N-30D 1 pn30d357.txt ANNUAL REPORT Dreyfus California Tax Exempt Money Market Fund ANNUAL REPORT March 31, 2002 The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund. Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the Chairman 3 Discussion of Fund Performance 6 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 15 Financial Highlights 16 Notes to Financial Statements 19 Report of Independent Auditors 20 Important Tax Information 21 Board Members Information 23 Officers of the Fund FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus California Tax Exempt Money Market Fund LETTER FROM THE CHAIRMAN Dear Shareholder: We present this annual report for Dreyfus California Tax Exempt Money Market Fund, covering the 12-month period from April 1, 2001 through March 31, 2002. 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, Joseph Irace. Over the past year, we've seen economic conditions ranging from recession to steps toward recovery. Events during the reporting period included the September 11 terrorist attacks, the bankruptcies of major U.S. corporations, an energy crisis in California and the first calendar quarter of U.S. economic contraction in about 10 years. These events have contributed to wide price fluctuations for stocks and bonds, and tax-exempt money market yields have declined to levels not seen in decades. Indeed, the financial markets' directions become clearer only when viewed from a perspective measured in years, not months or weeks. Although you may become excited about opportunities or worried about the challenges presented under current market conditions, we encourage you to stop and think of your long-term goals before you take action. And, as always, we urge you to solicit the advice of a professional financial advisor who can help you navigate a smoother course to financial security for yourself and your family. For our part, and as we have for more than 50 years, we at The Dreyfus Corporation are ready to serve you with a full range of investment alternatives and our experienced teams of portfolio managers. Thank you for your continued confidence and support. Sincerely, Stephen E. Canter Chairman and Chief Executive Officer The Dreyfus Corporation April 15, 2002 DISCUSSION OF FUND PERFORMANCE Joseph Irace, Portfolio Manager How did Dreyfus California Tax Exempt Money Market Fund perform during the period? For the 12-month period ended March 31, 2002, the fund produced a 1.57% yield. Taking into account the effects of compounding, the fund produced an effective yield of 1.58%.(1) We attribute the fund's performance to declining interest rates in a generally weakening economy, which caused tax-exempt money market yields to fall to historically low levels. What is the fund's investment approach? The fund seeks as high a level of current income exempt from federal and California state income taxes as is consistent with the preservation of capital and the maintenance of liquidity. In pursuing the fund's investment approach, we employ two primary strategies. First, we attempt to add value by constructing a portfolio of high quality money market instruments that provide income exempt from federal and California state income taxes. Second, we actively manage the fund's weighted 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 fund's weighted average maturity, which should position the fund to purchase new securities with then current higher yields, if higher yields materialize as a result of an increase in short-term supply. 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 would tend to lengthen the fund's weighted average maturity. If we anticipate limited new-issue supply, we may extend the fund's weighted average maturity to The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) maintain then current yields for as long as we deem practical. At other times, we typically try to maintain a weighted average maturity that reflects our view of short-term interest-rate trends and future supply-and-demand considerations. What other factors influenced the fund's performance? During the reporting period the Federal Reserve Board (the "Fed") began to take steps to stimulate renewed economic growth, reducing short-term interest rates. The Fed reduced short-term interest rates by 1.50 percentage points during the reporting period. Yields on one-year tax-exempt notes fell to historically low levels in this environment. In addition, tax-exempt money market yields declined in response to a highly volatile stock market, which caused a "flight to quality" among investors seeking an investment alternative for their assets. As a result, total assets invested in tax-exempt money market funds generally rose throughout the reporting