-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BrVLD2QhITP95a3PUJD+SApd1SeYSYuE6HGMYOuaqhpqq53Jx/nTDHEXDV4dCT0f lli2nK8odWTn3+5HNL+pIg== 0000762855-02-000006.txt : 20021122 0000762855-02-000006.hdr.sgml : 20021122 20021122095035 ACCESSION NUMBER: 0000762855-02-000006 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021122 EFFECTIVENESS DATE: 20021122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS CALIFORNIA TAX EXEMPT MONEY MARKET FUND CENTRAL INDEX KEY: 0000762855 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04216 FILM NUMBER: 02836986 BUSINESS ADDRESS: STREET 1: THE DREYFUS CORPORATION STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2129228297 MAIL ADDRESS: STREET 1: C/O DREYFUS CORP STREET 2: 200 PARK AVENUE, 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: SHARON TAX EXEMPT MONEY MARKET FUND INC DATE OF NAME CHANGE: 19851023 N-30D 1 pn30d-357.txt SEMI-ANNUAL REPORT Dreyfus California Tax Exempt Money Market Fund SEMIANNUAL REPORT September 30, 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 FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus California Tax Exempt Money Market Fund LETTER FROM THE CHAIRMAN Dear Shareholder: We present this semiannual report for Dreyfus California Tax Exempt Money Market Fund, covering the six-month period from April 1, 2002 through September 30, 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. Amid turbulence in the stock market, many investors have turned to the relative stability of the tax-exempt money markets. For some investors, tax-exempt money market funds are part of a broader strategy to diversify among various asset classes and to seek tax-exempt income. Others, however, have recently turned to money market funds in an attempt to time the stock market. In our view, the latter strategy is a risky one. Instead, we favor a well-balanced, diversified and valuation-sensitive approach to investing. If you have questions or are worried about current market conditions, we encourage you to talk with your financial advisor who can help you view current events from the perspective of long-term market trends. In the meantime, we at The Dreyfus Corporation intend to continue basing our investment decisions on an objective, long-term view of the markets. Thank you for your continued confidence and support. Sincerely, /s/Stephen E. Canter Stephen E. Canter Chairman and Chief Executive Officer The Dreyfus Corporation October 15, 2002 2 DISCUSSION OF FUND PERFORMANCE Joseph Irace, Portfolio Manager How did Dreyfus California Tax Exempt Money Market Fund perform during the period? For the six-month period ended September 30, 2002, the fund produced an annualized yield of 0.90%. Taking into account the effects of compounding, the fund produced an annualized effective yield of 0.91%.(1) The fund's performance was primarily the result of low interest rates throughout the reporting period. Tax-exempt money market yields were also affected by surging demand from investors seeking a relatively stable alternative to a falling stock market. 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 normally 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- The Fund 3 DISCUSSION OF FUND PERFORMANCE (CONTINUED) issue supply, we may extend the fund's weighted average maturity to 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? The fund was primarily influenced by low interest rates and heightened investor demand. When the reporting period began, the nation was in the midst of an economic recovery that proved to be less robust and more uneven than most investors had expected. Economic indicators remained mixed throughout the reporting period, with relatively strong consumer spending offset by weakness among corporations and manufacturers. These uncertain conditions were intensified by corporate scandals and heightened international tensions. As a result, the Federal Reserve Board continued to maintain an accommodative monetary policy, keeping short-term interest rates at 1.75%, their lowest level in 40 years. In this