Dreyfus California Municipal Income, Inc.
ANNUAL REPORT September 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
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 from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Selected Information
7 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
18 Report of Independent Auditors
19 Dividend Reinvestment Plan
21 Important Tax Information
22 Proxy Results
25 Officers and Directors
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus California
Municipal Income, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus California Municipal
Income, Inc., covering the 12-month period from October 1, 1998 through
September 30, 1999. Inside, you'll find valuable information about how the fund
was managed during the reporting period, including a discussion with the fund's
portfolio manager, Paul Disdier.
The past 12 months have been highly volatile for most bonds. Although U.S.
Treasury securities began the reporting period in the wake of a rally caused
primarily by a "flight to quality" amid the spread of the global financial
crisis in overseas markets, most higher yielding sectors of the bond market had
declined sharply. The Federal Reserve Board responded to the global financial
crisis last fall by reducing short-term interest rates. Its strategy apparently
was effective, and the U.S. economy remained strong through the remainder of the
reporting period.
Because inflation is more likely to rise in a strong economy, the bond market
overall -- including U.S. Treasury securities -- declined during the first nine
months of 1999. To help forestall a rise of inflation, the Federal Reserve Board
raised short-term interest rates twice during the summer of 1999, effectively
reversing most of last fall's interest-rate cuts. Higher interest rates led to
some erosion of bond prices, especially among the higher yielding market
sectors. In this environment, however, the yields of many higher yielding bonds
- -- including corporate bonds and U.S. government agency securities -- have
recently been quite attractive compared to the yields of U.S. Treasury
securities of comparable maturity.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus California Municipal Income, Inc.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
October 15, 1999
DISCUSSION OF FUND PERFORMANCE
Paul Disdier, Portfolio Manager
How did Dreyfus California Municipal Income, Inc. perform over the period?
The fund provided a total return of -2.53% for the 12-month reporting period
ended September 30, 1999.(1) The fund produced income dividends of $0.564 per
share, which is equal to a distribution rate of 5.86%, over the same period.(2)
We attribute the fund's performance to its security selection strategy, which
emphasizes income over total return. In rising interest-rate environments such
as the one that prevailed throughout most of the reporting period, prices of
high income-producing bonds tend to decline less than prices of bonds with lower
income yields. Conversely, when interest rates decline, prices of high-income
bonds tend to appreciate less than prices of their lower yielding counterparts.
What is the fund's investment approach?
The fund seeks high current income exempt from federal and California state
income taxes by investing in long-term municipal bonds.
To achieve this objective, we have constructed a portfolio designed to provide
consistently high-income streams. We found such income opportunities through
rigorous analysis of each bond's structure, paying particularly close attention
to each bond's yield, maturity and early redemption features.
Over time, many of the fund's high yielding bonds matured or were redeemed by
their issuers. We generally attempted to replace those bonds with new securities
that offered higher-than-average income payments. This strategy is designed to
help maximize income. We also seek to upgrade the fund with newly issued bonds
that, in our opinion, have better structural or income characteristics than
existing holdings. When such opportunities arise, we will usually sell bonds
that are close to redemption or maturity. This strategy is intended to protect
the fund' s income stream. In addition, we conduct extensive credit analysis of
our holdings in an attempt to avoid potential defaults on interest and principal
payments.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
The fund was affected by changing interest rates over the past year. When the
reporting period began on October 1, 1998, investors were concerned about the
potentially adverse economic effects of the global currency and credit crises,
which had spread from Asia to Russia and were threatening Latin America. In
response, the Federal Reserve Board reduced short-term interest rates last fall
in an attempt to stimulate global economic growth.
The Federal Reserve's strategy apparently was effective. Economies in Japan and
Southeast Asia appear to have halted their deterioration early in 1999, and the
growth of the U.S. economy was stronger than most analysts expected. Municipal
bond yields and prices stabilized in this environment. In the second and third
quarters, however, strong economic growth raised concerns among fixed-income
investors that inflationary pressures might re-emerge. The Federal Reserve Board
increased short-term interest rates twice during the summer of 1999 in an
attempt to forestall inflationary pressures. This change in monetary policy
caused municipal bond prices to fall.
In addition, strong economic conditions contributed to the nation's first
federal budget surplus in many years. While the government has had less need to
issue U.S. Treasury securities, demand has remained high from domestic and
overseas investors. This imbalance between supply and demand has, at times,
constrained the rise of taxable U.S. Treasury bond yields relative to tax-exempt
bond yields. As a result, the municipal bond market generally underperformed the
U.S. Treasury securities market during the reporting period. However, because of
this relative underperformance, municipal bonds -- including those from
California issuers -- are currently offering tax-exempt yields that compare very
favorably with taxable yields after adjusting for taxes.
What is the fund's current strategy?
