DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholders:
We are pleased to provide you with this report on Dreyfus California
Municipal Income, Inc. for the 12-month period ended September 30, 1998. Your
Fund produced a total return, including share price changes and dividend income
generated, of 6.70% .* During the reporting period, the Fund produced income
dividends exempt from Federal and State of California personal income taxes of
$0.576 per share.** This is equivalent to a tax-free distribution rate per share
of 5.52%.***
THE ECONOMY
The risk of global recession loomed large by the end of the reporting period.
Since last summer, the international economic crisis has spread from Asia and
Russia into Latin America and its effects are evident in the U.S., as witnessed
by early signs of a slowing in our domestic economy. Second-quarter gross
domestic product grew at an annual rate of 1.8%, well below the 5.5% rate in the
first quarter, while the trade deficit has continued to widen, affected by
weakening foreign demand and low-priced imports. These developments have
heightened a sense of global economic interdependence and have resulted in a
shift in emphasis by the Federal Reserve Board, whereby fighting inflation has
taken a subordinate role to that of maintaining stable U.S. economic growth. As
Fed Chairman Alan Greenspan noted in early September: "It is just not credible
that the United States can remain an oasis of prosperity unaffected by a world
that is experiencing greatly increased stress." On September 29, the Federal
Open Market Committee cut interest rates for the first time since January 1996.
That quarter-point reduction in the Federal Funds target rate to 5.25% was
designed to cushion the adverse effects of the overseas economic crisis on the
domestic economy. (The Federal Funds rate is the interest rate that banks charge
each other for overnight loans.)
So far, shock waves from the overseas economic turmoil have been dampened by
the continued propensity of U.S. consumers to spend. In the first half of the
year, their spending outpaced earned income, an unsustainable phenomenon, yet a
telling indicator of the level of consumer optimism. The reasons for such
optimism are no surprise. Inflation remains tame, running at an annual rate
comfortably below 2% . After-tax income is growing. Of great economic and
psychological importance to consumers, jobs are plentiful; the unemployment rate
has been at or near 30-year lows throughout the reporting period and new jobs
have been created at a robust pace.
While the corporate sector wrestles with the economic implications of global
developments, consumers have powered the economy. The consumer sector comprises
two-thirds of the activity in the $8-trillion U.S. economy and, with the
business sector slowing (corporate profits declined in the second quarter for
the first time in nearly a decade) , any significant pullback in household
spending could trigger a recession. Up to now, the spillover effect from
developments abroad has been largely confined to the manufacturing sector, whose
activity has contracted of late due to the falloff in foreign demand. Aside from
this "erosion at the edges" as Chairman Greenspan describes it, layoffs on a
broader scale--a factor that could weaken consumer resolve to spend--so far have
not occurred. It is clear that the Fed is concerned about the possibility of
worldwide recession. The recent interest rate reduction was an initial step
toward mitigating the domestic effects of international financial turmoil and a
gesture meant to serve notice to the world of the seriousness of its purpose.
<PAGE>
MARKET ENVIRONMENT
Conditions in the fixed income markets during the past 12 months have been
very dynamic. The normal economic fundamentals that exert the greatest influence
on the direction of interest rates have taken a backseat to other influences.
Price movements have often resulted from factors that are difficult to discern.
Most investors have seen, and perhaps felt, the effects of the Asian and
emerging market crises on stocks; it has only come to light in recent weeks how
dramatic the impact could be on the bond markets. Generally, the various market
sectors respond similarly to economic and other news by moving in the same
direction - though not necessarily at the same pace. However, these are not
normal times. Fear of a widening crisis in the foreign markets has pushed more
investors to the relative safety of U.S. Treasury bonds. Compounding the problem
are substantial hedge fund positions involving complex transactions. The rapid
rise in U.S. Treasury prices has forced the unwinding of many of these positions
which, in turn, occasionally has disrupted the fixed-income market.
