DREYFUS MUNICIPAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus Municipal
Bond Fund, Inc. For its annual reporting period ended August 31, 1996, your
Fund produced a total return, including bond price changes and interest
income, of 4.16%.* Income dividends of approximately $.690 per share, exempt
from Federal personal income taxes, were paid to shareholders.** This is
equivalent to an annualized tax-free distribution rate per share of 5.64%.***
THE ECONOMY
Recent reports indicating some moderation in the rate of economic growth,
low unemployment and benign inflation have so far deferred the
well-anticipated hiking of short-term interest rates by the Federal Reserve
Board's Open Market Committee (the "Fed"). Ever alert to signs of price
pressures that could rekindle inflation, the Central Bank left the Fed Funds
rate unchanged at 5.25% at the Fed's meeting on August 20. The Fed has not
raised short-term interest rates since February 1, 1995. Since then, monetary
policy has tended to lower the cost of short-term credit. Investors have
grown increasingly wary that, as the economy continues to expand, the Federal
Reserve would apply the monetary brakes to ward off higher levels of
inflation. Reports throughout the year of strong increases in new jobs and
the decline in the unemployment rate have been widely viewed as harbingers of
wage pressures that could lead to undesirable inflationary consequences. The
bond market has been particularly volatile in its anticipation of Federal
Reserve restraint - since January, long-term interest rates have risen a full
percentage point. Despite all this, inflation, both at the consumer and at
the production level, has remained subdued. The latest reports indicated that
both the Consumer and Producer Price Indices remained in the 3% range over
the past 12 months. Prices at earlier stages of the manufacturing process
fell over the past two months, lending credence to those who foresee a flat
inflation curve.
There has been some recent evidence that the economy may be reflecting
the effects of the rise in long-term interest rates earlier in the year.
Retail sales have slackened of late. In July, housing starts declined for the
third consecutive month and sales of existing homes also fell. On the
production side of the economy, latest reports on industrial output also
showed signs of moderation. In July, factory production rose only .1%, its
smallest monthly increase in four months. Despite these anecdotal signs of
slowing, several indicators of future economic activity remained positive.
The Index of Leading Economic Indicators has been on the rise since early
this year, and the Conference Board's Consumer Confidence Index reached a
six-year high in August. While rising consumer confidence is favorable for
business (and political incumbents), it could engender a conflict with the
efforts of the Federal Reserve Board to contain inflationary forces in the
economy. We remain alert to any indications that the economy may be entering
a phase of undue expansion.
MARKET ENVIRONMENT
The Municipal Bond Market has moved in concert with other fixed income
markets during a 12-month period in which market sentiment has swung between
euphoria and dejection many times. Critical to the markets' moods has been
the stream of constantly flowing data which reports on the health of our
economy.
To the extent that the day's reports reflect business growth which might
contain the seeds of an upsurge in the rate of inflation, the fixed income
markets customarily trade down; when the data indicate a slowing in the rate
of economic expansion, bond prices usually improve. In essence, the bond
market simply tries to anticipate what the direction of interest rates is
likely to be, and during periods in which the Fed itself is weighing whether
or not to tighten rates, price volatility in the marketplace can be quite
pronounced. We have been in exactly that phase for months, and the municipal
bond market, along with other capital markets, has experienced volatility in
prices. Compounding uncertainty over interest rates is the relatively low
volume (on an historical basis) of new issues entering the municipal
marketplace. That factor differentiates municipals from other fixed income
markets, and has supported their prices since the reduced supply has been met
with constant, if not increased, demand. The lack of new issues, along with
the retirement (via calls, refundings, and maturities) of billions of dollars
of bonds in each of the last three years, have worked to reduce the universe
of bonds in the marketplace, and that too, has contributed to volatility.
THE PORTFOLIO
New subscriptions into municipal bond funds were lackluster for the past
12 months: The various flat-tax proposals during the Presidential primary
campaigns discouraged many investors from adding to their municipal
positions, and the stock market, which seemed to be reaching new highs each
day, was a strong competitor for investors' dollars. As we altered our market
emphasis during the fiscal year to reflect changing market conditions, we had
to work within the context of the Fund's established portfolio, without the
benefit of new money which adds flexibility to portfolio management.
For the fiscal year ended August 31, 1996, the Fund's total return was
4.16%. In the Lipper General Municipal Debt Category, there were 228 funds of
various sizes and ages included in our competitive universe, and the average
return was 4.68%.+ In the first half of the year, we mistakenly became too
defensive, and that hurt our performance: We expected that the economic
expansion which was underway would move at a pace sufficiently fast to prompt
the Fed to tighten credit in order to thwart any increase in the rate of
inflation. As it turned out, the expansion continued, but without the
inflationary effects against which we had structured the portfolio, so the
Fed did not act. By the midpoint of the fiscal year, we had recognized that a
less defensively structured portfolio was called for, so we seized the buying
opportunities that occurred and adjusted the portfolio for an economy
experiencing moderate growth accompanied by a relatively flat inflation rate.
The change paid off: In the last six months of the fiscal year, when all bond
prices retreated, your Fund had a total return of -.05%, while the average of
the 237 competitor funds was -.29%.++
We continue to maintain a positive outlook regarding municipal bonds. The
economic data continue to give mixed signals, but they do not indicate that
inflationary pressures are excessive: Nonetheless, the Fed could justifiably
argue that an ounce of prevention is prudent, and raise the Fed Funds Rate at
any time. We think that the market already reflects the likelihood of a
modest increase, so that long bonds should not be adversely affected if such
an increase occurs; indeed, the bond market may consider a rate increase to
be beneficial longer-term. Be assured that our portfolio policy leans to the
cautious side while these uncertainties are being ironed out.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
September 12, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** Some income may be subject to the Federal Alternative Minimum Tax (AMT)
for certain shareholders.
*** Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the net asset
value per share at the end of the period.
+ SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment
of dividends and any capital gain distributions.
++Idem.
