General Municipal
Bond Fund, Inc.
ANNUAL REPORT
February 29, 2000
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by Dreyfus and
the fund's other service providers do not properly process and calculate
date-related information from and after January 1, 2000. Dreyfus has taken steps
designed to avoid year 2000-related problems in its systems and to monitor the
readiness of other service providers. In addition, issuers of securities in
which the fund invests may be adversely affected by year 2000-related problems.
This could have an impact on the value of the fund's investments and its share
price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Financial Highlights
18 Notes to Financial Statements
23 Report of Independent Auditors
24 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
General Municipal Bond Fund, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for General Municipal Bond Fund,
Inc., covering the 12-month period from March 1, 1999 through February 29, 2000.
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,
William M. Petty.
When the reporting period began, evidence had emerged that the U.S. economy was
growing strongly in an environment characterized by high levels of consumer
spending and low levels of unemployment. Concerns that inflationary pressures
might re-emerge caused the Federal Reserve Board to raise short-term interest
rates four times during the reporting period, for a total increase of 1.00
percentage point. Higher interest rates led to some erosion of municipal bond
prices, especially during the second half of the reporting period.
Municipal bonds were also adversely affected by supply-and-demand
considerations. These technical influences have recently caused the yields of
tax-exempt bonds to rise to very attractive levels compared to the after-tax
yields of taxable bonds of comparable maturity and credit quality. This is
especially true for investors in the higher federal and state income tax
brackets.
We appreciate your confidence over the past year, and we look forward to your
continued participation in General Municipal Bond Fund, Inc.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
March 23, 2000
2
DISCUSSION OF FUND PERFORMANCE
William M. Petty, Portfolio Manager
How did Dreyfus General Municipal Bond Fund, Inc. perform during the period?
For the 12-month period ended February 29, 2000, the fund produced a -4.81%
total return.(1) In comparison, the Lipper General Municipal Debt Funds category
average produced a -4.58% total return for the same period.(2) We attribute the
fund's negative returns to a rising interest-rate environment, which caused most
municipal bond prices to decline.
What is the fund's investment approach?
Our goal is to seek a high level of federally tax-exempt income from a
diversified portfolio of municipal bonds. Secondarily, we also seek to provide a
competitive total return.
We begin by evaluating supply-and-demand factors within the municipal bond
marketplace. Based on that assessment, we select the individual tax-exempt bonds
that we believe are most likely to provide the highest returns with the least
risk. We look at such criteria as the bond's yield, price, age, the
creditworthiness of its issuer, insurance, and any provisions for early
redemption. Under most circumstances, we look for high yielding bonds that
cannot be redeemed by their issuers within the next 10 years and that are
selling at a discount to their face values.
While we generally do not attempt to predict changes in interest rates, we may
tactically manage the portfolio's average duration -- a measure of sensitivity
to changes in interest rates -- in anticipation of temporary supply-and-demand
changes. If we expect the supply of newly issued bonds to increase, for example,
we may reduce the portfolio's average duration to make cash available for the
purchase of higher yielding securities. Conversely, if we expect demand for
municipal bonds to surge at a time when we anticipate little issuance, we may
increase the portfolio' s average duration to maintain current yields for
The Fund 3
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
as long as practical. At other times, we try to maintain a neutral average
duration that is consistent with other municipal bond funds.
What other factors influenced the fund's performance?
The fund's performance was hurt by a difficult investment environment, which
included rising interest rates and a fall-off in demand from institutional
investors.
When the reporting period began, evidence had emerged that the U.S. economy was
growing more rapidly than most analysts had anticipated. As a result, investors
became concerned that strong economic growth might rekindle long-dormant
inflationary pressures. In an attempt to forestall a reacceleration of
inflation, the Federal Reserve Board raised short-term interest rates four times
between June 1999 and February 2000, causing most bond prices to fall.
Municipal bond prices also fell because of adverse supply-and-demand influences.
For a variety of reasons, institutional investors participated less in the
tax-exempt market, which reduced overall demand and drove municipal bond prices
down significantly.
