
such controlling person, may incur under the Securities Act
of 1933, as amended, or under common law or otherwise,
arising out of or based upon any untrue statement, or
alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out
of or based upon any omission, or alleged omission, to
state a material fact required to be stated in either any
registration statement or any prospectus or necessary to
make the statements in either thereof not misleading;
provided, however, that the Fund's agreement to indemnify
you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement
or alleged untrue statement or omission or alleged omission
made in any registration statement or prospectus in
reliance upon and in conformity with written information
furnished to the Fund by you specifically for use in the
preparation thereof. The Fund's agreement to indemnify
you, your officers and directors, and any such controlling
person, as aforesaid, is expressly conditioned upon the
Fund's being notified of any action brought against you,
your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram
addressed to the Fund at its address set forth above within
ten days after the summons or other first legal process
shall have been served. The failure so to notify the Fund
of any such action shall not relieve the Fund from any
liability which the Fund may have to the person against
whom such action is brought by reason of any such untrue,
or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Fund's indemnity
agreement contained in this paragraph 1.9. The Fund will
be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such
case, such defense shall be conducted by counsel of good
standing chosen by the Fund and approved by you. In the
event the Fund elects to assume the defense of any such
suit and retain counsel of good standing approved by you,
the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any
of them; but in case the Fund does not elect to assume the
defense of any such suit, or in case you do not approve of
counsel chosen by the Fund, the Fund will reimburse you,
your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in
this paragraph 1.9 and the Fund's representations and
warranties in this agreement shall remain operative and in
full force and effect regardless of any investigation made
by or on behalf of you, your officers and directors, or any
controlling person, and shall survive the delivery of any
Shares. This agreement of indemnity will inure exclusively
to your benefit, to the benefit of your several officers
and directors, and their respective estates, and to the
benefit of any controlling persons and their successors.
The Fund agrees promptly to notify you of the commencement
of any litigation or proceedings against the Fund or any of
its officers or Board members in connection with the issue
and sale of Shares.
1.10 You agree to indemnify, defend and hold the
Fund, its several officers and Board members, and any
person who controls the Fund within the meaning of Sec-
tion 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) which the Fund, its officers or Board members,
or any such controlling person, may incur under the Securi-
ties Act of 1933, as amended, or under common law or
otherwise, but only to the extent that such liability or
expense incurred by the Fund, its officers or Board
members, or such controlling person resulting from such
claims or demands, shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the
Fund specifically for use in the Fund's registration
statement and used in the answers to any of the items of
the registration statement or in the corresponding state-
ments made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a
material fact in connection with such information furnished
in writing by you to the Fund and required to be stated in
such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its
officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your
being notified of any action brought against the Fund, its
officers or Board members, or any such controlling person,
such notification to be given by letter or telegram
addressed to you at your address set forth above within ten
days after the summons or other first legal process shall
have been served. You shall have the right to control the
defense of such action, with counsel of your own choosing,
satisfactory to the Fund, if such action is based solely
upon such alleged misstatement or omission on your part,
and in any other event the Fund, its officers or Board
members, or such controlling person shall each have the
right to participate in the defense or preparation of the
defense of any such action. The failure so to notify you
of any such action shall not relieve you from any liability
which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of your
indemnity agreement contained in this paragraph 1.10. This
agreement of indemnity will inure exclusively to the Fund's
benefit, to the benefit of the Fund's officers and Board
members, and their respective estates, and to the benefit
of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement
of any litigation or proceedings against you or any of your
officers or directors in connection with the issue and sale
of Shares.