It is difficult to anticipate when the markets will return to more normal
conditions. The bond markets continue to be driven by foreign events and hedge
funds' deleveraging needs. Mindful of these forces and the prospects for
softening in the domestic economy, it appears that the Fed will have to maintain
an accommodative bias in its conduct of monetary policy.
The impact on municipal securities has generally been positive. Yields have
moved lower throughout the past year, though the path down has not been a smooth
one. With stock prices experiencing significant erosion, more signals of a
slowing economy, and the consensus view that the Fed will act again to lower
short-term interest rates, we believe that the merits of owning tax-exempt
securities are compelling. For example, some "AAA"-rated municipal bonds are
yielding nearly 100% of taxable U.S. Treasury bonds. Furthermore, while newly
issued municipal securities have been marketed at a near record level in 1998,
future projections call for a curtailment in the quantity of new issues to be
marketed.
Portfolio Focus
In managing the Fund, the generation of income exempt from both California
and Federal income taxes is a principal focus. In the current market
environment, because of the narrowing yield differentials between the highest
quality and lower rated tax-exempts, opportunities to add enhanced yield were
limited during the reporting period. However, we would anticipate that a
softening in the U.S. economy could lead to more opportunities in the future.
<PAGE>
With our focus on income generation, the portfolio has been managed to
maintain an unchanged posture with respect to the Fund's duration. Duration (a
measure of the Fund' s sensitivity to changes in interest rates) has been
maintained between five and six years. This is considerably shorter than the
benchmark indices. This duration positioning has worked successfully in terms of
total return* measurement whenever interest rates were flat or rising during the
Fund' s fiscal year. During the market's upswing this past year, the Fund may
not have captured as much price appreciation as more aggressively structured
funds, that is, those with longer durations.
California' s robust economy and improving financial condition supports our
security positions. The State' s economy continues to outpace the country in
terms of employment and personal income growth. As a result of this strong
performance, last month Moody' s Investors Service raised the rating on
California's general obligation bonds to Aa3 from A1.
While no one can determine when this period of market turbulence will end, we
continue to seek California tax-free income for the Fund. We trust that this
philosophy is in keeping with your investment objectives.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 16, 1998
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid,
based upon net asset value per share.
** Some income may be subject to state and local income taxes for non-California
residents and, for certain shareholders, to the Federal Alternative Minimum Tax
(AMT).
*** 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.
<PAGE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
SELECTED INFORMATION SEPTEMBER 30, 1998 (UNAUDITED)
<S> <C>
Market Price per share September 30, 1998 . . . . . . . . . . . . . . . . . . $10 7/16
Shares Outstanding September 30, 1998 . . . . . . . . . . . . . . . . . . . . 4,541,692
American Stock Exchange Ticker Symbol . . . . . . . . . . . . . . . . . . . . DCM
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE (AMERICAN STOCK EXCHANGE)
Fiscal Year Ended September 30, 1998
_________________________________________________________________________________________________________________________________
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
December 31, 1997 March 31, 1998 June 30, 1998 September 30, 1998
__________________ ______________ _____________ ___________________
<S> <C> <C> <C> <C>
High $10 5/8 $10 13/16 $10 5/16 $10 1/2
Low 10 9 7/16 9 5/8 10
Close 10 7/16 10 10 1/8 10 7/16
</TABLE>
PERCENTAGE GAIN based on change in Market Price*
October 21, 1988 (commencement of operations)
through September 30, 1998
95.24%
October 1, 1993 through September 30, 1998 . . . . . . . . . 40.72
October 1, 1997 through September 30, 1998 . . . . . . . . . 7.98