environment, yields on one-year tax-exempt notes remained near historically low levels. Tax-exempt money market yields also continued to fall in response to a highly volatile stock market, which caused many investors to seek more stable investment alternatives. This surge in demand for money market securities persisted throughout the reporting period. At the same time, the uneven economic recovery contributed to fiscal problems for many states and municipalities, including California. Like many other states, California lost jobs during the 2001 recession and has collected less tax revenue than it originally anticipated. The state bridged the substantial gap in its fiscal 2003 budget by reducing expenses, raising certain taxes, tapping a number of non-recurring revenue sources and borrowing in the tax-exempt bond markets. Although an increase in the supply of tax-exempt securities usually puts upward pressure on yields, new issuance during the reporting period was easily absorbed by the surge in demand from equity investors, and tax-exempt money market yields remained low. 4 In this environment, we adopted a relatively conservative investment approach, emphasizing preservation of capital in the uncertain market environment. Accordingly, the fund purchased relatively few of California's new tax-exempt notes when they were issued in June. Instead, we preferred to diversify the fund' s holdings among highly rated or insured securities issued by local municipalities, such as school districts.(2) In addition, we generally maintained the fund's weighted average maturity at points that were in line with that of its peer group average. This strategy was designed to maintain existing yields for as long as we deemed practical while giving us the flexibility we need to capture higher yields if and when they become available. What is the fund's current strategy? Because the yield differences between very short-term securities and one-year notes have been narrower than average, we have continued to maintain the fund's weighted average maturity in the neutral range. In addition, we have maintained our focus on high credit quality. In our view, this conservative approach should continue to help the fund weather the current period of low yields and economic weakness. October 15, 2002 (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 $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. (2) INSURANCE ON INDIVIDUAL SECURITIES EXTENDS TO THE REPAYMENT OF PRINCIPAL AND THE PAYMENT OF INTEREST IN THE EVENT OF DEFAULT. IT DOES NOT EXTEND TO THE MARKET VALUE OF THE FUND'S SECURITIES OR THE VALUE OF THE FUND'S SHARES. The Fund 5 STATEMENT OF INVESTMENTS September 30, 2002 (Unaudited) Principal TAX EXEMPT INVESTMENTS--100.7% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA--97.2% Alameda County Industrial Development Authority Industrial Revenue, VRDN: (Intermountain Trading) 1.70% (LOC; California State Teachers Retirement) 160,000 (a) 160,000 (Niles Machine and Tool) 1.65% (LOC; Wells Fargo Bank) 1,150,000 (a) 1,150,000 State of California, Revenue, VRDN, Merlots Program 1.61% (Insured; AMBAC and Liquidity Facility; First Union Bank) 3,995,000 (a) 3,995,000 California Counties Industrial Development Authority IDR, VRDN (Allwire Inc. Project) 1.70% (LOC; California State Teachers Retirement) 180,000 (a) 180,000 California Economic Development Financing Authority, Industrial Revenue VRDN (Joseph Schmidt Project) 1.65% (LOC; Banque Nationale de Paris) 3,000,000 (a) 3,000,000 California Educational Facilities Authority, College and University Revenue, VRDN: (Loyola Marymount University) 1.75% (Insured; MBA and Liquidity Facility; Allied Irish Bank) 700,000 (a) 700,000 Refunding (Art Center Design College) 1.75% (LOC; Allied Irish Bank) 4,350,000 (a) 4,350,000 California Health Facilities Financing Authority, Revenue: Refunding (Children's Hospital) 6%, 7/1/2003 (Insured; MBIA) 1,200,000 1,237,830 VRDN (Adventist Health System/Sunbelt) 1.65% (LOC; U.S. Bank NA) 4,210,000 (a) 4,210,000 California Infrastructure