GENERAL MUNICIPAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the General Municipal
Bond Fund, Inc. for its annual reporting period ended February 28, 1998. Your
Fund produced a total return, including share price changes and dividend
income generated, of 8.52%,* and an annualized tax-free distribution rate per
share of 5.14%.**
The Economy
The economy grew at a 3.8% rate in 1997, the strongest performance since
1988. So far, the slowdown anticipated from the Asian financial crisis last
fall has not materialized. The trade deficit reached a nine-year high last
year, a result of the strong U.S. economy rather than any reduction in
exports. It is widely anticipated that the slowdown in economic activity in
Asia will cause our trade deficit to widen further this year, which could act
as a drag on economic growth. There could be positive effects from such a
domestic slowdown since it might help control inflation if U.S. manufacturers
are unable to raise prices in the face of declining demand for exports. Also,
it might further stay the hand of the Federal Reserve Board (the "Fed") from
raising interest rates since production cutbacks could cool the robust labor
market and dampen potentially inflationary wage increases. It is worth noting
that January 1998 marked the first month since October 1996 that industrial
production failed to rise. While a one-month statistic is not a trend, it is
a possible indication of a developing Asian effect on our economy.
Inflation at the consumer level remained comfortably below 2% over the
past 12 months. Producer price inflation was nonexistent over the same
period, a continuation of the trend of falling wholesale prices that was
established at the beginning of last year. Sharp gains in worker productivity
have so far easily exceeded increases in wages and hours worked, thus
negating the inflationary consequences of rising labor costs. However, we may
be nearing an inflection point when productivity gains become outpaced by
compensation demands, at which time unit labor costs begin to rise. The
potential inflationary effects of increasing labor costs have been of
particular concern to Fed Chairman Alan Greenspan. Meanwhile, growth in new
jobs continued strong over the reporting period and the unemployment rate
remained near its 25-year low.
There are a few extremely preliminary indications that the economy may be
cooling. Consumer borrowing slowed last year, increasing just 4.7%, compared
to rises of 6.9% and 14.2% in 1996 and 1995. This could be a reaction of
consumers burdened with heavy debt loads who had the financial ability to
operate their personal budgets on a less leveraged basis. Furthermore, a
reluctance to borrow may become a reluctance to spend, and that could slow
the economy. Consumers play a key role in determining the course of economic
activity since their spending accounts for two-thirds of national output. The
modest growth of retail sales since mid-1997 suggests some retrenching on the
part of consumers. Yet consumer confidence has remained high as measured by
the University of Michigan's index of consumer sentiment. Benign inflation,
plentiful jobs, and robust economic growth have been powerful forces
contributing to consumer optimism.
The expectation that the Asian economic and financial crisis will lessen
our economic growth rate and, in consequence, further suppress inflation, has
kept the Fed from increasing interest rates. The last increase in short-term
rates came in March 1997 when the Federal Open Market Committee (the FOMC,
the policy-making arm of the Fed) hiked the Federal Funds rate by one-quarter
of a percent to 5.5%. (The Federal Funds rate is the rate of interest that
banks charge one another for overnight loans.) Low interest rates (longer
term interest rates have been in decline for almost a year) have provided a
strong fundamental underpinning for interest-sensitive sectors of the economy
such as housing. The housing market is an important component of the total eco
nomy and new housing starts have been vigorous, particularly over the second
half of 1997.
To tighten monetary policy, or not, seems to depend upon the degree to
which the Asian slowdown carries over to the United States. In recent
testimony to Congress, Fed Chairman Greenspan expressed concern that the
economy appeared to be in a delicate balance between two strong forces:
potential inflation from a robust and mature domestic economy and potential
recession from the Asian effect. We continue to monitor developments that
could lead the Fed to change its current steady-as-you-go monetary policy.
Market Environment
The market environment for bonds has been very constructive. During the
last six months, yields on long-term, high-grade, tax-exempt bonds have
declined by almost one-third of a percentage point. During this same time
U.S. Treasury bond yields fell a bit more. Certainly, it has been the
uncertain impact of the Asian financial crisis which has kept the Fed from
pushing rates higher despite strong domestic economic data. Spurred by this
drop in rates, the issuance of new municipal securities surged during the
last several months. In fact, the volume of new issuance last year rose 20%
over the previous year, marking 1997 as one of the most prolific years of
issuance in history. So far, 1998 is on track to eclipse last year's pace.
Through the first two months of the year, municipal new issue volume is at
its highest year-to-date total ever. The relatively minor correction to lower
prices in recent weeks is reflective of the supply build-up.
