GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the General California
Municipal Bond Fund, 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 8.76%,* and a tax-free distribution rate per share of 4.85%.**
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 October interest rate reduction was a major step
by the Fed 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.
MARKET ENVIRONMENT
Conditions in the fixed-income markets during the past 12 months have been
dynamic. The normal economic fundamentals, which exert the greatest influence on
the direction of interest rates, have taken a back seat 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. government bonds. Compounding the
problem are substantial hedge fund positions involving complex transactions. In
many instances, the positions entail owning low-quality corporate or foreign
bonds and short-selling high-quality U.S. Treasuries. The rapid rise in U.S.
Treasury prices has forced the unwinding of many of these positions which, in
turn, has exacerbated the problem.
It is difficult to anticipate when the markets will return to more normal
conditions. The bond markets continue to be driven by foreign liquidity 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 the yield of taxable U.S. Treasury bonds. Furthermore,
while the supply of newly issued municipal securities has been at a near-record
level for the past year, future projections call for a curtailment in the amount
of issues to be marketed.
PORTFOLIO FOCUS
The overriding objective in managing the Fund continues to emphasize the
generation of income exempt from both California and Federal income taxes.
Because of the narrowing yield differentials between the highest-quality and
lower rated tax-exempts, opportunities to make yield enhancements have been
limited in the current market environment. However, we would anticipate that a
softening in the U.S. economy could lead to a more opportunistic environment.
For the past 12 months the portfolio has been managed to maintain a neutral
posture with respect to the Fund's duration. Duration (a measure of the Fund's
sensitivity to changes in interest rates) has ranged between seven and eight
years. This neutral duration strategy has worked successfully when interest
rates have not declined too dramatically: During the market's latest upswing,
the Fund may not have captured as much price appreciation as more aggressively
structured funds. However, in view of our positive outlook for municipal
securities, we intend to add bonds to the Fund that will react more favorably if
interest rates decline further as anticipated. Due to the price appreciation of
the Fund' s securities during the past 12 months, trading activity resulted in
the realization of net capital gains, so we anticipate that shareholders will
again be receiving a capital gains distribution before the end of 1998.
California' s robust economy and improving financial condition support our
position. 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 focus on our long-term objectives of maximizing the Fund's
distribution of tax-free income, while achieving a competitive total return. 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.
Income may be subject to state and local income taxes for non-California
residents.
**Distribution rate per share is based upon dividends per share paid from net
investment income during the period, divided by the net asset value per share at
the end of the period, adjusted for capital gain distributions. Some income may
be subject to the Federal Alternative Minimum Tax (AMT) for certain
shareholders.
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC. SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN GENERAL CALIFORNIA
MUNICIPAL BOND FUND, INC. AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Dollars
$20,520
Lehman Brothers Municipal Bond Index*
$19,977
General California Municipal Bond Fund, Inc.
*Source: Lehman Brothers
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended Five Years Ended From Inception (10/10/89)
September 30, 1998 September 30, 1998 to September 30, 1998
____________________ ____________________ __________________________
<S> <C> <C> <C>
8.76% 5.78% 8.02%
- ------------------------
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in General California
Municipal Bond Fund, Inc. on 10/10/89 (Inception Date) to a $10,000 investment
made in the Lehman Brothers Municipal Bond Index on that date. For comparative
purposes, the value of the Index on 9/30/89 is used as the beginning value on
10/10/89. All dividends and capital gain distributions are reinvested.
The Fund invests primarily in California municipal securities and its
performance shown in the line graph takes into account fees and expenses. The
Lehman Brothers Municipal Bond Index is not limited to investments principally
in California municipal obligations and does not take into account fees and
expenses. The Lehman Brothers Municipal Bond Index, unlike the Fund, is an
unmanaged total return performance benchmark for the long-term, investment
grade, geographically unrestricted tax exempt bond market, calculated by using
municipal bonds selected to be representative of the municipal market overall.
These factors can contribute to the Index potentially outperforming the Fund.
Further information relating to Fund performance, including expense
reimbursements, if applicable, is contained in the Financial Highlights section
of the Prospectus and elsewhere in this report.