1.11 No Shares shall be offered by either you or
the Fund under any of the provisions of this agreement and
no orders for the purchase or sale of such Shares hereunder
shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect
or any necessary amendments thereto shall be suspended
under any of the provisions of the Securities Act of 1933,
as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on
file with the Securities and Exchange Commission; provided,
however, that nothing contained in this paragraph 1.11
shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares
from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and
Exchange Commission for amendments to the reg-
istration statement or prospectus then in effect
or for additional information;
(b) in the event of the issuance by the
Securities and Exchange Commission of any stop
order suspending the effectiveness of the regis-
tration statement or prospectus then in effect or
the initiation of any proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in
the registration statement or prospectus then in
effect or which requires the making of a change in
such registration statement or prospectus in order
to make the statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments
to any registration statement or prospectus which
may from time to time be filed with the Securities
and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale
by you shall be offered for sale at a price per share (the
"offering price") approximately equal to (a) their net
asset value (determined in the manner set forth in the
Fund's charter documents) plus (b) a sales charge, if any
and except to those persons set forth in the then-current
prospectus, which shall be the percentage of the offering
price of such Shares as set forth in the Fund's then-
current prospectus. The offering price, if not an exact
multiple of one cent, shall be adjusted to the nearest
cent. In addition, Shares of any class of the Fund offered
for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current
prospectus. You shall be entitled to receive any sales
charge or contingent deferred sales charge in respect of
the Shares. Any payments to dealers shall be governed by a
separate agreement between you and such dealer and the
Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if
the Fund has Series, a separate Reapproval Date shall be
specified on Exhibit A for each Series), and thereafter
shall continue automatically for successive annual periods
ending on the day (the "Reapproval Day") of each year set
forth on Exhibit A hereto, provided such continuance is
specifically approved at least annually by (i) the Fund's
Board or (ii) vote of a majority (as defined in the Invest-
ment Company Act of 1940) of the Shares of the Fund or the
relevant Series, as the case may be, provided that in
either event its continuance also is approved by a majority
of the Board members who are not "interested persons" (as
defined in said Act) of any party to this agreement, by
vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable
without penalty, on 60 days' notice, by vote of holders of
a majority of the Fund's or, as to any relevant Series,
such Series' outstanding voting securities or by the Fund's
Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270
days' notice, effective on or after the fifth anniversary
of the date hereof. This agreement also will terminate
automatically, as to the Fund or relevant Series, as the
case may be, in the event of its assignment (as defined in
said Act).
4. Exclusivity
So long as you act as the distributor of Shares,
you shall not perform any services for any entity other
than investment companies advised or administered by The
Dreyfus Corporation. The Fund acknowledges that the
persons employed by you to assist in the performance of
your duties under this agreement may not devote their full
time to such service and nothing contained in this
agreement shall be deemed to limit or restrict your or any
of your affiliates right to engage in and devote time and
attention to other businesses or to render services of
whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the
Fund by the undersigned officer of the Fund in his capacity
as an officer of the Fund. The obligations of this
agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any
Board member, officer or shareholder of the Fund
individually.
Please confirm that the foregoing is in accordance
with your understanding and indicate your acceptance hereof
by signing below, whereupon it shall become a binding
agreement between us.
Very truly yours,
DREYFUS CALIFORNIA TAX EXEMPT MONEY
MARKET FUND
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Reapproval Date Reapproval Day
November 21, 1995 November 21st
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the
above-captioned investment company (the "Fund") adopt a
Shareholder Services Plan (the "Plan") under which the Fund
would reimburse Dreyfus Service Corporation ("DSC") for
certain allocated expenses of providing personal services
and/or maintaining shareholder accounts to (a) shareholders
of each series of the Fund or class of Fund shares set forth
on Exhibit A hereto, as such Exhibit may be revised from
time to time, or (b) if no series or classes are set forth
on such Exhibit, shareholders of the Fund. The Plan is not
to be adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), and the fee
under the Plan is intended to be a "service fee" as defined
in Article III, Section 26 (a "Service Fee"), of the NASD
Rules of Fair Practice (the "NASD Rules").
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such information as it deemed necessary to an informed
determination as to whether a written plan should be
implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use
Fund assets for such purposes.
In voting to approve the implementation of such a
plan, the Board has concluded, in the exercise of its
reasonable business judgment and in light of applicable
fiduciary duties, that there is a reasonable likelihood that
the plan set forth below will benefit the Fund and its
shareholders.
The Plan: The material aspects of this Plan are
as follows:
1. The Fund shall reimburse 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 its allocated expenses
of providing personal services to shareholders and/or
maintaining shareholder accounts; provided that, at no time,
shall the amount paid to DSC under this Plan, together with
amounts otherwise paid by the Fund, or each series or class
identified on Exhibit A, as a Service Fee under the NASD
Rules, exceed the maximum amount then payable under the NASD
Rules as a Service Fee. The amount of such reimbursement
shall be based on an expense allocation methodology prepared
by DSC annually and approved by the Fund's Board or on any
other basis from time to time deemed reasonable by the
Fund's Board.