However, beginning in February 2000, we began to see signs that the bulk of the
market's decline may be behind us. Municipal bond investors were evidently
encouraged by comments from Federal Reserve Board Chairman Alan Greenspan, which
were interpreted as implying that the nation's central bank may need only a few
additional interest-rate increases to reduce inflationary pressures. Because
several further rate hikes were already incorporated into municipal bond prices,
the market rallied on this news. Yet, municipal bonds currently continue to
offer tax-exempt yields that compare very favorably with the taxable yields on
comparable term U.S. Treasury securities, after adjusting for taxes. Of course,
there can be no guarantee that municipals will continue to offer competitive
relative after-tax yields in the future.
What is the fund's current strategy?
One important part of our strategy has been to reduce the fund's average
duration. However, this proved difficult to accomplish in a rising
4
interest-rate environment. That's because portfolio durations naturally extend
as interest rates rise, creating a "headwind" that worked against us. As a
result, while we achieved a reduction in the fund's duration, we did not reduce
it as quickly as we would have liked. More recently, we have continued to
attempt to maintain the fund's average duration at or below that of our
benchmark.
Another important part of our strategy is security selection. During the second
half of the reporting period, we sold deep-discount bonds because they tend to
perform poorly when interest rates rise. We replaced those holdings with bonds
that sell at a modest premium to face value, and therefore provide a degree of
protection against a declining market. We focused primarily on the more stable
market sectors, such as housing bonds. In addition, we upgraded the portfolio by
replacing some 30-year bonds with 20- to 25-year bonds without sacrificing yield
or credit quality.
March 23, 2000
(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, 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 ANALYTICAL SERVICES, INC.
The Fund 5
FUND PERFORMANCE
Exhibit A
Comparison of change in value of $10,000 investment in General Municipal Bond
Fund, Inc. and the Lehman Brothers Municipal Bond Index
- --------------------------------------------------------------------------------
<TABLE>
Average Annual Total Returns AS OF 2/29/00
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FUND (4.81)% 4.28% 6.36%
</TABLE>
(+) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN GENERAL MUNICIPAL BOND
FUND, INC. ON 2/28/90 TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
ARE REINVESTED.
THE FUND INVESTS PRIMARILY IN MUNICIPAL SECURITIES AND ITS PERFORMANCE SHOWN IN
THE LINE GRAPH TAKES INTO ACCOUNT FEES AND EXPENSES. THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX, UNLIKE THE FUND, IS AN UNMANAGED TOTAL RETURN PERFORMANCE
BENCHMARK FOR THE LONG-TERM, INVESTMENT-GRADE, TAX-EXEMPT BOND MARKET,
CALCULATED BY USING MUNICIPAL BONDS SELECTED TO BE REPRESENTATIVE OF THE
MUNICIPAL MARKET OVERALL. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES
AND OTHER EXPENSES, WHICH CAN CONTRIBUTE TO THE INDEX POTENTIALLY OUTPERFORMING
OR UNDERPERFORMING THE FUND. FURTHER INFORMATION RELATING TO FUND PERFORMANCE,
INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL
HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
6
STATEMENT OF INVESTMENTS
<TABLE>
February 29, 2000
Principal
LONG-TERM MUNICIPAL INVESTMENTS--94.1% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA--3.1%
Alabama Industrial Development Authority, SWDR
(Pine City Fiber Co.) 6.45%, 12/1/2023 12,000,000 11,219,760
Courtland Industrial Development Authority, SWDR
(Champion International Corp. Project)
6.375%, 3/1/2029 2,650,000 2,504,965
CALIFORNIA--4.1%
State of California 4.50%, 10/1/2018 5,260,000 4,339,237
California Pollution Control Financing Authority, PCR
(San Diego Gas and Electric Co.) 8.536%, 6/1/2014 6,355,000 (a,b) 7,051,381
San Joaquin Hills Transportation Corridor, Toll Road Revenue:
Zero Coupon, 1/15/2026 (Insured; MBIA) 6,000,000 1,237,320
Zero Coupon, 1/15/2031 (Insured; MBIA) 24,000,000 3,637,200
Zero Coupon, 1/15/2032 (Insured; MBIA) 13,690,000 1,948,771
COLORADO--7.4%
Colorado Housing Finance Authority, Single Family
Program 7.55%, 8/1/2023 1,270,000 1,305,217
Denver City and County, Airport System Revenue:
7.25%, 11/15/2012 4,065,000 4,288,006
7.25%, 11/15/2012 (Prerefunded 11/15/2002) 1,035,000 (c) 1,116,786
7.75%, 11/15/2021 5,365,000 5,655,354
7.75%, 11/15/2021 (Prerefunded 11/15/2001) 1,395,000 (c) 1,493,013
7.25%, 11/15/2023 3,985,000 4,148,385
7.25%, 11/15/2023 (Prerefunded 11/15/2002) 1,200,000 (c) 1,294,824
8.00%, 11/15/2025 3,890,000 4,050,579
8.00%, 11/15/2025 (Prerefunded 11/15/2001) 1,360,000 (c) 1,435,684
E-470 Public Highway Authority, Revenue
Zero Coupon, 9/1/2022 (Insured; MBIA) 11,000,000 2,735,370
Lakewood, MFHR, Mortgage
6.70%, 10/1/2036 (Insured; FHA) 5,000,000 5,143,050
FLORIDA--6.6%
Florida Board of Education:
4.50%, 6/1/2018 2,795,000 2,299,726
4.50%, 6/1/2019 3,960,000 3,233,974
Jacksonville Electric Authority, Water and Sewer System
Revenue 5.375%, 10/1/2029 3,850,000 3,462,266
Palm Beach County, Solid Waste IDR (Osceola Power Ltd.
