UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3757
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
(Exact name of Registrant as specified in charter)
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Address of principal executive offices) (Zip code)
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 922-6000
Date of fiscal year end: 5/31/03
Date of reporting period: 11/30/03
-2-
California Tax Exempt Form N-CSR
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Dreyfus California
Tax Exempt
Bond Fund, Inc.
SEMIANNUAL REPORT November 30, 2003
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
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Back Cover
The Fund
Dreyfus California
Tax Exempt Bond Fund, Inc.
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This semiannual report for Dreyfus California Tax Exempt Bond Fund, Inc. covers
the six-month period from June 1, 2003, through November 30, 2003. 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 Darcy.
Recent reports of marked improvement in the growth of U.S. Gross Domestic
Product suggest to us that the economy has started to turn the corner. Tax cuts
and low mortgage rates have put cash in consumers' pockets, and corporations
have begun to increase spending and investment. As a result, after several years
of falling interest rates and rising bond prices, the municipal bond market
recently has become more volatile. As might be expected in a strengthening
economy, securities that are more sensitive to their issuers' credit quality
generally have outperformed those that tend to respond more to changes in
interest rates.
Of course, we have seen upturns before, only to be disappointed when growth
proved unsustainable over the longer term. However, based on recent data, we are
cautiously optimistic about the current economic environment. As always, we urge
you to speak regularly with your financial advisor, who may be in the best
position to suggest the Dreyfus funds designed to meet your current needs,
future goals and attitudes toward risk.
Thank you for your continued confidence and support.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
December 15, 2003
DISCUSSION OF FUND PERFORMANCE
Joseph Darcy, Portfolio Manager
How did Dreyfus California Tax Exempt Bond Fund, Inc. perform relative to its
benchmark?
For the six-month period ended November 30, 2003, the fund achieved a total
return of -0.73% .(1) In comparison, the Lehman Brothers Municipal Bond Index,
the fund' s benchmark, achieved a total return of 0.19% for the same period.(2)
In addition, the fund is reported in the Lipper California Municipal Debt Funds
category. The average total return for all funds reported in the Lipper category
was -0.40%.(3)
After several years of above-average total returns driven by falling interest
rates, California's municipal bonds encountered heightened volatility during the
reporting period when voters effected a change in the governor's office and a
stronger economy raised concerns that interest rates might climb. The fund's
return was slightly lower than its Lipper category average, primarily because
our defensive positioning prevented it from participating fully in market
rallies. The fund also underperformed its benchmark, mainly because the
benchmark contains bonds from many states, not just California, and does not
reflect transaction fees and other fund expenses.
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.
To pursue this goal, the fund normally invests substantially all of its assets
in municipal bonds that provide income exempt from federal and California state
personal income taxes. The fund will invest at least 80% of its assets in
investment-grade municipal bonds or the unrated equivalent as determined by
Dreyfus. The dollar-weighted average maturity of the fund's portfolio normally
exceeds 10 years, but the fund's average portfolio maturity is not restricted.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The portfolio manager may buy and sell bonds based on credit quality, market
outlook and yield potential. In selecting municipal bonds for investment, the
portfolio manager may assess the current interest-rate environment and the
municipal bond' s potential volatility in different rate environments. The
portfolio manager focuses on bonds with the potential to offer attractive
current income, typically looking for bonds that can provide consistently
attractive current yields or that are trading at competitive market prices. A
portion of the fund' s assets may be allocated to "discount" bonds, which are
bonds that sell at a price below their face value, or to "premium" bonds, which
are bonds that sell at a price above their face value. The fund's allocation
either to discount bonds or to premium bonds will change along with our changing
views of the current interest-rate and market environment. The portfolio manager
also may look to select bonds that are most likely to obtain attractive prices
when sold.
What other factors influenced the fund's performance?
The reporting period was volatile for both the national and California municipal
bond market. The quick end to major combat operations in Iraq lifted a veil of
uncertainty from the U.S. economy, and signs of stronger growth began to emerge.