2. For the purposes of determining the fees
payable under this Plan, the value of the net assets of the
Fund or the net assets attributable to each series or class
of Fund shares identified on Exhibit A, shall be computed in
the manner specified in the Fund's charter documents for the
computation of the value of the Fund's net assets.
3. The Board shall be provided, at least
quarterly, with a written report of all amounts expended
pursuant to this Plan. The report shall state the purpose
for which the amounts were expended.
4. This Plan will become effective immediately
upon approval by a majority of the Board members, including
a majority of the Board members 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
this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the approval of
this Plan.
5. This Plan shall continue for a period of one
year from its effective date, unless earlier terminated in
accordance with its terms, and thereafter shall continue
automatically for successive annual periods, provided such
continuance is approved at least annually in the manner
provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the
Board, provided that any material amendments of the terms of
this Plan shall become effective only upon approval as
provided in paragraph 4 hereof.
7. This Plan is terminable without penalty at
any time by vote of a majority of the Board members 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 this Plan or in any agreements entered into in
connection with this Plan.
8. The obligations hereunder and under any
related Plan agreement shall only be binding upon the assets
and property of the Fund and shall not be binding upon any
Trustee, officer or shareholder of the Fund individually.
Dated: August 2, 1993
As Revised: October 24, 1994
EXHIBIT A
[STROOCK & STROOCK & LAVAN LETTERHEAD]
November 25, 1985
Dreyfus California Tax Exempt Money
Market Fund
666 Old Country Road
Garden City, New York 11530
Gentlemen:
We have acted as counsel to Dreyfus California Tax Exempt Money
Market Fund (the "Fund") in connection with the preparation of a
Registration Statement on Form N-1A, Registration No. 2-95595 (the
"Registration Statement"), covering shares of beneficial interest
(the "Shares") of the Fund.
We have examined copies of the Agreement and Declaration of Trust and
By-Laws of the Fund, the Registration Statement and such other
documents, records, papers, statutes and authorities as we deemed
necessary to form a basis for the opinion hereinafter expressed. In
our examination of such material, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies
submitted to us. As to various questions of fact material to such
opinion, we have relied upon statements and certificates of officers
and representatives of the Fund and others.
Attorneys involved in the preparation of this opinion are admitted
only to the bar of the State of New York. As to various questions
arising under the laws of the Commonwealth of Massachusetts, we have
relied on the opinion of Messrs. Ropes & Gray, a copy of which is
attached hereto. Qualifications set forth in their opinion are
deemed incorporated herein.
Based upon the foregoing, we are of the opinion that the Shares of
the Fund to be issued in accordance with the terms of the offering as
set forth in the Prospectus included as part of the Registration
Statement, when so issued and paid for, will constitute validly
authorized and issued Shares, fully paid and non-assessable by the
Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus
included in the Registration Statement, and to the filing of this
opinion as an exhibit to any application made by or on behalf of the
Fund or any Distributor or dealer in connection with the registration
and qualification of the Fund or its Shares under the securities laws
of any state or jurisdiction. In giving such permission, we do not
admit hereby that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or
the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
[ROPES & GRAY LETTERHEAD]
November 25, 1985
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Gentlemen:
We are furnishing this opinion in connection with the proposed offer
and sale from time to time by Dreyfus California Tax Exempt Money
Market Fund, a Massachusetts business trust (the "Trust"), of an
indefinite number of shares of beneficial interest (the "Shares") of
the Trust pursuant to the Trust's Registration Statement on Form N-1A
under the Securities Act of 1933.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's
records of Trustee action, its By-Laws and its Agreement and
Declaration of Trust on file at the Office of the Secretary of State
of The Commonwealth of Massachusetts. We have examined copies of
such Registration Statement, in the form filed with the Securities
and Exchange Commission, and such other documents a we deem necessary
for the purposes of this opinion.