DREYFUS MUNICIPAL BOND FUND, INC. AUGUST 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS MUNICIPAL BOND
FUND, INC. AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
[Exhibit A:
Dollars
$21,128
Lehman Brothers
Municipal Bond Index*
$19,445
Dreyfus
Municipal Bond Fund
*Source: Lehman Brothers]
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
<S> <C> <C>
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED
AUGUST 31, 1996 AUGUST 31, 1996 AUGUST 31, 1996
___________ ___________ _________
4.16% 6.46% 6.88%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Municipal Bond
Fund, Inc. on 8/31/86 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>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-93.3% AMOUNT VALUE
________ ________
<S> <C> <C>
ALABAMA-.9%
Alabama Housing Finance Authority, SFMR
6.45%, 10/1/2025........................................................ $ 7,970,000 $8,122,466
Industrial Development Board of the Town of Courtland, SWDR
(Champion International Corp. Project)
7%, 11/1/2022........................................................... 8,100,000 8,379,531
West Jefferson Industrial Development Board, PCR, Refunding
(Alabama Power Co.- Miller Plant) 6.05%, 5/1/2023 (Insured; MBIA)....... 15,000,000 15,088,950
ALASKA-1.6%
Alaska Housing Finance Corp.:
(Collateralized Veterans Mortgage Program)
6.375%, 12/1/2027..................................................... 9,135,000 9,265,174
Refunding 5.875%, 12/1/2030 (Insured; MBIA)............................. 12,475,000 12,054,842
Anchorage, Electric Utility Revenue, Refunding
6.50%, 12/1/2015 (Insured; MBIA)........................................ 6,135,000 6,699,788
Valdez, Marine Terminal Revenue, Refunding:
(BP Pipeline Inc. Project) 5.50%, 10/1/2028............................. 10,000,000 9,231,200
(Mobil Alaska Pipeline) 5.75%, 11/1/2028................................ 22,000,000 21,082,380
CALIFORNIA-4.7%
Airport Commission City and County of San Francisco
(San Francisco International Airport) 6.50%, 5/1/2015 (Insured; FGIC)... 10,100,000 10,605,202
California Department Water Resource, Water System Revenue (Central Valley
Project)
5%, 12/1/2022........................................................... 10,000,000 8,787,000
California Higher Education Loan Authority, Inc.,
Student Loan Revenue, Refunding 6.50%, 6/1/2005......................... 19,250,000 20,387,290
Duarte, COP (City of Hope Medical Center)
6.25%, 4/1/2023......................................................... 26,000,000 25,480,260
Long Beach, Harbor Revenue 5.25%, 5/15/2025 (Insured; MBIA)................. 25,000,000 22,429,500
Orange County, Recovery COP, Refunding:
5.875%, 7/1/2019 (Insured; MBIA)........................................ 21,000,000 20,635,440
6%, 7/1/2026 (Insured; MBIA)............................................ 31,500,000 31,475,115
San Diego County, COP, Refunding (Interim Justice Facilities Project) 6.50%, 8/1/2007 9,805,000 10,359,571
State Public Works Board of the State of California, LR
(Various University of California Projects) 6.375%, 10/1/2019........... 5,000,000 5,149,550
University of California, HR (University of California - Davis Medical
Center)
5.75%, 7/1/2014 (Insured; AMBAC)........................................ 12,160,000 12,085,216
COLORADO-1.8%
Arapahoe County Capital Improvement Trust Fund, Highway Revenue (E-470
Project)
7%, 8/31/2026........................................................... 18,025,000 18,959,957
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
COLORADO (CONTINUED)
City and County of Denver, Airport Revenue:
7.25%, 11/15/2023....................................................... $ 25,765,000 $ 27,168,162
5.50%, 11/15/2025 (Insured; MBIA)....................................... 18,000,000 16,989,300
CONNECTICUT-1.1%
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
6.70%, 11/15/2012....................................................... 4,000,000 4,178,920
6.30%, 5/15/2024........................................................ 8,000,000 8,089,760
6.50%, 5/15/2027........................................................ 18,480,000 18,662,213
Connecticut Resource Recovery Authority
(American Fuel Co. Project) 6.45%, 11/15/2022........................... 7,325,000 7,520,724
DELAWARE-.5%
Delaware Economic Development Authority, Water Development Revenue
(Wilmington Suburban Water Corp. Project) 6.80%, 12/1/2023.............. 8,000,000 8,324,320
Delaware Housing Authority, Senior SFMR
6.45%, 1/1/2026......................................................... 8,835,000 8,909,391
DISTRICT OF COLUMBIA-1.9%
Metropolitan Washington Airports Authority, Airport System Revenue:
6.625%, 10/1/2012 (Insured; MBIA)....................................... 40,400,000 42,858,744
6.625%, 10/1/2019 (Insured; MBIA) (a)................................... 23,600,000 24,848,912
FLORIDA-4.4%
Brevard County Housing Finance Authority, SFMR 6.80%, 3/1/2028.............. 5,885,000 6,031,360
Collier County School Board, COP 5%, 2/15/2016 (Insured; FSA)............... 6,500,000 5,908,565
Dade County, Water and Sewer System Revenue
5.50%, 10/1/2025 (Insured; FGIC)........................................ 22,445,000 21,276,962
Florida Community Services Corp. Walton County, Water and Sewer Revenue
(South Walton County Regional Utility):
6.95%, 3/1/2012....................................................... 3,000,000 3,278,490
7%, 3/1/2018.......................................................... 3,500,000 3,770,200
Hillsborough County, Capital Improvement Non-Ad Valorem, Refunding Revenue
(County Center Project) 5.125%, 7/1/2022 (Insured; MBIA)................ 17,050,000 15,340,908
Lakeland, Electric and Water Revenue 5.625%, 10/1/2036...................... 18,825,000 17,879,985
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project) 6.70%, 2/15/2015.......... 23,400,000 20,218,302
(Osceola Power Limited Partnership) 6.95%, 1/1/2022..................... 33,800,000 29,589,196
Polk County Industrial Development Authority, IDR
(IMC Fertilizer) 7.525%, 1/1/2015....................................... 15,200,000 16,063,968
Saint Johns River Water Management District, Land Acquisition Revenue,
Refunding
5.125%, 7/1/2016 (Insured; FSA)......................................... 19,000,000 17,509,070
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
GEORGIA-.8%
Georgia Housing and Finance Authority:
Homeownership Mortgage
Zero Coupon, 12/1/2031................................................ $ 122,735,000 $ 9,553,692
Single Family Mortgage:
7.125%, 12/1/2026..................................................... 10,000,000 10,364,100
6.55%, 12/1/2027...................................................... 5,495,000 5,590,943
Georgia Residential Finance Authority, Single Family Insured Mortgage
8.30%, 12/1/2019........................................................ 2,000,000 2,099,440
IDAHO-.4%
Idaho Housing Agency:
Multi-Family Housing Refunding 6.70%, 7/1/2024.......................... 10,050,000 10,295,924
Single Family Mortgage 6.60%, 7/1/2027.................................. 4,365,000 4,446,276
ILLINOIS-8.1%
Bryant, PCR, Refunding (Central Illinois Light Co. Project) 5.90%, 8/1/2023. 11,000,000 10,831,700
Chicago:
Refunding 5.125%, 1/1/2016.............................................. 17,250,000 15,654,202
Wastewater Transmission Revenue, Refunding
5.125%, 1/1/2025 (Insured; FGIC)...................................... 23,600,000 20,873,728
Chicago Board of Education (Chicago School Reform)
6%, 12/1/2026 (Insured; MBIA)........................................... 9,425,000 9,321,513
Chicago O'Hare International Airport, Revenue:
Refunding 5%, 1/1/2008 (Insured; MBIA).................................. 12,475,000 11,968,265
Special Facilities (United Airlines Inc. Project):
8.50%, 5/1/2018....................................................... 6,500,000 7,160,140
8.85%, 5/1/2018....................................................... 15,125,000 17,182,454
Illinois, Refunding 5.25%, 12/1/2020 (Insured; FGIC)........................ 26,000,000 23,879,180
Illinois Development Finance Authority, Revenue:
(Community Rehabilitation Providers Facilities) 8.75%, 3/1/2010......... 18,720,000 19,936,426
Pollution Control, Refunding (Central Illinois Public Service Co.):
5.70%, 8/15/2026...................................................... 11,150,000 10,727,415
6.375%, 1/1/2028...................................................... 14,000,000 14,329,000
Illinois Educational Facilities Authority, Revenue
(Illinois Institute of Technology)
Refunding 6.875%, 12/1/2015............................................. 7,250,000 7,619,097
Illinois Health Facilities Authority, Revenue:
(Beverly Farm Foundation) 9.125%, 12/15/2015 (Prerefunded 12/15/2000) (b) 3,730,000 4,435,007
Refunding:
(Evangelical Hospitals) 6.50%, 4/15/2009 (Insured; FSA)............... 5,000,000 5,366,500
(Mercy Hospital and Medical Center) 7%, 1/1/2015...................... 7,500,000 7,721,775
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority, Revenue (continued):
Refunding (continued):
(Trinity Medical Center) 7%, 7/1/2012................................. $ 3,000,000 $ 3,282,030
Illinois Housing Development Authority:
Homeowner Mortgage Revenue:
6.70%, 8/1/2025....................................................... 4,980,000 5,099,122
6.625%, Subseries B-2, 8/1/2026....................................... 15,385,000 15,707,470
Multi-Family Housing (Lawndale Redevelopment Project) 6.90%, 12/1/2026.. 8,750,000 9,081,713
Multi-Family Program 6.75%, 9/1/2021.................................... 8,750,000 8,948,450
Section 8 Elderly Housing Revenue (Morningside North Development)
6.85%, 1/1/2021....................................................... 11,220,000 11,569,391
Peru, Electric System Revenue 5.75%, 5/1/2025 (Insured; FGIC)............... 6,750,000 6,533,190
Robbins (Resource Recovery Partners) 9.25%, 10/15/2014...................... 32,000,000 31,920,000
Solid Waste Agency of Northern Cook County, Contract Revenue, Refunding
5.50%, 5/1/2015 (Insured; MBIA)......................................... 9,000,000 8,445,150
INDIANA-5.9%
Allen County, COP, Refunding 6.50%, 11/1/2008............................... 5,000,000 5,371,650
Brownsburg School Building Corp., First Mortgage
6.10%, 2/1/2013 (Insured; FSA).......................................... 7,500,000 7,678,425
Carmel High School Building Corp., First Mortgage
5.25%, 1/15/2018 (Insured; MBIA)........................................ 6,525,000 6,016,833
Fort Wayne Hospital Authority, HR (Lutheran Hospital)
8%, 2/15/2003 (Prerefunded 2/15/1998) (b)............................... 7,000,000 7,493,150
Hamilton Southeastern Consolidated School Building Corp., First Mortgage
5.25%, 1/15/2017 (Insured; AMBAC)....................................... 5,000,000 4,620,050
Hammond Multi-School Building Corp., First Mortgage
7.10%, 1/15/2015 (Prerefunded 7/15/2001) (b)............................ 5,585,000 6,252,910
Indiana Transportation Finance Authority, Airport Facility LR
6.50%, 11/1/2007........................................................ 12,500,000 13,132,125
Indianapolis Airport Authority, Special Facility Revenue (United Airlines
Project)
6.50%, 11/15/2031....................................................... 31,510,000 31,298,883
Indianapolis Local Public Improvement Bond Bank:
Refunding 5%, 1/1/2017.................................................. 14,575,000 13,167,784
8.50%, 2/1/2018 (Prerefunded 2/1/1998) (b).............................. 73,000,000 78,558,950
IPS School Building Corp., First Mortgage 6.10%, 1/15/2020.................. 11,000,000 11,182,600
Logansport Multi - Purpose School Building Corp., First Mortgage Refunding
6%, 1/1/2009............................................................ 7,645,000 7,848,357
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
INDIANA (CONTINUED)
New Prairie United School Building Corp., First Mortgage Refunding
5.50%, 7/5/2015 (Insured; FSA).......................................... $ 5,240,000 $ 5,005,929
Westfield High School 1995 Building Corp., First Mortgage
5.80%, 7/15/2018 (Insured; AMBAC)....................................... 10,000,000 9,668,800
IOWA-.4%
Iowa Finance Authority, SFMR
(Mortgage Backed Securities Program)
6.65%, 7/1/2028......................................................... 12,070,000 12,340,006
KANSAS-1.5%
Wichita, HR 6.464%, 10/1/2022 (Insured; MBIA)............................... 51,300,000 53,468,451
KENTUCKY-2.4%
City of Ashland, Sewage and Solid Waste Revenue
(Ashland Inc. Project) 7.125%, 2/1/2022................................. 13,170,000 13,848,123
Kenton County Airport Board, Airport Revenue:
(Greater Cincinnati International Airport)
8.25%, 3/1/2015....................................................... 10,945,000 11,677,658
Special Facilities (Delta Airlines Project):
7.125%, 2/1/2021...................................................... 8,455,000 8,780,179
6.125%, 2/1/2022...................................................... 20,000,000 19,206,000
Mount Sterling, LR (Kentucky League Cities Funding)
6.10%, 3/1/2018......................................................... 7,955,000 7,997,718
Pendleton County, Multi-County LR
(Kentucky Associates Counties Leasing Trust Program) 6.50%, 3/1/2019.... 21,000,000 21,740,880
LOUISIANA-1.1%
Parish of Saint Charles, PCR (Louisiana Power and Lighting Co. Project)
8.25%, 6/1/2014......................................................... 7,500,000 8,176,650
Parish of West Feliciana, PCR:
(Gulf States Utilities Co. Project) 9%, 5/1/2015........................ 13,500,000 15,047,775
(Gulf States Utilities-I) 7.70%, 12/1/2014.............................. 14,000,000 15,049,860
MAINE-.9%
Maine Financial Authority, Solid Waste Revenue
Recycling Facilities (Great Northern Paper, Inc. Project-Bowater Inc.