January 1, 1998 through September 30, 1998 . . . . . . . . . 4.43
April 1, 1998 through September 30, 1998 . . . . . . . . . . 7.45
July 1, 1998 through September 30, 1998. . . . . . . . . . . 4.59
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
<S> <C>
October 21, 1988 (commencement of operations) . . . . . . . . . . . $9.22
September 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . 9.71
December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . 9.75
March 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . 9.71
June 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.67
September 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . 9.77
</TABLE>
PERCENTAGE GAIN based on change in Net Asset Value*
October 21, 1988 (commencement of operations)
through September 30, 1998
98.22%
October 1, 1993 through September 30, 1998 . . . . . . . . . 33.64
October 1, 1997 through September 30, 1998 . . . . . . . . . 6.70
January 1, 1998 through September 30, 1998 . . . . . . . . . 4.64
April 1, 1998 through September 30, 1998 . . . . . . . . . . 3.58
July 1, 1998 through September 30, 1998. . . . . . . . . . . 2.51
* With dividends reinves
<PAGE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
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STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998
Principal
Long-Term Municipal Investments--97.3% Amount Value
- -------------------------------------------------------
____________ ____________
California--92.5%
Abag Financial Authority For Nonprofit Corps, MFHR
<S> <C> <C>
(Central Park Apartments) 5.60%, 7/1/2038 . . . . . . . . . . . . . . . . . . . . . . . $ 815,000 $ 831,104
Alvoro Unified School District, COP
5.125%, 9/1/2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 600,900
Bakersfield Central District Development Agency, Tax Allocation Revenue,
Refunding
(Downtown Bakersfield Redevelopment) 6.625%, 4/1/2015 (Prerefunded 4/1/2003) (a) . . . 1,000,000 1,138,820
California 7.469%, 12/1/2018 (b,c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,000 390,068
California Department Water Resources, Revenue
(Central Valley Project) 8.531%, 12/1/2026 (Prerefunded 6/1/2002) (a,b,c) . . . . . . . 900,000 1,100,970
California Educational Facilities Authority, Revenue (University of San
Francisco)
6.40%, 10/1/2017 (Prerefunded 10/1/2002) (a) . . . . . . . . . . . . . . . . . . . . . 1,100,000 1,238,215
California Health Facilities Financing Authority, Revenue
5.40%, 5/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,033,470
California Pollution Control Finance Authority:
Facilities Revenue (Mobil Oil Corp.) 5.50%, 12/1/2029 (Guaranteed; Mobil Oil Corp.) . . 1,250,000 1,302,800
SWDR:
(Browning Ferris Industries):
5.80%, 12/1/2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,146,800
6.75%, 9/1/2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 684,174
(Keller Canyon Landfill Co. Project) 6.875%, 11/1/2027 . . . . . . . . . . . . . . 1,000,000 1,102,200
California Public Works Board, LR (Various University of California Projects)
6.60%, 12/1/2022 (Prerefunded 12/1/2002) (a) . . . . . . . . . . . . . . . . . . . . . 800,000 909,800
California Statewide Communities Development Authority, LR (Special
Facilities-United Airlines)
5.70%, 10/1/2033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,035,980
Capistrano Unified School District, Special Tax
(Community Facilities District Number 87-1-Aliso Vieio)
8.375%, 10/1/2020 (Prerefunded 10/1/2000) (a) . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,229,700
Compton Community Redevelopment Agency, Tax Allocation Revenue,
Refunding (Walnut Industrial Park) 8.10%, 8/1/2013 (Prerefunded 8/1/1999) (a) . . . . . 1,000,000 1,059,750
Contra Costa County, MFHR (Bollinger Crest Apartments)
5.20%, 11/01/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 756,893
Duarte, COP (City of Hope National Medical Center) 6.125%, 4/1/2013. . . . . . . . . . . . 1,000,000 1,060,250
Emeryville Public Financing Authority, Revenue
(Shellmound Park Redevelopment Project) 6.80%, 5/1/2014 (Prerefunded 5/1/2004) (a) . . 500,000 584,955
Escondido Improvement Bond, Act of 1915, Refunding
(Reassessment District Number 98) 5.70%, 9/2/2026 . . . . . . . . . . . . . . . . . . . 450,000 458,635
Fontana Redevelopment Agency, Tax Allocation Revenue, Refunding
(Jurupa Hills Redevelopment Project) 5.50%, 10/1/2027 . . . . . . . . . . . . . . . . . 750,000 775,343