At this time, we believe that it is still too early to draw any
conclusions in terms of how much the Asian crisis will impact the U.S.
economy. Until a clearer picture emerges from Asia, we believe investors will
continue to find fixed income investments attractive. The still strong and
expanding economy would normally be a cause for concern for inflation
watchers. However, as previously stated, it is believed that the Fed will
refrain from taking any interest rate actions that could exacerbate the Asian
situation. While the most recent economic and employment data has been
indicative of a strengthening economy, inflation remains quiescent.
The fixed-income markets are now in the middle of what has historically
been a time of year when prices weaken. March and April are generally large
debt issuance months in all markets. Based on past experience, it is expected
that bonds will lose some ground. However, for the reasons cited, we believe
that the current environment supports an outlook for steady monetary policy
and well-anchored interest rates. As long as inflation remains low and the
pace of demand cools somewhat this spring, we feel that any setback in bonds
should not be prolonged, and should be reversed.
Portfolio Overview
As discussed in previous communications to shareholders, the Fund strives
to maximize tax-exempt income consistent with the preservation of capital.
The Fund seeks to own securities that bear the best characteristics and
potential for performance maximization in both up and down markets. Because
the underlying characteristics of municipal bonds are static (coupon,
maturity, time until optional call, and quality rating), the portfolio
manager needs to make adjustments in response to a number of dynamic factors
that can affect performance, such as anticipated interest rate moves.
Looking back over the past year, our early defensive positioning of the
Fund was, in hindsight, a hindrance to performance. The strength displayed by
the economy during the first half of the year did not persist, nor did it
cause inflation to accelerate. Late in the year, when it was becoming
apparent that the economy, and perhaps inflation as well, might be
accelerating too fast, the Asian crisis was already intensifying. The Fed's
hands were tied. In view of this, the Fund's duration was extended, which has
positively impacted performance.
Looking forward, our focus will continue to be to own the optimal
securities meeting our investment criteria. The large slate of new issues
scheduled for sale over the next several weeks makes us cautious near-term.
However, as long as the economic data doesn't surprise negatively, this could
prove to be a good buying opportunity. The market has not
made any significant moves in recent weeks. It is likely that this condition
could persist until a clearer picture of the Asian impact emerges.
Sincerely,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
March 18, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period, adjusted for any capital gain
distributions. Some income may be subject to the Federal Alternative Minimum
Tax (AMT) for certain shareholders.
GENERAL MUNICIPAL BOND FUND, INC. FEBRUARY 28, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN GENERAL MUNICIPAL BOND
FUND, INC.
AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
$22,351
General Municipal
Bond Fund, Inc.
Dollars
$22,004
Lehman Brothers
Municipal Bond Index*
*Source: Lehman Brothers
Average Annual Total Returns
<TABLE>
<CAPTION>
One Year Ended Five Years Ended Ten Years Ended
February 28, 1998 February 28, 1998 February 28, 1998
____________________ ____________________ __________________________
<S> <C> <C> <C>
8.52% 5.53% 8.38%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in General Municipal Bond
Fund, Inc. on 2/29/88 to a $10,000 investment made in the Lehman Brothers
Municipal Bond Index on that date. All dividends and capital gain
distributions are reinvested.
The Fund invests primarily in municipal securities and its performance shown
in the line graph takes into account fees and expenses. Unlike the Fund, the
Lehman Brothers Municipal Bond Index is an unmanaged total return performance
benchmark for the long-term, investment-grade tax exempt bond market,
calculated by using municipal bonds selected to be representative of the
municipal market overall. The Index does not take into account charges, fees
and other expenses, which can contribute to the Index potentially
outperforming the Fund. Further information relating to Fund performance,
including expense reimbursements, if applicable, is contained in the
Financial Highlights section of the Prospectus and elsewhere in this report.
</TABLE>
<TABLE>
<CAPTION>
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998
Principal
Long-Term Municipal Investments-95.5% Amount Value
_____________ _____________
<S> <C> <C>
Alabama-2.7%
Alabama Industrial Development Authority, SWDR (Pine City Fiber Co.)
