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,
1996, your portfolio produced a total return of 9.62% based on net asset
value, including bond price changes and interest income.* Income dividends
exempt from Federal and State of California personal income taxes of $.492
per share were paid to shareholders.** This is equivalent to a tax-free
distribution rate per share of 5.96%.***
THE ECONOMY
Low inflation in the face of ongoing strong growth in new jobs and low
unemployment remained the big economic story over the reporting period. On
September 24, the Federal Reserve Board's Open Market Committee ("the Fed")
again decided against raising interest rates. Despite what appeared to be a
sharp split within the Fed, the Central Bank kept the Fed Funds rate at
5.25%. (A news leak reported that eight of the 12 presidents of the regional
Federal Reserve Banks were concerned about inflation and leaning toward an
increase in rates.)
The potential resurgence in inflation has been a primary concern of the
Fed as the economic expansion continues. Yet inflation has remained subdued.
The Consumer Price Index has risen just 2.9% over the past twelve months.
Furthermore, indications of inflation at crude, intermediate and finished
goods levels, as measured by the Producer Price Index, remained well-behaved.
There appear to be few signs of inflation in the production pipeline.
The past inverse relationship between unemployment and inflation has so
far not prevailed during this economic expansion. Most recently, the
unemployment rate fell to 5.1%, its lowest level in seven years. Job growth
has continued to be robust. Yet despite signs of a tightening labor market,
wage gains, considered by many economists to be a harbinger of future
inflation, remained modest, as have virtually all measures of inflation.
Buoyed by such good news, consumers remained confident. The Conference
Board's Consumer Confidence Index has risen since the beginning of the year
and was near a six-year high by the end of the reporting period. Yet, there
were some signs that consumer spending was moderating from its strong pace in
the first half of the year. Retail sales remained subdued all summer.
Consumer borrowing rose over the reporting period, continuing the three-year
trend of steady increases in credit.
Industrial production has risen consistently since February and
businesses showed some signs of inventory accumulation by late summer.
Corporate pricing power still seems to be in check. In a survey of member
corporations released in mid-September, the National Federation of
Independent Business reported that only 20% of its respondents planned to
increase prices in coming months.
Despite all these favorable developments, we are alert for signs of
potential economic excess that could result in a resurgence in inflation.
THE MARKET
The municipal bond market, like its taxable counterparts, has been
buffeted by an unprecedented amount of price volatility during the past year.
The market continues to fixate on the periodic releases of
key economic data, and this has resulted in large and dramatic swings in bond
prices and yields. At this juncture it appears that for now the Fed will
maintain a neutral stance regarding interest rate policy. However, there
continues to be no clear consensus regarding the future direction of the
economy or its strength, or of inflation, as evidenced by a fairly equal
division of opinion among economists. The prevailing uncertain state of
affairs has taken its toll on the psyche (not to mention the profitability)
of many market traders as a sharp decline in prices one day is quickly
followed the next by a reverse move.
In view of the municipal bond market's price activity over the past year,
we restate that our posture is to maintain a long-term perspective that is
not unduly influenced by short-term price swings. The sharp market sell-off
last winter, followed by a strong rally during the summer, followed recently
by yet another climb and then a subsequent fall in yields, underscores this
point!
THE PORTFOLIO
At the time of our last letter to shareholders (dated April 15, 1996) the
fixed-income markets were in the throes of a major bear market move. This
Fund, because of its primary objective of maximizing current tax-exempt
income, is structured to weather such an adverse move. Conversely, when the
market is in a bull phase (e.g., 1995) this Fund will likely experience lower
values in its portfolio holdings than those funds that are geared towards
total return (capital gains plus income). Looking back over the past several
months, the Fund has experienced significantly less price volatility than the
market in general. Both the Fund's net asset value and stock price per share
have deviated only minimally over the past twelve months from the levels at
which they began the year.
Going forward, our strategy will remain as it has been - to emphasize the
maximization of tax-exempt dividend income. In periods such as this,
characterized by unprecedented volatility, we will continue to be guided by
the Fund's investment objective.
Very truly yours,
[ Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 15, 1996
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.
