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Dreyfus Premier California AMT-Free Municipal Bond Fund, Inc. Dreyfus Premier California
AMT-Free Municipal Bond Fund, Inc.
Seeks current income exempt from federal and
California state income taxes and the federal alternative minimum tax
P R O S P E C T U S October 1, 2008
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense. Contents
The Fund
Goal/Approach
1
Main Risks
2
Past Performance
4
Expenses
5
Management
6
Financial Highlights
8
Your Investment
Shareholder Guide
12
Distributions and Taxes
20
Services for Fund Investors
21
Instructions for Regular Accounts
23
For More Information
See back cover. T h e F u n d
1
G O A L / A P P R O A C H
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 capi-
tal. 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 also seeks to
provide income exempt from the federal alternative
minimum tax.
The fund invests at least 80% of its assets in munici-
pal bonds rated investment grade or the unrated
equivalent as determined by Dreyfus. The fund may
invest up to 20% of its assets in municipal bonds rated
below investment grade (high yield or junk
bonds) or the unrated equivalent as determined by
Dreyfus.The dollar-weighted average maturity of the
funds portfolio normally exceeds ten years, but the
fund may invest without regard to maturity.
The portfolio manager may buy and sell bonds
based on credit quality, market outlook and yield
potential. In selecting municipal bonds for invest-
ment, the portfolio manager may assess the current
interest rate environment and the municipal bonds
potential volatility in different rate environments.
The portfolio manager focuses on bonds with the
potential to offer attractive current income, typical-
ly looking for bonds that can provide consistently
attractive current yields or that are trading at com-
petitive market prices. A portion of the funds 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 funds allocation to
either discount bonds or to premium bonds will
change along with the portfolio managers chang-
ing views of the current interest rate and market
environment.The portfolio manager also may look
to select bonds that are most likely to obtain attrac-
tive prices when sold.
Although the fund seeks to provide income exempt
from federal and California personal income taxes,
the fund may invest temporarily in taxable bonds
and/or municipal bonds that pay income exempt
only from federal personal income tax, including
when the portfolio manager believes acceptable
California municipal bonds are not available for
investment.
Concepts to understand
Municipal bonds: debt securities that provide income free
from federal income tax, and state income tax if you live in
the issuing state. Municipal bonds are typically of two types:
general obligation bonds, which are secured by the full
faith and credit of the issuer and its taxing power
revenue bonds, which are payable from the revenue
derived from a specific revenue source, such as charges for
water and sewer service or highway tolls
Dollar-weighted average maturity: an average of the stated
maturities of the securities held by the fund, based on their
dollar-weighted proportions in the fund.
Credit rating: independent rating organizations analyze and
evaluate a bond issuers, and/or any credit enhancers, credit
profile and ability to repay debts. Based on their assessment,
these rating organizations assign letter grades that reflect the
issuers, and/or any credit enhancers, creditworthiness. AAA or
Aaa represents the highest credit rating, AA/Aa the second
highest, and so on down to D, for defaulted debt. Bonds rated
BBB or Baa and above are considered investment grade.
Dreyfus Premier California
AMT-Free Municipal Bond Fund, Inc.
Ticker Symbols Class A: DCAAX
Class B: DCABX
Class C: DCACX
Class Z: DRCAX
The Fund
The fund may, but is not required to, use derivatives,
such as futures, options and swap agreements, as a
substitute for investing directly in an underlying
asset, to increase returns, to manage credit or inter-
est rate risk, or as part of a hedging strategy. The
fund may buy securities that pay interest at rates
that float inversely with changes in prevailing inter-
est rates (inverse floaters) and may make forward
commitments in which the fund agrees to buy or
sell a security in the future at a price agreed upon
today. Inverse floaters are created by depositing
municipal bonds in a trust which divides the bonds
income stream into two parts: a short-term variable
rate demand note and a residual interest bond (the
inverse floater) which received interest based on the
remaining cash flow of the trust after payment of
interest on the note and various trust expenses.
Interest on the inverse floater usually moves in the
opposite direction as the interest on the variable
rate demand note.The fund also may make forward
commitments in which the fund agrees to buy or
sell a security in the future at a price agreed upon
today. 2
M A I N R I S K S
The funds principal risks are discussed below. The
value of your investment in the fund will fluctuate,
which means you could lose money.
Municipal bond market risk. The amount of public
information available about municipal bonds is
less than that for corporate equities or bonds.
Special factors, such as legislative changes and
local and business developments, may adversely
affect the yield and/or value of the funds invest-
ments in municipal bonds. Other factors include
the general conditions of the municipal bond
market, the size of the particular offering, the
maturity of the obligation and the rating of the
issue.
Interest rate risk. Prices of municipal bonds tend to
move inversely with changes in interest rates.
Typically, a rise in rates will adversely affect bond
prices and, accordingly, the funds share price.The
longer the effective maturity and duration of the
funds portfolio, the more the funds share price is
likely to react to interest rates.
Credit risk. Failure of an issuer to make timely
interest or principal payments, or a decline or
perception of a decline in the credit quality of a
bond, can cause a bonds price to fall, potentially
lowering the funds share price. Although the
fund invests primarily in investment grade bonds,
it may invest to a limited extent in high yield
(junk) bonds, which involve greater credit risk,
including the risk of default, than investment
grade bonds, and are considered predominantly
speculative with respect to the issuers continuing
ability to make principal and interest payments.
The prices of high yield bonds can fall dramati-
cally in response to bad news about the issuer or
its industry, or the economy in general.
Call risk. Some municipal bonds give the issuer
the option to call, or redeem, the bonds before
their maturity date. If an issuer calls its bond
during a time of declining interest rates, the fund
might have to reinvest the proceeds in an invest-
ment offering a lower yield. During periods of
market illiquidity or rising interest rates, prices of
callable issues are subject to increased price
fluctuation.
Liquidity risk. The secondary market for certain
municipal bonds tends to be less well developed
or liquid than many other securities markets,
which may adversely affect the funds ability to
sell such municipal bonds at attractive prices.
When there is little or no active trading market
for specific types of securities, it can become
more difficult to sell the securities at or near their
perceived value. In such a market, the value of
such securities and the funds share price may fall
dramatically, even during periods of declining
interest rates.
State-specific risk. The fund is subject to the risk
that Californias economy, and the revenues
underlying its municipal bonds, may decline.
Investing primarily in a single state makes the
fund more sensitive to risks specific to the state
and may magnify other risks.
Market sector risk. The funds overall risk level will
depend on the market sectors in which the fund
is invested and the current interest rate, liquidity
and credit quality of such sectors. The fund may
significantly overweight or underweight certain
industries or market sectors, which may cause
the funds performan