DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus California
Municipal Income, Inc. For its annual reporting period ended September 30,
1995, your Fund produced a total return, including bond price changes,
interest income and capital gain distributions, of 10.05% based on net asset
value.* Income dividends, exempt from Federal and State of California
personal income taxes, of $.54 per share were paid.** This is equivalent to a
tax-free distribution rate per share of 6.56%, comfortably in excess of the
inflation rate of 2.54% as measured by the Consumer Price Index for the same
period.
THE ECONOMY
The Federal Reserve Board relaxed its policy of monetary restraint in
July of 1995 when it lowered the Fed Funds rate on July 6th. This reduction
ended the upward pressure on short-term rates which had prevailed since the
beginning of 1994. Despite the monetary restraint that existed, long-term
rates began their decline early in the year. The Fed's policy of restraint
was based on concern about inflation, given the strong economic news then
prevailing. But by July these same reports indicated a significant weakening
trend in the economy. The July decrease in the Fed Funds rate signaled that
economic growth issues outweighed, for a time, the Fed's fear of inflation.
The economic reports indicated lagging home and auto sales and a decline
in new home construction from earlier in the year. Furthermore, rising
business inventories (a frequent harbinger of a business slowdown) and
weakening retail sales lent additional credibility to the case for easier
credit conditions. By midyear, jobless claims were also on the rise as the
trend of corporate cost cutting, and layoffs in particular, continued. After
the easing of the Fed Funds in the early summer, until recently, economic
signals were mixed and inflationary expectations remained subdued.
Accordingly, interest rates stabilized.
Recently, however, economic strength has been reflected in some of the
indicators. Inflation is moderate, but various sectors of the economy such as
consumer spending and housing appear to be picking up. The stronger numbers
may forestall any immediate easing by the Federal Reserve Board.
Nevertheless, one should not rule out the possibility of another Fed move
before year end.
A word about inflation: despite strong economic growth at the beginning
of the reporting period, inflation remained in check. We believe a
continuation of this moderating trend for prices appears likely, particularly
if the economy remains sluggish. This could be good news for bond investors
since easing inflation often results in falling interest rates. Declining
interest rates, often a corollary to slow business conditions, cause bond
prices to rise. Although we strive to maintain a high level of current tax
exempt income for the Fund, we are also concerned with credit quality, so we
are mindful of the potential erosion in bond quality if the economy slips
back into a recession. As you know, we manage portfolios with a long-term
perspective, aware that market conditions can change rapidly.
MARKET ENVIRONMENT
The municipal bond market, buffeted by six interest rate hikes by the
Federal Reserve Board in 1994, recovered strongly in 1995. Weaker than
expected December sales figures tumbled rates and this decline persisted
throughout the remainder of the reporting period. This summer's rate cut
confirmed what declining long-term interest rates had indicated all year:
that business conditions were weaker than monetary policy makers thought. If
economic conditions remain sluggish, and Congress is able to arrive at an
acceptable budget accord, we believe further Fed easing is likely. In our
view, this would create a favorable environment for bond markets in general.
We are certainly pleased and encouraged by the good year-to-date performance
in the bond market and by the Fund; however, we are wary that this bond
market strength may be counting too much on continued low inflation. We are
alert to the stimulating effects of easing monetary policy, and are watchful
for any signs of rekindling inflation.
While the municipal market and the Fund have performed well, results for
municipal securities have been trailing the other
fixed income markets. The prospect of tax reform appears to be limiting the
enthusiasm for tax-exempt securities. Since April, when serious tax reform
proposals began to surface, the municipal rally has lagged, resulting in an
increase in municipal yields as a percentage of comparable taxable bond
yields. Today, long-term municipal bonds are yielding nearly 90% of U.S.
Treasuries, which is a greater yield ratio than existed before the onset of
talk about tax reform. While it could be years before an actual change in the
tax code is adopted, the market's reaction so early in the proposal cycle
suggests that the ultimate legislation, if any, may have a less radical effect
on the market than feared.