*** Distribution rate per share is based upon dividends per share paid
from net investment income during the period, divided by the market price per
share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
SELECTED INFORMATION SEPTEMBER 30, 1996 (UNAUDITED)
<S> <C>
Market Price per share September 30, 1996........................... $8 1\4
Shares Outstanding September 30, 1996............................... 4,502,021
American Stock Exchange Ticker Symbol............................... DCM
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE (AMERICAN STOCK EXCHANGE)
FISCAL YEAR ENDED SEPTEMBER 30, 1996
___________________________________________________________________________________________________
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 1995 MARCH 31, 1996 JUNE 30, 1996 SEPTEMBER 30, 1996
_________________________ ___________ ___________ ___________________
<S> <C> <C> <C> <C>
High $8 3\8 $8 7\16 $8 7\16 $8 7\16
Low 71 5\16 7 15\16 8 8 1\8
Close 71 5\16 8 1\4 8 1\4 8 1\4
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
PERCENTAGE GAIN based on change in Market Price*
October 21, 1988 (commencement of operations) through September 30, 1996.............. 36.84%
October 1, 1991 through September 30, 1996............................................ 14.65
October 1, 1995 through September 30, 1996............................................ 6.86
January 1, 1996 through September 30, 1996............................................ 8.60
April 1, 1996 through September 30, 1996.............................................. 2.97
July 1, 1996 through September 30, 1996............................................... 1.46
NET ASSET VALUE PER SHARE
October 21, 1988 (commencement of operations)........ $9.22
September 30, 1995................................... 9.21
December 31, 1995.................................... 9.50
March 31, 1996....................................... 9.31
June 30, 1996........................................ 9.37
September 30, 1996................................... 9.52
PERCENTAGE GAIN based on change in Net Asset Value*
October 21, 1988 (commencement of operations) through September 30, 1996.............. 71.26%
October 1, 1991 through September 30, 1996............................................ 41.70
October 1, 1995 through September 30, 1996............................................ 9.62
January 1, 1996 through September 30, 1996............................................ 4.71
April 1, 1996 through September 30, 1996.............................................. 5.29
July 1, 1996 through September 30, 1996............................................... 3.09
* With dividends reinvested.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.1% AMOUNT VALUE
_________ _________
<S> <C> <C>
CALIFORNIA-95.6%
Bakersfield Central District Development Agency, Tax Allocation Revenue,
Refunding (Downtown Bakersfield Redevelopment) 6.625%, 4/1/2015......... $ 1,000,000 $ 1,035,180
California Department of Water Resources, Water System Revenue
(Central Valley Project) 8.632%, 12/1/2026 (a,b)........................ 900,000 975,375
California Educational Facilities Authority, Revenue (University of San Francisco)
6.40%, 10/1/2017........................................................ 1,100,000 1,224,179
California Pollution Control Financing Authority, SWDR:
(Browning-Ferris Industries) 6.75%, 9/1/2019............................ 600,000 634,926
(Keller Canyon Landfill Co. Project) 6.875%, 11/1/2027.................. 1,000,000 1,062,910
California Public Works Board, LR:
(Department of Corrections - California State Prison-Susanville)
5.375%, 6/1/2012...................................................... 2,000,000 1,928,040
(Various University of California Projects):
6.60%, 12/1/2022 (Prerefunded 12/1/2002) (c).......................... 800,000 900,384
Refunding 5.50%, 6/1/2021............................................. 1,000,000 939,010
Capistrano Unified School District, Special Tax
(Community Facilities District Number 87-1 - Aliso Viejo)
8.375%, 10/1/2020 (Prerefunded 10/1/2000) (c)........................... 2,000,000 2,311,680
Compton Community Redevelopment Agency, Tax Allocation Revenue,
Refunding (Walnut Industrial Park) 8.10%, 8/1/2013 (Prerefunded 8/1/1999) (c) 1,000,000 1,120,220
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 1,036,570
Emeryville Public Financing Authority, Revenue
(Shellmound Park Redevelopment Project) 6.80%, 5/1/2014................. 500,000 526,385
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
6%, 1/1/2034............................................................ 1,000,000 971,650
Fountain Valley Agency for Community Development, Tax Allocation Revenue
(City Center Area Redevelopment Project) 9.10%, 1/1/2015................ 2,500,000 2,564,750
City of Fresno, Health Facility Revenue, Refunding (Holy Cross Health System Corp.)
