DREYFUS MUNICIPAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
We are pleased to provide you with this report on the Dreyfus Municipal
Bond Fund, Inc. for its semi-annual reporting period ended February 28, 1997.
Your Fund produced a total return during this period, including bond price
changes and interest income, of 4.47%* and an annualized tax-free
distribution rate per share of 5.40%.**
ECONOMIC REVIEW
With the economy nearing the end of its sixth year of expansion,
inflation still remains quiescent despite the robust rate of new job creation
and low unemployment. Because of the relatively tight labor market, the
potential inflationary consequences of increased wage demands have been of
growing concern to Federal Reserve Board Chairman Alan Greenspan and other
members of the Federal Open Market Committee ("FOMC," the policy-making arm
of the Federal Reserve Board). In recent testimony to the Senate Banking
Committee, Chairman Greenspan spoke very directly about the possibility of
the FOMC raising interest rates, despite the absence of any clear sign of
accelerating inflation. The Federal Reserve last changed its interest rate
policy on January 31, 1996 when it reduced both the Federal Funds target rate
and the Discount Rate. Since then, the economy has continued to advance.
Gains in worker productivity along with job security worries have been
keeping wage increases modest and noninflationary. Yet there are signs that
this wage restraint may be ending. Recent data suggest a tightening in the
labor market. Growing numbers of workers appear willing to quit current jobs,
more confident now that there are better positions available elsewhere. In
reaction to this, companies could be under pressure to raise compensation
levels. With this in mind, the recent comment by Chairman Greenspan warrants
attention: "Given the lags with which monetary policy affects the economy,
however, we cannot rule out a situation in which a preemptive policy
tightening may become appropriate before any sign of actual inflation becomes
evident." The lack of price pressure was particularly apparent in the fourth
quarter increase in the GDP price deflator, the government's broadest measure
of inflation: its 1.4% annual pace was the lowest rate of increase in 30
years.
With such low inflation accompanying the strong growth in new jobs,
consumer optimism remains high. The Research Board's Index of Consumer
Confidence reported that popular opinion about the state of the economy
reached a 27-year high in February. Since consumers account for two thirds of
economic activity, their collective attitude is an important indicator of
future economic momentum. Yet, despite this high level of consumer optimism,
retail sales growth remained modest, although signs of strengthening are
appearing.
While it is possible that a retrenchment in consumer spending could
result in an economic slowdown without a change in Federal Reserve monetary
policy, it is likely that the continued strong growth in new jobs and the low
unemployment rate will lead to labor shortages that could trigger
inflationary wage increases. We take Chairman Greenspan at his word and are
mindful of the possibility of a preemptive tightening in monetary policy.
MARKET ENVIRONMENT
The municipal bond market endured a significant amount of volatility
during the past six months. Similar to today's market environment, six months
ago at this time interest rates were on the rise, as the markets braced for a
possible tightening of interest rates by the Federal Reserve Board. After
waffling during the summer, the bond markets staged a significant rally late
in the year as the economic and inflation data proved to be less robust than
feared earlier. However, just during the past few months, bond yields have
gyrated in a rather wide range. Today, the bears are back in control: the
economy is stronger and a tightening of monetary policy is a possibility. At
the time of our last letter, the bond markets were in a bullish mode.
The political climate in Washington is also weighing on the markets.
Investors had been counting on a bipartisan compromise on a balanced budget
agreement and a possible cut in the capital gains tax rate. Today, the odds
of
either happening anytime soon appear less likely. Therefore, it looks as
though this year's budget wrangling could become protracted.
The past two years produced far better returns for equity holders than
for bond owners. When viewing the record levels attained by most stock
indices, many people question the sustainability of the market at current
levels. Certainly, the Federal Reserve Chairman is concerned having, on more
than one occasion, publicly questioned the stock market's "irrational
exuberance." While the implications for the bond markets are uncertain, there
is a general feeling that any sustained sell-off in stocks could spur
investors to shift more money into bonds. The rise in long-term yields makes
bonds more attractive today.