THE PORTFOLIO
During the reporting period, the portfolio's structure remained
aggressive in keeping with our view of interest rate trends. We have remained
fully invested to maximize income to our shareholders and have closely
monitored credit quality during the period. Concern about Orange County's
default has had a minimal impact on California credits as a whole, but
continues to roil those issuers located within the County.
So far this year, market yields have dropped significantly. This decline
in interest rates constitutes a primary threat to an income-oriented Fund
since, in this environment, the risk of early redemption of high coupon
securities rises dramatically. A principal strategy during this period has
been to identify such securities and attempt to achieve a price above the
redemption value and reinvest proceeds at an attractive level of income.
Performance of the Fund most recently has improved, with total return
reaching double digits for the fiscal year. Income remains attractive and
credit quality concerns have diminished significantly. Going forward we do
not envision a major sell-off, and we believe that income should provide the
bulk of the returns to be seen during 1995. Of course, when possible we will
seek to enhance the Fund's overall credit quality, limit price volatility and
increase income.
The issuance of new tax-exempt bonds continues at a lackluster pace
while, at the same time, a substantial number of outstanding bonds are being
retired. Therefore, our strategies are influenced and their implementations
limited, at times, by the fact that there exists a limited inventory of
securities from which to choose.
The Fund's goal-to maximize current income exempt from Federal and State
of California income taxes to the extent consistent with the preservation of
capital - continues to guide our portfolio management decisions. The high
level of volatility exhibited by the market in recent years highlights the
need to maintain a disciplined, long-term focus. Solid market performance
thus far in 1995 has rewarded the patient investor.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 16, 1995
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders. Capital gains may be subject to Federal, State and
local taxes.
Distribution rate per share is based upon dividends per share paid from
net investment income during the period, divided by the market value per
share at the end of the period, adjusted for any capital gain distributions.
Source: Lipper Analytical Services, Inc. The Consumer Price Index is
published by the Bureau of Labor Statistics and is a widely accepted measure
of inflation in the United States.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
SELECTED INFORMATION SEPTEMBER 30, 1995 (UNAUDITED)
<S> <C> <C>
Market Price per share September 30, 1995................................... $8 3\16
Shares Outstanding September 30, 1995....................................... 4,502,021
American Stock Exchange Ticker Symbol....................................... DCM
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE (AMERICAN STOCK EXCHANGE)
FISCAL YEAR ENDED SEPTEMBER 30, 1995
------------------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 1994 MARCH 31, 1995 JUNE 30, 1995 SEPTEMBER 30, 1995
-------------------- ---------------- --------------- --------------------
<S> <C> <C> <C> <C>
High $8 3\8 $8 5\8 $8 11\16 $8 5\16
Low 7 1\4 8 1\8 7 7\8 7 7\8
Close 8 1\8 8 3\8 8 1\8 8 3\16
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE GAIN based on change in Market Price*
<S> <C> <C>
October 21, 1988 (commencement of operations) through September 30, 1995.............. 28.05%
October 1, 1990 through September 30, 1995............................................ 21.15
October 1, 1994 through September 30, 1995............................................ 8.12
January 1, 1995 through September 30, 1995........................................... 5.65
April 1, 1995 through September 30, 1995............................................. .81
July 1, 1995 through September 30, 1995.............................................. 2.28
NET ASSET VALUE PER SHARE
October 21, 1988 (commencement of operations)........... $ 9.22
September 30, 1994...................................... 8.98
December 31, 1994....................................... 8.55
March 31, 1995.......................................... 8.85
June 30, 1995........................................... 8.90