Partnership) 6.95%, 1/1/2022 3,000,000 (d) 1,620,000
Polk County Industrial Development Authority,
IDR 7.525%, 1/1/2015 13,840,000 14,221,430
City of Tampa, Solid Waste System Revenue
5.25%, 10/1/2016 4,265,000 3,950,584
The Fund 7
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--6.3%
City of Chicago 5.375%, 1/1/2034 (Insured; FGIC) 11,750,000 10,406,035
City of Chicago Board of Education, School Reform
Zero Coupon, 12/1/2026 (Insured; FGIC) 20,000,000 3,668,600
Illinois Health Facilities Authority, Health Hospital and Nursing
Home Revenue (Residential Centers Inc.)
(Residential Centers Inc.) 8.50%, 8/15/2016 5,475,000 5,738,512
Village of Romeoville 8.375%, 1/1/2010 7,495,000 7,951,895
INDIANA--1.0%
Indiana State Development Finance Authority, Revenue
(Inland Steel Facilities) 5.75%, 10/1/2011 5,000,000 4,307,350
KENTUCKY--6.5%
Kenton County Airport Board, Airport Revenue
(Special Facilities--Delta Airlines Project):
7.50%, 2/1/2012 11,550,000 11,879,175
7.125%, 2/1/2021 4,630,000 4,682,597
City of Mount Sterling, Revenue (Kentucky League of Cities
Funding Trust Lease Program) 6.10%, 3/1/2018 5,500,000 5,605,655
Pendleton County, Multi-County Lease Revenue (Kentucky
Association of Counties Leasing Trust Program)
6.40%, 3/1/2019 6,000,000 6,231,780
LOUISIANA--2.5%
Louisiana Public Facilities Authority, HR (Louisiana Association
of Independent Colleges and Universities Facilities
Loan Program) 7%, 12/1/2017 (Prerefunded 12/1/2002) 6,195,000 (c) 6,639,801
Parish of Saint James, SWDR (Freeport-McMoRan Partnership
Project) 7.70%, 10/1/2022 4,140,000 4,294,091
MARYLAND--1.4%
Maryland Community Development Administration Department
of Community Development 9.395% 4/1/2026 4,845,000 (a,b) 5,014,284
Montgomery County Housing Opportunities Commission,
MFMR 7.375%, 7/1/2032 1,225,000 1,239,026
MASSACHUSETTS--2.5%
Massachusetts Development Finance Agency, College and
University Revenue (Boston University) 6%, 5/15/2059 2,500,000 2,340,050
Massachusetts Port Authority, Special Project Revenue
(Harborside Hyatt Project) 10%, 3/1/2026 3,000,000 3,152,760
Massachusetts Water Resource Authority, Water Revenue
4%, 12/1/2018 (Insured; MBIA) 7,000,000 5,277,160
Principal
8
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN--8.9%
Dickinson County Healthcare System, HR 5.80%, 11/1/2024 5,000,000 3,956,900
Michigan Hospital Finance Authority, HR
(Genesys Health System):
8.10%, 10/1/2013 (Prerefunded; 10/1/2005) 2,000,000 (c) 2,321,080
8.125%, 10/1/2021 (Prerefunded 10/1/2005) 4,910,000 (c) 5,703,898
7.50%, 10/1/2027 (Prerefunded 10/1/2005) 8,000,000 (c) 8,937,440
Michigan Strategic Fund, SWDR (Genesee Power Station
Project) 7.50%, 1/1/2021 7,000,000 7,196,070
Romulus Economic Development Corp., Economic Development
Revenue (HIR Limited Partnership Project)
7%, 11/1/2015 (Surety Bond; ITT Lyndon Property Co. Inc.) 5,000,000 5,489,400
Wayne Charter County, Special Airport Facilities Revenue
(Northwest Airlines Inc.) 6.75%, 12/1/2015 5,605,000 5,563,467
MINNESOTA--2.4%
Minneapolis and Saint Paul Metropolitan Airports Commission,
Airport Revenue 5%, 1/1/2030 (Insured; AMBAC) 5,000,000 4,239,000