5.625%, 12/1/2018....................................................... 750,000 716,138
City of Highland, Special Tax (Community Facilities District Number 90-1)
8.60%, 9/1/2015 (Prerefunded 9/1/1998) (c).............................. 2,000,000 2,199,080
Irvine Ranch Water District Joint Powers Agency, Local Pool Revenue
8.25%, 8/15/2023........................................................ 1,000,000 1,062,270
Los Angeles, Wastewater System Revenue,
Refunding 5.20%, 11/1/2021 (Insured; FGIC).............................. 1,800,000 1,668,132
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ __________
CALIFORNIA (CONTINUED)
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 $ 1,086,870
(Community Facilities District Number 88-1 - Aliso Viejo)
8.10%, 8/15/2013 (Prerefunded 8/15/1998) (c).......................... 1,000,000 1,088,880
Palmdale Civic Authority, Tax Allocation Revenue,
Refunding (Merged Redevelopment Project Areas) 6.60%, 9/1/2034.......... 1,000,000 1,078,360
Redwood Empire Financing Authority, COP 6.40%, 12/1/2023.................... 4,000,000 4,018,840
Riverside County, Single Family Revenue 10.50%, 9/1/2014.................... 25,000 26,329
Sacramento Municipal Utility District, Electric Revenue,
Refunding 7.875%, 8/15/2016 (Prerefunded 8/15/1998) (c)................. 1,500,000 1,632,150
San Diego, IDR (San Diego Gas and Electric Co.) 7.375%, 12/1/2021........... 600,000 613,758
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue
6.75%, 1/1/2032......................................................... 1,000,000 1,040,550
San Jose, MFHR 8.801%, 4/1/2012 (a)......................................... 3,000,000 3,386,250
Santa Cruz County Public Financing Authority, Tax Allocation Revenue
6.20%, 9/1/2023......................................................... 2,000,000 2,000,660
Walnut Improvement Agency, Tax Allocation Revenue (Walnut Improvement Project):
8%, 9/1/2018............................................................ 230,000 250,258
8%, 9/1/2018 (Prerefunded 9/1/1998) (c)................................. 1,000,000 1,091,700
U.S. RELATED-2.5%
Guam Power Authority, Revenue 6.75%, 10/1/2024.............................. 1,000,000 1,037,150
__________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $39,026,540)...................................................... $41,228,634
===========
SHORT-TERM MUNICIPAL INVESTMENT-1.9%
- ------------------------------------
CALIFORNIA;
Irvine Ranch Water District, Refunding, VRDN
3.85% (LOC; Bank of America National Trust & Savings Association) (d,e)
(cost $800,000)......................................................... $ 800,000 $ 800,000
===========
TOTAL INVESTMENTS-100.0%
(cost $39,826,540)...................................................... $42,028,634
===========
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
COP Certificate of Participation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH(F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ ______ ________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 28.8%
AA Aa AA 4.0
A A A 18.0
BBB Baa BBB 31.5
F1 MIG1, VMIG1, P1 SP1, A1 1.9
Not Rated (g) Not Rated (g) Not Rated (g) 15.8
_______
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in a transaction exempt from
registration, normally to a qualified institutional buyer. At September
30, 1996, this security amounted to $975,375 or 2.3% of net assets.
(c) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(d) Secured by letters of credit.
(e) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) 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, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $39,826,540)-see statement.... $42,028,634
Cash.................................................................... 58,852
Interest receivable..................................................... 842,577
Prepaid expenses........................................................ 2,608
_____________
42,932,671
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 28,620
Accrued expenses........................................................ 56,941 85,561
____________ _____________
NET ASSETS.................................................................. $42,847,110
=============
REPRESENTED BY:
Paid-in capital......................................................... $41,617,951
Accumulated undistributed investment income-net......................... 1,026,403
Accumulated net realized (loss) on investments.......................... (1,999,338)
Accumulated net unrealized appreciation on investments-Note 4........... 2,202,094
_____________
NET ASSETS at value applicable to 4,502,021 shares outstanding
(110 million shares of $.001 par value Common Stock authorized)......... $42,847,110
=============
NET ASSET VALUE, per share
($42,847,110 / 4,502,021 shares)........................................ $9.52
=======
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 3,622,642
EXPENSES:
Management fee-Note 3(a).............................................. $ 295,230
Legal fees............................................................ 37,281
Directors' fees and expenses-Note 3(c)................................ 33,585
Auditing fees......................................................... 27,091
Shareholder servicing costs-Note 3(b)................................. 22,492
Shareholders' reports................................................. 9,964
Registration fees..................................................... 9,137
Custodian fees-Note 3(b).............................................. 4,400
Miscellaneous......................................................... 9,943
____________
TOTAL EXPENSES.................................................... 449,123
_____________
INVESTMENT INCOME-NET............................................. 3,173,519
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 4:
Net realized (loss) on investments...................................... $(1,271,943)
Net unrealized appreciation on investments.............................. 1,708,455
____________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 436,512
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,610,031
=============
See notes to financial statements.
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
_________________________________
1995 1996
_____________ ____________
OPERATIONS:
Investment income-net................................................... $ 2,362,343 $ 3,173,519
Net realized (loss) on investments...................................... (726,947) (1,271,943)
Net unrealized appreciation on investments for the year................. 2,023,417 1,708,455
_____________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 3,658,813 3,610,031
_____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (2,431,090) (2,214,994)
Net realized gain on investments........................................ (216,997) -
_____________ ____________
TOTAL DIVIDENDS....................................................... (2,648,087) (2,214,994)
_____________ ____________
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c).......................................... - -
_____________ ____________
TOTAL INCREASE IN NET ASSETS...................................... 1,010,726 1,395,037
NET ASSETS:
Beginning of year....................................................... 40,441,347 41,452,073
_____________ ____________
End of year (including undistributed investment income-net:
$67,878 in 1995 and $1,026,403 in 1996)............................... $41,452,073 $42,847,110
============== =============
SHARES SHARES
_____________ ____________
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED...... - -
============== =============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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.