6.45%, 12/1/2023.......................................................... $ 12,000,000 $ 13,105,680
Courtland Industrial Development Authority, SWDR
(Champion International Corp. Project) 6.375%, 3/1/2029................... 4,000,000 4,277,800
California-5.6%
California Pollution Control Financing Authority, PCR, Refunding
(San Diego Gas and Electric Co.) 5.90%, 6/1/2014 (Insured; MBIA).......... 9,715,000 10,934,524
California Public Works Board, Lease Revenue, Refunding
(University of California Projects) 5.50%, 6/1/2010....................... 6,415,000 6,954,117
Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue,
Refunding 6%, 7/1/2026 (Insured; MBIA).................................... 3,900,000 4,219,488
Monterey County, COP, (Natividad Medical Center)
4.75%, 8/1/2025 (Insured; MBIA)........................................... 5,000,000 4,721,750
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
Refunding
Zero Coupon, 1/15/2032 (Insured; MBIA).................................... 53,690,000 9,153,071
Colorado-12.3%
Colorado Housing Finance Authority, Single Family Program 7.55%, 8/1/2023... 2,855,000 3,030,326
Denver City and County:
Airport System Revenue:
7.25%, 11/15/2012....................................................... 4,065,000 4,556,499
7.25%, 11/15/2012 (Prerefunded 11/15/2002) (a).......................... 1,035,000 1,190,291
8.25%, 11/15/2012....................................................... 4,125,000 4,582,339
7.75%, 11/15/2021....................................................... 5,365,000 6,008,746
7.75%, 11/15/2021 (Prerefunded 11/15/2001) (a).......................... 1,395,000 1,594,569
7.25%, 11/15/2023....................................................... 3,985,000 4,465,033
7.25%, 11/15/2023 (Prerefunded 11/15/2002) (a).......................... 1,200,000 1,380,048
8.00%, 11/15/2025....................................................... 3,890,000 4,314,282
8.00%, 11/15/2025 (Prerefunded 11/15/2001) (a).......................... 1,360,000 1,542,757
Refunding 5.50% (Series D) 11/15/2025 (Insured; MBIA) (b)............... 12,000,000 12,381,480
Refunding 5.50% (Series E) 11/15/2025 (Insured; MBIA)................... 17,825,000 18,510,371
Special Facilities Airport Revenue (United Airlines Project) 6.875%, 10/1/2032 9,235,000 10,144,647
Lakewood, MFHR, Mortgage 6.70%, 10/1/2036 (Insured; FHA).................... 5,000,000 5,365,250
Connecticut-1.0%
Connecticut Housing Finance Authority, Refunding (Housing Mortgage Finance
Program)
6%, 11/15/2027............................................................ 6,000,000 6,264,600
Florida-4.4%
Florida State Board of Education 4.50%, 6/1/2027............................ 5,000,000 4,539,150
Palm Beach County, Solid Waste IDR (Osceola Power Ltd. Partnership)
6.95%, 1/1/2022 (c)....................................................... 3,000,000 2,310,000
Pinellas County Housing Facilities Authority, SFMR (Multi-County Program)
6.70%, 2/1/2028 (Insured; FHA)............................................ 5,920,000 6,337,952
Polk County Industrial Development Authority, IDR 7.525%, 1/1/2015.......... 13,840,000 14,996,194
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Georgia-2.0%
Fulton County School District, Refunding 6.375%, 5/1/2016................... $ 5,900,000 $ 6,938,813
Macon-Bibb County Industrial Authority, Industrial Revenue (Weyerhaeuser Co.
Project)
9%, 10/1/2007............................................................. 1,000,000 1,348,840
Monroe County Development Authority, PCR, Refunding
(Oglethorpe Power Corp., Scherer Project) 6.75%, 1/1/2010................. 4,000,000 4,708,040
Hawaii-1.6%
Hawaii Department of Budget and Finance, Electric Power and Light Revenue
(Hawaiian Electric Company Project) 5.65%, 10/1/2027 (Insured; MBIA)...... 9,750,000 10,219,657
Idaho-.6%
Idaho Housing Agency, Housing Revenue (Blue Meadows Project)
7.20%, 7/1/2033 (Insured; FHA)............................................ 3,500,000 3,676,085
Illinois-6.0%
Chicago, Gas Supply Revenue (People's Gas Light and Coke Co. Project)
8.10%, 5/1/2020........................................................... 3,000,000 3,285,690
Chicago-Midway Airport, Port, Airport and Marina Revenue
5.50%, 1/1/2029 (Insured; MBIA)........................................... 4,145,000 4,278,013
Chicago-O'Hare International Airport, Special Facility Revenue
(United Airlines Inc. Project):
8.40%, 5/1/2018......................................................... 2,750,000 2,945,387
8.50%, 5/1/2018......................................................... 2,500,000 2,740,500
8.85%, 5/1/2018......................................................... 6,200,000 7,041,092
Illinois Development Finance Authority, Health Hospital and Nursing Home
Revenue:
8.75%, 3/1/2010........................................................... 15,000 15,837
8.75%, 3/1/2010 (Prerefunded 3/1/1999) (a)................................ 1,674,000 1,787,983
Illinois Health Facilities Authority, Health Hospital and Nursing Home
Revenue:
(Beverly Farm Foundation) 9.125%, 12/15/2015 (Prerefunded 12/15/2000) (a). 2,000,000 2,322,520
(Residential Centers Inc.) 8.50%, 8/15/2016............................... 5,715,000 6,383,769
Village of Romeoville 8.375%, 1/1/2010...................................... 7,495,000 8,365,319
Indiana-1.1%
Fishers, Economic Development Revenue, First Mortgage (United Student Funds
Inc.)