September 30, 1995...................................... 9.21
PERCENTAGE GAIN based on change in Net Asset Value*
October 21, 1988 (commencement of operations) through September 30, 1995.............. 56.23%
October 1, 1990 through September 30, 1995............................................ 37.38
October 1, 1994 through September 30, 1995............................................ 10.05
January 1, 1995 through September 30, 1995............................................ 12.94
April 1, 1995 through September 30, 1995.............................................. 7.32
July 1, 1995 through September 30, 1995............................................... 5.04
* With dividends reinvested.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
------------- -------------
<S> <C> <C>
CALIFORNIA-97.4%
Bakersfield Central District Development Agency, Tax Allocation Revenue,
Refunding (Downtown Bakersfield Redevelopment) 6.625%, 4/1/2015......... $ 1,000,000$ 992,960
California Department of Water Resources, Revenue (Central Valley Project)
8.054%, 12/1/2026 (a,b)................................................. 900,000 924,750
California Educational Facilities Authority, Revenue (University of San
Francisco)
6.40%, 10/1/2017........................................................ 1,100,000 1,103,718
California Pollution Control Financing Authority, SWDR:
(Browning-Ferris Industries) 6.75%, 9/1/2019............................ 600,000 620,724
(Keller Canyon Landfill Co. Project) 6.875%, 11/1/2027.................. 1,000,000 1,044,870
California Public Works Board, LR:
(Department of Corrections - Susanville State Prison)
5.375%, 6/1/2012...................................................... 2,000,000 1,851,360
(Various University of California Projects):
6.60%, 12/1/2022 (Prerefunded 12/1/2002) (c).......................... 800,000 912,512
Refunding 5.50%, 6/1/2021............................................. 1,000,000 903,440
Capistrano Unified School District, Special Tax
(Community Facilities District Number 87-1- Aliso Viejo) 8.375%, 10/1/2020 2,000,000 2,134,920
Compton Community Redevelopment Agency, Tax Allocation Revenue,
Refunding (Walnut Industrial Park) 8.10%, 8/1/2013 (Prerefunded 8/1/1999) (c) 1,000,000 1,146,210
Costa Mesa City Hall and Public Safety Facilities, Inc., LR (Victoria Street)
7.60%, 10/1/2018 (Prerefunded 10/1/1997) (c)............................ 1,000,000 1,065,930
Emeryville Public Financing Authority, Revenue
(Shellmound Park Redevelopment Project) 6.80%, 5/1/2014................. 500,000 506,540
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
6%, 1/1/2034............................................................ 1,000,000 926,970
Fountain Valley Agency for Community Development, Tax Allocation Revenue
(City Center Area Redevelopment Project) 9.10%, 1/1/2015................ 2,500,000 2,602,175
City of Fresno, Health Facility Revenue, Refunding (Holy Cross Health System
Corp.)
5.625%, 12/1/2018....................................................... 750,000 700,755
City of Highland, Special Tax (Community Facilities District Number 90 -1)
8.60%, 9/1/2015......................................................... 2,000,000 2,126,680
Irvine Ranch Water District Joint Powers Agency, Local Pool Revenue
8.25%, 8/15/2023........................................................ 1,000,000 1,097,810
Northern California Power Agency, Public Power Revenue, Refunding
(Hydroelectric Project No.1) 8%, 7/1/2013 (Prerefunded 7/1/1996) (c).... 600,000 630,432
Orange County, Special Tax:
(Community Facilities District Number 87-5-Rancho Santa Margarita)
7.80%, 8/15/2013 (Prerefunded 8/15/1998) (c).......................... 1,000,000 1,116,910
(Community Facilities District Number 88-1- Aliso Viejo)
8.10%, 8/15/2013 (Prerefunded 8/15/1998) (c).......................... 1,000,000 1,120,320
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
CALIFORNIA (CONTINUED)
Palmdale Civic Authority, Tax Allocation Revenue,
Refunding (Merged Redevelopment Project Areas) 6.60%, 9/1/2034.......... $ 1,000,000 $ 1,081,900
Redwood Empire Financing Authority, COP 6.40%, 12/1/2023.................... 4,000,000 3,872,960
Riverside County, Single Family Revenue 10.50%, 9/1/2014.................... 40,000 42,116
Sacramento Municipal Utility District, Electric Revenue, Refunding
7.875%, 8/15/2016 (Prerefunded 8/15/1998) (c)........................... 1,500,000 1,678,380
San Diego, IDR (San Diego Gas and Electric Co.)