and Economic Development Bank VRDN: IDR (Lance Camper Manufacturing Corp.) 1.70% (LOC; Comerica Bank) 2,920,000 (a) 2,920,000 Revenue (Los Angeles SPCA Project) 1.60% (LOC; Bank of New York) 6,200,000 (a) 6,200,000 California Pollution Control Financing Authority, VRDN SWDR: (Greenteam of San Jose Project) 1.65% (LOC; Wells Fargo Bank) 3,000,000 (a) 3,000,000 (Mottra Corp. Project) 1.65% (LOC; Wells Fargo Bank) 1,000,000 (a) 1,000,000 (Norcal Waste System Inc. Project) 1.65% (LOC; Fleet National Bank) 1,750,000 (a) 1,750,000 (Waste Management Inc. Project) 1.70% (LOC; JPMorgan Chase Bank) 5,000,000 (a) 5,000,000 6 Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (CONTINUED) California Statewide Communities Development Authority: Revenues, TRAN: 3%, 6/30/2003 (Insured; FSA) 4,945,000 4,992,076 (Riverside County) 3%, 6/30/2003 4,000,000 4,038,080 VRDN: MFHR, Refunding (Sunrise Danville) 1.65% (LOC; FNMA) 2,165,000 (a) 2,165,000 Private Schools Revenue (Robert Louis Stevenson) 1.70% (LOC; Allied Irish Bank) 9,250,000 (a) 9,250,000 California Statewide Communities Development Corporation, Industrial Revenue, VRDN: (Andercraf Products Inc.) 1.70% (LOC; California State Teachers Retirement) 420,000 (a) 420,000 (APM Inc. Project) 1.70% (LOC; California State Teachers Retirement) 200,000 (a) 200,000 (Carvin Project) 1.70% (LOC; California State Teachers Retirement) 105,000 (a) 105,000 (DV Industries) 1.70% (LOC; California State Teachers Retirement) 1,020,000 (a) 1,020,000 (J. Michelle) 1.70% (LOC; California State Teachers Retirement) 1,340,000 (a) 1,340,000 (Lesaint) 1.70% (LOC; PNC Bank) 2,240,000 (a) 2,240,000 (Lustre California) 1.70% (LOC; Comerica Bank) 3,000,000 (a) 3,000,000 (Redline Project) 1.70% (LOC; California State Teachers Retirement) 930,000 (a) 930,000 (Ziemen Manufacturing Co. Project) 1.70% (LOC; California State Teachers Retirement) 280,000 (a) 280,000 Central Coast Water Authority, Water Revenue State Water Project Regional Facilities 6.50%, 10/1/2002 400,000 (b) 408,000 Central Valley Financing Authority Cogeneration Project, Revenue (Carson Ice-General Project) 6.20%, 7/1/2003 250,000 (b) 263,666 Chico, MFHR, Refunding, VRDN (Sycamore Glen) 1.70% (LOC; Bank of America) 2,060,000 (a) 2,060,000 Contra Costa County: COP, Capital Projects Program 4.25%, 2/1/2003 (Insured; AMBAC) 200,000 201,321 GO Notes, TRAN 3%, 10/4/2002 1,940,000 1,940,130 Desert Sands Unified School District, GO Notes, BAN 3%, 7/1/2003 6,000,000 6,057,330 The Fund 7 STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (CONTINUED) Elk Grove Unified School District, Special Tax Community Facilities District No. 1 6.375%, 12/1/2002 (Insured; AMBAC) 100,000 100,830 Folsom Public Financing Authority, LR, Refunding (City Hall & Community Center) 1.40%, 10/1/2002 (Insured; FSA) 500,000 500,000 Laguna Beach Unified School District, GO Notes 8%, 8/1/2003 (Insured; FSA) 1,000,000 1,054,461 Lake Tahoe Unified School District GO Notes, Refunding 2.75%, 7/1/2003 (Insured; MBIA) 130,000 131,157 Los Angeles Department Airports, Airport Revenue (Ontario International Airport) 5.60%, 5/15/2003 (Insured; FGIC) 100,000 102,394 Los Angeles Harbor Department, Revenue 6%, 8/1/2003 (Insured; AMBAC) 285,000 290,472 Newport Beach, Revenues, VRDN (Hoag Memorial Presbyterian Hospital) 1.90% 1,500,000 (a) 1,500,000 Oakland Unified School District, GO Notes, TRAN 3%, 10/24/2002 1,500,000 1,501,441 Palm Springs Unified School District GO Notes, Refunding 2%, 2/1/2003 (Insured; FSA) 180,000 180,238 Port of Oakland, Revenue, CP 1.35%, 11/13/2002 (LOC: Bank of Nova Scotia and Commerzbank) 7,000,000 7,000,000 Redondo Beach Public Financing Authority Tax Allocation Revenue, VRDN (Aviation High Redevelopment Project) 1.70% (LOC; Allied Irish Bank) 1,480,000 (a) 1,480,000 Riverside-San Bernardino Housing and Finance Agency, LR, VRDN: 1.80%, Series A (Liquidity Facility; Societe Generale) 5,900,000 (a) 5,900,000 1.80%, Series B (Liquidity Facility; Societe Generale) 2,500,000 (a) 2,500,000 8 Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) San