8.375%, 9/1/2014.......................................................... 2,000,000 2,068,480
Indiana State Development Finance Authority Revenue, Refunding
(Inland Steel Facilities) 5.75%, 10/1/2011................................ 5,000,000 5,277,900
Iowa-.6%
Iowa Finance Authority, Single Family Mortgage 6.10%, 1/1/2028.............. 4,000,000 4,197,080
Kentucky-4.8%
Kenton County Airport Board, Airport Revenue
(Special Facilities-Delta Airlines Project):
7.50%, 2/1/2012......................................................... 11,550,000 12,920,408
7.125%, 2/1/2021........................................................ 4,630,000 5,089,574
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Kentucky (continued)
City of Mount Sterling, Revenue (Kentucky League of Cities Funding Trust
Lease
Program) 6.10%, 3/1/2018.................................................. $ 5,500,000 $ 6,125,735
Pendleton County, Multi-County Lease Revenue (Kentucky Association of
Counties
Leasing Trust Program) 6.40%, 3/1/2019.................................... 6,000,000 6,922,140
Louisiana-1.8%
Louisiana Public Facilities Authority, HR
(Louisiana Association of Independent Colleges and Universities Facilities
Loan Program)
7%, 12/1/2017 (Prerefunded 12/1/2002) (a)................................. 6,195,000 7,044,830
Parish of Saint James, SWDR (Freeport-McMoRan Partnership Project)
7.70%, 10/1/2022.......................................................... 4,140,000 4,513,469
Maine-1.2%
Maine Finance Authority, SWDR (Boise Cascade Corp. Project) 7.90%, 6/1/2015. 6,900,000 7,447,446
Maryland-1.9%
Maryland Community Development Administration, Department of Housing and
Community Development (Single Family Program) 6.55%, 4/1/2026............. 9,970,000 10,688,538
Montgomery County Housing Opportunities Commission, MFMR 7.375%, 7/1/2032... 1,405,000 1,465,373
Massachusetts-1.4%
Massachusetts Health and Educational Facilities Authority, Revenue
(New England Deaconess Hospital Issue) 7.20%, 4/1/2022 (Prerefunded 4/1/2001) (a) 5,070,000 5,618,625
Massachusetts Port Authority, Special Project Revenue (Harborside Hyatt
Project)
10%, 3/1/2026............................................................. 3,000,000 3,385,170
Michigan-5.7%
Michigan Hospital Finance Authority, HR, Refunding (Genesys Health System):
8.10%, 10/1/2013.......................................................... 2,000,000 2,382,160
8.125%, 10/1/2021......................................................... 4,910,000 5,895,290
7.50%, 10/1/2027.......................................................... 8,000,000 9,185,040
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021........................................................... 7,000,000 7,622,930
Romulus Economic Development Corp., Economic Development Revenue, Refunding
(HIR Limited Partnership Project)
7%, 11/1/2015 (Surety Bond; ITT Lyndon Property Co. Inc.)................. 5,000,000 5,426,450
Wayne Charter County, Special Airport Facilities Revenue, Refunding
(Northwest Airlines Inc.) 6.75%, 12/1/2015................................ 5,620,000 6,200,883
Mississippi-.8%
Clairborne County, PCR, Refunding (System Energy Resources Inc.)