Washington County Housing and Redevelopment Authority,
Hospital Facility Revenue (Healtheast Project)
5.50%, 11/15/2027 (Insured; ACA) 7,000,000 6,146,560
MISSOURI--.3%
Missouri State Housing Development Commission, SFMR
6.30%, 9/1/2025 (Guaranteed; GNMA, FNMA) 1,500,000 1,500,210
NEW HAMPSHIRE--.7%
New Hampshire Housing Finance Authority,
Single Family Residential Mortgage:
7.75%, 7/1/2023 695,000 717,824
7.70%, 7/1/2029 2,175,000 2,220,218
NEW YORK--5.7%
New York City Transitional Finance Authority, Revenue
4.75%, 5/1/2023 3,000,000 2,463,840
New York State Dormitory Authority, Revenue:
(Mount Sinai School of Medicine)
5.15%, 7/1/2024 (Insured; MBIA) 4,000,000 3,537,160
(State University Educational Facilities) 7.50%, 5/15/2013 2,500,000 2,927,450
New York State Local Government Assistance Corp., Sales
Tax Revenue 5.25%, 4/1/2016 (Insured; AMBAC) 6,410,000 6,111,743
Triborough Bridge and Tunnel Authority, Highway Toll Revenues
5.50%, 1/1/2017 (Insured; MBIA) 10,000,000 9,856,800
The Fund 9
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA--7.5%
Charlotte, Special Facilities, Airport and Marina
Revenue (Charlotte--Douglas International Airport)
5.60%, 7/1/2027 10,480,000 8,350,988
State of North Carolina, Public School Building 4.60%, 4/1/2016 4,600,000 3,981,760
North Carolina Medical Care Commission, Revenue
(North Carolina Housing Foundation Inc.)
6.625%, 8/15/2030 (Insured; ACA) 2,565,000 (e) 2,569,207
North Carolina Eastern Municipal Power Agency, Power
System Revenue:
6%, 1/1/2014 3,000,000 2,906,640
5.375%, 1/1/2024 9,200,000 8,265,832
5.75%, 1/1/2024 2,000,000 1,772,980
6.75%, 1/1/2026 5,000,000 5,049,100
NORTH DAKOTA--1.2%
North Dakota Housing Finance Agency, SFMR:
7.30%, 7/1/2024 2,525,000 2,580,222
7.75%, 7/1/2024 (Insured; MBIA) 2,505,000 2,578,547
OHIO--5.0%
Cuyahoga County, HR (Metrohealth Systems Project)
6.15%, 2/15/2029 6,825,000 6,206,655
State of Ohio, SWDR (USG Corp. Project) 5.60%, 8/1/2032 4,000,000 3,392,880
Ohio Housing Finance Agency, Residential Mortgage
Revenue (Mortgage Backed Securities Program)
6.25%, 9/1/2020 (Guaranteed; GNMA) 5,000,000 5,028,400
Ohio Water Development Authority, Pollution Control Facilities
Revenue (Cleveland Electric) 6.10%, 8/1/2020 8,400,000 7,488,516
OKLAHOMA--1.8%
McGee Creek Authority, Water Revenue
6%, 1/1/2013 (Insured; MBIA) 6,025,000 6,324,804
Oklahoma Industries Authority, Health System Revenue
(Integris Health Obligated Group)
5.75%, 8/15/2029 1,750,000 1,658,632
PENNSYLVANIA--.9%
Lehigh County General Purpose Authority, Revenue (Wiley
House) 9.50%, 11/1/2016 (Prerefunded 11/1/2001) 3,500,000 (c) 3,838,730
RHODE ISLAND--2.4%
Rhode Island Housing and Mortgage Finance Corp.:
(Homeownership E-1) 7.55%, 10/1/2022 4,305,000 4,436,561
(Homeownership Opportunity) 5.85%, 10/1/2025 6,495,000 6,088,023
10
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
TEXAS--8.0%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc. Project)
7%, 12/1/2011 (Guaranteed; AMR Corp.) 10,000,000 10,531,400
Dallas--Fort Worth International Airport Facility Improvement
Corp., Revenue (Delta Airlines Inc.)