period, creating additional downward pressure on yields. A combination of the California energy crisis and a worsening economy created large budget deficits resulting in several downgrades in the state's credit rating. In this environment, we avoided California's general obligation securities and other credits that did not meet our stringent analytical criteria. What is the fund's current strategy? Early in the reporting period, the fund's relatively long weighted average maturity proved advantageous because it enabled us to lock in prevailing higher yields for as long as we deemed practical while short-term interest rates fell. However, when it became clear that the Fed was not likely to reduce interest rates further, we reduced the fund's weighted average maturity by increasing our emphasis on commercial paper with three- to six-month maturities, rather than one-year municipal notes, to enhance our ability to capture higher yields as they become available. Of course, we are prepared to change our strategy and the fund's composition as market conditions develop. April 15, 2002 (1) 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 $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. The Fund STATEMENT OF INVESTMENTS March 31, 2002
Principal TAX EXEMPT INVESTMENTS--99.0% Amount ($) Value ($) ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA--95.4% ABAG Finance Authority for Non-Profit Corporations Revenue, VRDN (Jewish Community Center Project) 1.55% (LOC: Allied Irish Bank and Bank of New York) 2,000,000 (a) 2,000,000 Adelanto Public Utility Authority, Revenue, VRDN (Utility System Project) 1.50% (LOC; California State Teachers Retirement) 1,085,000 (a) 1,085,000 Alameda County Industrial Development Authority Industrial Revenue, VRDN: (Intermountain Trading) 1.50% (LOC; California State Teachers Retirement) 190,000 (a) 190,000 (Niles Machine and Tool) 1.55% (LOC; Wells Fargo Bank) 1,150,000 (a) 1,150,000 State of California, Revenue, VRDN, Merlots Program 1.53% (Insured; AMBAC and Liquidity Facility; First Union Bank) 4,000,000 (a) 4,000,000 California Counties Industrial Development Authority IDR, VRDN (Allwire Inc. Project) 1.50% (LOC; California State Teachers Retirement) 210,000 (a) 210,000 California Economic Development Financing Authority, Industrial Revenue VRDN (Joseph Schmidt Project) 1.55% (LOC; Banque Nationale de Paris) 3,100,000 (a) 3,100,000 California Educational Facility Authority College and University Revenue, VRDN (San Francisco Conservatory) 1.40% (LOC; California State Teachers Retirement) 2,800,000 (a) 2,800,000 California Health Facilities Financing Authority Revenue, VRDN: (Adventist Health System) 1.65% (LOC; U.S. Bank NA) 4,210,000 (a) 4,210,000 (Catholic Healthcare) 1.65% (Insured; MBIA and Liquidity Facility; Morgan Guaranty Trust Co.) 7,100,000 (a) 7,100,000 California Housing Finance Agency MFHR, VRDN: 1.35% (Liquidity Facility: California State Teachers Retirement and Landesbank Hessen-Thuringen Girozentrale) 3,000,000 (a) 3,000,000 1.35% (Liquidity Facility; Landesbank Hessen-Thuringen Girozentrale) 1,800,000 (a) 1,800,000 California Infrastructure and Economic Development Bank, IDR, VRDN (Lance Camper Manufacturing Corp.) 1.55% (LOC; Comerica Bank) 2,920,000 (a) 2,920,000 Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) California Pollution Control Financing Authority, VRDN: PCR, Refunding (U.S. Borax Inc. Project) 1.45% (LOC; First Union National Bank) 10,200,000 (a) 10,200,000 SWDR: (Greenteam of San Jose Project) 1.60% (LOC; Wells Fargo Bank) 3,000,000 (a) 3,000,000 (Norcal Waste System Inc. Project) 1.65% (LOC; Fleet Bank) 2,250,000 (a) 2,250,000 (Waste Management Inc. Project) 1.60% (LOC; Chase Manhattan Bank) 5,000,000 (a) 5,000,000 California School Cash Reserve Program Authority Revenue 4%, 7/3/2002 (Insured; AMBAC) 5,000,000 5,016,753 California Statewide Communities Development Authority VRDN: MFHR, Refunding (Sunrise Danville) 1.55% (LOC; FNMA) 465,000 (a) 465,000 Revenues: COP (Continuing Care/University Project) 1.45% (LOC; Bank of Scotland) 1,000,000 (a) 1,000,000 (Robert Louis Stevenson) 1.60% (LOC; Allied Irish Bank) 9,250,000 (a) 9,250,000 California Statewide Communities Development Corporation, Industrial Revenue, VRDN: (Andercraf Products Inc.) 1.50% (LOC; California State Teachers Retirement) 460,000 (a) 460,000 (APM Inc. Project) 1.50% (LOC; California State Teachers Retirement) 300,000 (a) 300,000 (Carvin Project) 1.50% (LOC; California State Teachers Retirement) 520,000 (a) 520,000 (DV Industries) 1.50% (LOC; California State Teachers Retirement) 1,095,000 (a) 1,095,000 (Johanson Project) 1.50% (LOC; California State Teachers Retirement) 1,025,000 (a) 1,025,000 (Lesaint) 1.55% (LOC; PNC