7.375%, 12/1/2021....................................................... 600,000 619,914
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue
6.75%, 1/1/2032......................................................... 1,000,000 1,015,660
San Jose, MFHR 8.647%, 4/1/2012 (a)......................................... 3,000,000 3,202,500
Santa Cruz County Public Financing Authority, Tax Allocation Revenue
6.20%, 9/1/2023......................................................... 2,000,000 1,892,340
Temecula Valley Unified School District, Special Tax
(Community Facilities District Number 89-3) 8%, 9/1/2019 (d)........... . 2,000,000 1,200,000
University of California, Facilities Mortgage Revenue (Board of Regents)
9.125%, 7/1/2012........................................................ 15,000 15,537
Walnut Improvement Agency, Tax Allocation Revenue (Walnut Improvement
Project):
8%, 9/1/2018............................................................ 230,000 257,050
8%, 9/1/2018 (Prerefunded 9/1/1998) (c)................................. 1,000,000 1,123,790
U.S. RELATED-2.6%
Guam Power Authority, Revenue
6.75%, 10/1/2024........................................................ 1,000,000 1,034,520
----------
TOTAL INVESTMENTS
(cost $40,073,014)...................................................... $40,566,653
===========
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
COP Certificate of Participation MFHR Multi-Family Housing Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LR Lease Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH(E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- --------- --------------------- ----------------------
<S> <C> <C> <C>
AAA Aaa AAA 21.4%
AA Aa AA 4.0
A A A 21.2
BBB Baa BBB 31.7
Not Rated (f) Not Rated (f) Not Rated (f) 21.7
-------
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Residual interest security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September
30, 1995, this security amounted to $924,750 or 2.2% of net assets.
(c) Bonds which are prerefunded are collateralized with U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(d) Non-income producing security; interest payment in default.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $40,073,014)-see statement...................................... $40,566,653
Cash.................................................................... 157,024
Interest receivable..................................................... 812,777
Prepaid expenses........................................................ 3,188
----------
41,539,642
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 23,482
Accrued expenses........................................................ 64,087 87,569
------------ -------
NET ASSETS.................................................................. $41,452,073
===========
REPRESENTED BY:
Paid-in capital......................................................... $41,617,951
Accumulated undistributed investment income-net......................... 67,878
Accumulated net realized (loss) on investments.......................... (727,395)
Accumulated net unrealized appreciation on investments-Note 3........... 493,639
----------
NET ASSETS at value applicable to 4,502,021 shares outstanding
(110 million shares of $.001 par value Common Stock authorized)......... $41,452,073
===========
NET ASSET VALUE, per share
($41,452,073 / 4,502,021 shares)........................................ $9.21
=====
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 2,784,488
EXPENSES:
Management fee-Note 2(a).............................................. $ 277,847
Directors' fees and expenses-Note 2(c)................................ 32,295
Auditing fees......................................................... 26,091
Legal fees............................................................ 25,638
Shareholder servicing costs-Note 2(b)................................. 21,450
Shareholders' reports................................................. 19,208
Registration fees..................................................... 5,312
Custodian fees........................................................ 4,421
Miscellaneous......................................................... 9,883
----------
TOTAL EXPENSES.................................................... 422,145
--------
INVESTMENT INCOME-NET............................................. 2,362,343
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (726,947)
Net unrealized appreciation on investments.............................. 2,023,417
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 1,296,470
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,658,813
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
-------------------------------
1994 1995
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 2,534,587 $ 2,362,343
Net realized gain (loss) on investments................................. 271,986 (726,947)
Net unrealized appreciation (depreciation) on investments for the year.. (4,716,486) 2,023,417
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... (1,909,913) 3,658,813
------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (2,586,125) (2,431,090)
Net realized gain on investments........................................ --- (216,997)
------------ -----------
TOTAL DIVIDENDS....................................................... (2,586,125) (2,648,087)
------------ -----------
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c).......................................... 278,969 ---
------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... (4,217,069) 1,010,726
NET ASSETS:
Beginning of year....................................................... 44,658,416 40,441,347
------------ -----------
End of year (including undistributed investment income-net:
$136,625 in 1994 and $67,878 in 1995)................................. $40,441,347 $41,452,073
=========== ============
SHARES SHARES
------------ -----------
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED. 29,327 ---
=========== ============
</TABLE>
See notes to financial statements.