7.125%, 11/1/2026 5,000,000 5,027,750
Gulf Coast Waste Disposal Authority, SWDR
(Champion International Corp. Project):
7.25%, 4/1/2017 2,810,000 2,908,968
7.25%, 4/1/2017 (Prerefunded 4/1/2002) 1,925,000 (c) 2,049,451
Houston:
Airport System Revenue, Special Facilities
(Continental Airlines Project) 5.70%, 7/15/2029 5,000,000 4,047,150
Water and Sewer System Revenue
5.25%, 12/1/2025 (Insured; FGIC) 8,630,000 7,626,504
Tomball Hospital Authority, Health Hospital and Nursing Home
Revenue (Tomball Regional Hospital) 6%, 7/1/2025 3,750,000 3,194,100
UTAH--.9%
Carbon County, SWDR (Sunnyside Cogeneration Project):
7.10%, 8/15/2023 4,055,000 3,923,375
Zero Coupon, 8/15/2024 1,235,000 199,885
WASHINGTON--4.8%
Chelan County Public Utility District Number 001, Consolidated
Revenue (Chelan Hydroelectric) 7.50%, 7/1/2011 5,655,000 6,486,737
Washington Housing Finance Commission, Nonprofit Housing
Revenue (Seattle University Auxiliary Services Project)
5.30%, 7/1/2031 (LOC; Bank of America) 3,070,000 2,593,628
Washington Public Power Supply System, Revenue (Nuclear
Project Number 3) 7.125%, 7/1/2016 (Insured; MBIA) 10,425,000 11,872,094
WYOMING--1.2%
Wyoming Community Development Authority, Housing Revenue
6.25%, 6/1/2027 2,620,000 2,616,280
Wyoming Student Loan Corp., Student Loan Revenue
6.25%, 6/1/2029 2,500,000 2,500,700
U.S. RELATED--1.0%
Puerto Rico Electric Power Authority, Power Revenue
4.50%, 7/1/2018 (Insured; MBIA) 5,000,000 4,179,700
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $420,031,082) 412,986,912
The Fund 11
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM MUNICIPAL INVESTMENTS--2.4% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
IDAHO--.4%
Idaho Health Facilities Authority, Revenue, VRDN
(Saint Luke's Medical Center Project)
3.85% (LOC; Bayerische Landesbank) 1,920,000 (f) 1,920,000
IOWA--1.1%
Iowa Finance Authority, SWDR, VRDN
(Cedar River Paper Co. Project)
3.95% (LOC; Union Bank of Switzerland) 5,000,000 (f) 5,000,000
LOUISIANA--.4%
Calcasieu Parish Inc. Industrial Development Board,
Environmental Revenue, VRDN (Citgo Petroleum Corp.)