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue 6%, 1/1/2034. . . . . . 1,000,000 1,080,350
Fresno Health Facility, Revenue, Refunding
(Holy Cross Health System Corp.) 5.625%, 12/1/2018 . . . . . . . . . . . . . . . . . . 750,000 788,730
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- -------------------------------------------------------
____________ ____________
California (continued)
Palmdale Civic Authority, Tax Allocation Revenue, Refunding
<S> <C> <C>
(Merged Redevelopment Project Areas) 6.60%, 9/1/2034 . . . . . . . . . . . . . . . . . $ 1,000,000 $ 1,124,230
Redwood Empire Financing Authority, COP 6.40%, 12/1/2023 . . . . . . . . . . . . . . . . . 4,000,000 4,353,920
Sacramento County, Community Facilities District Number 1, Special Tax,
Refunding
5.70%, 12/1/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 765,405
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue
6.75%, 1/1/2032 (Prerefunded 1/1/2003) (a) . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,141,790
San Jose, MFHR
9.1292%, 4/1/2012 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,940,000 3,390,437
Santa Cruz County Public Financing Authority, Tax Allocation Revenue
6.20%, 9/1/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,150,700
Stockton Improvement Bond, Act of 1915, Refunding
(Weber/Sperry) 5.00%, 9/2/2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 300,825
Torrance Redevelopment Agency, Tax Allocation Revenue, Refunding
5.625%, 9/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 507,660
Turlock Health Facility, COP, Refunding (Emanuel Medical Center)
5.75%, 10/15/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 2,566,650
Valley Health System, HR, Refunding (Improvement Project) 6.50%, 4/15/2025 . . . . . . . . 2,000,000 2,178,260
Walnut Improvement Agency, Tax Allocation Revenue (Walnut Improvement Project)
8%, 9/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000 238,547
U.S. Related--4.8%
Guam Power Authority, Revenue 6.75%, 10/1/2024 . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,127,160
Virgin Island Housing Finance Authority, SFMR
5.25%, 8/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,013,130
_____________
TOTAL LONG-TERM INVESTMENTS (cost $39,514,994) . . . . . . . . . . . . . . . . . . . . . . $43,168,621
==============
</TABLE>
<TABLE>
<CAPTION>
Short-Term Municipal Investments--2.2%
- -------------------------------------------------------
California Pollution Control Finance Authority, Pollution Control Revenue,
Refunding
<S> <C> <C>
VRDN (Pacific Gas & Electric) 4.10% (d) (cost $1,000,000) . . . . . . . . . . . . . . . $ 1,000,000 $ 1,000,000
_____________
_____________
TOTAL INVESTMENTS (cost $40,514,994) . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.5% $44,168,621
======= =============
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5% $ 217,111
======= =============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $44,385,732
======= =============
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
Summary of Abbreviations
- -----------------------------------------------------------------------------
<S> <C> <S> <C>
COP Certificate of Participation SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
LR Lease Revenue VRDN Variable Rate Demand Notes
MFHR Multi-Family Housing Revenue
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
- -----------------------------------------------------------------------------
Fitch or Moody's or Standard & Poor's Percentage of Value
_______ ________ __________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 26.6%
AA Aa AA 7.2
A A A 21.1
BBB Baa BBB 37.4
F1 MIG1/P1 SP1/A1 2.2
Not Rated (e) Not Rated (e) Not Rated (e) 5.5
_______
100.0%
=======
</TABLE>
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Bonds which are prerefunded are collateralized by U.S. Government securities
which are held in escrow and are used to pay principal and interest on the
municipal issue and to retire the bonds in full at the earliest refunding date.
(b) Inverse floater security--the interest rate is subject to change
periodically.
(c) Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to a qualified institutional buyer. At September 30, 1998, these
securities amounted to $1,491,038 or 3.4% of net assets.
(d) Variable interest rate--subject to periodic change.