Diego Area Housing and Finance Agency, LR, VRDN: 1.65%, Series A (Liquidity Facility; Societe Generale) 14,555,000 (a) 14,555,000 1.65%, Series B (Liquidity Facility; Societe Generale) 2,465,000 (a) 2,465,000 San Diego County Regional Transportation Commission Sales Tax Revenue 4.70%, 4/1/2003 (Insured; AMBAC) 300,000 304,581 San Joaquin Hills Transportation Corridor Agency Toll Road Revenue 6.75%, 1/1/2003 600,000 (b) 619,919 San Juan Unified School District, GO Notes, TRAN 2.50%, 10/24/2002 5,000,000 5,001,077 Santa Clara County-El Camino Hospital District Hospital Facilities Authority, LR VRDN (Valley Medical Center Project): 1.60%, Series A (LOC; Bayerische Hypo-Und Vereinsbank) 772,000 (a) 772,000 1.60%, Series B (LOC; Bayerische Hypo-Und Vereinsbank) 12,130,000 (a) 12,130,000 Stockton Community Facilities District Special Tax Revenue, VRDN (Arch Road East) 1.65% (LOC; Wells Fargo Bank) 3,100,000 (a) 3,100,000 Tobacco Securitization Authority, Southern California Tobacco Settlement Revenue, VRDN 1.78% (LOC; Westdeutsche Landesbank) 13,000,000 (a) 13,000,000 Tulare-Porterville Schools Financing Authority COP, VRDN (2002 Refinancing Project) 1.60% (Insured; FSA and Liquidity Facility; Dexia Credit Locale) 3,575,000 (a) 3,575,000 University of California: College and University Housing System Revenue 5%, 11/1/2002 (Insured; MBIA) 300,000 300,888 HR, Refunding (UCLA Medical Center) 4.70%, 12/1/2002 (Insured; MBIA) 300,000 301,232 The Fund 9 STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (CONTINUED) Vallejo, Water Revenue (Water Improvement Project) 6%, 11/1/2002 (Insured; FGIC) 125,000 (b) 125,466 Walnut Improvement Agency Industrial Development Authority, IDR, VRDN (Fairway Molds Project) 1.70% (LOC; California State Teachers Retirement) 360,000 (a) 360,000 U.S. RELATED--3.5% Commonwealth of Puerto Rico, GO Notes 5%, 7/1/2003 (Insured; MBIA) 100,000 102,437 Government of Guam, LOR 3.25%, 12/1/2002 (Insured; FSA) 2,220,000 2,225,027 Puerto Rico Telephone Authority Telecommunications Revenue 4.95%, 1/1/2003 (Insured; AMBAC) 100,000 (b) 100,811 Virgin Islands Public Finance Authority Revenue, Refunding Matching Fund Loan Notes 7.25%, 10/1/2002 3,225,000 (b) 3,289,500 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $164,332,364) 100.7% 164,332,364 LIABILITIES, LESS CASH AND RECEIVABLES (.7%) (1,130,567) NET ASSETS 100.0% 163,201,797 10 Summary of Abbreviations AMBAC American Municipal Bond IDR Industrial Development Revenue Assurance Corporation LOC Letter of Credit BAN Bond Anticipation Notes LOR Limited Obligation Revenue COP Certificate of Participation LR Lease Revenue CP Commercial Paper MBIA Municipal Bond Investors FGIC Financial Guaranty Insurance Assurance Insurance Company Corporation FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue FSA Financal Security Assurance SWDR Solid Waste Disposal Revenue GO General Obligation TRAN Tax and Revenue Anticipation HR Hospital Revenue Notes VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ F1+, F1 VMIG1, MIG1, P1 SP1+, SP1, A1+, A1 91.5 AAA, AA, A (c) Aaa, Aa, A (c) AAA, AA, A (c) 7.2 Not Rated (d) Not Rated (d) Not Rated (d) 1.3 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (B) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (C) NOTES WHICH ARE NOT F, MIG AND SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S, HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 11 STATEMENT OF ASSETS AND LIABILITIES September 30, 2002 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 164,332,364 164,332,364 Interest receivable 690,578 Prepaid expenses and other assets 10,831 165,033,773 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 70,671 Cash overdraft due to Custodian 1,724,619 Accrued expenses 36,686 1,831,976 - -------------------------------------------------------------------------------- NET ASSETS ($) 163,201,797 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 163,209,806 Accumulated net realized gain (loss) on investments (8,009) - -------------------------------------------------------------------------------- NET ASSETS ($) 163,201,797 - -------------------------------------------------------------------------------- SHARES OUTSTANDING (unlimited number of $.01 par value shares of Beneficial Interest authorized) 163,272,615 NET ASSET VALUE, offering and redemption price per share ($) 1.00 SEE NOTES TO FINANCIAL STATEMENTS. 