We have generally maintained our portfolio positions in a fiscal year
characterized by little trading activity. As a result, the fund continues to
hold many of the securities it originally purchased. Because interest rates have
declined substantially since the fund was originally constructed, there have
been very few opportunities to upgrade the portfolio with higher yielding
securities that have suitable credit characteristics.
While the fund' s average maturity was at 22 years as of September 30, its
average duration, a measure of sensitivity to changes in interest rates, was
substantially lower at 8.77 years. That's primarily because lower prevailing
interest rates make it more likely that issuers will redeem higher yielding
bonds on their call dates, which are usually well in advance of their final
maturity dates.
As existing holdings have been called over the past year, we have reinvested the
proceeds in long-term, higher yielding bonds as well as in inverse floaters,
which are adjustable-rate securities that tend to produce more income along with
more risk. As interest rates have risen, we have looked to capture higher yields
from newly issued securities. When interest rates peak, this will potentially
allow us to lock in these higher yields and participate in the possibility of
capital appreciation if interest rates subsequently fall.
October 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BASED UPON NET ASSET VALUE PER SHARE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-CALIFORNIA
RESIDENTS, AND SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX
(AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) 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.
The Fund
SELECTED INFORMATION
September 30, 1999 (Unaudited)
Market Price per share September 30, 1999 $ 9 5/8
Shares Outstanding September 30, 1999 4,570,248
American Stock Exchange Ticker Symbol DCM
MARKET PRICE (AMERICAN STOCK EXCHANGE)
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, 1999
-----------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 1998 MARCH 31, 1999 JUNE 30, 1999 SEPTEMBER 30, 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High $10 3/4 $10 9/16 $10 1/8 $10 1/8
Low 10 3/16 10 9 1/2 9 1/2
Close 10 9/16 10 1/16 9 1/2 9 5/8
</TABLE>
PERCENTAGE GAIN (LOSS) based on change in Market Price*
October 21, 1988 (commencement of operations)
through September 30, 1999 90.93%
October 1, 1989 through September 30, 1999 88.74
October 1, 1994 through September 30, 1999 61.22
October 1, 1998 through September 30, 1999 (2.21)
January 1, 1999 through September 30, 1999 (4.74)
April 1, 1999 through September 30, 1999 (1.43)
July 1, 1999 through September 30, 1999 2.86
NET ASSET VALUE PER SHARE
October 21, 1988 (commencement of operations) $ 9.22
September 30, 1998 9.77
December 31, 1998 9.67
March 31, 1999 9.58
June 30, 1999 9.28
September 30, 1999 8.98
PERCENTAGE GAIN (LOSS) based on change in Net Asset Value*
October 21, 1988 (commencement of operations) through
September 30, 1999 93.21%
October 1, 1989 through September 30, 1999 80.68
October 1, 1994 through September 30, 1999 36.10
October 1, 1998 through September 30, 1999 (2.53)
January 1, 1999 through September 30, 1999 (2.92)
April 1, 1999 through September 30, 1999 (3.40)
July 1, 1999 through September 30, 1999 (1.75)
*WITH DIVIDENDS REINVESTED.
STATEMENT OF INVESTMENTS
September 30, 1999
<TABLE>
<CAPTION>
Principal
LONG-TERM MUNICIPAL INVESTMENTS--98.0% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--91.2%
Abag Financial Authority For Nonprofit Corps, MFHR
<S> <C> <C>
(Central Park Apartments) 5.60%, 7/1/2038 815,000 766,076
Bakersfield Central District Development Agency,
Tax Allocation Revenue, Refunding
(Downtown Bakersfield Redevelopment)
6.625%, 4/1/2015 (Prerefunded 4/1/2003) 1,000,000 (a) 1,097,410
California, 7.131%, 12/1/2018 375,000 (b,c) 354,600
California Department Water Resources, Revenue