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the financial statements and market price data for the
Fund's shares.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............... $ 9.30 $ 9.22 $ 9.40 $ 9.98 $ 8.98
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............................ .65 .60 .62 .56 .52
Net realized and unrealized gain (loss) on investments (.07) .18 .56 (.98) .30
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS............... .58 .78 1.18 (.42) .82
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net............. (.63) (.60) (.60) (.58) (.54)
Dividends from net realized gain on investments.. (.03) .- .- .- (.05)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS............................ (.66) (.60) (.60) (.58) (.59)
------- ------- ------- ------- -------
Net asset value, end of year..................... $ 9.22 $ 9.40 $ 9.98 $ 8.98 $ 9.21
======= ======= ======= ======= =======
Market Value, end of year........................ $ 97\8 $ 93\8 $ 101\8$ 81\8 $ 83\16
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN *............................ 12.92% 1.23% 14.84% (14.64%) 8.12%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 1.04% 1.11% 1.06% 1.02% 1.06%
Ratio of net investment income to average net assets 6.96% 6.48% 6.45% 6.01% 5.95%
Portfolio Turnover Rate.......................... 15.43% 27.77% 15.54% 33.65% 13.80%
Net Assets, end of year (000's Omitted).......... $40,661 $41,726 $44,658 $40,441 $41,452
* Calculated based on market value.
</TABLE>
See notes to financial statements.
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified closed-end management investment company. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
(A) PORTFOLIO VALUATION: Investments in municipal debt securities
(excluding options and financial futures on municipal and U.S. treasury
securities) are valued on the last business day of each week and month by an
independent pricing service ("Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Options and financial futures on
municipal and U.S. treasury securities are valued at the last sales price on
the securities exchange on which such securities are primarily traded or at
the last sales price on the national securities market on the last business
day of each week and month. Investments not listed on an exchange or the
national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
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: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid monthly.
Dividends from net realized capital gain are declared and paid at least
annually. 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.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less than
95% of the market price) as defined in the dividend reinvestment plan.
On September 28, 1995, the Board of Directors declared a cash dividend of
$.041 per share from investment income-net, payable on October 26, 1995 to
shareholders of record as of the close of business on October 12, 1995.
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
NET INCREASE
NET REALIZED & (DECREASE)
UNREALIZED IN NET ASSETS
TOTAL INVESTMENT NET INVESTMENT GAIN (LOSS) RESULTING FROM
INCOME INCOME ON INVESTMENTS OPERATIONS
----------------- ----------------- ----------------- -----------------
(000'S) PER (000'S) PER (000'S) PER (000'S) PER
QUARTER ENDED OMITTED SHARE OMITTED SHARE OMITTED SHARE OMITTED SHARE
- --------------- ------- ------- -------- ----- ------ -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1993.............. $ 788 $0.18 $ 666 $0.15 $ (944) $(0.21) $ (278) $(0.06)
March 31, 1994................. 758 0.17 651 0.14 (2,876) (0.64) (2,225) (0.50)
June 30, 1994.................. 710 0.15 600 0.13 (241) (0.05) 359 0.08
September 30, 1994............. 707 0.15 618 0.14 (384) (0.08) 234 0.06
- --------------- ------- ------- -------- ----- ------ -------- ------- --------
Total........................ $2,963 $0.65 $2,535 $0.56 $(4,445) $(0.98) $(1,910) $(0.42)
- --------------- ======= ======= ======= ======= ======= ======= ======= =======
December 31, 1994.............. $ 719 $0.16 $ 617 $0.14 $(1,692) $(0.37) $(1,075) $(0.23)
March 31, 1995................. 685 0.15 587 0.13 1,362 0.30 1,949 0.43
June 30, 1995.................. 691 0.15 586 0.13 276 0.06 862 0.19
September 30, 1995............. 689 0.15 572 0.12 1,350 0.31 1,922 0.43
- --------------- ------- ------- -------- ----- ------ -------- ------- --------
Total........................ $2,784 $0.61 $2,362 $0.52 $ 1,296 $ 0.30 $ 3,658 $ 0.82
- --------------- ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can
distribute tax exempt dividends, by complying with the applicable provisions
of the Internal Revenue Code, and to make distributions of income and net
realized capital gain sufficient to relieve it from substantially all Federal
income and excise taxes.