7.30%, 5/1/2025........................................................... 5,000,000 5,302,250
New Hampshire-2.0%
New Hampshire Higher Educational and Health Facilities Authority, Revenue
(Crotched Mountain Rehabilitation Center) 7.75%, 1/1/2020 (Prerefunded 1/1/2000) (a) 2,200,000 2,391,576
New Hampshire Housing Finance Authority, Single Family Residential Mortgage:
7.75%, 7/1/2023........................................................... 6,060,000 6,481,534
7.70%, 7/1/2029........................................................... 3,990,000 4,197,201
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
New Mexico-1.2%
Farmington, PCR, Refunding (Public Service Company of San Juan Project)
6.375%, 4/1/2022.......................................................... $ 6,925,000 $ 7,558,153
New York-7.0%
New York State Dormitory Authority, Revenue:
(Mount Sinai School of Medicine) 5.15%, 7/1/2024 (Insured; MBIA).......... 4,000,000 4,072,920
(State University Educational Facilities) 7.50%, 5/15/2013................ 2,500,000 3,188,075
New York State Local Government Assistance Corp., Sales Tax Revenue,
Refunding 5.25%, 4/1/2016 (Insured; AMBAC)................................ 6,410,000 6,684,733
New York State Urban Development Corp., Lease Revenue, Refunding
(Correctional Capital Facilities) 5.25%, 1/1/2014 (Insured; FSA).......... 6,925,000 7,259,685
Triborough Bridge and Tunnel Authority, Revenues, General Purpose, Refunding:
5.50%, 1/1/2017 (Insured; MBIA)........................................... 10,000,000 10,668,200
5.50%, 1/1/2017........................................................... 12,500,000 13,351,125
North Carolina-2.8%
Charlotte North Carolina Special Facilities Airport and Marina Revenue
(Charlotte-Douglas International Airport) 5.60%, 7/1/2027 (d)............. 5,230,000 5,199,718
Columbus County Industrial Facilities, PCR, Financing Authority
(International Paper Co. Project) 5.85%, 12/1/2020........................ 5,000,000 5,279,200
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding:
6.125%, 1/1/2009.......................................................... 5,000,000 5,439,850
5.875% 1/1/2013........................................................... 2,250,000 2,318,085
North Dakota-1.2%
North Dakota Housing Finance Agency, SFMR:
7.30%, 7/1/2024........................................................... 3,640,000 3,847,662
7.75%, 7/1/2024 (Insured; MBIA)........................................... 3,885,000 4,144,518
Ohio-1.8%
Cleveland, Parking Facilities Improvement Revenue
8.10%, 9/15/2022 (Prerefunded 9/15/2002) (a).............................. 2,300,000 2,708,618
Ohio State Water Development Authority, Pollution Control Facilities Revenue,
Refunding (Cleveland Electric) 6.10%, 8/1/2020............................ 8,500,000 8,935,370
Oklahoma-4.8%
McGee Creek Authority, Water Revenue 6%, 1/1/2013 (Insured; MBIA)........... 6,025,000 6,813,371
Trustees of the Tulsa Municipal Airport Trust, Revenue
(American Airlines Inc. Project):
7.375%, 12/1/2020 (Guaranteed; AMR Corp.)............................... 9,850,000 10,742,804
7.60%, 12/1/2030........................................................ 12,000,000 13,266,960
Pennsylvania-1.1%
Lehigh County General Purpose Authority, Revenue (Wiley House)
9.50%, 11/1/2016.......................................................... 3,500,000 3,847,480
Montgomery County Higher Education and Health Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016...................................... 3,000,000 3,219,390
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Rhode Island-1.2%
Rhode Island Housing and Mortgage Finance Corp.:
(Homeownership E-1) 7.55%, 10/1/2022...................................... $ 4,305,000 $ 4,587,882
(Rental Housing Program) 7.95%, 10/1/2020................................. 3,195,000 3,374,303
South Carolina-1.4%
Piedmont Municipal Power Agency, Electric Revenue, Refunding
6.55%, 1/1/2016........................................................... 9,100,000 9,111,284
Tennessee-.2%
Shelby County Health Educational & Housing Facilities Board, MFHR
(Cameron Kirby) 6%, 7/1/2028.............................................. 1,000,000 1,030,620
Texas-9.2%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc. Project) 7%, 12/1/2011 (Guaranteed; AMR Corp.).... 10,000,000 11,938,400
Arlington Independent School District
4.50%, 2/15/2020 (Guaranteed; Permanent School Fund)...................... 4,570,000 4,193,158
Bell County Health Facilities Development Corp., Revenue
(Southern Healthcare-Southview) 10.50%, 3/1/2020 (Prerefunded 3/1/2000) (a) 2,855,000 3,261,381
Dallas-Fort Worth International Airport Facility Improvement Corp., Revenue
(Delta Airlines Inc.):
7.625%, 11/1/2021....................................................... 2,200,000 2,448,732
7.125%, 11/1/2026....................................................... 5,000,000 5,388,950
Dickens County, Lease Obligation (Jail and Detention Facility Project)
8.875%, 4/1/2005.......................................................... 3,950,000 4,040,218
Gulf Coast Waste Disposal Authority, SWDR (Champion International Corp.