(Central Valley Project) 8.21%, 12/1/2026
(Prerefunded 6/1/2002) 900,000 (a,b,c) 1,033,236
California Educational Facilities Authority, Revenue
(University of San Francisco)
6.40%, 10/1/2017 (Prerefunded 10/1/2002) 1,100,000 (a) 1,193,863
California Pollution Control Finance Authority:
Facilities Revenue (Mobil Oil Corp.) 5.50%, 12/1/2029
(Guaranteed; Mobil Oil Corp.) 1,250,000 1,189,088
Pollution Control Revenue, 8.536%, 6/1/2014 1,000,000 (b,c) 1,128,500
SWDR:
(Browning Ferris Industries):
5.80%, 12/1/2016 2,000,000 1,832,460
6.75%, 9/1/2019 600,000 604,854
(Keller Canyon Landfill Co. Project) 6.875%, 11/1/2027 1,000,000 1,009,920
California Public Works Board, LR (Various University of
California Projects)
6.60%, 12/1/2022 (Prerefunded 12/1/2002) 800,000 (a) 875,576
California Statewide Communities Development Authority:
COP (The Internext Group) 5.375%, 4/1/2030 1,300,000 1,142,661
LR, 7.326%, 10/1/2033 1,000,000 (b,c) 862,960
Capistrano Unified School District, Special Tax:
(Community Facilities District Number 87-1-Aliso Vieio)
8.375%, 10/1/2020 (Prerefunded 10/1/2000) 2,000,000 (a) 2,134,120
(Community Facilities District Number 98-2-Ladera)
5.75%, 9/1/2029 500,000 471,785
Duarte, COP (City of Hope National Medical Center)
6.125%, 4/1/2013 (Prerefunded 4/1/2003) 1,000,000 (a) 1,081,260
Emeryville Public Financing Authority, Revenue
(Shellmound Park Redevelopment Project)
6.80%, 5/1/2014 (Prerefunded 5/1/2004) 500,000 (a) 561,020
Escondido Improvement Bond, Act of 1915, Refunding
(Reassessment District Number 98) 5.70%, 9/2/2026 450,000 422,654
Fresno Health Facility, Revenue, Refunding
(Holy Cross Health System Corp.) 5.625%, 12/1/2018 750,000 731,903
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
Palmdale Civic Authority, Revenue, Refunding
(Merged Redevelopment Project Areas):
6.60%, 9/1/2034 (Prerefunded 9/1/2004) 590,000 (a) 660,594
6.60%, 9/1/2034 410,000 435,006
Redwood Empire Financing Authority, COP 6.40%, 12/1/2023 4,000,000 4,085,880
Sacramento County, Community Facilities District Number 1,
Special Tax, Refunding
5.70%, 12/1/2020 750,000 712,740
San Diego County, COP:
5.70%, 2/1/2028 1,000,000 926,170
(Burnham Institute) 6.25%, 9/1/2029 1,000,000 1,005,280
San Joaquin Hills Transportation Corridor Agency,
Toll Road Revenue
6.75%, 1/1/2032 (Prerefunded 1/1/2003) 1,000,000 (a) 1,098,500
San Jose, MFHR
8.745%, 4/1/2012 2,895,000 (b,c) 3,119,160
Santa Cruz County Public Financing Authority,
Tax Allocation Revenue
6.20%, 9/1/2023 2,000,000 2,043,120
Torrance Redevelopment Agency, Tax Allocation Revenue,
Refunding
5.625%, 9/1/2028 500,000 463,110
Turlock Health Facility, COP, Refunding (Emanuel Medical Center)
5.75%, 10/15/2023 2,500,000 2,357,300
Valley Health System, HR, Refunding (Improvement Project)
6.50%, 5/15/2025 2,000,000 2,011,600
U.S. RELATED--6.8%
Commonwealth of Puerto Rico Highway and
Transportation Authority,
Transportation Revenue,
6.09%, 7/1/2038 1,000,000 (b,c) 752,679
Commonwealth of Puerto Rico Infrastructure
Financing Authority,
Special Tax Revenue, 6.495%, 7/1/2015 1,000,000 (b,c) 910,579
Guam Power Authority, Revenue 6.75%, 10/1/2024
(Prerefunded 10/1/2004) 1,000,000 (a) 1,126,359
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $40,017,810) 98.0% 40,202,023
CASH AND RECEIVABLES (NET) 2.0% 829,028
NET ASSETS 100.0% 41,031,051
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
<S> <C> <C> <C>
COP Certificate of Participation MFHR Multi-Family Housing Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
LR Lease Revenue
</TABLE>
Summary of Combined Ratings (Unaudited)
<TABLE>
<CAPTION>
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA Aaa AAA 26.4
AA Aa AA 7.4
A A A 9.7
BBB Baa BBB 35.6
BB Ba BB 8.6
Not Rated(d) Not Rated(d) Not Rated(d) 12.3
100.0
</TABLE>
(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 QUALIFIED INSTITUTIONAL BUYERS. AT SEPTEMBER 30, 1999,
THESE SECURITIES AMOUNTED TO $8,161,714 OR 19.9% OF NET ASSETS.