Bank) 2,240,000 (a) 2,240,000 (Lustre California) 1.55% (LOC; Comerica Bank) 3,000,000 (a) 3,000,000 (Redline Project) 1.50% (LOC; California State Teachers Retirement) 930,000 (a) 930,000 (W&H Voortman Inc.) 1.50% (LOC; California StateTeachers Retirement) 840,000 (a) 840,000 (Ziemen Manufacturing Co. Project) 1.50% (LOC; California State Teachers Retirement) 315,000 (a) 315,000 Central Coast Water Authority, Water Revenue State Water Project Regional Facilities 6.50%, 10/1/2002 400,000 (b) 417,508 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) Contra Costa County, GO Notes, TRAN 3%, 10/4/2002 1,940,000 1,948,080 Cotati-Rohnert Park Union School District GO Notes, Refunding 3.75%, 8/1/2002 (Insured; FSA) 100,000 100,748 East Bay Municipal Utility District, Water System Revenue Refunding 6%, 6/1/2002 (Insured; FGIC) 200,000 201,499 Fullerton Redevelopment Agency, Tax Allocation Revenue Refunding (Central Fullerton) 4.90%, 8/1/2002 (Insured; MBIA) 100,000 101,131 Kern High School District, GO Notes, Refunding 5.90%, 8/1/2002 (Insured; MBIA) 150,000 151,912 City of Los Angeles, VRDN: MFHR, Refunding (Moutainback Apartments) 1.49% (LOC; Banco Santander) 1,840,000 (a) 1,840,000 Water and Power Revenue 1.50% (Insured; MBIA and Liquidity Facility; J.P. Morgan Chase and Co.) 3,995,000 (a) 3,995,000 Los Angeles Industrial Development Authority Empowerment Zone Facilities Revenue, VRDN (AAA Packing & Shipping Project) 1.50% (LOC; California State Teachers Retirement) 3,000,000 (a) 3,000,000 Newport Beach, Revenues, VRDN (Hoag Memorial Presbyterian Hospital) 1.45% 4,700,000 (a) 4,700,000 Oakland Union School District, GO Notes, TRAN 3%, 10/24/2002 6,500,000 6,535,124 Orange County Community Facilities District Special Tax Revenue (Aliso Viejo) 7.35%, 8/15/2002 100,000 (b) 104,163 Orange County Development Agency Tax Allocation Revenue, Refunding (Neighborhood Development) 4%, 9/1/2002 (Insured; MBIA) 665,000 671,422 Pasadena, COP, VRDN (Rose Bowl Improvements Project) 1.45% (LOC: Bank of New York and California State Teachers Retirement) 1,720,000 (a) 1,720,000 Port of Oakland, Revenue, CP: 1.25%, 4/8/2002 (LOC: Bank of Nova Scotia and Commerzbank) 3,200,000 3,200,000 1.70%, 5/23/2002 (LOC: Bank of Nova Scotia and Commerzbank) 8,000,000 8,000,000 Rancho Water District Financing Authority, Revenue Refunding 4.50%, 8/1/2002 (Insured; FGIC) 100,000 100,996 Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (CONTINUED) Riverside-San Bernardino Housing and Finance Agency, LR, VRDN: 1.65%, Series A (Liquidity Facility; Societe Generale) 5,500,000 (a) 5,500,000 1.65%, Series B (Liquidity Facility; Societe Generale) 2,000,000 (a) 2,000,000 San Bernardino County Industrial Development Authority Industrial Revenue, VRDN (W&H Voortman) 1.50% (LOC; California State Teachers Retirement) 2,280,000 (a) 2,280,000 San Diego Area Housing and Finance Agency, LR, VRDN: 1.45%, Series A (Liquidity Facility; Societe Generale) 8,555,000 (a) 8,555,000 1.45%, Series B (Liquidity Facility; Societe Generale) 2,465,000 (a) 2,465,000 San Francisco City and County Airport Commission International Airport Revenue 5.60%, 5/1/2002 (Insured; FSA) 2,295,000 2,299,791 San Francisco City and County Finance Corporation, LR (Combined Emergency Communications) 4%, 4/1/2002 (Insured; MBIA) 1,000,000 1,000,000 San Francisco City and County Redevelopment Agency, MFHR, Refunding, VRDN (Fillmore Center) 1.49% (LOC; Credit Suisse Group) 8,000,000 (a) 8,000,000 San Jose Financing Authority, LR, Refunding VRDN (Hayes Mansion) 1.35% (Insured; AMBAC and Liquidity Facility; Bank of Nova Scotia) 10,800,000 (a) 10,800,000 San Juan Unified School District, GO Notes, TRAN 2.50%, 10/24/2002 5,000,000 5,009,651 San Luis Obispo County Board of Education GO Notes, TRAN 3.50%, 7/2/2002 5,065,000 5,075,561 Santa Barbara County, TRAN 3.25%, 8/1/2002 2,000,000 2,003,879 Santa Clara County-El Camino Hospital District Hospital Facilities Authority, LR VRDN (Valley Medical Center Project): 1.50%, Series A (LOC; Bayerische Hypo-Und Vereinsbank) 200,000 (a) 200,000 1.50%, Series B (LOC; Bayerische Hypo-Und Vereinsbank) 4,875,000 (a) 4,875,000 Santa Rosa, Wastewater Revenue (Subregional Wastewater Project) 6.10%, 9/1/2002 (Insured; FGIC) 175,000 178,344 Selma Unified School District, GO Notes 3.65%, 6/1/2002 (Insured; FGIC) 100,000 100,358 South Coast Local Education Agencies TRAN 3.25%, 6/28/2002 2,000,000 2,002,911 South Poway Community Facilities District Number 1 GO Notes, Refunding (Pomerado) 3.60%, 8/2/2002 (Insured; MBIA) 150,000 150,789 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) -----------------------------------------------------------------------------------------------------------------------------------= CALIFORNIA (CONTINUED) Stockton Community Facilities District Special Tax Revenue, VRDN (Arch Road East) 1.50% (LOC; Wells Fargo Bank) 3,100,000 (a) 3,100,000 University of California: College and University Revenue, Housing System 5%, 11/1/2002 (Insured; MBIA) 300,000 306,129 Revenues, Refunding (UCLA Medical Center) 4.70%, 12/1/2002 (Insured; MBIA) 300,000 304,929 University of California Board of Regents Revenue, CP 1.30%, 8/8/2002 5,000,000 5,000,000 Upland Community Redevelopment Agency, MFHR Refunding, VRDN (Northwoods 156 Project) 1.50% (LOC; FNMA) 1,000,000 (a) 1,000,000 Vallejo Unified School District GO Notes, TRAN 4%, 7/17/2002 2,200,000 2,208,414 Walnut Improvement Agency Industrial Development Authority, IDR, VRDN (Fairway Molds Project) 1.50% (LOC; California State Teachers Retirement) 420,000 (a) 420,000 U.S. RELATED--3.6% Commonwealth of Puerto Rico, Public Improvement GO Notes 6.80%, 7/1/2002 1,000,000 (b) 1,025,044 Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue: 6%, 7/1/2002 (Insured; MBIA) 250,000 252,835 6.625%, 7/1/2002 500,000 (b) 512,906 Guam Government, LOR 3.25%, 12/1/2002 (Insured; FSA) 2,220,000 2,240,107 Virgin Islands Public Finance Authority Revenue, Refunding Matching Fund Loan Notes 7.25%, 10/1/2002 3,075,000 (b) 3,214,011 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (cost $199,339,995) 99.0% 199,339,995 CASH AND RECEIVABLES (NET) 1.0% 2,047,254 NET ASSETS 100.0% 201,387,249
Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation COP Certificate of Participation CP Commercial Paper FGIC Financial Guaranty Insurance Company FNMA Federal National Mortgage Association FSA Financal Security Assurance GO General Obligation IDR Industrial Development Revenue LOC Letter of Credit LOR Limited Obligation Revenue LR Lease Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue PCR Pollution Control Revenue SWDR Solid Waste Disposal Revenue TRAN Tax and Revenue Anticipation Notes VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1, A2 83.5 AAA/AA (c) Aaa/Aa (c) AAA/AA (c) 11.9 Not Rated (d) Not Rated (d) Not Rated (d) 4.6 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE -- SUBJECT TO PERIODIC CHANGE. (B) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (C) NOTES WHICH ARE NOT F, MIG AND SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S, HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF ASSETS AND LIABILITIES March 31, 2002 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 199,339,995 199,339,995 Cash 1,117,993 Interest receivable 1,065,202 Prepaid expenses and other assets 11,566 201,534,756 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 91,797 Accrued expenses and other liabilities 55,710 147,507 -------------------------------------------------------------------------------- NET ASSETS ($) 201,387,249 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 201,410,836 Accumulated net realized gain (loss) on investments (23,587) -------------------------------------------------------------------------------- NET ASSETS ($) 201,387,249 -------------------------------------------------------------------------------- SHARES OUTSTANDING (unlimited number of $.01 par value shares of Beneficial Interest authorized) 201,473,645 NET ASSET VALUE, offering and redemption price per share ($) 1.00 SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF OPERATIONS Year Ended March 31, 2002 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 4,174,936 EXPENSES: Management fee--Note 2(a) 951,399 Shareholder servicing costs--Note 2(b) 125,204 Professional fees 45,689 Trustees' fees and expenses--Note 2(c) 34,455 Custodian fees 24,311 Registration fees 22,222 Prospectus and shareholders' reports 14,107 Miscellaneous 8,342 TOTAL EXPENSES 1,225,729 INVESTMENT INCOME--NET 2,949,207 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): Net realized gain (loss) on investments 15,631 Net unrealized appreciation (depreciation) on investments (6,057) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 9,574 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,958,781 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended March 31, ----------------------------------- 2002 2001 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 2,949,207 5,038,786 Net realized gain (loss) from investments 15,631 22,923 Net unrealized appreciation (depreciation) of investments (6,057) 6,057 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,958,781 5,067,766 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): INVESTMENT INCOME--NET (2,949,207) (5,038,786) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share): Net proceeds from shares sold 304,711,068 335,603,801 Dividends reinvested 1,919,400 3,337,958 Cost of shares redeemed (281,842,950) (325,690,086) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 24,787,518 13,251,673 TOTAL INCREASE (DECREASE) IN NET ASSETS 24,797,092 13,280,653 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 176,590,157 163,309,504 END OF PERIOD 201,387,249 176,590,157 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.