Project)
7.25%, 4/1/2017........................................................... 4,735,000 5,194,721
Harlandale Independent School District
4.50%, 2/15/2023 (Guaranteed; Permanent School Fund) (d).................. 10,685,000 9,677,511
Houston, Airport System Revenue (Continental Airlines Project):
6.125% (Series B) 7/15/2027............................................... 1,000,000 1,047,880
6.125% (Series C) 7/15/2027............................................... 5,000,000 5,239,400
Montgomery County Health Facilities Development Corp., Hospital Mortgage
Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014 (Prerefunded 8/15/1999) (a) 6,520,000 7,088,805
Utah-.7%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration Project) 9.25%, 7/1/2018 (c) 8,000,000 4,801,600
Washington-3.1%
Chelan County Public Utility District Number 001, Consolidated Revenue
(Chelan Hydroelectric) 7.50%, 7/1/2011.................................... 5,655,000 6,913,294
Washington Public Power Supply System, Revenue, Refunding
(Nuclear Project Number 3) 7.125%, 7/1/2016 (Insured; MBIA)............... 10,425,000 12,918,660
Wyoming-.8%
Wyoming Community Development Authority, Housing Revenue 6.25%, 6/1/2027.... 5,000,000 5,264,350
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
U.S. Related-1.5%
Puerto Rico Commonwealth Infrastructure, Special Financing Authority
5%, 7/1/2028 (Insured; AMBAC)............................................. $ 9,645,000 $ 9,452,486
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $576,418,040)....................................................... $616,308,143
=============
Short-Term Municipal Investments-4.5%
Arizona-1.5%
Pinal County Industrial Development Authority,
PCR, VRDN (Magma Copper/Newmont Mining Corp.)
3.70% (LOC; National Westminster Bank) (e,f)............................ $ 10,000,000 $ 10,000,000
California-1.6%
Irvine Ranch Water District, Refunding, VRDN
3.55% (LOC; Sumitomo Bank) (e,f).......................................... 10,100,000 10,100,000
Florida-1.4%
Jacksonville, PCR, Refunding, VRDN (Florida Power and Light Co. Project) 3.55% (e) 9,000,000 9,000,000
_____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $29,100,000)........................................................ $ 29,100,000
=============
TOTAL INVESTMENTS-100.0%
(cost $605,518,040)....................................................... $645,408,143
=============
</TABLE>
<TABLE>
<CAPTION>
GENERAL MUNICIPAL BOND FUND, INC.
Summary of Abbreviations
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
COP Certificate of Participation Insurance Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
FSA Financial Security Assurance MFMR Multi-Family Mortgage Revenue
HR Hospital Revenue PCR Pollution Control Revenue
IDR Industrial Development Revenue SFMR Single-Family Mortgage Revenue
LOC Letter of Credit SWDR Solid Waste Disposal Revenue
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Fitch (g) or Moody's or Standard & Poor's Percentage of Value
_______ ________ _________________ ___________________
<S> <C> <C> <C>
AAA Aaa AAA 25.9%
AA Aa AA 14.5
A A A 6.2
BBB Baa BBB 31.9
BB Ba BB 4.3
F1 Mig1 SP1 4.5
Not Rated (h) Not Rated (h) Not Rated (h) 12.7
_______
100.0%
=======
Notes to Statement of Investments:
(a) 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.
(b) Held in segregated account as collateral for delayed-delivery
security.
(c) Non-income accruing security.
(d) Purchased on a delayed-delivery basis.
(e) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Secured by letter of credit.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) 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.