Although the Federal Reserve Board reduced short-term interest rates in late
June to a 45-year low of 1%, municipal bond prices declined sharply in July and
August amid new evidence of economic recovery. Tax-exempt securities recovered
much of their lost value in the fall, but the market remained volatile through
the reporting period's end.
California' s bonds were subject to additional volatility because of the
controversy surrounding the recall of former Governor Davis and uncertainty
regarding the fiscal policies of new Governor Schwarzenegger. Largely because of
these factors, bonds from California issuers recently have traded at lower
prices than historical norms when compared to prices in the national market.
In this challenging environment, we generally have maintained a conservative
posture, emphasizing bonds from localities we' ve determined to be
fiscally sound and securities backed by revenues from essential-services
facilities, such as water and sewer plants. Conversely, we generally have
de-emphasized the fund's exposure to California's unsecured general obligation
bonds. We have focused primarily on securities with maturities in the 15- to
20-year range, which provided most of the yield of longer-term bonds but with
less sensitivity to potential changes in interest rates.
What is the fund's current strategy?
We have maintained a generally defensive posture as we await Governor
Schwarzenegger's proposal, due in January 2004, to address the state's budgetary
problems. We currently expect the supply of newly issued California bonds to be
relatively heavy during the first half of 2004 as the state continues to finance
its budget deficit. In addition, we are anticipating the upcoming maturities of
its shorter-term debt, which could put additional downward pressure on bond
prices.
In an attempt to manage the risks of the heavy supply of bonds and potentially
higher interest rates in a stronger economy, we have set the fund's average
duration in a range that we consider to be in line with or slightly shorter than
that of its Lipper category average. Of course, we are prepared to change our
strategies as developments unfold.
December 15, 2003
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL
TAXES FOR NON-CALIFORNIA RESIDENTS, AND SOME INCOME MAY BE SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF
ANY, ARE FULLY TAXABLE.
(2) SOURCE: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN PERFORMANCE BENCHMARK FOR THE
LONG-TERM, INVESTMENT-GRADE, TAX-EXEMPT BOND MARKET. INDEX RETURNS DO NOT
REFLECT FEES AND EXPENSES ASSOCIATED WITH OPERATING A MUTUAL FUND.
(3) SOURCE: LIPPER INC. -- CATEGORY AVERAGE RETURNS REFLECT THE FEES AND
EXPENSES OF THE FUNDS COMPRISING THE AVERAGE.
The Fund
November 30, 2003 (Unaudited)
STATEMENT OF INVESTMENTS
STATEMENT OF INVESTMENTS
Principal
LONG-TERM MUNICIPAL INVESTMENTS--97.1% Amount ($) Value ($)
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CALIFORNIA--88.2%
Anaheim Public Finance Authority, Tax Allocation Revenue
6.45%, 12/28/2018 (Insured; MBIA) 20,000,000 23,567,200
California, GO 5.65%, 6/1/2030 20,000,000 20,694,400
California Department of Veteran Affairs,
Home Purchase Revenue 5.50%, 12/1/2019 15,000,000 15,621,150
California Department of Water Resources:
(Central Valley Project--Water System Revenue)
5%, 12/1/2011 (Insured; FGIC) 15,415,000 17,373,167
Power Supply Revenue:
5.875%, 5/1/2016 10,000,000 11,157,800
5.375%, 5/1/2018 (Insured; AMBAC) 27,100,000 29,681,546
California Educational Facilities Authority, Revenue
(University of Southern California)
5%, 10/1/2033 23,500,000 23,999,845
California Health Facilities Financing Authority,
Revenue:
(Cedars-Sinai Medical Center) 6.125%, 12/1/2030 27,695,000 29,656,637
Health Facility (Adventist Health System/West)
5%, 3/1/2033 8,500,000 8,031,905
(Sutter Health) 5.35%, 8/15/2028 (Insured; MBIA) 3,780,000 4,012,394
California Housing Finance Agency:
Home Mortage Revenue:
6.30%, 2/1/2008 1,380,000 1,402,190
6.40%, 8/1/2027 (Insured; MBIA) 3,505,000 3,532,689
MFHR 6.30%, 8/1/2026 (Insured; AMBAC) 7,130,000 7,420,120
Revenue 11.729%, 8/1/2026 1,955,000 (a,b) 2,073,121
Single Family Mortgage:
6.25%, 8/1/2014 (Insured; AMBAC) 1,115,000 1,171,854
6.30%, 8/1/2024 2,775,000 2,814,655
6.45%, 8/1/2025 3,450,000 3,476,461
California Infrastructure and Economic Development
Bank, Revenue (Clean Water State Revolving Fund)
5%, 10/1/2017 8,735,000 9,383,050
California Pollution Control Financing Authority
PCR:
10.35%, 6/1/2014 24,165,000 (a,b) 33,282,938
(Southern California Edison Co.):
7%, 3/1/2005 15,000,000 15,188,250
6.40%, 12/1/2024 12,600,000 12,671,946
California Public Works Board, LR:
(Department of Corrections, Calipatria State Prison,
Imperial County) 6.50%, 9/1/2017 (Insured; MBIA) 13,000,000 16,045,510
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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CALIFORNIA (CONTINUED)
California Public Works Board, LR (continued):
(Department of General Services-Capital East End
Complex) 5.25%, 12/1/2019 (Insured; AMBAC) 10,000,000 10,783,900
(University of California Project)
5.35%, 12/1/2015 (Insured; AMBAC) 11,415,000 12,584,238
(Various University of California Projects):
5.50%, 6/1/2014 5,000,000 5,700,500
6.375%, 10/1/2019 (Prerefunded 10/1/2004) 7,775,000 (c) 8,271,900
California State University, Fresno Association Inc.,
Auxiliary Organization Event Center Revenue:
6%, 7/1/2022 3,500,000 3,637,445
6%, 7/1/2026 2,500,000 2,590,050
6%, 7/1/2031 5,250,000 5,375,737
California Statewide Communities
Development Authority:
COP:
(Saint Joseph Health System Group)
6.50%, 7/1/2015 (Prerefunded 7/1/2004) 7,000,000 (c) 7,362,810
(The Internext Group) 5.375%, 4/1/2030 19,000,000 17,829,790
Revenue:
California Endowment:
5%, 7/1/2028 11,940,000 (d) 12,227,396
5%, 7/1/2033 16,710,000 (d) 17,073,275
5%, 7/1/2036 14,355,000 (d) 14,637,219
(Kaiser Permanente) 5.50%, 11/1/2032 13,500,000 13,753,800
(Sutter Health) 5.50%, 8/15/2028 10,000,000 10,238,900
Central California Joint Powers
Health Financing Authority, COP
(Community Hospitals of Central California)
5.75%, 2/1/2031 15,000,000 15,090,900
Delano, COP (Delano Regional Medical Center)
5.25%, 1/1/2018 10,000,000 9,544,300
Fontana, Special Tax
5.25%, 9/1/2017 (Insured; MBIA) 10,000,000 10,943,800
Fontana Public Financing Authority,
Tax Allocation Revenue
(North Fontana Redevelopment Project)
5.50%, 9/1/2032 (Insured; AMBAC) 10,000,000 10,803,500
Fremont Union High School District
