N-30D 1 0001.txt SEMI-ANNUAL REPORT Dreyfus California Tax Exempt Money Market Fund SEMIANNUAL REPORT September 30, 2000 (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 Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 14 Financial Highlights 15 Notes to Financial Statements FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus California Tax Exempt Money Market Fund LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus California Tax-Exempt Money Market Fund, covering the six-month period from April 1, 2000 through September 30, 2000. 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, Scott Sprauer. Yields on tax-exempt money market instruments rose in general over the past six months. However, because of supply-and-demand influences that are unique to the tax-exempt markets, yields of tax-exempt money market instruments did not rise as much as their taxable counterparts. Amid signs that its previous rate hikes had begun to slow the economy, the Federal Reserve Board refrained from raising rates further at its meetings in June and August. Other factors such as higher energy prices and a weak euro also served to slow economic growth. In general, the overall investment environment that prevailed in the second half of the 1990s had provided returns well above long-term averages, establishing unrealistic expectations for some investors. In our opinion, as the risks of the stock market have become more apparent due to recent volatility, the safety and tax-free income potential of tax-exempt money market funds can make them an attractive investment as part of a well-balanced portfolio. For more information about the economy and financial markets, we encourage you to visit the Market Commentary section of our website at www.dreyfus.com. Or, to speak with a Dreyfus customer service representative, call us at 1-800-782-6620 Thank you for investing in Dreyfus California Tax-Exempt Money Market Fund. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation October 16, 2000 DISCUSSION OF FUND PERFORMANCE Scott Sprauer, Portfolio Manager How did Dreyfus California Tax-Exempt Money Market Fund perform during the period? For the six-month period ended September 30, 2000, the fund produced an annualized tax-exempt yield of 3.09% . Taking into account the effects of compounding, the fund provided an annualized effective yield of 3.13%.(1) A continuing decline in the volume of new short-term securities from California issuers constrained the rise of tax-exempt money market yields relative to their taxable counterparts during the reporting period. What is the fund's investment approach? The fund seeks high current federal and California state tax-exempt income while looking to maintain a stable $1.00 share price. We are vigilant in our efforts to preserve capital. In pursuing the fund's investment approach, we employ two primary strategies. First, we attempt to add value by constructing a diverse portfolio of high quality, tax-exempt money market instruments from California issuers. Second, we actively manage the fund's average maturity in anticipation of what we believe to be supply-and-demand changes in California' s short-term municipal marketplace. For example, if we expect an increase in short-term supply, we may decrease the average maturity of the fund, which would enable us to purchase new securities with then current higher yields. Yields tend to rise when there is an increase in new-issue supply competing for investor interest. New securities are generally issued with maturities in the one-year range, which will lengthen the fund' s average maturity. If we anticipate limited new-issue supply, we may extend the fund' s average maturity to maintain current yields for as long as practical. At other times, we try to maintain an average maturity that reflects our view of short-term interest-rate trends and future supply-and-demand considerations. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) What other factors influenced the fund's performance? The fund was positively influenced over the past year by rising interest rates. When the reporting period began on April 1, 2000, the U.S. economy continued to grow strongly, raising concerns that long-dormant inflationary pressures might reemerge. In response, the Federal Reserve Board (the "Fed") raised short-term interest rates by 0.50 percentage points at its May meeting. However, tax-exempt yields later declined modestly when the Fed did not change interest rates at subsequent meetings. The Fed held monetary policy steady because of signs that its previous rate hikes were having the desired effect of slowing the economy. Fewer housing starts, moderating growth and little change in the core inflation rate may suggest that the Fed's rate hikes could be at or near an end. Despite slower growth, the continuing strength of the U.S. economy helped keep tax-exempt money market yields relatively low compared to taxable money market instruments. California enjoyed higher tax revenues, curtailing the state's need to borrow and resulting in a reduced supply of securities compared to the same period one year earlier. In fact, California did not issue any revenue anticipation notes in 2000, which marks the first time in 20 years that the state has not issued these securities. At