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998
Principal
Long-Term Municipal Investments--99.6% Amount Value
- ------------------------------------------------------- _____________ _____________
ABAG Finance Authority, Nonprofit Corps., MFHR
<S> <C> <C>
(Central Park Apartments) 5.60%, 7/1/2038 . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000 $ 5,098,800
ABAG Finance Corporation., COP (ABAG XXIV) 6.90%, 4/1/2012 . . . . . . . . . . . . . . . . 3,500,000 3,687,530
Alameda County, COP (Various Financing Projects)
6%, 9/1/2021 (Insured; MBIA, LOC; The Fuji Bank) . . . . . . . . . . . . . . . . . . . . 4,865,000 5,420,048
Allan Hancock Joint Community College District, COP, Refunding
7.625%, 10/1/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,055,000 1,175,523
Anaheim Public Financing Authority, Tax Allocation Revenue
6.45%, 12/28/2018 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000,000 6,979,020
Beaumont Unified School District, COP (Capital Improvement Project)
7.70%, 1/1/2021 (Prerefunded 1/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . 1,100,000 1,219,119
California Educational Facilities Authority, Revenue
(Chapman College) 7.50%, 1/1/2018 (Prerefunded 1/1/2001) (a) . . . . . . . . . . . . . . 1,760,000 1,946,296
California Health Facilities Financing Authority, Revenue:
(HELP Group)
7%, 8/1/2021 (Insured; California Health Facilities Construction Loan Program) . . . . 1,800,000 1,967,076
(Kaiser) 5.40%, 5/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500,000 4,650,615
(Pomona Valley Hospital Medical Center)
7.375%, 1/1/2014 (Prerefunded 1/1/2000) (a) . . . . . . . . . . . . . . . . . . . . . 750,000 800,970
(Walden House) 6.85%, 3/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,225,000 3,531,440
California Housing Finance Agency:
MFHR:
6.15%, 8/1/2022 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,850,000 4,119,346
6.05%, 8/1/2038 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 2,651,625
SFMR:
6%, 8/1/2016 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,149,720
6.375%, 8/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,250,000 2,431,552
5.60%, 8/1/2029 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,350,000 4,531,351
7.50%, 8/1/2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,065,000 1,107,589
7.60%, 8/1/2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,365,000 1,435,297
7.70%, 8/1/2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765,000 797,635
California Pollution Control Financing Authority, PCR, Refunding
(San Diego Gas and Electric) 5.90%, 6/1/2014 (Insured; MBIA) . . . . . . . . . . . . . . 9,000,000 10,432,800
California Statewide Communities Development Authority:
COP, Health Facilities Revenue, Refunding (Barton Memorial Hospital)
6.50%, 12/1/2009 (LOC; Banque Nationale De Paris) . . . . . . . . . . . . . . . . . . 1,600,000 1,758,384
Special Facilities LR (United Airlines, Inc.):
5.70%, 10/1/2033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,600,000 8,909,428
5.625%, 10/1/2034 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,895,000 2,982,429
Chico Public Financing Authority, Revenue
(Chico Municipal Airport and Central Chico Redevelopment Project)
7.40%, 4/1/2021 (Prerefunded 4/1/2000) (a) . . . . . . . . . . . . . . . . . . . . . . . 2,410,000 2,595,112
Commerce Joint Powers Financing Authority, Revenue, Multiple Project Loans
8%, 3/1/2022 (Prerefunded 3/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . . 2,395,000 2,688,555
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _____________ _____________
Contra Costa County, Mortgage Revenue, Refunding (Cedar Pointe)
6.15%, 9/1/2025 (Insured; FHA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,955,000 $ 3,129,286
Del Mar Race Track Authority, Revenue, Refunding 6.20%, 8/15/2011. . . . . . . . . . . . . 2,000,000 2,190,540
Dry Creek Joint School District, Special Tax
(Community Facilities District Number 1)
7.25%, 9/1/2011 (Insured; FSA, Prerefunded 9/1/2000) (a) . . . . . . . . . . . . . . . . 1,000,000 1,091,270
Duarte, COP (Hope City Medical Center) 6%, 4/1/2008. . . . . . . . . . . . . . . . . . . . 4,070,000 4,328,852
East Bay Municipal Utility District, Water System Revenue
4.75%, 6/1/2028 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,910,000 5,812,603
Fontana Public Financing Authority, Tax Allocation Revenue, Refunding
(North Fontana Redevelopment Project) 7.25%, 9/1/2020 . . . . . . . . . . . . . . . . . 2,000,000 2,123,900
Fontana Redevelopment Agency, Tax Allocation, Refunding
(Jurupa Hills Redevelopment Project):
5.50%, 10/1/2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,070,980
5.50%, 10/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,168,950
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue:
6%, 1/1/2034 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,401,750
5%, 1/1/2035 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,955,000 4,869,080
Fresno Unified School District, COP (Phase VI Project)
7.20%, 5/1/2011 (Prerefunded 5/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . 4,250,000 4,719,498
Hollister Redevelopment Agency, Tax Allocation
(Hollister Community Development Project)
7.55%, 10/1/2013 (Prerefunded 10/1/1999) (a) . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,061,550
Inglewood, HR (Daniel Freeman Hospital)
6.75%, 5/1/2013 (Prerefunded 5/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,199,800
Loma Linda, HR (Loma Linda University Medical Center Project)
6%, 12/1/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,277,750
Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue
Refunding 6%, 7/1/2026 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,536,900
Metropolitan Water District, Southern California Waterworks Revenue, Refunding
4.75%, 7/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 9,838,400
Monterey County, COP (Natividad Medical Center Improvement):
4.75%, 8/1/2020 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,680,000 3,657,515
4.75%, 8/1/2027 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,650,000 5,519,485
M-S-R Public Power Agency, Power Revenue, Refunding
(San Juan Project) 5.90%, 7/1/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,930,000 6,940,326
Newhall Elementary and Castaic Union School Districts, COP
(School Improvement Project) 7.70%, 3/1/2011 (Prerefunded 3/1/2001) (a) . . . . . . . . 2,695,000 2,957,116
Northern California Power Agency, Public Power Revenue, Refunding
(Hydroelectric Project Number 1) 6.30%, 7/1/2018 (Insured; MBIA) . . . . . . . . . . . . 20,400,000 24,613,212
Orange County, COP, Special Tax (Community Facilities District Number 87-3)
7.80%, 8/15/2015 (Prerefunded 8/15/2000) (a) . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,645,620
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _____________ _____________
Otay Municipal Water District (Improvement District Number 27)
6.70%, 9/1/2022 (Prerefunded 9/1/2002) (a) . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000 $ 2,263,560
Port Oakland, Special Facilities Revenue (Mitsui O.S.K. Lines Limited)
6.80%, 1/1/2019 (LOC; Industrial Bank of Japan) . . . . . . . . . . . . . . . . . . . . 3,000,000 3,285,780
Redwood City Elementary School District 5%, 8/1/2015 (Insured; FGIC) . . . . . . . . . . . 3,875,000 4,085,335
Richmond Joint Powers Financing Authority, Revenue
7.25%, 5/15/2013 (Prerefunded 5/15/2000) (a) . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,158,980
Riverside County Asset Leasing Corporation, LR
(Riverside County Hospital Project) Zero Coupon, 6/1/2021 (Insured; MBIA) . . . . . . . 2,550,000 825,971
Sacramento County, Special Tax (Community Facilities District Number 1):
8.25%, 12/1/2020 (Prerefunded 12/1/2000) (a) . . . . . . . . . . . . . . . . . . . . . . 5,610,000 6,266,538
Refunding 5.70%, 12/1/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,250,000 1,275,675
San Bernardino, Health Care Systems Revenue (Sisters of Charity)
7%, 7/1/2021 (Prerefunded 7/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,222,040
San Diego Convention Center Expansion Financing Authority, LR
4.75%, 4/1/2028 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,050,000 4,967,281
San Francisco City and County Airports Commission, International Airport
Revenue:
5%, 5/1/2018 (Insured; FSA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,044,650
5.90%, 5/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,385,000 10,090,658
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue
(Junior Lien) Zero Coupon, 1/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 3,037,000
San Marcos Public Facilities Authority, Revenue, Refunding
(Public Improvement-Civic Center) 6.20%, 8/1/2022 . . . . . . . . . . . . . . . . . . . 3,000,000 3,117,780
San Marcos Unified School District
(School Facilities Improvement District Number 1)
5.80%, 11/1/2014 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,540,000 3,968,375
Santa Cruz County Redevelopment Agency, Tax Allocation
(Subordinated-Live Oak/Soquel Community Improvement) 5.625%, 9/1/2022 . . . . . . . . . 3,335,000 3,553,409
Simi Valley, Single Family Residential Mortgage Revenue 7.625%, 8/1/2022 (b) . . . . . . . 997,866 169,637
Southern California Home Finance Authority, SFMR
6.90%, 10/1/2024 (Collateralized: FNMA and GNMA) . . . . . . . . . . . . . . . . . . . . 1,620,000 1,713,685
Southern California Public Power Authority, Power Project Revenue
(Multiple Projects) 6.75%, 7/1/2011 (Insured; FSA) . . . . . . . . . . . . . . . . . . . 3,750,000 4,663,238
Stockton, Health Facilities Revenue, Refunding (Dameron Hospital Association)
5.70%, 12/1/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,032,030
Tehachapi Unified School District, COP (Tompkins Elementary School Project)
7.80%, 2/1/2021 (Prerefunded 2/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,100,490
Tracy Area Public Facilities Financing Agency, Special Tax, Refunding
(Community Facilities District Number 87-1) 5.875%, 10/1/2013 (Insured; MBIA) . . . . . 7,000,000 7,841,960
Turlock, COP, Health Facilities Revenue, Refunding
(Emanuel Medical Center, Inc.) 5.75%, 10/15/2023 . . . . . . . . . . . . . . . . . . . . 6,000,000 6,159,960
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _____________ _____________
West Covina Redevelopment Agency, Special Tax, Refunding
(Community Facilities District--Fashion Plaza):
6%, 9/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000,000 $ 6,843,780
6%, 9/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,325,000 9,548,609
Yolo County Housing Authority, Mortgage Revenue (Walnut Park Apartments)
7.20%, 8/1/2033 (Insured; FHA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,150,000 4,473,659
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $271,719,774). . . . . . . . . . . . . . . . . $294,931,723
_____________
Short-Term Municipal Investments--1.5%
- -------------------------------------------------------
California Pollution Control Financing Authority, PCR, VRDN
(Southern California Edison) 3.15% (c) . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,100,000 $ 1,100,000
Newport Beach, Revenue, VRDN:
(Hoay Memorial Hospital) Series A, 2.90% (c) . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,000,000