Obligor)
7.75%, 10/1/2022........................................................ 8,165,000 8,830,529
Maine Housing Authority, Mortgage Purchase
6.875%, 11/15/2023...................................................... 14,000,000 14,414,400
Skowhegan, SWDR (S.D. Warren Co. Project) 8.40%, 10/1/2015.................. 7,700,000 8,631,546
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
MARYLAND-2.2%
Calvert County, PCR, Refunding (Baltimore Gas and Electric Co. Project)
5.55%, 7/15/2014........................................................ $ 8,000,000 $ 7,800,400
Community Development Administration,
Department of Housing and Community Development State of Maryland,
Single Family Program Bonds:
6.80%, 4/1/2024....................................................... 33,690,000 34,446,677
6.55%, 4/1/2026....................................................... 9,190,000 9,386,206
6.75%, 4/1/2026....................................................... 19,990,000 20,541,724
Northeast Waste Disposal Authority, Solid Waste Revenue
(Montgomery County Resource Recovery Project) 6.30%, 7/1/2016........... 7,500,000 7,453,050
MASSACHUSETTS-2.1%
Massachusetts Bay Transportation Authority, General Transportation
5.375%, 3/1/2020 (Insured; AMBAC)....................................... 17,880,000 16,835,093
Massachusetts Housing Finance Agency, Revenue:
Housing:
6.65%, 7/1/2019 (Insured; AMBAC)...................................... 7,275,000 7,469,461
6.50%, 7/1/2025 (Insured; AMBAC)...................................... 4,140,000 4,233,233
6.60%, 1/1/2037 (Insured; AMBAC)...................................... 7,100,000 7,275,867
Single Family Housing:
7.125%, 6/1/2025...................................................... 26,975,000 28,051,842
6.65%, 12/1/2027...................................................... 7,200,000 7,393,752
Massachusetts Industrial Finance Agency, Revenue
Museum (Norman Rockwell Stockbridge) 8.125%, 7/1/2011................... 3,055,000 3,207,506
MICHIGAN-2.4%
Charter County of Wayne, Special Airport Facilities Revenue, Refunding
(Northwest Airlines, Inc., Facilities) 6.75%, 12/1/2015................. 8,800,000 8,867,760
Detroit, Sewage Disposal System Revenue 5.25%, 7/1/2015 (Insured; MBIA)..... 8,700,000 8,131,716
East Grand Rapids Public School District 5%, 5/1/2020 ...................... 8,675,000 7,751,112
The Economic Development Corp. of the County of Gratiot,
Limited Obligation EDR
(Danly Die Set Project) 7.625%, 4/1/2007................................ 3,200,000 3,328,608
Michigan Hospital Finance Authority, Revenue:
Hospital Refunding:
(Genesys Health System Obligated Group):
8.125%, 10/1/2021................................................. 15,000,000 16,417,800
7.50%, 10/1/2027.................................................. 15,300,000 15,942,141
(Henry Ford Health System)
5.25%, 11/15/2025................................................. 10,000,000 8,965,100
(Metropolitan Hospital) 8.125%, 7/1/2018 (Prerefunded 7/1/1999) (b)..... 5,000,000 5,607,150
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
MICHIGAN (CONTINUED)
Western Townships Utilities Authority, Sewer Disposal System
(Limited Tax G.O.) 8.125%, 1/1/2009..................................... $ 8,765,000 $ 9,568,049
MINNESOTA-1.7%
Minneapolis, HR, Refunding (Lifespan Inc. Issue)
9.125%, 12/1/2014 (Prerefunded 12/1/1997) (b)........................... 4,000,000 4,320,600
Minnesota Housing Finance Agency, Single Family Mortgage:
6.90%, 7/1/2022......................................................... 7,205,000 7,449,322
6.50%, 7/1/2024......................................................... 15,870,000 16,130,744
6.45%, 7/1/2025......................................................... 30,210,000 30,570,103
MISSOURI-1.0%
Kansas City Municipal Assistance Corp., Leasehold Refunding Revenue
(H. Roe Bartle Convention Center Project):
5.125%, 4/15/2015 (Insured; MBIA) .................................... 11,055,000 10,348,585
5%, 4/15/2020 (Insured; MBIA)......................................... 5,500,000 4,960,395
Missouri Higher Education Loan Authority, Student Loan Revenue
6.75%, 2/15/2009........................................................ 11,500,000 11,827,060
Sikeston, Electric Revenue, Refunding
5%, 6/1/2022 (Insured; MBIA)............................................ 7,745,000 6,897,387
MONTANA-.2%
Montana Board of Housing (Single Family Program)
6.35%, 12/1/2021........................................................ 7,255,000 7,277,273
NEBRASKA-.6%
Omaha Public Power District, Electric Revenue 5.50%, 2/1/2014............... 20,000,000 19,723,600
NEVADA-1.7%
Clark County, School District 5.50%, 6/15/2016 (Insured; FGIC).............. 28,475,000 27,232,636
Nevada, Refunding (Colorado River Commission)
5.25%, 7/1/2020......................................................... 10,000,000 9,348,600
Nevada Housing Division (Single Family Program)
6.80%, 4/1/2027......................................................... 9,960,000 10,219,956
Washoe County:
Gas Facilities Revenue (Sierra Pacific Power Co. Project)
6.70%, 11/1/2032 (Insured; MBIA)...................................... 10,000,000 10,603,400
Gas and Water Facilities Revenue, Refunding (Sierra Pacific)
6.30%, 12/1/2014 (Insured; AMBAC)..................................... 4,375,000 4,559,406
NEW HAMPSHIRE-4.5%
Business Finance Authority of the State of New Hampshire,
State Guaranteed Airport Revenue (Manchester Airport Project):
6.50%, 1/1/2019....................................................... 12,600,000 13,110,552
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW HAMPSHIRE (CONTINUED)
Business Finance Authority of the State of New Hampshire,
State Guaranteed Airport Revenue (Manchester Airport Project)
(continued):
6.375%, 1/1/2022...................................................... $ 8,650,000 $ 8,903,531
New Hampshire Housing Finance Authority:
Multi-Family Housing:
7.55%, 7/1/2013....................................................... 4,205,000 4,606,872
(Mariners Village Project)
6.60%, 1/1/2038 (Insured; FHA).................................... 7,365,000 7,474,297
Single Family Mortgage:
7.25%, 1/1/2016....................................................... 3,430,000 3,610,452
6.55%, 7/1/2026....................................................... 22,190,000 22,634,688
Single Family Residential Mortgage:
7.10%, 1/1/2023....................................................... 24,860,000 25,947,874
7.75%, 7/1/2023....................................................... 16,930,000 17,785,981
6.85%, 1/1/2025....................................................... 10,515,000 10,772,617
6.95%, 1/1/2026....................................................... 10,210,000 10,553,771
New Hampshire Industrial Development Authority, Revenue
(Pollution Control Public Service Co. Project):
7.65%, Series A, 5/1/2021............................................. 21,450,000 21,766,173
7.65%, Series C, 5/1/2021............................................. 13,550,000 13,749,727
NEW JERSEY-3.6%
Howell Township Municipal Utilities Authority, Revenue
8.60%, 1/1/2014 (Prerefunded 7/1/1998) (b).............................. 4,000,000 4,367,800
New Jersey Economic Development Authority, PCR
(Public Service Electric and Gas Co. Project)
6.40%, 5/1/2032 (Insured; MBIA)......................................... 32,040,000 33,264,248
New Jersey Educational Facilities Authority, Revenue:
(Trenton State College Issue):