12 STATEMENT OF OPERATIONS Six Months Ended September 30, 2002 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 1,303,490 EXPENSES: Management fee--Note 2(a) 417,613 Shareholder servicing costs--Note 2(b) 64,664 Professional fees 21,771 Trustees' fees and expenses--Note 2(c) 14,397 Custodian fees 10,501 Registration fees 9,230 Prospectus and shareholders' reports 5,517 Miscellaneous 5,599 TOTAL EXPENSES 549,292 INVESTMENT INCOME--NET 754,198 - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) 15,578 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 769,776 SEE NOTES TO FINANCIAL STATEMENTS. The Fund 13 STATEMENT OF CHANGES IN NET ASSETS Six Months Ended September 30, 2002 Year Ended (Unaudited) March 31, 2002 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 754,198 2,949,207 Net realized gain (loss) from investments 15,578 15,631 Net unrealized appreciation (depreciation) of investments -- (6,057) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 769,776 2,958,781 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): INVESTMENT INCOME--NET (754,198) (2,949,207) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share): Net proceeds from shares sold 129,647,396 304,711,068 Dividends reinvested 440,329 1,919,400 Cost of shares redeemed (168,288,755) (281,842,950) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (38,201,030) 24,787,518 TOTAL INCREASE (DECREASE) IN NET ASSETS (38,185,452) 24,797,092 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 201,387,249 176,590,157 END OF PERIOD 163,201,797 201,387,249 SEE NOTES TO FINANCIAL STATEMENTS. 14 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, 2002 Year Ended March 31, ---------------------------------------------------------------- (Unaudited) 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 Investment Operations: Investment income--net .005 .016 .029 .024 .026 .029 Distributions: Dividends from investment income--net (.005) (.016) (.029) (.024) (.026) (.029) Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) .90(a) 1.58 2.94 2.43 2.59 2.91 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/ SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .66(a) .64 .65 .68 .66 .69 Ratio of net investment income to average net assets .45(a) 1.55 2.89 2.40 2.56 2.88 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 163,202 201,387 176,590 163,310 194,220 194,213 (A) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 15 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 California state 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 premium and discount on investments, is earned from settlement date and recognized on the accrual basis. Realized gain and 16 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 earnings credits of $8,128 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, if any, 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 $23,587 available for federal income tax purposes 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 17 NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) The tax character of distributions paid to shareholders during the fiscal year ended March 31, 2002 was all tax exempt income. The tax character of current year distributions will be determined at the end of the current fiscal year. At September 30, 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 September 30, 2002, the fund was charged $47,116 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, 2002, the fund was charged $15,948 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. 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 100 Church 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 357SA0902 -----END PRIVACY-ENHANCED MESSAGE-----