(e) Securities which, while not rated by Fitch, Moody's and Standard & Poor's
have been determined by the Manager to be of comparable quality to those rated
securities in which the Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1998
Cost Value
___________ ___________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $40,514,994 $44,168,621
Interest receivable . . . . . . . . . . . . . . . . . . . 894,645
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 2,481
____________
45,065,747
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 33,183
Cash overdraft due to Custodian . . . . . . . . . . . . . 6,793
Payable for investment securities purchased . . . . . . . 593,998
Accrued expenses . . . . . . . . . . . . . . . . . . . . 46,041
____________
680,015
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,385,732
============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $42,003,945
Accumulated undistributed investment income--net . . . . 586,007
Accumulated net realized gain (loss) on investments . . . (1,857,847)
Accumulated gross unrealized appreciation on investments . 3,653,627
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,385,732
============
SHARES OUTSTANDING
(110 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED). . . . . . . . . . . . . . 4,541,692
NET ASSET VALUE per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.77
=====
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income . . . . . . . . . . . . . . . . . $2,780,479
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . $307,236
Directors' fees and expenses--Note 3(c) . . . . . 34,991
Professional fees . . . . . . . . . . . . . . . . 27,923
Shareholders' reports . . . . . . . . . . . . . . 24,474
Shareholders' servicing costs--Note 3(b) . . . . 22,811
Registration fees . . . . . . . . . . . . . . . . 8,732
Custodian fees--Note 3(b) . . . . . . . . . . . . 3,293
Miscellaneous . . . . . . . . . . . . . . . . . . 9,140
_________
Total Expenses . . . . . . . . . . . . . . . . 438,600
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,341,879
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . $ 91,848
Net unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . . . . . 442,951
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . 534,799
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . $2,876,678
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, 1998 September 30, 1997
__________________ __________________
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,341,879 $ 2,405,476
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 91,848 49,643
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 442,951 1,008,582
____________ ____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 2,876,678 3,463,701
____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,607,243) (2,580,508)
____________ ____________
CAPITAL STOCK TRANSACTIONS:
Dividends reinvested--Note 1(c) . . . . . . . . . . . . . . . . . . . . . . . 278,726 107,268
____________ ____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . 548,161 990,461
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,837,571 42,847,110
____________ ____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,385,732 $43,837,571
============ ============
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . $ 586,007 $ 851,371
____________ ____________
Shares Shares
____________ ____________
CAPITAL SHARE TRANSACTIONS:
Increase in Shares Outstanding as a Result of Dividends Reinvested . . . 28,549 11,122
============ ============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
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 period 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: 1998 1997 1996 1995 1994
_____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . $9.71 $9.52 $9.21 $8.98 $9.98
_____ _____ _____ _____ _____
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . .52 .53 .70 .52 .56
Net realized and unrealized gain (loss) on investments . . . . .12 .23 .10 .30 (.98)
_____ _____ _____ _____ _____
Total from Investment Operations . . . . . . . . . . . . . . . .64 .76 .80 .82 (.42)
_____ _____ _____ _____ _____
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . (.58) (.57) (.49) (.54) (.58)
Dividends from net realized gain on investments . . . . . . . . -- -- -- (.05) --
_____ _____ _____ _____ _____
Total Distributions . . . . . . . . . . . . . . . . . . . . . . (.58) (.57) (.49) (.59) (.58)
_____ _____ _____ _____ _____
Net asset value, end of period . . . . . . . . . . . . . . . . $9.77 $9.71 $9.52 $9.21 $8.98
_____ _____ _____ _____ _____
_____ _____ _____ _____ _____
Market value, end of period . . . . . . . . . . . . . . . . . . $10 7/16 $10 1/4 $ 8 1/4 $ 8 3/16 $ 8 1/8
======= ======= ======== ======== ========
TOTAL INVESTMENT RETURN* . . . . . . . . . . . . . . . . . . . . . 7.98% 32.14% 6.86% 8.12% (14.64%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . 1.00% .98% 1.06% 1.06% 1.02%
Ratio of net investment income to average net assets . . . . . 5.34% 5.57% 7.53% 5.95% 6.01%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 19.28% 26.38% 3.30% 13.80% 33.65%
Net Assets, end of period (000's omitted) . . . . . . . . . . . $44,386 $43,838 $42,847 $41,152 $40,441
- ------------
* Calculated based on market value.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
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, as amended (the "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 (the "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 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.