(i) At February 28, 1998, the Fund had $207,260,266 (31.7% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from transportation projects.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998
Cost Value
_____________ ____________
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $605,518,040 $645,408,143
Cash....................................... 4,792,840
Interest receivable........................ 9,689,609
Receivable for investment securities sold.. 9,070,308
Receivable for shares of Common Stock subscribed 112,000
Prepaid expenses........................... 19,653
_____________
669,092,553
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 342,865
Due to Distributor......................... 37,939
Payable for investment securities purchased 14,974,457
Payable for shares of Common Stock redeemed 34,279
Accrued expenses........................... 187,682
_____________
15,577,222
_____________
NET ASSETS.................................................................. $653,515,331
=============
REPRESENTED BY: Paid-in capital............................ $605,597,591
Accumulated undistributed investment income-net..... 91,141
Accumulated net realized gain (loss) on investments 7,936,496
Accumulated net unrealized appreciation (depreciation)
on investments-Note 4(b).................... 39,890,103
_____________
NET ASSETS.................................................................. $653,515,331
=============
SHARES OUTSTANDING
(150 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED).............. 43,705,768
NET ASSET VALUE, offering and redemption price per share -Note 3(d)......... $14.95
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1998
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $42,853,035
EXPENSES: Management fee-Note 3(a)................... $ 3,860,541
Shareholder servicing costs-Note 3(b)...... 1,915,821
Registration fees.......................... 91,324
Custodian fees............................. 64,642
Professional fees.......................... 63,414
Directors' fees and expenses-Note 3(c)..... 48,961
Prospectus and shareholders' reports-Note 3(b) 34,688
Loan commitment fees-Note 2................ 9,619
Interest expense-Note 2.................... 6,733
Miscellaneous.............................. 34,785
____________
Total Expenses......................... 6,130,528
____________
INVESTMENT INCOME-NET....................................................... 36,722,507
____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... $11,281,088
Net realized gain (loss) on financial futures (432,462)
____________
Net Realized Gain (Loss)............... 10,848,626
Net unrealized appreciation (depreciation) on investments 11,450,416
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 22,299,042
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $59,021,549
============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
GENERAL MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
February 28, 1998 February 28, 1997
_________________ _________________
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 36,722,507 $ 42,819,625
Net realized gain (loss) on investments................................ 10,848,626 (738,739)
Net unrealized appreciation (depreciation) on investments.............. 11,450,416 (7,523,574)
______________ ______________
Net Increase (Decrease) in Net Assets Resulting from Operations...... 59,021,549 34,557,312
______________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................. (36,631,366) (42,819,625)
Net realized gain on investments....................................... (837,108) (14,473,553)
______________ ______________
Total Dividends...................................................... (37,468,474) (57,293,178)
______________ ______________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................... 1,796,646,098 2,667,841,855
Dividends reinvested................................................... 25,404,886 40,371,255
Cost of shares redeemed................................................ (1,880,181,758) (2,862,540,890)
______________ ______________
Increase (Decrease) in Net Assets from Capital Stock Transactions.... (58,130,774) (154,327,780)
______________ ______________
Total Increase (Decrease) in Net Assets............................ (36,577,699) (177,063,646)
NET ASSETS:
Beginning of Period.................................................... 690,093,030 867,156,676
______________ ______________
End of Period.......................................................... $ 653,515,331 $ 690,093,030
============== ==============
UNDISTRIBUTED INVESTMENT INCOME-NET...................................... $ 91,141 ----
______________ ______________
Shares Shares
______________ ______________
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 123,506,929 183,985,040
Shares issued for dividends reinvested................................. 1,727,793 2,780,020
Shares redeemed........................................................ (129,007,469) (197,113,727)
______________ ______________
Net Increase (Decrease) in Shares Outstanding........................ (3,772,747) (10,348,667)
============== ==============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
GENERAL MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
Fiscal Year Ended February,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $14.53 $15.00 $14.45 $15.46 $15.74
______ ______ ______ ______ ______
Investment Operations:
Investment income-net........................ .77 .78 .82 .86 .90
Net realized and unrealized gain (loss)
on investments............................. .44 (.21) .57 (.89) (.04)
______ ______ ______ ______ ______
Total from Investment Operations............. 1.21 .57 1.39 (.03) .86
______ ______ ______ ______ ______
Distributions:
Dividends from investment income-net......... (.77) (.78) (.82) (.86) (.91)
Dividends from net realized gain on investments (.02) (.26) (.02) (.12) (.23)
Dividends in excess of net realized gain
on investments............................. - - - .00* -
______ ______ ______ ______ ______
Total Distributions.......................... (.79) (1.04) (.84) (.98) (1.14)
______ ______ ______ ______ ______
Net asset value, end of period............... $14.95 $14.53 $15.00 $14.45 $15.46
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN.......................... 8.52% 4.04% 9.79% .07% 5.50%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .87% .88% .88% .87% .82%
Ratio of net investment income
to average net assets...................... 5.23% 5.40% 5.50% 5.99% 5.71%
Decrease reflected in above expense ratios due to
undertakings by the Manager................ - - - - .03%
Portfolio Turnover Rate...................... 91.37% 115.62% 114.78% 67.87% 59.19%
Net Assets, end of period (000's Omitted).... $653,515 $690,093 $867,157 $934,277 $1,240,815
* Amount represents less than $.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
GENERAL MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
General Municipal Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company. The Fund's investment objective is to maximize current
income exempt from Federal income tax to the extent consistent with the
preservation of capital. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares, which are sold to the public without a
sales load.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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 premiums and original issue discounts on
investments, 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.