Year Ended March 31, ------------------------------------------------------------------ 2002 2001 2000 1999 1998 ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($): Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 Investment Operations: Investment income--net .016 .029 .024 .026 .029 Distributions: Dividends from investment income--net (.016) (.029) (.024) (.026) (.029) Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%) 1.58 2.94 2.43 2.59 2.91 ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .64 .65 .68 .66 .69 Ratio of net investment income to average net assets 1.55 2.89 2.40 2.56 2.88 ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 201,387 176,590 163,310 194,220 194,213
SEE NOTES TO FINANCIAL STATEMENTS. The Fund NOTES TO FINANCIAL STATEMENTS 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 accounting principles generally accepted in the United States, 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 received net earn ings credits of $18,575 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, 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. At March 31, 2002, the components of accumulated earnings on a tax basis was substantially the same as for financial reporting purposes. The tax character of distributions paid to shareholders during the fiscal periods ended March 31, 2002 and March 31, 2001, respectively, were all tax exempt income. The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to March 31, 2002. If not applied, $10,092 of the carryover expires in fiscal 2003, $9,381 expires in fiscal 2004 and $4,114 expires in fiscal 2005. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) At March 31, 2002, 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 March 31, 2002, the fund was charged $73,560 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 March 31, 2002, the fund was charged $37,190 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. REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus California Tax Exempt Money Market Fund We have audited the accompanying statement of assets and liabilities of Dreyfus California Tax Exempt Money Market Fund, including the statement of investments, as of March 31, 2002 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 auditing standards generally accepted in the United States. 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 March 31, 2002 by correspondence with the custodian. 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 Tax Exempt Money Market Fund at March 31, 2002, 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 accounting principles generally accepted in the United States. New York, New York May 3, 2002 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby designates all the dividends paid from investment income-net during its fiscal year ended March 31, 2002 as "exempt-interest dividends" (not generally subject to regular Federal and, for individuals who are California residents, California personal income taxes). BOARD MEMBERS INFORMATION (Unaudited) Joseph S. DiMartino (58) Chairman of the Board (1995) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Corporate Director and Trustee OTHER DIRECTORSHIPS AND AFFILIATIONS: * The Muscular Dystrophy Association, Director * Carlyle Industries, Inc., a button packager and distributor, Director * Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director * The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director * QuikCAT.com, a developer of high speed movement, routing, storage and encryption of data, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 190 -------------- David W. Burke (65) Board Member (1994) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Corporate Director and Trustee. OTHER DIRECTORSHIPS AND AFFILIATIONS: * John F. Kennedy Library Foundation * U.S.S. Constitution Museum; Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 59 -------------- Hodding Carter III (66) Board Member (1988) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * President and Chief Executive Officer of the John S. and James L. Knight Foundation * President and Chairman of MainStreet TV (thru 1998) * Knight Professor in Journalism at the University of Maryland NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7 -------------- Ehud Houminer (61) Board Member (1994) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Professor