THE PORTFOLIO
In response to a strengthening economy, the portfolio's duration was
lengthened during the last half of 1996, amid signs that the economic rebound
was not as strong as originally believed. In view of the premium afforded by
the market for securities bearing good structure (i.e., call protection,
duration, and liquidity), the Fund moved a significant portion of its
portfolio into these types of bonds, and will continue to do so when
appropriate.
At the present time, the portfolio has adopted a defensive posture. The
possibility of a hike in short-term interest rates looks more likely with the
announcement of each new piece of economic data. The Fed has stated its
intention to strike preemptively, if necessary. After such a long period of
uninterrupted economic expansion with no inflation pressures, we believe it
is prudent to heed the warning signals. While maintaining a shorter than
normal duration (7.5 years), we continue to look for those bonds that will
increase the Fund's tax-exempt dividend yield. In short, we are willing to
bet that, at least over the near term, the market will be buffeted by rising
interest rates, an increase in the supply of new bond issuance, and tepid
investor demand.
The axiom of capital preservation is foremost in our decision-making
presently. We do see the risk of higher interest rates this year. However,
the economy has displayed the ability to sustain its record of steady
expansion without as yet exhibiting any significant pricing pressures that
might lead to higher inflation. We see no reason why this pattern of moderate
growth can't continue in the future with or without the Fed applying some
restraint by raising short rates. For this reason we feel good about the
prospects for bond markets going forward and continue to recommend that all
investors maintain a long-term perspective.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Securities Division
The Dreyfus Corporation
March 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
** Distribution rate per share is based upon dividends per share paid
from net investment income during the period (annualized), divided by the net
asset value per share at the end of the period, adjusted for any capital gain
distributions.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments-99.9% Amount Value
-------- --------
<S> <C> <C>
Alabama-2.4%
Alabama Housing Finance Authority, SFMR:
6.45%, 10/1/2025.......................................................... $ 7,970,000 $ 8,195,471
6.10%, 10/1/2027.......................................................... 10,125,000 10,209,645
Alabama Industrial Development Authority, SWDR (Pine City Fiber Co.):
6.45%, 12/1/2023.......................................................... 16,000,000 16,207,200
6.45%, 12/1/2023.......................................................... 23,000,000 23,088,090
Industrial Development Board of the Town of Courtland, SWDR
(Champion International Corp. Project)
7%, 11/1/2022............................................................. 8,100,000 8,528,895
West Jefferson Industrial Development Board, PCR, Refunding
(Alabama Power Co.- Miller Plant) 6.05%, 5/1/2023 (Insured; MBIA)......... 15,000,000 15,220,650
Alaska-1.2%
Alaska Housing Finance Corp.
(Collateralized Veterans Mortgage Program)
6.375%, 12/1/2027......................................................... 9,135,000 9,372,419
Anchorage, Electric Utility Revenue:
(Municipal Light and Power) 5.125%, 12/1/2026 (Insured; AMBAC)............ 25,060,000 23,189,772
Refunding 6.50%, 12/1/2015 (Insured; MBIA)................................ 6,135,000 6,889,114
California-6.7%
Airport Commission City and County of San Francisco
(San Francisco International Airport):
6.50%, 5/1/2015 (Insured; FGIC)......................................... 10,100,000 10,918,807
5.50%, 5/1/2026 (Insured; MBIA)......................................... 9,910,000 9,473,068
California, Refunding 5.25%, 6/1/2017 (Insured; FGIC)....................... 11,640,000 11,251,690
California Higher Education Loan Authority, Inc.,
Student Loan Revenue, Refunding 6.50%, 6/1/2005........................... 19,250,000 20,718,197