NOTE 2-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 .70 of 1% of the average
weekly value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. There was no expense
reimbursement for the year ended September 30, 1995.
(B) The Fund compensates Mellon Bank, N.A. (the parent of the Manager)
under a Transfer Agency Agreement for providing transfer agency services for
the Fund. Such compensation amounted to $21,450 for the year ended September
30, 1995.
(C) Prior to February 1, 1995, certain officers, of the Fund were
"affiliated persons," as defined in the Act, of the Manager and/or Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager. Each director
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.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $10,894,140 and $11,470,740, respectively, for the year ended
September 30, 1995, and consisted entirely of long-term and short-term
municipal investments.
At September 30, 1995, accumulated net unrealized appreciation on
investments was $493,639, consisting of $1,851,758 gross unrealized
appreciation and $1,358,119 gross unrealized depreciation.
At September 30, 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 MUNICIPAL INCOME, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus California Municipal Income, Inc., including the statement of
investments, as of September 30, 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 September 30, 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 Municipal Income, Inc. at September 30, 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.
[Ernst and Young LLP signature logo]
New York, New York
November 1, 1995
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
The Fund generally distributes net investment income monthly. From and
after any issuance of Preferred Stock, monthly distributions to the holders
of the Common Stock (the "Common Shareholders") will consist of all net
investment income of the Fund remaining after payment of dividends on such
Preferred Stock. Any net realized short-term capital gains and any net
realized long-term capital gains will be distributed at least annually.
Net realized short- or long-term capital gains, if any, will be
distributed to Common Shareholders at least once a year to the extent not
necessary to pay dividends on or meet the liquidation preference of shares of
any Preferred Stock. While there are any shares of Preferred Stock
outstanding, the Fund may not declare any cash dividend or other distribution
on its Common Stock, unless at the time of such declaration, (i) all accrued
Preferred Stock dividends have been paid and (ii) the net asset value of the
Fund's portfolio (determined after deducting the amount of such dividend or
other distribution) is at least 200% of the liquidation value of the
outstanding Preferred Stock (expected to equal the original purchase price
per share plus any accrued and unpaid dividends thereon). This limitation on
the Fund's ability to make distributions on its Common Stock could under
certain circumstances impair the ability of the Fund to maintain its
qualification for taxation as a regulated investment company.
Under the Fund's Dividend Reinvestment Plan (the "Plan"), a Common
Shareholder who has Fund shares registered in his name will have all
dividends and distributions reinvested automatically by Mellon Bank, N.A., as
Plan agent (the "Agent"), in additional shares of the Fund at the lower of
prevailing market price or net asset value (but not less than 95% of market
value at the time of valuation) unless such shareholder elects to receive
cash as provided below. If market price is equal to or exceeds net asset
value, shares will be issued at net asset value. If net asset value exceeds
market price or if a cash dividend only is declared, the Agent, as agent for
the Plan participants, will buy Fund shares in the open market. A Plan
participant is not relieved of any income tax that may be payable on such
dividends or distributions.