and Executive-in-Residence at the Columbia Business School, Columbia University. * Principal of Lear, Yavitz and Associates, a management consulting firm OTHER DIRECTORSHIPS AND AFFILIATIONS: * Avnet Inc., an electronics distributor * Super Sol Limited, an Israeli supermarket chain * Principal of Lear, Yavitz and Associates, a management consulting firm NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 21 The Fund BOARD MEMBERS INFORMATION (Unaudited) (CONTINUED) Richard C. Leone (61) Board Member (1985) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * President of the Century Foundation (formerly The Twentieth Century Fund, Inc.) a tax exempt research foundation engaged in the study of economic, foreign policy and domestic issues NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7 -------------- Hans C. Mautner (64) Board Member (1985) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Vice Chairman and Director Simon Property Group, a real estate investment company * From 1997 to 1998, Chairman, Chief Executive Officer of Corporate Property Investors, which merged into Simon Property Group in September 1998 NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7 -------------- Robin A. Pringle (38) Board Member (1995) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Senior Vice President of The National Mentoring Partnership (formerly, The One to One Partnership) a national non-profit organization that seeks to promote mentoring and economic empowerment for at-risk youths. * President of The Boisi Family Foundation, a private family foundation devoted to youths and higher education located in New York City NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7 -------------- John E. Zuccotti (64) Board Member (1985) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Chairman of Brookfield Financial Properties, Inc. * Vice Chairman of Brookfield Properties Corporation OTHER DIRECTORSHIPS AND AFFILIATIONS: * Applied Graphics Technologies NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7 ONCE ELECTED ALL BOARD MEMBERS SERVE FOR AN INDEFINITE TERM. ADDITIONAL INFORMATION ABOUT THE BOARD MEMBERS, INCLUDING THEIR ADDRESS IS AVAILABLE IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION WHICH CAN BE OBTAINED FROM DREYFUS FREE OF CHARGE BY CALLING THIS TOLL FREE NUMBER: 1-800-554-4611. OFFICERS OF THE FUND (Unaudited) STEPHEN E. CANTER, PRESIDENT SINCE MARCH 2000. Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 82 investment companies (comprised of 186 portfolios) managed by the Manager. Mr. Canter also is a Director and Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 56 years old, and has been an employee of the Manager since May 1995. MARK N. JACOBS, VICE PRESIDENT SINCE MARCH 2000. Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 200 portfolios) managed by the Manager. He is 56 years old, and has been an employee of the Manager since June 1977. JOHN B. HAMMALIAN, SECRETARY SINCE MARCH 2000. Associate General Counsel of the Manager, and an officer of 36 investment companies (comprised of 43 portfolios) managed by the Manager. He is 38 years old, and has been an employee of the Manager since February 1991. MICHAEL A. ROSENBERG, ASSISTANT SECRETARY SINCE MARCH 2000. Associate General Counsel of the Manager, and an officer of 93 investment companies (comprised of 198 portfolios) managed by the Manager. He is 42 years old, and has been an employee of the Manager since October 1991. STEVEN F. NEWMAN, ASSISTANT SECRETARY SINCE MARCH 2000. Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 200 portfolios) managed by the Manager. He is 52 years old, and has been an employee of the Manager since July 1980. JAMES WINDELS, TREASURER SINCE NOVEMBER 2001. Director of Mutual Fund Treasury Accounting of the Manager, and an officer of 94 investment companies (comprised of 200 portfolios) managed by the Manager. He is 43 years old, and has been an employee of the Manager since April 1985. MICHAEL CONDON, ASSISTANT TREASURER SINCE MARCH 2000. Senior Treasury Manager of the Manager, and an officer of 36 investment companies (comprised of 78 portfolios) managed by the Manager. He is 40 years old, and has been an employee of the Manager since August 1984. KENNETH SANDGREN, ASSISTANT TREASURER SINCE NOVEMBER 2001. Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 200 portfolios) managed by the Manager. He is 47 years old, and has been an employee of the Manager since June 1993. The Fund NOTES 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 15 Broad Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9263 Boston, MA 02205-8501 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) 2002 Dreyfus Service Corporation 357AR0302