<PAGE>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On September 30, 1998, the Board of Directors declared a cash dividend of
$.047 per share from investment income-net, payable on October 28, 1998 to
shareholders of record as of the close of business on October 14, 1998.
(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 of 1986,
as amended, 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 $1,857,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1998. If not
applied, $635,000 of the carryover expires in fiscal 2004 and 1,222,000 expires
in fiscal 2005.
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. During the period ended September 30, 1998, 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 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 period ended September 30, 1998.
(B) The Fund compensates Mellon under a transfer agency agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. During the period ended September 30, 1998, the Fund was charged $12,600
pursuant to the transfer agency agreement.
The Fund compensates Mellon under a custody agreement for providing custodial
services for the Fund. During the period ended September 30, 1998, the Fund was
charged $3,293 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 period ended September 30, 1998
amounted to $8,311,470 and $8,687,130, respectively.
At September 30, 1998, 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).
<PAGE>
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, 1998, 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 and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of September 30, 1998 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, 1998, 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
November 3, 1998
<PAGE>
DREYFUS CALIFORNIA MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
Under the Fund' s Dividend Reinvestment Plan (the "Plan"), a holder of the
Common Stock ("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, c/o ChaseMellon Shareholder Services, Shareholder
Investment Plan, P.O. Box 3338, South Hackensack, New Jersey 07606, 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.
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, 1998 as "exempt-interest dividends" (not generally subject to
regular Federal income tax 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 1998 calendar year on Form 1099-DIV
which will be mailed by January 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
DREYFUS NEW YORK MUNICIPAL INCOME, INC.
- -----------------------------------------------------------------------------
PROXY RESULTS (UNAUDITED)
Shareholders voted on the following proposals presented at the annual
shareholders' meeting held on May 22, 1998. The description of each proposal and
the number of shares voted are as follows:
Shares
_______________________________________________________
For Authority Withheld
_________________ _______________________
<S> <C> <C> <C>
1. To elect three Class II Directors:*
Whitney I. Gerard . . . . . . . . . . . . . . . . . . . 3,601,877 54,136
Robert R. Glauber . . . . . . . . . . . . . . . . . . . 3,602,153 53,860
Arthur A. Hartman . . . . . . . . . . . . . . . . . . . 3,598,553 57,460
Shares
___________________________________________________
For Against Abstained
_________________ ______________ ______________
2. To ratify the selection of Ernst & Young LLP
as independent auditors of the Fund. . . . . . . . . . . . . . 3,557,952 13,940 84,121
* The terms of these Class II Directors expire in 2001.
</TABLE>
YEAR 2000 RISK (UNAUDITED)
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by The Dreyfus Corporation and the Fund's other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Dreyfus
Corporation is taking steps to address the Year 2000 Problem with respect to the
computer systems that it uses and to obtain assurances that comparable steps are
being taken by the Fund's other major service providers. At this time, however,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Fund.
<PAGE>
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
Margaret W. Chambers
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President, Assistant Treasurer and Assistant Secretary
Michael Petrucelli
Vice President, Assistant Treasurer and Assistant Secretary
Stephanie Pierce
Vice President and Assistant Treasurer
George A. Rio
Vice President and Assistant Treasurer
Joseph F. Tower, III
Vice President and Assistant Secretary
Douglas C. ConroyI
Vice President and Assistant Secretary
Christopher J. Kelley
Vice President and Assistant Secretary
Kathleen K. Morrisey
Vice President and Assistant Secretary
Elba Vasquez
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 LLP
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.
- --------------------------------------------------------------------------------
<PAGE>
(reg.tm)
(reg.tm)
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. 426AR989
California
Municipal
Income, Inc.
Annual Report
September 30, 1998