5.10%, 7/1/2021 (Insured; MBIA)....................................... 11,000,000 10,039,590
5.125%, 7/1/2024 (Insured; MBIA)...................................... 17,000,000 15,499,240
(University of Medicine and Dentistry of New Jersey Issue)
5.25%, 12/1/2021 (Insured; AMBAC)..................................... 15,000,000 13,958,850
New Jersey Housing and Mortgage Finance Agency, Revenue:
6%, 11/1/2002........................................................... 5,000,000 5,136,750
6.45%, 11/1/2007........................................................ 15,260,000 15,866,432
New Jersey Transportation Trust Fund Authority, Refunding
(Transportation System) 5.25%, 6/15/2014 (Insured; MBIA)................ 18,500,000 17,604,970
New Jersey Wastewater Treatment Trust, Insured Loan Revenue
9%, 9/1/2007 (Prerefunded 9/1/1997) (b)................................. 6,000,000 6,410,040
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW JERSEY (CONTINUED)
Pollution Control Financing Authority of Salem County, PCR, Refunding
(Public Service Electric and Gas Co. Project)
6.25%, 6/1/2031 (Insured; MBIA)......................................... $ 6,500,000 $ 6,731,985
NEW MEXICO-.7%
Albuquerque, HR, Refunding (Presbyterian Health Care Services)
6.375%, 8/1/2007 (Insured; MBIA)........................................ 4,500,000 4,848,165
New Mexico Educational Assistance Foundation, Student Loan Revenue
7.45%, 3/1/2010......................................................... 12,045,000 12,584,496
New Mexico Mortgage Financing Authority
6.80%, 1/1/2026......................................................... 5,500,000 5,811,630
NEW YORK-10.9%
New York City:
7.50%, 2/1/2003......................................................... 9,000,000 9,871,650
5.90%, 2/1/2005......................................................... 11,815,000 11,744,819
8.25%, 6/1/2006......................................................... 2,750,000 3,278,990
5.60%, 8/15/2006........................................................ 23,100,000 22,263,318
5.70%, 8/15/2007........................................................ 13,445,000 12,915,670
7.25%, 8/15/2007........................................................ 13,790,000 15,086,122
6.25%, 8/1/2008......................................................... 10,000,000 9,991,000
6.375%, 8/15/2011....................................................... 31,285,000 31,320,352
5.75%, 2/1/2014......................................................... 15,000,000 13,999,050
5.75%, 2/1/2015......................................................... 12,280,000 11,366,736
5.75%, 2/1/2017......................................................... 20,000,000 18,411,400
5.875%, 3/15/2018....................................................... 20,000,000 18,593,800
5.875%, 2/15/2019....................................................... 23,715,000 21,989,259
5.75%, 2/1/2020......................................................... 9,580,000 8,726,518
6%, 2/15/2025........................................................... 23,375,000 21,824,536
New York City Municipal Water Finance Authority, Water and Sewer System
Revenue:
5.625%, 6/15/2011....................................................... 26,000,000 25,260,820
5.75%, 6/15/2026........................................................ 17,500,000 17,144,050
5.875%, 6/15/2026....................................................... 13,000,000 12,538,760
New York State Dormitory Authority, Revenue:
(City University) 7.50%, 7/1/2010....................................... 10,000,000 11,482,200
Court Facilities Lease 5.70%, 5/15/2022................................. 10,000,000 9,210,100
New York State Energy, Research and Development Authority,
Electric Facilities Revenue
(Con Edison Co. Project) 7.50%, 1/1/2026................................ 16,970,000 18,252,084
New York State Mortgage Agency, Revenue (Homeowner Mortgage)
6.65%, 10/1/2025........................................................ 22,225,000 22,869,525
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW YORK (CONTINUED)
New York State Urban Development Corp., Revenue,
(Correctional Capital Facilities):
5.375%, 1/1/2025...................................................... $ 32,550,000 $ 28,767,365
5.50%, 1/1/2025 (Insured; MBIA)....................................... 9,210,000 8,711,002
NORTH CAROLINA-.7%
North Carolina Housing Finance Agency, Single Family Revenue
6.50%, 9/1/2026......................................................... 6,125,000 6,227,471
Pitt County, Revenue (Pitt County Memorial Hospital)
6.90%, 12/1/2021 (Prerefunded 12/1/2001) (b)............................ 12,000,000 13,423,920
Winston Salem, COP 6.90%, 6/1/2011 (Prerefunded 6/1/2001) (b)............... 5,245,000 5,806,687
NORTH DAKOTA-.2%
North Dakota Housing Finance Agency
(Housing Mortgage Finance Program) 6.75%, 7/1/2025...................... 6,375,000 6,530,614
OHIO-1.1%
Cleveland, Waterworks Revenue, Refunding and Improvement
5.75%, 1/1/2026 (Insured; MBIA)......................................... 18,285,000 17,840,675
Cuyahoga County, HR (Meridia Health System) 7%, 8/15/2023................... 7,000,000 7,461,090
Franklin County, HR (Holy Cross Health System Corp.)
5.875%, 6/1/2021........................................................ 9,000,000 8,758,890
Ohio Air Quality Development Authority, PCR (Ohio Edison)
5.625%, 11/15/2029 (Insured; AMBAC)..................................... 6,750,000 6,400,620
OKLAHOMA-.8%
Claremore Industrial and Redevelopment Authority, EDR
(Yuba Project) 8.375%, 7/1/2011......................................... 7,500,000 7,918,200
Southern Oklahoma Memorial Hospital Authority, HR 6.60%, 12/1/2012.......... 5,725,000 5,853,813
Tulsa Municipal Airport Trust, Revenue
(AMR Corp.) 7.60%, 12/1/2030............................................ 14,390,000 15,346,216
PENNSYLVANIA-3.8%
Allegheny County Hospital Development Authority, Revenue (Health Center - University
of Pittsburgh Medical Center System) 5.375%, 12/1/2025 (Insured; MBIA).. 22,280,000 20,642,643
Delaware County Industrial Development Authority, Water Facilities Revenue
(Philadelphia Suburban Water) 6.35%, 8/15/2025 (Insured; FGIC).......... 10,000,000 10,306,100
Lehigh County Industrial Development Authority, PCR, Refunding
(Pennsylvania Power and Light Co. Project) 5.50%, 2/15/2027 (Insured; MBIA) 8,805,000 8,327,153
Pennsylvania:
5%, 11/15/2014 (Insured; AMBAC)......................................... 8,875,000 8,133,671
5%, 11/15/2015 (Insured; AMBAC)......................................... 8,875,000 8,063,026
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
PENNSYLVANIA (CONTINUED)
Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue (MacMillan Ltd. Partnership Project)
7.60%, 12/1/2020........................................................ $ 4,500,000 $ 4,947,840
Pennsylvania Higher Educational Facilities Authority,
Health Services Revenue, Refunding (Allegheny Delaware Valley
Obligation):
5.40%, 11/15/2007 (Insured; MBIA)..................................... 5,000,000 5,030,900
5.60%, 11/15/2009 (Insured; MBIA)..................................... 9,475,000 9,540,093
Philadelphia:
5%, 5/15/2020 (Insured; MBIA)........................................... 7,650,000 6,843,614
Water and Wastewater Revenue, Refunding
5.25%, 6/15/2023 (Insured; MBIA)...................................... 6,000,000 5,436,600