3.95% (LOC; Banque Nationale Paris) 1,700,000 (f) 1,700,000
UTAH--.5%
Emery County, PCR, VRDN (Pacificorp Project)
3.80% (SBPA; Bank of Nova Scotia Trust Co.) 2,000,000 (f) 2,000,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $10,620,000) 10,620,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $430,651,082) 96.5% 423,606,912
CASH AND RECEIVABLES (NET) 3.5% 15,220,169
NET ASSETS 100.0% 438,827,081
12
Summary of Abbreviations
ACA American Capital Access MFHR Multi-Family
AMBAC American Municipal Bond Housing Revenue
Assurance Corporation MFMR Multi-Family
FHA Federal Housing Administration Mortgage Revenue
FGIC Financial Guaranty PCR Pollution Control Revenue
Insurance Company SBPA Standby Bond
FNMA Federal National Purchase Agreement
Mortgage Association SFMR Single Family
GNMA Government National Mortgage Revenue
Mortgage Association SWDR Solid Waste
HR Hospital Revenue Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate
LOC Letter of Credit Demand Notes
MBIA Municipal Bond Investors
Assurance Insurance Corporation
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 34.3
AA Aa AA 14.5
A A A 9.1
BBB Baa BBB 25.2
BB Ba BB 2.7
B B B 1.0
F1 Mig1 SP1 2.5
Not Rated (g) Not Rated (g) Not Rated (g) 10.7
100.0
(A) INVERSE FLOATER SECURITY-THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(B) 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 FEBRUARY 29,
2000, THESE SECURITIES AMOUNTED TO $12,065,665 OR 2.7% OF NET ASSETS.
(C) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND
INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE
EARLIEST REFUNDING DATE.
(D) NON-INCOME ACCRUING SECURITY.
(E) PURCHASED ON A DELAYED DELIVERY BASIS.
(F) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST-SUBJECT TO PERIODIC
CHANGE.
(G) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE
RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 13
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 430,651,082 423,606,912
Cash 606,711
Receivable for investment securities sold 12,544,358
Interest receivable 6,583,330
Prepaid expenses 13,362
443,354,673
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 294,600
Due to Distributor 15,544
Payable for investment securities purchased 4,054,178
Payable for shares of Common Stock redeemed 42
Accrued expenses 163,228
4,527,592
- --------------------------------------------------------------------------------
NET ASSETS ($) 438,827,081
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 464,140,953
Accumulated net realized gain (loss) on investments (18,269,702)
Accumulated net unrealized appreciation (depreciation)
on investmentst--Note 4 (7,044,170)
- --------------------------------------------------------------------------------
NET ASSETS ($) 438,827,081
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(150 million shares of $.001 par value Common Stock authorized) 33,687,373
NET ASSET VALUE, offering and redemption price per share--Note 3(d) ($) 13.03
SEE NOTES TO FINANCIAL STATEMENTS.
14
STATEMENT OF OPERATIONS
Year Ended February 29, 2000
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 31,481,342
EXPENSES:
Management fee--Note 3(a) 2,808,786
Shareholder servicing costs--Note 3(b) 1,405,538
Custodian fees 46,179
Directors' fees and expenses--Note 3(c) 42,878
Prospectus and shareholders' reports--Note 3(b) 39,371
Professional fees 39,001
Registration fees 38,267
Loan commitment fees--Note 2 4,216
Miscellaneous 28,637
TOTAL EXPENSES 4,452,873
INVESTMENT INCOME--NET 27,028,469
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (18,324,025)
Net unrealized appreciation (depreciation) on investments (34,848,198)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (53,172,223)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (26,143,754)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 15
STATEMENT OF CHANGES IN NET ASSETS
Year Ended
----------------------------------------
February 29, 2000 February 28, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 27,028,469 31,888,308
Net realized gain (loss) on investments (18,324,025) 9,380,080
Net unrealized appreciation (depreciation)
on investments (34,848,198) (12,086,075)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (26,143,754) 29,182,313
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (27,197,310) (31,810,608)
Net realized gain on investments (4,690,240) (12,572,013)
TOTAL DIVIDENDS (31,887,550) (44,382,621)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 249,567,796 780,640,827
Dividends reinvested 22,212,897 31,599,382
Cost of shares redeemed (350,134,837) (875,342,703)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (78,354,144) (63,102,494)
TOTAL INCREASE (DECREASE) IN NET ASSETS (136,385,448) (78,302,802)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 575,212,529 653,515,331
END OF PERIOD 438,827,081 575,212,529
Undistributed investment income--net -- 168,841
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 17,395,556 52,769,098
Shares issued for dividends reinvested 1,623,846 2,136,104
Shares redeemed (24,802,975) (59,140,024)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (5,783,573) (4,234,822)
SEE NOTES TO FINANCIAL STATEMENTS.
16
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.