(Hoay Memorial Hospital) Series C, 2.90% (c) . . . . . . . . . . . . . . . . . . . . . . 2,200,000 2,200,000
_____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $4,300,000) . . . . . . . . . . . . . . . . . $ 4,300,000
_____________
TOTAL INVESTMENTS (cost $276,019,774). . . . . . . . . . . . . . . . . . . . . . . . . . . 101.1% $299,231,723
_______ _____________
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . (1.1%) $ (3,221,267)
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $296,010,456
_______ _____________
</TABLE>
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
Summary of Abbreviations
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FHA Federal Housing Administration MBIA Municipal Bond Investors Assurance
FNMA Federal National Mortgage Association Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
- -----------------------------------------------------------------------------
Fitch or Moody's or Standard & Poor's Percentage of Value
____ ________ _________________ ___________________
AAA Aaa AAA 42.2%
AA Aa AA 6.5
A A A 22.8
BBB Baa BBB 20.8
D N/A D .1
F-1+ & F-1 MIG1,VMIG1,& P1 SP1 & A1 1.4
Not Rated (d) Not Rated (d) Not Rated (d) 6.2
_______
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) Non-income producing security; interest payments in default.
(c) Securities payable on demand. Variable interest rate--subject to periodic
change.
(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.
(e) At September 30, 1998, 29.0% of the Fund's net assets are insured by MBIA.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1998
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $276,019,774 $299,231,723
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 239,535
Interest receivable . . . . . . . . . . . . . . . . . . . 4,318,179
Receivable for shares of Common Stock subscribed . . . . 250
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 48,658
_____________
303,838,345
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 148,906
Payable for investment securities purchased . . . . . . . 7,625,670
Accrued expenses . . . . . . . . . . . . . . . . . . . . 53,313
_____________
7,827,889
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $296,010,456
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $269,677,753
Accumulated net realized gain (loss) on investments . . . 3,120,754
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 . . . . . . . . . . . . . . . . 23,211,949
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $296,010,456
_____________
SHARES OUTSTANDING
(500 million shares of $.001 par value Common Stock authorized). . . . . . . . . . . . . . 21,274,252
NET ASSET VALUE, offering and redemption price per share--Note 3(d). . . . . . . . . . . . $13.91
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income . . . . . . . . . . . . . . . . . . . . . $16,549,962
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . $ 1,749,203
Shareholder servicing costs--Note 3(b) . . . . . . . . . 341,320
Professional fees . . . . . . . . . . . . . . . . . . . . 39,355
Directors' fees and expenses--Note 3(c) . . . . . . . . . 34,071
Custodian fees . . . . . . . . . . . . . . . . . . . . . 30,594
Registration fees . . . . . . . . . . . . . . . . . . . . 14,265
Prospectus and shareholders' reports . . . . . . . . . . 13,090
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 1,757
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 17,673
____________
Total Expenses . . . . . . . . . . . . . . . . . . . . 2,241,328
____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,308,634
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . $ 3,116,198
Net unrealized appreciation (depreciation) on investments . . 7,160,883
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 10,277,081
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $24,585,715
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, 1998 September 30, 1997
__________________ __________________
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,308,634 $ 15,118,128
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 3,116,198 1,593,884
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 7,160,883 7,392,293
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . 24,585,715 24,104,305
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,504,662) (15,349,099)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . (1,543,915) (5,388,593)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,048,577) (20,737,692)
_____________ _____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 43,599,346 51,850,255
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,154,889 14,541,143
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,825,931) (75,010,729)
_____________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . (4,071,696) (8,619,331)
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . 4,465,442 (5,252,718)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291,545,014 296,797,732
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $296,010,456 $291,545,014
_____________ _____________
Undistributed investment income--net . . . . . . . . . . . . . . . . . . . . . . ---- $ 196,028
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,196,561 3,898,171
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 817,966 1,091,458
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,319,009) (5,636,312)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . (304,482) (646,683)
_____________ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, 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 Fund's financial statements.