A Common Shareholder who owns Fund shares registered in nominee name
through his broker/dealer (i.e., in "street name") may not participate in the
Plan, but may elect to have cash dividends and distributions reinvested by
his broker/dealer in additional shares of the Fund if such service is
provided by the broker/dealer; otherwise such dividends and distributions
will be treated like any other cash dividend or distribution.
A Common Shareholder who has Fund shares registered in his name may elect
to withdraw from the Plan at any time for a $5.00 fee and thereby elect to
receive cash in lieu of shares of the Fund. Changes in elections must be in
writing, sent to Mellon Bank, N.A., P.O. Box 750, Pittsburgh, Pennsylvania
15230, Attention: Dividend Reinvestment, should include the shareholder's
name and address as they appear on the Agent's records and will be effective
only if received more than ten business days prior to the record date for any
distribution.
The Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account. Shares in the
account of each Plan participant will be held by the Agent in
non-certificated form in the name of the participant, and each such
participant's proxy will include those shares purchased pursuant to the Plan.
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
DIVIDEND REINVESTMENT PLAN (UNAUDITED) (CONTINUED)
The Fund pays the Agent's fee for reinvestment of dividends and
distributions. Plan participants pay a pro rata share of brokerage
commissions incurred with respect to the Agent's open market purchases in
connection with the reinvestment of dividends or distributions.
The Fund reserves the right to amend or terminate the Plan as applied to
any dividend or distribution paid subsequent to notice of the change sent to
Plan participants at least 90 days before the record date for such dividend
or distribution. The Plan also may be amended or terminated by the Agent on
at least 90 days' written notice to Plan participants.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended September 30, 1995:
-all the dividends paid from investment income-net are "exempt-interest
dividends" (not subject to regular Federal and, for individuals who are
California residents, California personal income taxes), and
-the $.0482 per share paid by the Fund on December 28, 1994 represents a
long-term capital gain distribution.
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1995 calendar year
on Form 1099-DIV which will be mailed by January 31, 1996.
OFFICERS AND DIRECTORS
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
200 Park Avenue
New York, NY 10166
DIRECTORS
Joseph S. DiMartino, Chairman
Lucy Wilson Benson
David W. Burke
Martin D. Fife
Whitney I. Gerard
Robert R. Glauber
Arthur A. Hartman
George L. Perry
Paul Wolfowitz
OFFICERS
President and Treasurer
Marie E. Connolly
Vice President and Secretary
John E. Pelletier
Vice President and Assistant Treasurer
Frederick C. Dey
Vice President and Assistant Secretary
Eric B. Fischman
Assistant Treasurer
John J. Pyburn
Assistant Treasurer
Joseph F. Tower, III
Assistant Secretary
Ruth Leibert
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
L. Lawrence Troutman
Samuel J. Weinstock
Monica S. Wieboldt
MANAGER
The Dreyfus Corporation
CUSTODIAN
The Bank of New York
COUNSEL
Stroock & Stroock & Lavan
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
Mellon Bank, N.A.
STOCK EXCHANGE LISTING
AMEX Symbol: DCM
INITIAL SEC EFFECTIVE DATE
10/21/88
The Net Asset Value appears in the
following publications: Barron's,
Closed-End Bond Funds section
under the heading "Municipal
Bond Funds" every Monday; Wall
Street Journal, Mutual Funds
section under the heading
"Closed-End Bond Funds" every
Monday; New York Times,
Business section under the
heading "Closed-End Bond Funds"
every Monday.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase shares of its
common stock in the open market when it can do so at prices below the then
current net asset value per share.
[Dreyfus lion "d" logo]
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
Mellon Bank, N.A.
85 Challenger Road
Ridgefield Park, NJ 07660
Printed in U.S.A. 857AR959
[Dreyfus logo]
California
Municipal
Income, Inc.
Annual Report
September 30, 1995