<TABLE>
Fiscal Year Ended February,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 14.57 14.95 14.53 15.00 14.45
Investment Operations:
Investment income--net .73 .74 .77 .78 .82
Net realized and unrealized
gain (loss) on investments (1.42) (.09) .44 (.21) .57
Total from Investment Operations (.69) .65 1.21 .57 1.39
Distributions:
Dividends from investment income--net (.73) (.74) (.77) (.78) (.82)
Dividends from net realized gain
on investments (.12) (.29) (.02) (.26) (.02)
Total Distributions (.85) (1.03) (.79) (1.04) (.84)
Net asset value, end of period 13.03 14.57 14.95 14.53 15.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (4.81) 4.47 8.52 4.04 9.79
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .87 .86 .87 .88 .88
Ratio of net investment income
to average net assets 5.29 5.04 5.23 5.40 5.50
Portfolio Turnover Rate 47.10 99.51 91.37 115.62 114.78
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 438,827 575,213 653,515 690,093 867,157
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 17
</TABLE>
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, as amended (the "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 (the "Manager") serves
as the fund's investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation.
Premier Mutual Fund Services, Inc. (the "Distributor") 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 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
18
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. Under the terms of the custody
agreement, the fund received net earnings credits of $2,450 during the period
ended February 29, 2000 based on available cash balances left on deposit. Income
earned under this arrangement is included in interest income.
(c) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net. Such dividends are paid monthly. Dividends
from net realized capital gain are normally declared and paid annually, but the
fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). To the extent that net realized capital gain can be offset by capital
loss carryovers, it is the policy of the fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the fund to continue to qualify as
a regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
The fund has an unused capital loss carryover of approximately $12,272,000
available for Federal income tax purposes to be applied against future net
securties profits, if any, realized subsequent to February 29, 2000. This amount
is calculated based on Federal income
The Fund 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
tax regulations which may differ from financial reporting in accordance with
generally accepted accounting principles. If not applied, the carryover expires
in fiscal 2008.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 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 at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
February 29, 2000, 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 .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 1-1/2% 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 29, 2000, 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
20
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 29, 2000, the fund was charged $1,029,429
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 29, 2000, the fund was charged $248,158 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) A .10% redemption fee is charged and retained by the fund on shares redeemed
within fifteen days following the date of issuance, including redemptions made
through the use of the fund' s exchange privilege. During the period ended
February 29, 2000, redemption fees retained by the fund amounted to $26,054.
The Fund 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended February 29, 2000, amounted to
$232,776,492 and $352,305,555, respectively.
At February 29, 2000, accumulated net unrealized depreciation on investments was
$7,044,170, consisting of $12,034,309 gross unrealized appreciation and
$19,078,479 gross unrealized depreciation.
At February 29, 2000, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
NOTE 5--Subsequent Event:
At a meeting of the fund's Board of Directors held on January 26, 2000, the
Board approved the termination of the fund's Distribution Agreement with Premier
Mutual Fund Services, Inc., and approved a new Distribution Agreement with
Dreyfus Service Corporation. The new Distribution Agreement with Dreyfus Service
Corporation became effective on March 22, 2000. In addition, the Board approved
amendments to the fund' s Rule 12b-1 Service Plan to provide for all payments
under the Plan to be made to Dreyfus Service Corporation. These amendments also
took effect on March 22, 2000.
22
REPORT OF 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 29, 2000, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of February 29, 2000 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 29, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated years, in conformity with accounting principles generally accepted
in the United States.
[ERNST & YOUNG LLP SIGNATURE LOGO]
New York, New York
April 3, 2000
The Fund 23
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby makes the following
designations regarding its fiscal year ended February 29, 2000:
--all the dividends paid from investment income-net are "exempt-interest
dividends" (not generally subject to regular Federal income tax), and
--the fund hereby designates $.1240 per share as a long-term capital gain
distribution paid on July 15, 1999.
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 2000 calendar year on Form 1099-DIV which
will be mailed by January 31, 2001.
24
For More Information
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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
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 [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 106AR002
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, INC.
2/28/90 10,000 10,000
2/28/91 10,922 10,904
2/29/92 12,013 12,250
2/28/93 13,666 14,226
2/28/94 14,423 15,008
2/28/95 14,694 15,019
2/29/96 16,318 16,494
2/28/97 17,217 17,161
2/28/98 18,791 18,623
2/28/99 19,947 19,456
2/29/00 19,530 18,521
*Source: Lipper Analytical Services, Inc.