Year Ended September 30,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $13.51 $13.35 $13.30 $12.90 $14.36
______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .67 .69 .70 .73 .78
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . .48 .41 .19 .48 (1.40)
______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . 1.15 1.10 .89 1.21 (.62)
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.68) (.70) (.68) (.73) (.78)
Dividends from net realized gain on investments . . . . . (.07) (.24) (.16) (.08) (.06)
______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . . . . . (.75) (.94) (.84) (.81) (.84)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . $13.91 $13.51 $13.35 $13.30 $12.90
______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 8.76% 8.56% 6.85% 9.82% (4.43%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . .77% .76% .76% .76% .76%
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . 4.91% 5.15% 5.25% 5.66% 5.72%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 63.60% 90.03% 164.93% 83.31% 29.74%
Net Assets, end of period (000's Omitted) . . . . . . . . $296,010 $291,545 $296,798 $317,835 $347,063
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
General California Municipal Bond Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act") as a non-diversified
open-end management investment company. The Fund's investment objective is to
maximize current income exempt from Federal and State of 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. Premier Mutual Fund
Services, Inc. is the distributor of the Fund's shares, which are sold to the
public without a sales charge.
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 securities (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day 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 each business day. 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. Under the terms of the custodian
agreement, the Fund received net earnings credits of $18,345 during the period
ended September 30, 1998 based on available cash balances left on deposit.
Income earned under this arrangement is included in interest income.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). To the extent that net realized capital gain can be offset
by capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify
as a regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
September 30, 1998, the Fund did not borrow under the Facility.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management fee is
computed at the annual rate of .60 of 1% of the value of the Fund's average
daily net assets and is payable monthly.
(B) Under the Shareholder Services Plan, the Fund reimburses Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, an amount not to exceed
an annual rate of .25 of 1% of the value of the Fund's average daily net assets
for certain allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the period ended
September 30, 1998, the Fund was charged $202,927 pursuant to the Shareholder
Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, 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 $90,195 pursuant to the transfer
agency 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 $500 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
(D) A .10% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemptions through the use of the Fund
Exchanges service) where the redemption or exchange occurs less than fifteen
days following the date of issuance. During the period ended September 30, 1998,
redemption fees amounted to $1,412.
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 $183,019,145 and $182,235,019, respectively.
At September 30, 1998, accumulated net unrealized appreciation on investments
was $23,211,949, consisting of $24,081,114 gross unrealized appreciation and
$869,165 gross unrealized depreciation.
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).
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of General
California Municipal Bond Fund, 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 confirmation of
securities owned as of September 30, 1998 by correspondence with the custodian
and brokers. 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
General California Municipal Bond Fund, 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.
[Ernst & Young LLP signature logo]
New York, New York
October 30, 1998
GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended September 30, 1998:
--all the dividends paid from investment income-net are "exempt-interest
dividends" (not generally subject to regular Federal income tax and, for
individuals who are California residents, California personal income taxes), and
--the Fund hereby designates $.0061 per share as a long-term capital gain
distribution (of which 0% is subject to the 20% maximum Federal tax rate) of the
$.0717 per share paid on December 4, 1997.
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.
Dreyfus lion "d" logo (reg.tm)
Dreyfus logo (reg.tm)
GENERAL CALIFORNIA
MUNICIPAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 131AR989
General California
Municipal
Bond Fund, Inc.
Annual Report
September 30, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN GENERAL CALIFORNIA MUNICIPAL BOND FUND, INC.
AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
EXHIBIT A:
LEHMAN GENERAL
BROTHERS CALIFORNIA
PERIOD MUNICIPAL MUNICIPAL
BOND INDEX * BOND FUND, INC.
10/10/89 10,000 10,000
9/30/90 10,680 10,676
9/30/91 12,088 11,888
9/30/92 13,351 13,114
9/30/93 15,053 15,086
9/30/94 14,685 14,418
9/30/95 16,328 15,834
9/30/96 17,314 16,919
9/30/97 18,875 18,367
9/30/98 20,520 19,977
*Source: Lehman Brothers