(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. 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 Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
GENERAL MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("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 at rates based on prevailing
market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period
ended February 28, 1998 was approximately $106,800, with a related weighted
average annualized interest rate of 6.30%.
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 .55 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, interest on borrowings, commitment fees and
extraordinary expenses, exceed 11\2% of the value of the Fund's average daily
net assets, the Fund may deduct from payments to be made to the Manager, or
the Manager will bear such excess expense. During the period ended February
28, 1998, there was no expense reimbursement pursuant to the Agreement.
(b) Under a Service Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund (a) reimburses the Distributor for payments to
certain Service Agents (a securities dealer, financial institution or other
industry professional) for distributing the Fund's shares and servicing
shareholder accounts ("Servicing") and (b) pays the Manager, Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, and any affiliate of
either of them (collectively, "Dreyfus") for advertising and marketing
relating to the Fund and for Servicing, at an aggregate annual rate of .20 of
1% of the value of the Fund's average daily net assets. Both the Distributor
and Dreyfus may pay one or more Service Agents a fee in respect of the Fund's
shares owned by shareholders with whom the Service Agent has a Servicing
relationship or for whom the Service Agent is the dealer or holder of record.
Both the Distributor and Dreyfus determine the amounts, if any, to be paid to
Service Agents under the Plan and the basis on which such payments are made.
The fees payable under the Plan are payable without regard to actual expenses
incurred. The Plan also separately provides for the Fund to bear the costs of
preparing, printing and distributing certain of the Fund's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan, not to exceed the greater of $100,000 or .005 of 1%
of the value of the Fund's average daily net assets for any full fiscal year.
During the period ended February 28, 1998, the Fund was charged $1,415,623
pursuant to the 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 February 28, 1998, the Fund was charged $308,064 pursuant to the
transfer agency agreement.
(c) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $4,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
(d) Effective May 12, 1997, a .10% redemption fee is charged and retained
by the Fund on certain redemptions of Fund shares (including redemptions
through use of the Fund Exchanges service) where the shares being redeemed
were issued subsequent to a specified effective date and the redemption or
exchange occurs less than fifteen days following the date of issuance. During
the period ended February 28, 1998, the redemption fees amounted to $198,677.
GENERAL MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4-SECURITIES TRANSACTIONS:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1998,
amounted to $595,434,993 and $674,910,280, respectively.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the Fund to "mark to
market" on a daily basis, which reflects the change in the market value of
the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses.
When the contracts are closed, the Fund recognizes a realized gain or loss.
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board
of Trade on which the contract is traded and is subject to change. At
February 28, 1998, there were no financial futures contracts outstanding.
(b) At February 28, 1998, accumulated net unrealized appreciation on
investments was $39,890,103, consisting of $44,470,084 gross unrealized
appreciation and $4,579,981 gross unrealized depreciation.
At February 28, 1998, 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).
GENERAL MUNICIPAL BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
General Municipal Bond Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
General Municipal Bond Fund, Inc., including the statement of investments, as
of February 28, 1998, 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 generally accepted auditing
standards. 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 February 28, 1998 by correspondence
with the custodian and brokers. 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 General Municipal Bond Fund, Inc. at February 28, 1998, 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 generally
accepted accounting principles.
[ERNST & YOUNG LLP signature logo]
New York, New York
March 31, 1998
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
February 28, 1998 as "exempt-interest dividends" (not generally subject to
regular Federal income tax).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1998 calendar year
on Form 1099-DIV which will be mailed by January 31, 1999.
Registration Mark
[Dreyfus lion "d" logo]
GENERAL MUNICIPAL 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
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 106AR982
Registration Mark
[Dreyfus logo]
General Municipal
Bond Fund, Inc.
Annual Report
February 28, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN GENERAL MUNICIPAL BOND FUND, INC. AND THE
LEHMAN BROTHERS MUNICIPAL BOND INDEX
EXHIBIT A:
LEHMAN
BROTHERS GENERAL
PERIOD MUNICIPAL MUNICIPAL
BOND INDEX * BOND FUND
2/29/88 10,000 10,000
2/28/89 10,621 10,815
2/28/90 11,710 12,002
2/28/91 12,790 13,087
2/29/92 14,067 14,702
2/28/93 16,003 17,074
2/28/94 16,890 18,013
2/28/95 17,208 18,026
2/29/96 19,109 19,796
2/28/97 20,161 20,597
2/28/98 22,004 22,351
*Source: Lehman Brothers