Duarte, COP (City of Hope Medical Center)
6.25%, 4/1/2023........................................................... 26,000,000 26,285,740
Los Angeles Harbor Department, Revenue 5.375%, 11/1/2023.................... 9,000,000 8,454,240
Orange County, Recovery COP, Refunding:
5.875%, 7/1/2019 (Insured; MBIA).......................................... 21,000,000 21,328,440
6%, 7/1/2026 (Insured; MBIA).............................................. 31,500,000 32,371,290
Sacramento Municipal Utility District, Electric Revenue, Refunding
6%, 2/1/2017.............................................................. 10,000,000 10,001,600
San Diego County, COP, Refunding (Interim Justice Facilities Project) 6.50%, 8/1/2007 9,805,000 10,460,856
San Francisco State Building Authority, LR (San Francisco Civic Center
Complex):
5.25%, 12/1/2016 (Insured; AMBAC)......................................... 12,175,000 11,745,953
5.25%, 12/1/2021 (Insured; AMBAC)......................................... 31,500,000 29,848,455
Santa Rosa, Wastewater Revenue, Refunding (Subregional Wastewater Project)
5%, 9/1/2022 (Insured; FGIC).............................................. 7,000,000 6,402,270
University of California, HR (University of California-Davis Medical Center)
5.75%, 7/1/2014 (Insured; AMBAC).......................................... 12,160,000 12,407,821
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Colorado-2.3%
Arapahoe County Capital Improvement Trust Fund, Highway Revenue (E-470 Project)
7%, 8/31/2026............................................................. $ 18,025,000 $ 19,903,205
City and County of Denver:
Airport Revenue:
7.25%, 11/15/2023....................................................... 25,765,000 27,882,625
Refunding 5.50%, 11/15/2025 (Insured; MBIA)............................. 17,500,000 16,874,900
Special Facilities Airport Revenue (United Airlines Project)
6.875, 10/1/2032........................................................ 10,000,000 10,501,700
Connecticut-1.6%
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
6.70%, 11/15/2012......................................................... 3,815,000 4,028,106
6.30%, 5/15/2024.......................................................... 8,000,000 8,210,320
6.50%, 5/15/2027.......................................................... 18,100,000 18,683,906
Connecticut Resource Recovery Authority
(American Fuel Co. Project) 6.45%, 11/15/2022............................. 7,325,000 7,592,509
Mashantucket Western Pequot Tribe, Special Revenue
6.40%, 9/1/2011 (a)....................................................... 15,000,000 15,601,050
Delaware-.5%
Delaware Economic Development Authority, Water Development Revenue
(Wilmington Suburban Water Corp. Project) 6.80%, 12/1/2023................ 8,000,000 8,457,360
Delaware Housing Authority, Senior SFMR
6.45%, 1/1/2026........................................................... 8,085,000 8,242,981
District of Columbia-2.1%
Metropolitan Washington Airports Authority, Airport System Revenue:
6.625%, 10/1/2012 (Insured; MBIA)......................................... 40,400,000 43,858,644
6.625%, 10/1/2019 (Insured; MBIA)......................................... 23,600,000 25,381,564
Florida-4.5%
Brevard County Housing Finance Authority, SFMR 6.80%, 3/1/2028.............. 5,885,000 6,131,993
Collier County School Board, COP 5%, 2/15/2016 (Insured; FSA)............... 6,500,000 6,116,500
Florida Board of Education, Public Education Capital Outlay:
5.25%, 6/1/2016........................................................... 9,435,000 9,161,574
5.25%, 6/1/2017........................................................... 9,965,000 9,667,943
Florida Community Services Corp. Walton County, Water and Sewer Revenue
(South Walton County Regional Utility):
6.95%, 3/1/2012......................................................... 3,000,000 3,334,320
7%, 3/1/2018............................................................ 3,500,000 3,853,815
Gainesville, Utilities System Revenue, Refunding
5.20%, 10/1/2022.......................................................... 6,000,000 5,671,500
Hillsborough County, Capital Improvement Non-Ad Valorem, Refunding Revenue