5.25%, 9/1/2025 (Insured; FGIC) 11,295,000 11,817,281
Fresno, Sewer Revenue
5.25%, 9/1/2019 (Insured; AMBAC) 9,400,000 10,534,486
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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CALIFORNIA (CONTINUED)
Golden State Tobacco Securitization Corp.,
Enhanced Tobacco Settlement Asset-Backed Bonds
5.50%, 6/1/2043 10,000,000 9,833,700
Los Angeles, GO:
5%, 9/1/2016 (Insured; MBIA) 11,670,000 12,668,369
5%, 9/1/2019 (Insured; MBIA) 13,110,000 13,876,017
5%, 9/1/2020 (Insured; MBIA) 12,610,000 13,271,268
Los Angeles County Metropolitan Transportation Authority,
Proposition A First Tier Senior Sales Tax Revenue
5%, 7/1/2018 (Insured; FSA) 28,400,000 30,374,368
Los Angeles County Public Works Financing
Authority, Revenue (Los Angeles County Flood
Control District) 5%, 3/1/2011 (Insured; MBIA) 11,660,000 13,053,370
Los Angeles Department of Water and Power, Revenue:
Power System:
5.25%, 7/1/2013 (Insured; MBIA) 12,300,000 13,641,561
5%, 7/1/2018 (Insured; MBIA) 10,000,000 10,695,200
5.25%, 7/1/2019 (Insured; FSA) 44,000,000 47,676,640
Waterworks
6.375%, 7/1/2034 (Insured; MBIA) 9,000,000 9,441,000
Los Angeles Harbor Department, Revenue
6%, 8/1/2012 8,900,000 9,854,347
Los Angeles Unified School District
5.75%, 7/1/2017 (Insured; MBIA) 10,135,000 11,916,125
Merced Union High School District:
Zero Coupon, 8/1/2023 (Insured; FGIC) 2,500,000 904,425
Zero Coupon, 8/1/2024 (Insured; FGIC) 2,555,000 865,481
M-S-R Public Power Agency, Revenue
(San Juan Project) 5.90%, 7/1/2020 5,430,000 5,510,636
Northern California Power Agency, Revenue
(Hydroelectric Project Number 1):
7%, 7/1/2016 (Insured; AMBAC)
(Prerefunded 1/1/2016) 670,000 (c) 860,809
5.125%, 7/1/2023 (Insured; MBIA) 3,500,000 3,617,495
7.50%, 7/1/2023 (Insured; AMBAC)
(Prerefunded 7/1/2021) 375,000 (c) 506,929
Oakland Unified School District
5.25%, 8/1/2024 (Insured; FGIC) 17,275,000 18,101,091
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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CALIFORNIA (CONTINUED)
Pasadena Community Development Commission,
MFHR (Civic Center) 6.45%, 12/1/2021 (Insured; FSA) 13,185,000 13,190,801
Port of Oakland, Revenue
Special Facilities (Mitsui O.S.K. Lines Ltd.)
6.80%, 1/1/2019 (LOC; Industrial Bank of Japan) 1,385,000 1,395,540
Public Utilities Commission of the City and County
of San Francisco, Clean Water Revenue:
5%, 10/1/2012 (Insured; MBIA) 23,095,000 25,792,496
5%, 10/1/2013 (Insured; MBIA) 22,195,000 24,640,445
5.25%, 10/1/2018 (Insured; MBIA) 10,000,000 10,937,300
Sacramento County, Airport System Revenue
6%, 7/1/2017 (Insured; MBIA) 5,850,000 6,489,113
Sacramento Municipal Utility District,
Electric Revenue:
6.50%, 9/1/2013 (Insured; MBIA) 6,930,000 8,464,094
5.20%, 7/1/2017 (Insured; MBIA) 300,000 326,481
5%, 8/15/2020 (Insured; MBIA) 14,010,000 14,809,691
San Bernardino County, COP
(Capital Facilities Project) 6.875%, 8/1/2024 5,000,000 6,395,900
San Diego Unified School District:
5.25%, 7/1/2023 (Insured: FSA) 9,790,000 10,466,685
5.25%, 7/1/2024 (Insured; FSA) 2,570,000 2,734,223
San Juan Unified School District:
Zero Coupon, 8/1/2023 (Insured; FSA) 10,030,000 3,628,553
Zero Coupon, 8/1/2024 (Insured; FSA) 10,655,000 3,609,275
Southeast Resource Recovery Facility Authority, LR:
5.25%, 12/1/2016 (Insured; AMBAC) 11,715,000 12,948,590
5.25%, 12/1/2017 (Insured; AMBAC) 6,475,000 7,106,313
5.25%, 12/1/2018 (Insured; AMBAC) 7,585,000 8,278,876
University of California, Revenue (Multi Purpose)
5.25%, 9/1/2027 (Insured; MBIA) 31,475,000 33,173,706
West Basin Municipal Water District, Revenue, COP:
5.25%, 8/1/2014 (Insured; MBIA) 5,000,000 5,618,700
5.25%, 8/1/2015 (Insured; MBIA) 5,000,000 5,588,550
Whittier Health Facility, Revenue
(Presbyterian Intercommunity Hospital)
5.75%, 6/1/2031 10,090,000 10,333,774
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. RELATED--8.9%
Commonwealth of Puerto Rico, Public Improvement
5.50%, 7/1/2016 (Insured; MBIA) 11,830,000 13,756,397
Commonwealth of Puerto Rico
Infrastructure Financing Authority,
Special Tax Revenue:
5%, 7/1/2014 (Insured; AMBAC) 15,000,000 16,377,750
5.50%, 10/1/2032 26,000,000 28,404,740
5.50%, 10/1/2040 33,290,000 36,306,740
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $996,136,480) 1,040,503,619
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SHORT-TERM MUNICIPAL INVESTMENTS--5.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Abag Finance Authority for Nonprofit Corps.,
Revenue, VRDN (Jewish Community
Center Project) 1.10% (LOC; Bank of
New York and Allied Irish Bank) 3,775,000 (e) 3,775,000
California, VRDN 1.10% (LOC; J.P. Morgan
Chase & Co. and Westdeutsche Landesbank) 2,000,000 (e) 2,000,000
California Department of Water Resources,
Power Supply, Revenue, VRDN:
1.08%, Series B-1 (LOC; Bank of New York) 15,900,000 (e) 15,900,000
1.10%, Series B-2 (LOC; Banque Nationale de Paris) 12,700,000 (e) 12,700,000
1.05%, Series B-4 (LOC; Bayerische Landesbank) 7,000,000 (e) 7,000,000
Irvine, Improvement Bond Act of 1915,
Limited Obligation Assement District,
VRDN 1.07% (LOC; Kredietbank N.V.--KBC Bank) 5,442,000 (e) 5,442,000
Newport Beach, Revenue, VRDN
(Hoag Memorial Hospital):
1.12%, Series A 1,000,000 (e) 1,000,000
1.12%, Series B 7,300,000 (e) 7,300,000
Orange County, Sanitation Districts, COP, VRDN
1.07% 5,370,000 (e) 5,370,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $60,487,000) 60,487,000
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TOTAL INVESTMENTS (cost $1,056,623,480) 102.7% 1,100,990,619
LIABILITIES, LESS CASH AND RECEIVABLES (2.7%) (28,967,319)
NET ASSETS 100.0% 1,072,023,300
Summary of Abbreviations
AMBAC American Municipal Bond Assurance
Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance
Company
FSA Financial Security Assurance
GO General Obligation
LOC Letter of Credit
LR Lease Revenue
MBIA Municipal Bond Investors Assurance
Insurance Corporation
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
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AAA Aaa AAA 69.6
AA Aa AA 8.2
A A AA 9.8
BBB Baa BBB 4.9
BB Ba BB 2.5
F1 MIG1/P1 SP1/A1 5.0
100.0
(A) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT NOVEMBER 30, 2003,
THESE SECURITIES AMOUNTED TO $35,356,059 OR 3.3% OF NET ASSETS.
(B) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(C) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(D) PURCHASED ON A DELAYED DELIVERY BASIS.
(E) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
(F) AT NOVEMBER 30, 2003, 28.9% OF THE FUND'S NET ASSETS INSURED BY MBIA.