the same time, demand for tax-exempt money market instruments has been strong from California residents seeking to protect their wealth from stock market volatility. When demand rises and supply falls, prices of existing fixed-income securities tend to move higher. In this environment, we generally maintained a longer average maturity than our peer group. When it appeared likely in the summer that yields might fall, we increased our holdings of fixed-rate commercial paper and reduced our holdings of variable rate demand notes (VRDNs), which feature floating rates that are reset daily or weekly. This change was designed to lock in prevailing yields for as long as practical. What is the fund's current strategy? In our view, yields may decline further if the current economic slowdown continues. Accordingly, we have maintained the fund's average maturity at a point that is longer than the average for our peer group. However, we currently believe it is likely that we may allow the fund's average maturity to decline naturally as holdings mature over the next several months. In our opinion, this strategy can allow us to make more funds available for new investments in the fourth quarter of 2000, when we expect yields to rise temporarily in response to year-end pressures. If yields should rise, we would then consider re-extending the fund' s average maturity in order to lock in higher rates. Of course, markets, strategy and portfolio composition can change at any time. October 16, 2000 (1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE. 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. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. The Fund STATEMENT OF INVESTMENTS September 30, 2000 (Unaudited) STATEMENT OF INVESTMENTS
Principal TAX EXEMPT INVESTMENTS--100.8% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA--87.2% Anaheim Housing Authority, MFHR, Refunding VRDN (Sage Park Project) 4.45%, Series A (LOC; FNMA) 2,000,000 (a) 2,000,000 State of California: 3.60%, Series BJ, 6/1/2001 5,000,000 4,978,629 CP 3.95%, 10/19/2000 (Liquidity Facility: Bayerische Landesbank, Commerzbank, Credit Agricole-Indosuez, Credit Locale de France, Landesbank Hessen, Morgan Guaranty Trust Co., State Street Bank and Trust, Toronto Dominion Bank and Westdeutsche Landesbank) 5,000,000 5,000,000 GO Notes 7%, 3/1/2001 1,500,000 1,517,633 California Community College Finance Authority TRAN 5%, Series B, 8/3/2001 3,500,000 3,522,306 California Educational Facility Authority, Revenues VRDN (San Francisco Conservatory) 4.50% (Corp. Guaranty; California State Teachers Retirement System) 3,000,000 (a) 3,000,000 California Health Facilities Finance Authority, HR VRDN (Adventist) 4.75%, Series B (Insured; MBIA and Liquidity Facility; California State Teachers Retirement System) 2,000,000 (a) 2,000,000 California Housing Finance Agency Home Mortgage Revenue: 3.90%, Series W, 10/1/2001 2,900,000 2,900,000 VRDN 2.60%, Series C (Corp. Guaranty; California State Teachers Retirement System and LOC; Commerzbank) 4,000,000 (a) 4,000,000 California Pollution Control Finance Authority, PCR CP (Southern California Edison) 3.50%, Series C, 10/12/2000 (Corp. Guaranty; Southern California Edison) 5,400,000 5,400,000 California Public Capital Improvements Financing Authority, Revenue (Pooled Project) 3.95%, Series C, 12/15/2000 (LOC; National Westminster Bank) 9,000,000 9,000,000 California School Cash Reserve Program Authority Revenue 5.25%, Series A, 7/3/2001 (Insured; AMBAC) 2,000,000 2,014,149 Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) City of Daly Housing Development Financing Agency Multi-Family Revenue, Refunding, VRDN (Serramonte Del Ray) 4.30%, Series A (LOC; FNMA) 10,000,000 (a) 10,000,000 Garden Grove Housing Authority Multi-Family Revenue VRDN (Valley View-Senior Villas Project) 5%, Series A (LOC; Wells Fargo Bank) 3,200,000 (a) 3,200,000 Kings County Housing Authority, MFHR, Refunding VRDN (Edgewater Isle Apartments) 4.35%, Series A (LOC; Wells Fargo Bank) 6,155,000 (a) 6,155,000 City of Los Angeles, Multi-Family Revenue, VRDN (Moutainback Apartments) 4.35%, Series B (LOC; Banco Santander) 1,840,000 (a) 1,840,000 Los Angeles County Metropolitan Transportation Authority, CP, Sales Tax Revenue 4%, 10/13/2000 (Insured: Bank of America, Bayerische Landesbank, Credit Agricole-Indosuez, Helaba Bank and Morgan Guaranty Trust Co.) 2,000,000 2,000,000 Los Angeles County Public Works Financing Authority LR, Refunding (Master Refunding Project) 5%, Series A, 3/1/2001 (Insured; FSA) 3,000,000 3,014,832 Los Angeles Department of Water and Power Electric Plant Revenue, VRDN (Second Issue) 4.45%, Series D (Liquidity Facility; Toronto-Dominion Bank) 8,000,000 (a) 8,000,000 Los Angeles Industrial Development Authority Empowerment Zone Facilities Revenue VRDN (AAA Packing and Shipping Project) 4.40% (Corp. Guaranty; California State Teachers Retirement System) 3,000,000 (a) 3,000,000 Metropolitan Water District of Southern California VRDN 3.65%, Series B 2,200,000 (a) 2,200,000 Waterworks Revenue: CP 4%, Series A, 12/14/2000 (LOC; Westdeutsche Landesbank) 7,100,000 7,100,000 Newport Beach, Revenues, VRDN (Hoag Memorial Presbyterian Hospital) 5.40% 5,000,000 (a) 5,000,000 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (CONTINUED) Orange County: Apartment