Pittsburgh, Refunding 5.125%, 3/1/2009 (Insured; FGIC)...................... 29,655,000 28,441,814
Quakertown General Authority, Revenue (Community Mental Health/Retardation)
8.875%, 11/1/2010....................................................... 6,420,000 6,976,421
Ridley Park Hospital Authority, Revenue (Taylor Hospital)
8.625%, 12/1/2020 (Prerefunded 12/1/2000) (b)........................... 10,000,000 11,679,100
RHODE ISLAND-1.6%
Rhode Island Health and Educational Building Corp., Revenue:
(Johnson and Wales University) 8.375%, 4/1/2020 (Prerefunded 4/1/2000) (b) 11,000,000 12,516,350
(Landmark Medical Center) 5.60%, 10/1/2012 (Insured; FSA)............... 5,000,000 4,911,400
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity):
6.95%, 4/1/2022....................................................... 9,250,000 9,547,943
6.60%, 10/1/2025...................................................... 10,270,000 10,441,201
6.50%, 4/1/2027....................................................... 11,835,000 12,064,836
6.85%, 4/1/2027....................................................... 5,615,000 5,839,207
SOUTH CAROLINA-1.0%
Richland County, Solid Waste Disposal Facilities Revenue
(Union Camp Corp. Project) 7.125%, 9/1/2021............................. 6,250,000 6,666,750
South Carolina Housing Finance and Development Authority,
Mortgage Revenue:
6.55%, 7/1/2015....................................................... 3,950,000 4,046,617
6.75%, 7/1/2026....................................................... 7,000,000 7,170,870
6.70%, 7/1/2027....................................................... 8,000,000 8,175,760
Spartanburg County, Hospital Facilities Improvement Revenue, Refunding
(Mary Black Memorial Project) 8.25%, 10/1/2008 (Prerefunded 10/1/1998) (b) 5,000,000 5,461,800
York County, Industrial Revenue, Exempt Facility (Hoechst Celanese)
5.70%, 1/1/2024......................................................... 5,000,000 4,744,650
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
TENNESSEE-1.2%
Tennessee Housing Development Agency, Mortgage Finance:
6.45%, 7/1/2021......................................................... $ 11,565,000 $ 11,698,460
6.55%, 7/1/2026......................................................... 31,735,000 32,372,874
TEXAS-5.8%
Alliance Airport Authority Inc., Special Facilities Revenue:
(American Airlines Inc. Project)
7%, 12/1/2011......................................................... 12,330,000 13,263,258
(Federal Express Corp. Project)
6.375%, 4/1/2021...................................................... 28,800,000 28,376,352
Angelina and Neches River Authority, SWDR (Champion International Corp.
Project)
7.375%, 5/1/2015........................................................ 5,570,000 5,951,991
Austin, Utility System Revenue, Refunding:
5.25%, 5/15/2016 (Insured; FSA) (c)..................................... 23,645,000 22,087,740
5.60%, 5/15/2025 (Insured; MBIA)........................................ 25,000,000 23,982,500
Gulf Coast Waste Disposal Authority, Revenue:
(Champion International Corp.)
7.375%, 10/1/2025..................................................... 12,000,000 12,764,760
Solid Waste Disposal (Occidental Petroleum Corp. Project) 7%, 11/1/2020. 7,725,000 7,978,225
Harris County Hospital District, Mortgage Revenue, Refunding
7.40%, 2/15/2010 (Insured; AMBAC)....................................... 5,000,000 5,822,000
Houston Hotel Occupancy Tax, Revenue 7%, 7/1/2009 (Insured; FGIC)
(Prerefunded 7/1/2001) (b).............................................. 12,225,000 13,430,507
Rio Grande Valley Health Facilities Development Corp., HR, Refunding
(Valley Baptist Medical Center Project) 6.40%, 8/1/2016 ................ 11,200,000 11,791,808
Texas, GO (Veterans Housing Assistance Fund):
7%, 12/1/2025........................................................... 9,920,000 10,330,886
Refunding 6.45%, 12/1/2020.............................................. 15,210,000 15,346,282
Texas College Student Loan 5%, 8/1/2021..................................... 8,000,000 6,995,200
Texas Municipal Power Agency, Revenue, Refunding
5.25%, 9/1/2012 (Insured; MBIA)......................................... 10,065,000 9,548,062
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation Project):
8.625%, 11/1/2000..................................................... 1,700,000 1,822,230
8.75%, 11/1/2010...................................................... 4,745,000 5,199,998
University of Texas, Revenue (Financing System)
5%, 8/15/2016........................................................... 10,000,000 9,066,500
UTAH-1.5%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018..... 20,000,000 14,221,800
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
UTAH (CONTINUED)
Intermountain Power Agency, Power Supply Revenue, Refunding
5%, 7/1/2021............................................................ $ 15,400,000 $ 13,504,106
Utah Housing Finance Agency, Single Family Mortgage:
6.55%, 1/1/2022......................................................... 5,340,000 5,443,756
6.40%, 1/1/2027......................................................... 6,695,000 6,811,493
6.65%, 7/1/2027......................................................... 10,325,000 10,563,817
7%, 7/1/2027............................................................ 4,025,000 4,207,775
VERMONT-.3%
Vermont Housing Finance Agency, Single Family Housing 6.875%, 5/1/2025...... 10,500,000 10,756,515
VIRGINIA-2.4%
Chesapeake Bay Bridge and Tunnel Commission, General Resolution, Revenue,
Refunding 5%, 7/1/2022 (Insured; MBIA).................................. 12,035,000 10,760,373
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022....................................................... 8,715,000 9,024,295
Henrico County Industrial Development Authority, Revenue
(Maryview Hospital Project) 7.50%, 9/1/2011 (Prerefunded 8/1/2000) (b).. 5,355,000 5,992,406
Virginia Housing Development Authority, Commonwealth Mortgage:
6.20%, 7/1/2021......................................................... 15,000,000 14,941,950
6.70%, 1/1/2022......................................................... 6,950,000 7,105,124
6.40%, 7/1/2022 (Insured; MBIA)......................................... 24,000,000 24,384,240
6.60%, 7/1/2022......................................................... 4,635,000 4,687,700
6.85%, 1/1/2027......................................................... 8,000,000 8,211,920
WASHINGTON-.4%
Public Utility District No. 1 of Chelan County,
Chelan Hydro Consolidated System Revenue 6.55%, 7/1/2023................ 10,000,000 10,326,900
Washington Health Care Facilities Authority, Revenue (Harrison Memorial
Hospital, Bremerton) 5.30%, 8/15/2014 (Insured; AMBAC).................. 5,000,000 4,662,500
WEST VIRGINA-.2%
Braxton County, Solid Waste Disposal Revenue (Weyerhaeuser Co. Project)
6.50%, 4/1/2025......................................................... 8,000,000 8,265,280
WISCONSIN-1.1%
Madison, IDR (Madison Gas and Electric Co. Project)
6.75%, 4/1/2027......................................................... 10,000,000 10,498,800
Wisconsin Health and Educational Facilities Authority, Revenue:
(Aurora Health Care)
5.25%, 8/15/2023 (Insured; MBIA)...................................... 14,000,000 12,528,040
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
WISCONSIN (CONTINUED)
Wisconsin Health and Educational Facilities Authority, Revenue (continued):
(Waukesha Memorial Hospital, Inc.)