SEE NOTES TO THE FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 1,056,623,480 1,100,990,619
Interest receivable 15,814,733
Receivable for investment securities sold 861,955
Receivable for shares of Common Stock subscribed 7,004
Prepaid expenses 20,850
1,117,695,161
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 568,821
Cash overdraft due to Custodian 946,147
Payable for investment securities purchased 44,003,838
Payable for shares of Common Stock redeemed 90,699
Accrued expenses 62,356
45,671,861
- --------------------------------------------------------------------------------
NET ASSETS ($) 1,072,023,300
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,017,236,587
Accumulated undistributed investment income--net 1,405,236
Accumulated net realized gain (loss) on investments 9,014,338
Accumulated net unrealized appreciation
(depreciation) on investments 44,367,139
- --------------------------------------------------------------------------------
NET ASSETS ($) 1,072,023,300
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized) 72,064,714
NET ASSET VALUE, offering and redemption price per share--Note 3(d) ($) 14.88
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended November 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 25,161,582
EXPENSES:
Management fee--Note 3(a) 3,224,744
Shareholder servicing costs--Note 3(b) 390,340
Custodian fees 40,931
Professional fees 30,984
Directors' fees and expenses--Note 3(c) 25,386
Registration fees 15,684
Loan commitment fees--Note 2 4,492
Miscellaneous 15,776
TOTAL EXPENSES 3,748,337
INVESTMENT INCOME--NET 21,413,245
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 3,958,238
Net unrealized appreciation (depreciation) on investments (34,320,871)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (30,362,633)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (8,949,388)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
November 30, 2003 Year Ended
(Unaudited) May 31, 2003
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 21,413,245 47,511,719
Net realized gain (loss) on investments 3,958,238 11,598,844
Net unrealized appreciation
(depreciation) on investments (34,320,871) 51,343,818
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (8,949,388) 110,454,381
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (21,299,625) (47,254,638)
Net realized gain on investments -- (11,261,160)
TOTAL DIVIDENDS (21,299,625) (58,515,798)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 118,909,209 232,655,581
Dividends reinvested 14,075,891 39,551,645
Cost of shares redeemed (171,110,437) (283,499,067)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS (38,125,337) (11,291,841)
TOTAL INCREASE (DECREASE) IN NET ASSETS (68,374,350) 40,646,742
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,140,397,650 1,099,750,908
END OF PERIOD 1,072,023,300 1,140,397,650
Undistributed investment income--net 1,405,236 124,601
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 8,083,113 15,706,623
Shares issued for dividends reinvested 956,061 2,665,098
Shares redeemed (11,589,935) (19,100,849)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (2,550,761) (729,128)
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.
Six Months Ended Year Ended May 31,
November 30, 2003 ------------------------------------------------------------------------
(Unaudited) 2003 2002(a) 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 15.28 14.60 14.56 13.65 14.72 14.88
Investment Operations:
Investment income--net .30(b) .63(b) .67(b) .71 .70 .68
Net realized and
unrealized gain (loss)
on investments (.41) .83 .29 .91 (1.01) (.12)
Total from
Investment Operations (.11) 1.46 .96 1.62 (.31) .56
Distributions:
Dividends from
investment income--net (.29) (.63) (.67) (.71) (.71) (.68)
Dividends from net realized
gain on investments -- (.15) (.25) -- (.05) (.04)
Total Distributions (.29) (.78) (.92) (.71) (.76) (.72)
Net asset value,
end of period 14.88 15.28 14.60 14.56 13.65 14.72
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (.73)(c) 10.30 6.69 11.98 (2.04) 3.81
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses
to average net assets .70(d) .70 .71 .70 .73 .72
Ratio of net investment
income to average
net assets 3.98(d) 4.27 4.54 4.87 5.03 4.56
Portfolio Turnover Rate 27.97(c) 47.21 51.69 32.21 34.09 58.49
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of
period ($ x 1,000) 1,072,023 1,140,398 1,099,751 1,099,495 1,045,993 1,234,856
(A) AS REQUIRED, EFFECTIVE JUNE 1, 2001, THE FUND HAS ADOPTED THE PROVISIONS OF
THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES AND BEGAN
AMORTIZING DISCOUNT OR PREMIUM ON A SCIENTIFIC BASIS FOR DEBT SECURITIES ON A
DAILY BASIS. THE EFFECT OF THIS CHANGE FOR THE PERIOD ENDED MAY 31, 2002 WAS TO
INCREASE NET INVESTMENT INCOME PER SHARE AND DECREASE NET REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS BY LESS THAN $.01 AND INCREASE THE RATIO
OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS FROM 4.51% TO 4.54%. PER SHARE
DATA AND RATIOS/SUPPLEMENTAL DATA FOR PERIODS PRIOR TO JUNE 1, 2001 HAVE NOT
BEEN RESTATED TO REFLECT THIS CHANGE IN PRESENTATION.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus California Tax Exempt Bond Fund, Inc. (the "fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified
open-end management investment company. The fund's investment objective is to
provide investors with a high level of current income exempt from federal and
California state income taxes, as is consistent with the preservation of
capital. The Dreyfus Corporation (the "Manager") serves as the fund's investment
adviser. The Manager is a wholly-owned 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.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: Investments in securities are valued each business day
by an independent pricing service (the "Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of discount and premium on invest
ments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date. Under the terms of the custody
agreement, the fund received net earnings credits of $34,238 during the period
ended November 30, 2003 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, if any, it is the policy of the fund not to distribute such
gain. Income and capital gain distributions are determined in accordance with
incomes tax regulations, which may differ from accounting principles generally
accepted in the United States.