YEAR ENDED SEPTEMBER 30,
_______________________________________________________________
PER SHARE DATA: 1992 1993 1994 1995 1996
________ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $ 9.22 $ 9.40 $ 9.98 $ 8.98 $ 9.21
________ _______ _______ _______ _______
INVESTMENT OPERATIONS:
Investment income-net........................ .60 .62 .56 .52 .70
Net realized and unrealized gain (loss) on investments .18 .56 (.98) .30 .10
________ _______ _______ _______ _______
TOTAL FROM INVESTMENT OPERATIONS........... .78 1.18 (.42) .82 .80
________ _______ _______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net......... (.60) (.60) (.58) (.54) (.49)
Dividends from net realized gain on investments - - - (.05) -
________ _______ _______ _______ _______
TOTAL DISTRIBUTIONS........................ (.60) (.60) (.58) (.59) (.49)
________ _______ _______ _______ _______
Net asset value, end of year................. $ 9.40 $ 9.98 $8.98 $ 9.21 $ 9.52
====== ======= ======= ======== =========
Market Value, end of year.................... $ 9 3\8 $ 10 1\8 $ 8 1\8 $ 8 3\16 $ 8 1\4
====== ======= ======= ======== =========
TOTAL INVESTMENT RETURN*......................... 1.23% 14.84% (14.64%) 8.12% 6.86%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.11% 1.06% 1.02% 1.06% 1.06%
Ratio of net investment income to average net assets 6.48% 6.45% 6.01% 5.95% 7.53%
Portfolio Turnover Rate...................... 27.77% 15.54% 33.65% 13.80% 3.30%
Net Assets, end of year (000's Omitted)...... $41,726 $44,658 $40,441 $41,452 $42,847
* Calculated based on market value.
See notes to financial statements.
</TABLE>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus California Municipal Income, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a non-diversified
closed-end management investment company. The Fund's investment objective is
to maximize current income exempt from Federal and California personal income
taxes to the extent consistent with the preservation of capital. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. ("Mellon").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in 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, if any, 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 30, 1996, the Board of Directors declared a cash dividend of
$0.041 per share from investment income-net, payable on October 28, 1996 to
shareholders of record as of the close of business on October 14, 1996.
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 $727,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through September 30, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, the carryover expires in
fiscal 2004.
NOTE 2-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed Funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended September 30, 1996, the Fund did not
borrow under the line of credit.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .70 of 1% of the value
of the Fund's average weekly net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, interest on borrowings, brokerage and extraordinary
expenses, exceed the expense limitation of any state having jurisdiction over
the Fund, the Fund may deduct from payments to be made to the Manager, or the
Manager will bear the amount of such excess to the extent required by state
law. There was no expense reimbursement for the year ended September 30,
1996.
(B) The Fund compensates Mellon under a transfer agency agreement for
providing personnel and facilities to perform transfer agency services for
the Fund. Such compensation amounted to $22,492 during the year ended
September 30, 1996.
Effective May 10, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. During the period ended
September 30, 1996, $1,396 was paid to Mellon pursuant to the custody
agreement.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund 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 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended September 30, 1996,
amounted to $1,624,140 and $1,359,068, respectively.
At September 30, 1996, accumulated net unrealized appreciation on
investments was $2,202,094, consisting of $2,359,685 gross unrealized
appreciation and $157,591 gross unrealized depreciation.
At September 30, 1996, 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, 1996, 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 verification by
examination of securities held by the custodian as of September 30, 1996 and
confirmation of securities not held by the custodian by correspondence with
others. 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, 1996,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[Ernst & Young signature logo]
New York, New York
October 31, 1996
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, 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 designates all the
dividends paid from investment income-net during the fiscal year ended
September 30, 1996 as "exempt-interest dividends" (not subject to regular
Federal and, for individuals who are California residents, California
personal income taxes).
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 1996 calendar year
on Form 1099-DIV which will be mailed by January 31, 1997.
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
Richard W. Ingram
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President and Assistant Treasurer
Joseph F. Tower, III
Vice President and Assistant Secretary
Elizabeth Bachman
Vice President and Assistant Secretary
Douglas C. Conroy
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
Samuel J. Weinstock
Monica S. Wieboldt
INVESTMENT ADVISER
The Dreyfus Corporation
CUSTODIAN
Mellon Bank, N.A.
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,
Money and Business Section under
the heading "Closed-End Bond
Funds-Single State Municipal
Bond Funds" every Sunday.
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.
New (cover) Page
[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
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
Mellon Bank, N.A.
85 Challenger Road
Ridgefield Park, NJ 07660
Printed in U.S.A. 857AR969
[Dreyfus logo]
California
Municipal
Income, Inc.
Annual Report
September 30, 1996