Development Revenue, VRDN (Laguna Summit Apartments) 4.65%, Series X (Insured; FGIC) 8,500,000 (a) 8,500,000 Public Finance Authority, Waste Management System Revenue, Refunding 5%, 12/1/2000 (Insured; Ambac) 1,360,000 1,361,254 Port Oakland, Revenue, VRDN Merlots 5.75%, Series JJ (Insured; FGIC and Liquidity Facility; First Union National Bank) 4,680,000 (a) 4,680,000 Sacramento Redevelopment Agency Tax Allocation Revenue, Refunding (Merged Downtown Redevelopment Project) 4%, 11/1/2000 (Insured; FSA) 1,000,000 1,000,019 San Bernardino County, LR, Prerefunded (Capital Facilities Project) 7%, Series B, 8/1/2001 (Escrowed in; U.S. Government Securities) 1,000,000 1,045,321 San Francisco Bay Area, Rapid Transit Distribution Revenue: 3.65%, Series C, 11/14/2000 (LOC; Morgan Guaranty Trust Company Co.) 1,000,000 1,000,000 3.70%, Series C, 11/14/2000 (LOC; Morgan Guaranty Trust Company Co.) 1,000,000 1,000,000 3.75%, Series C, 11/14/2000 (LOC; Morgan Guaranty Trust Company Co.) 1,000,000 1,000,000 City of San Jose, MFHR, Refunding, VRDN (Kimberly Woods Apartments) 4.30%, Series A (LOC; Federal Home Loan Banks) 6,000,000 (a) 6,000,000 Santa Ana Community Redevelopment Agency Tax Allocation Revenue, Prerefunded (Santa Ana Redevelopment Project Area) 6.50%, Series B, 12/15/2000 (Escrowed in; U.S. Government Securities) 2,000,000 2,050,862 Stanislaus County, Office of Education TRAN 5%, 8/10/2001 3,000,000 3,026,074 Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (CONTINUED) Tustin Improvement Bond Act 1915 Reassessment District Number 95-2-A Special Assessment Revenue, VRDN 4.75% (LOC; Kredietbank) 2,500,000 (a) 2,500,000 University, Revenues, Refunding (Multiple Purpose Project) 6.20%, 9/1/2001 (Insured; MBIA) 6,675,000 6,805,304 Victory Valley, Union High School District TRAN 5%, 7/12/2001 2,000,000 2,011,937 U.S. RELATED--13.6% Commonwealth of Puerto Rico Government Development Bank, CP: 3.55%, 10/26/2000 2,920,000 2,920,000 4.50%, 10/27/2000 4,000,000 4,000,000 4%, 12/18/2000 2,000,000 2,000,000 Commonwealth of Puerto Rico Highway and Transportation Authority, Transportation Revenue, VRDN 4.50%, Series A (Insured; AMBAC and Liquidity Facility; Bank of Nova Scotia) 10,300,000 (a) 10,300,000 Commonwealth of Puerto Rico, Public Improvement GO Notes 5.50%, Series B, 7/1/2001 (Insured; AMBAC) 400,000 404,778 Virgin Islands Public Finance Authority Revenue, Prerefunded 7.30%, Series A, 10/1/2000 (Escrowed in; U.S. Government Securities) 2,110,000 2,131,100 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (cost $160,578,319) 100.8% 160,579,198 LIABILITIES, LESS CASH AND RECEIVABLES (.8%) (1,320,715) NET ASSETS 100.8% 159,258,483 The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation CP Commercial Paper FGIC Financial Guaranty Insurance Company FNMA Federal National Mortgage Association FSA Financal Security Assurance GO General Obligation HR Hospital Revenue LOC Letter of Credit LR Lease Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue PCR Pollution Control Revenue TRAN Tax and Revenue Anticipation Notes VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1, A2 88.0 AAA/AA( b) Aaa/Aa( b) AAA/AA( b) 12.0 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE-SUBJECT TO PERIODIC CHANGE. (B) NOTES WHICH ARE NOT F, MIG AND SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS. (C) AT SEPTEMBER 30, 2000, THE FUND HAD $44,595,000 (28.0% OF NET ASSETS) INVESTED IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND OF INTEREST IS DEPENDENT UPON REVENUES GENERATED FROM HOUSING PROJECTS. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES September 30, 2000 (Unaudited) Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 160,578,319 160,579,198 Cash 608,527 Interest receivable 1,066,742 Prepaid expenses and other assets 39,308 162,293,775 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 92,836 Payable for investment securities purchased 2,900,000 Accrued expenses and other liabilities 42,456 3,035,292 -------------------------------------------------------------------------------- NET ASSETS ($) 159,258,483 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 159,317,902 Accumulated net realized gain (loss) on investments (60,298) Accumulated gross unrealized appreciation of investments 879 -------------------------------------------------------------------------------- NET ASSETS ($) 159,258,483 -------------------------------------------------------------------------------- SHARES OUTSTANDING (unlimited number of $.01 par value shares of Beneficial Interest authorized) 159,379,646 NET ASSET VALUE, offering and redemption price per share ($) 1.00 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF OPERATIONS Six Months Ended September 30, 2000 (Unaudited) -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 3,104,648 EXPENSES: Management fee--Note 2(a) 412,185 Shareholder servicing costs--Note 2(b) 83,001 Professional fees 19,526 Trustees' fees and expenses--Note 2(c) 14,753 Custodian fees 8,583 Registration fees 6,490 Prospectus and shareholders' reports 2,395 Miscellaneous 6,253 TOTAL EXPENSES 553,186 INVESTMENT INCOME--NET 2,551,462 ------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): Net realized gain (loss) on investments 2,907 Net unrealized appreciation (depreciation) on investments 879 