5.50%, 8/15/2015 (Insured; AMBAC)..................................... $ 8,545,000 $ 8,097,157
Wisconsin Housing and Economic Development Authority,
Homeownership Revenue 6.45%, 3/1/2017................................... 7,000,000 7,149,450
WYOMING-.7%
Sweetwater County, SWDR (FMC Corp. Project)
6.90%, 9/1/2024......................................................... 16,225,000 16,811,534
Uinta County Hospital Facility, Revenue, Refunding
(IHC Hospitals Inc.) 7.25%, 2/15/2019 (Prerefunded 2/15/1999) (b)....... 7,350,000 7,969,458
U.S. RELATED-.5%
Commonwealth of Puerto Rico 5.40%, 7/1/2025................................. 18,115,000 16,666,162
_______
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $3,249,223,710)................................................... $3,304,895,308
=======
SHORT-TERM MUNICIPAL INVESTMENTS-6.7%
CALIFORNIA-.8%
California Pollution Control Financing Authority, PCR, Refunding
VRDN (Pacific Gas and Electric) 3.75% (d)............................... $ 11,500,000 $ 11,500,000
Irvine Ranch Water District, VRDN 3.75% (LOC; Bank of America) (d,e)........ 16,200,000 16,200,000
FLORIDA-.1%
Florida Board of Education, Capital Outlay 3.67% (f,g)...................... 3,000,000 3,000,000
INDIANA-.4%
Petersburg, PCR, Refunding, VRDN (Indiana Power and Light)
3.40% (Insured; AMBAC) (d).............................................. 15,000,000 15,000,000
IOWA-.7%
Iowa Finance Authority, SWDR, VRDN (Cedar River Paper Co. Project)
3.85% (LOC; Swiss Bank Corp.) (d,e)..................................... 25,000,000 25,000,000
MARYLAND-.1%
Prince Georges' Housing Authority, Mortgage Revenue, VRDN (Laurel-Oxford)
3.525% (LOC; Bankers Trust) (d,e)....................................... 2,500,000 2,500,000
MICHIGAN-1.6%
Michigan Strategic Fund, LOR, Refunding
VRDN (Detroit Edison Co.) 3.65% (LOC; Barclays Bank PLC) (d,e).......... 30,900,000 30,900,000
Midland County Economic Development Corp., Economic Development LOR
VRDN (Dow Chemical Co Project) 3.90% (d)................................ 27,000,000 27,000,000
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
MINNESOTA-.2%
Cloquet, PCR, VRDN (Potlatch Corp. Project) 3.60% (LOC; Credit Suisse) (d,e) $ 2,000,000 $ 2,000,000
Golden Valley IDR Refunding, VRDN (Graco Inc. Project)
3.75% (LOC; Fuji Bank Ltd.) (d,e)....................................... 2,380,000 2,380,000
Minnesota Higher Education Coordinating Board, Revenue, VRDN
(Supplement Student Loan Program) 3.70% (d)............................. 1,000,000 1,000,000
MISSISSIPPI-.6%
Jackson County, PCR, Refunding, VRDN (Chevron USA Inc. Project)
3.80% (d)............................................................... 10,000,000 10,000,000
Perry County, PCR, Refunding, VRDN (Leaf River Forest Project)
3.80% (LOC; Credit Suisse) (d,e)........................................ 12,700,000 12,700,000
NEW JERSEY-.5%
New Jersey Sports and Exposition Authority, VRDN
3.15% (Insured; MBIA) (d)............................................... 18,000,000 18,000,000
PENNSYLVANIA-.0%
Bucks County Industrial Development Authority, VRDN
(Oxford Falls Plaza Project) 3.95% (d).................................. 900,000 900,000
Montgomery County Higher Education and Health Authority, HR,
VRDN (Holy Redeemer Hospital) 3.35% (Insured; AMBAC) (d)................ 100,000 100,000
SOUTH CAROLINA-.2%
Charleston County, Industrial Revenue, VRDN (Massey Coal Terminal SC Corp.)
3.80% (LOC; Morgan Guaranty Trust) (d,e)................................ 7,050,000 7,050,000
TEXAS-.4%
Bexar County Health Facilities Development Corp., VRDN
(Air Force Village Foundation Project) 3.40% (LOC; Rabobank Nederland) (d,e) 14,300,000 14,300,000
UTAH-.7%
Salt Lake County, PCR, Refunding, VRDN (Service Station Holdings Project)
3.75% (d)............................................................... 24,200,000 24,200,000
VIRGINIA-.4%
Peninsula Ports Authority, Revenue, Refunding VRDN
(Port Facility - Shell Oil Co. Project) 3.80% (d)....................... 14,000,000 14,000,000
U.S. RELATED-.0%
Commonwealth of Puerto Rico, Government Development Bank, Refunding VRDN
3.10% (LOC; Credit Suisse) (d,e)........................................ 1,000,000 1,000,000
_______
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $238,730,000)..................................................... $ 238,730,000
=======
TOTAL INVESTMENTS-100.0%
(cost $3,487,953,710)................................................... $3,543,625,308
=======
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation LOR Limited Obligation Revenue
EDR Economic Development Revenue LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
GO General Obligation SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (H) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ ____ _________ __________
AAA Aaa AAA 33.5%
AA Aa AA 24.1
A A A 18.3
BBB Baa BBB 11.0
BB Ba BB 1.9
F1 MIG1/P1 SP1/A1 5.5
Not Rated (i) Not Rated (i) Not Rated (i) 5.7
____
100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by custodian as collateral for delayed-delivery
security.
(b) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(c) Purchased on a delayed-delivery basis.
(d) 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.
(e) Secured by letters of credit.
(f) Inverse Floater Security - the interest rate is subject to change
periodically.
(g) Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1996, this security amounted to $3,000,000 or .1% of net assets.
(h) Fitch currently provides creditworthiness information for a limited
number of investments.
(i) Securities which, while not rated by Fitch, Moody's or 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.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $3,487,953,710)-see statement................................... $3,543,625,308
Interest receivable..................................................... 52,990,639
Receivable for investment securities sold............................... 4,095,241
Receivable for subscriptions to Common Stock............................ 94
Prepaid expenses........................................................ 103,432
_______
3,600,814,714
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 2,393,810
Due to Custodian........................................................ 3,210,981
Payable for investment securities purchased............................. 22,581,566
Payable for Common Stock redeemed....................................... 150,634
Accrued expenses........................................................ 191,735 28,528,726
______ _______
NET ASSETS.................................................................. $3,572,285,988
=======
REPRESENTED BY:
Paid-in capital......................................................... $3,515,265,600
Accumulated undistributed investment income-net......................... 533,961
Accumulated undistributed net realized gain on investments.............. 814,829
Accumulated net unrealized appreciation on investments-Note 3(b)....... 55,671,598
_______
NET ASSETS at value applicable to 291,979,817 shares outstanding
(600 million shares of $.01 par value Common Stock authorized).......... $3,572,285,988
=======
NET ASSET VALUE, offering and redemption price per share
($3,572,285,988 / 291,979,817 shares)................................... $12.23
===
</TABLE>
<TABLE>
<CAPTION>
See notes to financial statements.