(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 tax character of distributions paid to shareholders during the fiscal year
ended May 31, 2003 was as follows: tax exempt income $47,254,638, ordinary
income $1,927,910 and long term capital gain $9,333,250. The tax character of
current year distributions will be determined at the end of the current fiscal
year.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $350 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund based on prevailing market rates
in effect at the time of borrowings. During the period ended November 30, 2003,
the fund did not borrow under the Facility.
NOTE 3--Management Fee and Other Transactions with Affiliates:
(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .60 of 1% of the value of the
fund' s average daily net assets and is payable monthly. The Agreement provides
that if in any full fiscal year the aggregate expenses of the fund, exclusive of
taxes, brokerage fees, interest on borrowings, commitment fees and extraordinary
expenses, exceed 1 1_2% of the value of the fund's average net assets, the fund
may deduct from the payments to be made to the Manager, or the Manager will bear
such excess expense. During the period ended November 30, 2003, there was no
expense reimbursement pursuant to the Agreement.
(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 November 30, 2003, the fund was charged $199,115
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 November 30, 2003, the fund was charged $132,697 pursuant to the transfer
agency agreement.
(C) Each Board member also serves as a Board member of other funds within the
Dreyfus complex. Effective October 15, 2003, annual retainer fees and attendance
fees are allocated to each fund based on net assets. Prior to October 15, 2003,
each director who is not an "affiliated person" as defined in the Act received
from the fund an annual fee of $4,500 and an attendance fee of $500 per meeting
for services of the fund. The Chairman of the Board received an additional 25%
of such compensation and continues to do so under the new compensation
structure.
(D) A .10% redemption fee is charged and retained by the fund on shares redeemed
within thirty days following the date of issuance, including redemptions made
through the use of the fund' s exchange privilege. During the period ended
November 30, 2003, redemption fees charged and retained by the fund amounted to
$33,214.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended November 30, 2003, amounted to
$282,298,134 and $310,926,470, respectively.
At November 30, 2003, accumulated net unrealized appreciation on investments was
$44,367,139, consisting of $46,421,246 gross unrealized appreciation and
$2,054,107 gross unrealized depreciation.
At November 30, 2003, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Fund
NOTES
For More Information
Dreyfus California
Tax Exempt Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
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) 2004 Dreyfus Service Corporation 928SA1103
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Registrant's disclosure controls and procedures are reasonably designed to
ensure that information required to be disclosed by the Registrant on Form N-CSR
is recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the reports
that it files or submits on Form N-CSR is accumulated and communicated to the
Registrant's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.
(b) There were no changes to the Registrant's internal control over financial
reporting that occurred during the Registrant's most recently ended fiscal
half-year that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial officers as
required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certification of principal executive and principal financial officers as
required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DREYFUS CALIFORNIA TAX EXEMPT BOND FUND, INC.
By: /s/Stephen E. Canter
____________________
Stephen E. Canter
President
Date: January 23, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/Stephen E. Canter
______________________
Stephen E. Canter
Chief Executive Officer
Date: January 23, 2004
By: /s/James Windels
_______________________
James Windels
Chief Financial Officer
Date: January 23, 2004
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal financial
officers as required by Rule 30a-2(a) under the Investment Company Act of
1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers
as required by Rule 30a-2(b) under the Investment Company Act of 1940.
(EX-99.906CERT)