We assume that, upon sale of the Shares, the Trust will receive the
net asset value thereof. We also assume that, in connection with any
offer and sale of the Shares, the Trust will take proper steps to
effect compliance with applicable federal and state laws regulating
offerings and sales of securities.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the
Shares are issued and sold and the authorized consideration therefor
is received by the Trust, they will be validly issued, fully paid and
nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the obligations
of the Trust. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the
Trust or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of the Trust property for all loss
and expense of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its
obligations.
We consent to the filing of this opinion as an exhibit to the
aforesaid Registration Statement.
Very truly yours,
Ropes & Gray
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 May 2, 1995, in this Registration Statement (Form N-1A 2-95595)
of Dreyfus California Tax Exempt Money Market Fund.
ERNST & YOUNG LLP
New York, New York
July 12, 1995
POWER OF ATTORNEY
The undersigned, being members of the Board of the Dreyfus California
Tax Exempt Money Market Fund, hereby constitutes and appoints Frederick C. Dey,
Eric B. Fischman, Ruth D. Leibert and John Pelletier as the attorney-in-fact
for the proper officers of the Fund, with full power of substitution and
resubstitution; to sign any and all amendments to the Registration Statement
(including Post-Effective Amendments and amendments thereto); and that the
appointment of each of such persons as such attorney-in-fact hereby is
authorized and approved; and that such attorneys-in-fact, and each of them,
shall have full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection with such Registration
Statement and any and all amendments and supplements thereto, as fully to all
intents and purposes as the officer, for whom he is acting as attorney-in fact,
might or could do in person.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of
August 26, 1994.
/s/ David W. Burke /s/ Richard C. Leone
David W. Burke Richard C. Leone
/s/ Hodding Carter /s/ Hans C. Mautner
Hodding Carter, III Hans C. Mautner
/s/ Ehud Houminer /s/ John E.Zuccotti
Ehud Houminer John E. Zuccotti
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John Pelletier and each of them, with full
power to act without the other, her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution; for her and in her name,
place and stead, in any and all capacities (until revoked in writing) to sign
any and all amendments to the Registration Statement for Dreyfus California Tax
Exempt Money Market Fund (including Post-Effective Amendments and amendments
thereto); and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform each and every act ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of
December 7, 1994.
/s/ Marie E. Connolly
Marie E. Connolly
Other Exhibit
DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
POWER OF ATTORNEY
The undersigned, being members of the Board of Dreyfus California Tax
Exempt Money Market Fund (the "Fund"), hereby constitute and appoint
Frederick C. Dey, Eric B. Fischman, Ruth D. Leibert and John E. Pelletier as
attorney-in-fact for the proper officers of the Fund with full power of
substitution and resubstitution, to sign any and all amendments to the
Registration Statement (including post-effective amendments and amendments
thereto), and to file the same, with all exhibits thereto, and that the
appointment of each such persons as such attorney-in-fact hereby is
authorized and approved; and that such attorneys-in-fact, and each of them,
shall have full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection with such Registration
Statement and any and all amendments and supplements thereto, as fully to all
intents and purposes as the officer for whom he or she is acting as attorney-
in-fact, might or could do in person.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of June
14, 1995.
/s/Joseph S. DiMartino /s/Robin A. Smith
_________________________________ ________________________________
Joseph S. DiMartino Robin A. Smith
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000762855
<NAME> DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
<SERIES>
<NUMBER> 0
<NAME> DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 280,602
<INVESTMENTS-AT-VALUE> 280,602
<RECEIVABLES> 1,587
<ASSETS-OTHER> 9,892
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 292,081
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 215
<TOTAL-LIABILITIES> 215
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,034
<SHARES-COMMON-STOCK> 292,034
<SHARES-COMMON-PRIOR> 319,816
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (168)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 291,866
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,411
<OTHER-INCOME> 0
<EXPENSES-NET> 1,008
<NET-INVESTMENT-INCOME> 3,403
<REALIZED-GAINS-CURRENT> 21
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,424
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,403
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 296,995
<NUMBER-OF-SHARES-REDEEMED> (327,085)
<SHARES-REINVESTED> 2,308
<NET-CHANGE-IN-ASSETS> (27,761)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (190)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 764
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1008
<AVERAGE-NET-ASSETS> 304,723
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .011
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.011)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