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $236,295,788
EXPENSES:
Management fee-Note 2(a).............................................. $22,230,334
Shareholder servicing costs-Note 2(b)................................. 3,690,904
Custodian fees........................................................ 205,462
Prospectus and shareholders' reports.................................. 124,156
Professional fees..................................................... 101,704
Registration fees..................................................... 86,599
Directors' fees and expenses-Note 2(c)................................ 68,022
Miscellaneous......................................................... 210,384
______
TOTAL EXPENSES.................................................. 26,717,565
_______
INVESTMENT INCOME-NET........................................... 209,578,223
_______
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $47,382,435
Net realized (loss) on financial futures................................ (2,211,822)
______
NET REALIZED GAIN..................................................... 45,170,613
Net unrealized (depreciation) on investments............................ (86,386,337)
_______
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (41,215,724)
_______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $168,362,499
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
______________________________________
1995 1996
_________ _________
<S> <C> <C>
OPERATIONS:
Investment income-net............................................. $ 223,098,936 $ 209,578,223
Net realized gain (loss) on investments........................... (44,338,112) 45,170,613
Net unrealized appreciation (depreciation) on investments for the year 78,567,175 (86,386,337)
________ ________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 257,327,999 168,362,499
________ ________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................. (223,098,936) (209,044,262)
Net realized gain on investments.................................. (22,638,307) __
________ ________
TOTAL DIVIDENDS................................................. (245,737,243) (209,044,262)
________ ________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold..................................... 4,846,241,789 6,426,888,270
Dividends reinvested.............................................. 155,978,774 128,954,048
Cost of shares redeemed........................................... (5,085,554,561) (6,879,608,434)
________ ________
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS........ (83,333,998) (323,766,116)
________ ________
TOTAL (DECREASE) IN NET ASSETS.............................. (71,743,242) (364,447,879)
NET ASSETS:
Beginning of year................................................. 4,008,477,109 3,936,733,867
________ ________
End of year (including accumulated undistributed investment income-net;
$533,961 on August 31, 1996).................................... $ 3,936,733,867 $ 3,572,285,988
======== ========
SHARES SHARES
________ ________
CAPITAL SHARE TRANSACTIONS:
Shares sold....................................................... 400,686,274 519,000,847
Shares issued for dividends reinvested............................ 12,969,173 10,376,060
Shares redeemed................................................... (419,990,511) (554,619,976)
________ ________
NET (DECREASE) IN SHARES OUTSTANDING............................ (6,335,064) (25,243,069)
======== ========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS 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 year indicated. This information
has been derived from the Fund's financial statements.
YEAR ENDED AUGUST 31,
____________________________________________________________
PER SHARE DATA: 1992 1993 1994 1995 1996
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $12.68 $13.17 $13.68 $12.39 $12.41
____ ____ ____ ____ ____
INVESTMENT OPERATIONS:
Investment income-net........................ .84 .79 .75 .72 .69
Net realized and unrealized gain (loss)
on investments............................. .49 .79 (.96) .09 (.18)
____ ____ ____ ____ ____
TOTAL FROM INVESTMENT OPERATIONS........... 1.33 1.58 (.21) .81 .51
____ ____ ____ ____ ____
DISTRIBUTIONS:
Dividends from investment income-net......... (.84) (.79) (.75) (.72) (.69)
Dividends from net realized gain on investments - (.28) (.33) (.07) -
____ ____ ____ ____ ____
TOTAL DISTRIBUTIONS........................ (.84) (1.07) (1.08) (.79) (.69)
____ ____ ____ ____ ____
Net asset value, end of year................. $13.17 $13.68 $12.39 $12.41 $12.23
==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN.......................... 10.82% 12.62% (1.63%) 6.93% 4.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .68% .69% .68% .70% .71%
Ratio of net investment income to
average net assets......................... 6.49% 5.96% 5.80% 5.94% 5.57%
Portfolio Turnover Rate...................... 67.86% 45.37% 36.25% 51.55% 64.48%
Net Assets, end of year (000's Omitted)...... $4,272,679 $4,724,389 $4,008,477 $3,936,734 $3,572,286
See notes to financial statements.
</TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus 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 provide investors
with as high a level of current income exempt from Federal income tax as is
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. acts as
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: The Fund's investments (excluding 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.
(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, if any, 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.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. However,
pursuant to the court approved settlement of previously disclosed litigation,
commencing October 15, 1988, the Manager has agreed to make payments to the
Fund for ten years, ranging from $0 to $1 million per year depending on
average daily net assets of the Fund. The management fee during the year
ended August 31, 1996 was reduced by $350,000 pursuant to the settlement
of litigation.
DREYFUS MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, brokerage, interest
on borrowings and extraordinary expenses, exceed 1 1\2% of the value of the
Fund's average daily net assets for any full fiscal year. No expense
reimbursement was required for the year ended August 31, 1996.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended August 31, 1996, the Fund was charged an aggregate of
$2,087,233 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, 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. Such compensation amounted to $837,480 during the period ended
August 31, 1996.
(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 and the Director Emeritus receives 50% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended August 31, 1996
amounted to $2,266,717,419 and $2,602,451,160, 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. Accordingly, 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 August 31,1996, there were no financial futures contracts outstanding.
(B) At August 31, 1996, accumulated net unrealized appreciation on
investments was $55,671,598, consisting of $90,791,495 gross unrealized
appreciation and $35,119,897 gross unrealized depreciation.
At August 31, 1996, 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).
DREYFUS MUNICIPAL BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS MUNICIPAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Municipal Bond Fund, Inc., including the statement of investments, as
of August 31, 1996, 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. Our procedures included confirmation of
securities owned as of August 31, 1996 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 Dreyfus Municipal Bond Fund, Inc. at August 31, 1996, 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 and Young LLP signature logo]
New York, New York
October 1, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended August
31, 1996 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 1996 calendar year
on Form 1099-DIV which will be mailed by January 31, 1997.
[Dreyfus lion "d" logo]
DREYFUS 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. 054AR968
[Dreyfus logo]
Municipal
Bond Fund, Inc.
Annual Report
August 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS MUNICIPAL BOND FUND, INC. AND THE LEHMAN
BROTHERS MUNICIPAL BOND INDEX
EXHIBIT A:
_________________________________________________________
| | LEHMAN | DREYFUS |
| | BROTHERS | MUNICIPAL |
| PERIOD | MUNICIPAL | BOND FUND |
| | BOND INDEX * | |
|------------------|------------------| -----------------|
| 8/31/86 | 10,000 | 10,000 |
| 8/31/87 | 10,463 | 10,230 |
| 8/31/88 | 11,183 | 10,871 |
| 8/31/89 | 12,411 | 12,131 |
| 8/31/90 | 13,208 | 12,799 |
| 8/31/91 | 14,765 | 14,221 |
| 8/31/92 | 16,413 | 15,759 |
| 8/31/93 | 18,416 | 17,748 |
| 8/31/94 | 18,442 | 17,459 |
| 8/31/95 | 20,077 | 18,668 |
| 8/31/96 | 21,128 | 19,445 |
|--------------------------------------------------------|
* Source: Lehman Brothers