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,786 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,555,248 SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended September 30, 2000 Year Ended (Unaudited) March 31, 2000 ------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 2,551,462 4,260,364 Net realized gain (loss) from investments 2,907 8,135 Net unrealized appreciation (depreciation) of investments 879 -- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,555,248 4,268,499 ------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): INVESTMENT INCOME--NET (2,551,462) (4,260,364) ------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share): Net proceeds from shares sold 141,908,630 361,109,472 Dividends reinvested 1,800,890 2,767,290 Cost of shares redeemed (147,764,327) (394,794,925) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (4,054,807) (30,918,163) TOTAL INCREASE (DECREASE) IN NET ASSETS (4,051,021) (30,910,028) ------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 163,309,504 194,219,532 END OF PERIOD 159,258,483 163,309,504 SEE NOTES TO FINANCIAL STATEMENTS. The Fund 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.
Six Months Ended September 30, 2000 Year Ended March 31, ----------------------------------------------------------------- (Unaudited) 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 Investment Operations: Investment income--net .016 .024 .026 .029 .028 .030 Distributions: Dividends from investment income--net (.016) (.024) (.026) (.029) (.028) (.030) Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) 3.11(a) 2.43 2.59 2.91 2.80 3.07 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .67(a) .68 .66 .69 .66 .64 Ratio of net investment income to average net assets 3.08(a) 2.40 2.56 2.88 2.77 3.03 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 159,258 163,310 194,220 194,213 226,548 252,985 (A) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus California Tax Exempt Money Market Fund (the "fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified open-end management investment company. The fund's investment objective is to provide investors with as high a level of current income exempt from Federal and State of California income taxes as is consistent with the preservation of capital and the maintenance of liquidity. The Dreyfus Corporation (the " Manager" ) serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Dreyfus Service Corporation (the "Distributor" ), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares which are sold to the public without a sales charge. It is the fund's policy to maintain a continuous net asset value per share of $1.00; the fund has adopted certain investment, portfolio valuation and dividend and distribution policies to enable it to do so. There is no assurance, however, that the fund will be able to maintain a stable net asset value per share of $1.00. The fund' s financial statements are prepared in accordance with generally accepted accounting principles, which require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities are valued at amortized cost, which has been determined by the fund's Board of Trustees to represent the fair value of the fund's investments. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date 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. Realized gain and loss from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost. Under the terms of the custody agreement, the fund receives net earnings credits based on available cash balances left on deposit. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) 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, 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. The fund has an unused capital loss carryover of approximately $63,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to March 31, 2000. If not applied, $21,000 of the carryover expires in fiscal 2002, $27,000 expires in fiscal 2003, $10,000 expires in fiscal 2004 and $5,000 expires in fiscal 2005. During the period ended September 30, 2000, the fund reclassified $30,474 between accumulated net realized gain (loss) on investments and paid-in capital due to the expiration of capital loss carryovers. The results of operations and net assets were not affected by the reclassification. At September 30, 2000, 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). NOTE 2--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 .50 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 the Distributor 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, 2000, the fund was charged $54,267 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, 2000, the fund was charged $21,106 pursuant to the transfer agency agreement. (c) Each trustee 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. The Fund For More Information Dreyfus California Tax Exempt Money Market Fund 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Dreyfus Service Corporation 200 Park Avenue New York, NY 10166 To obtain information: BY TELEPHONE Call 1-800-645-6561 BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 BY E-MAIL Send your request to info@dreyfus.com ON THE INTERNET Information can be viewed online or downloaded from: http://www.dreyfus.com (c) 2000 Dreyfus Service Corporation 357SA009