(D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 40,017,810 40,202,023
Interest receivable 942,135
Prepaid expenses 6,694
41,150,852
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 23,692
Cash overdraft due to Custodian 42,513
Accrued expenses 53,596
119,801
- --------------------------------------------------------------------------------
NET ASSETS ($) 41,031,051
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 42,277,331
Accumulated undistributed investment income--net 214,530
Accumulated net realized gain (loss) on investments (1,645,023)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 184,213
- --------------------------------------------------------------------------------
NET ASSETS ($) 41,031,051
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(110 million shares of $.001 par value Common Stock authorized) 4,570,248
NET ASSET VALUE per share ($) 8.98
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended September 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 2,635,543
EXPENSES:
Management fee--Note 3(a) 302,249
Directors' fees and expenses--Note 3(c) 34,967
Auditing fees 30,028
Shareholder servicing costs--Note 3(b) 23,190
Shareholders' reports 20,843
Legal fees 8,485
Registration fees 4,443
Custodian fees--Note 3(b) 3,662
Interest expense--Note 2 1,142
Miscellaneous 9,387
TOTAL EXPENSES 438,396
INVESTMENT INCOME--NET 2,197,147
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 212,824
Net unrealized appreciation (depreciation) on investments (3,469,414)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (3,256,590)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,059,443)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended September 30,
----------------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 2,197,147 2,341,879
Net realized gain (loss) on investments 212,824 91,848
Net unrealized appreciation (depreciation)
on investments (3,469,414) 442,951
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS (1,059,443) 2,876,678
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (2,568,624) (2,607,243)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
DIVIDENDS REINVESTED--NOTE 1(C) 273,386 278,726
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,354,681) 548,161
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 44,385,732 43,837,571
END OF PERIOD 41,031,051 44,385,732
Undistributed investment income--net 214,530 586,007
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
INCREASE IN SHARES OUTSTANDING AS A
RESULT OF DIVIDENDS REINVESTED 28,556 28,549
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements and market price data for the fund's shares.
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 9.77 9.71 9.52 9.21 8.98
Investment Operations:
Investment income--net .48 .52 .53 .70 .52
Net realized and unrealized
gain (loss) on investments (.71) .12 .23 .10 .30
Total from Investment Operations (.23) .64 .76 .80 .82
Distributions:
Dividends from investment income--net (.56) (.58) (.57) (.49) (.54)
Dividends from net realized gain on investments -- -- -- -- (.05)
Total Distributions (.56) (.58) (.57) (.49) (.59)
Net asset value, end of period 8.98 9.77 9.71 9.52 9.21
Market value, end of period 9 5/8 10 7/16 10 1/4 8 1/4 8 3/16
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) (2.21) 7.98 32.14 6.86 8.12
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.02 1.00 .98 1.06 1.06
Ratio of net investment income
to average net assets 5.09 5.34 5.57 7.53 5.95
Portfolio Turnover Rate 25.65 19.28 26.38 3.30 13.80
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 41,031 44,386 43,838 42,847 41,152
(A) CALCULATED BASED ON MARKET VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
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.
On September 30, 1999, the Board of Directors declared a cash dividend of $.047
per share from investment income-net, payable on October 28, 1999 to
shareholders of record as of the close of business on October 14, 1999.
(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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $1,644,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1999. If not
applied, $422,000 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.
The average daily amount of borrowings outstanding during the period ended
September 30, 1999 was approximately $22,000, with a related weighted average
annualized interest rate of 5.28%.
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, 1999.
(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, 1999, the fund was charged $28,082
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, 1999, the fund was
charged $3,662 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, 1999, amounted to
$11,210,519 and $10,901,828, respectively.
At September 30, 1999, accumulated net unrealized appreciation on investments
was $184,213, consisting of $1,526,095 gross unrealized appreciation and
$1,341,882 gross unrealized depreciation.
At September 30, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Fund
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Dreyfus California 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, 1999, 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, 1999 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, 1999, 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 LLP
New York, New York
November 3, 1999
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
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, 1999
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 1999 calendar year on Form 1099-DIV which
will be mailed by January 31, 2000.
The Fund
PROXY RESULTS (Unaudited)
During the fiscal year ended September 30, 1999, shareholders voted on the
following proposals presented at the annual shareholders' meeting held on May
21, 1999. The description of each proposal and the number of shares voted are as
follows:
<TABLE>
<CAPTION>
Shares
------------------------------------------------------------------------------
For Authority Withheld
------------------------------------------------------------------------------
To elect three Class III Directors:*
<S> <C> <C>
Joseph S. DiMartino 3,555,925 64,932
George L. Perry 3,555,995 64,862
Paul Wolfowitz 3,555,375 65,482
</TABLE>
<TABLE>
<CAPTION>
Shares
----------------------------------------------------------------------------
For Against Abstained
----------------------------------------------------------------------------
To ratify the selection of
Ernst & Young LLP as
<S> <C> <C> <C>
independent auditors for the fund 3,575,815 6,705 38,337
* The terms of these Class III Directors expire in 2002.
</TABLE>
NOTES
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
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. Conroy
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
Douglas J. Gaylor
Stephen C. Kris
Richard J. Moynihan
W. Michael Petty
Jill C. Schaffro
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, 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.
The Fund
For More Information
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
(c) 1999 Dreyfus Service Corporation 426AR999