(County Center Project) 5.125%, 7/1/2022 (Insured; MBIA).................. 17,050,000 16,011,825
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Florida (continued)
Orlando Utilities Commission, Water and Electric Revenue, Refunding
6.75%, 10/1/2017.......................................................... $ 15,875,000 $ 18,616,454
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project) 6.70%, 2/15/2015............ 23,400,000 19,925,100
(Osceola Power Limited Partnership) 6.95%, 1/1/2022....................... 33,800,000 29,010,878
Polk County Industrial Development Authority, IDR
(IMC Fertilizer) 7.525%, 1/1/2015......................................... 15,200,000 16,392,744
Saint Johns River Water Management District, Land Acquisition Revenue,
Refunding
5.125%, 7/1/2016 (Insured; FSA)........................................... 6,000,000 5,668,860
Georgia-.5%
Georgia Housing and Finance Authority, Single Family Mortgage:
7.125%, 12/1/2026......................................................... 6,535,000 6,859,528
6.55%, 12/1/2027.......................................................... 9,440,000 9,747,555
Idaho-.3%
Idaho Housing Agency, Multi-Family Housing Refunding
6.70%, 7/1/2024........................................................... 10,050,000 10,437,327
Illinois-7.7%
Chicago:
Refunding 5.125%, 1/1/2016 (Insured; FGIC)................................ 13,250,000 12,463,347
Revenue (Midway Airport) 5.50%, 1/1/2029 (Insured; MBIA).................. 23,275,000 22,247,874
Wastewater Transmission Revenue, Refunding
5.125%, 1/1/2025 (Insured; FGIC)........................................ 23,600,000 21,730,644
Chicago O'Hare International Airport, Revenue:
Refunding 5%, 1/1/2008 (Insured; MBIA).................................... 12,475,000 12,366,093
Special Facilities (United Airlines Inc. Project):
8.50%, 5/1/2018......................................................... 6,500,000 7,146,035
8.85%, 5/1/2018......................................................... 15,125,000 17,150,237
Illinois Development Finance Authority, Revenue:
(Community Rehabilitation Providers Facilities) 8.75%, 3/1/2010........... 18,720,000 20,208,053
Pollution Control, Refunding (Central Illinois Public Service Co.)
6.375%, 1/1/2028........................................................ 14,000,000 14,599,480
Illinois Educational Facilities Authority, Revenue
(Illinois Institute of Technology)
Refunding 6.875%, 12/1/2015............................................... 7,250,000 8,013,207
Illinois Health Facilities Authority, Revenue:
(Beverly Farm Foundation) 9.125%, 12/15/2015 (Prerefunded 12/15/2000) (b). 3,730,000 4,417,775
Refunding:
(Evangelical Hospitals) 6.50%, 4/15/2009 (Insured; FSA)................. 5,000,000 5,581,400
(Mercy Hospital and Medical Center) 7%, 1/1/2015........................ 7,500,000 7,891,425
(Trinity Medical Center) 7%, 7/1/2012..................................... 3,000,000 3,338,250
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Illinois (continued)
Illinois Housing Development Authority:
Homeowner Mortgage Revenue:
6.70%, 8/1/2025......................................................... $ 4,815,000 $ 4,995,033
6.625%, 8/1/2026........................................................ 15,385,000 15,929,937
Multi-Family Housing (Lawndale Redevelopment Project) 6.90%, 12/1/2026.... 8,750,000 9,182,512
Multi-Family Program 6.75%, 9/1/2021...................................... 8,750,000 9,044,525
Section 8 Elderly Housing Revenue (Morningside North Development)
6.85%, 1/1/2021......................................................... 11,220,000 11,674,859
Robbins (Resource Recovery Partners) 8.375%, 10/15/2016..................... 37,000,000 38,656,120
Solid Waste Agency of Northern Cook County, Contract Revenue, Refunding
5.50%, 5/1/2015 (Insured; MBIA)........................................... 9,000,000 8,688,600
Indiana-6.4%
Allen County, COP, Refunding 6.50%, 11/1/2008............................... 5,000,000 5,432,500
Brownsburg School Building Corp., First Mortgage
6.10%, 2/1/2013 (Insured; FSA)............................................ 7,500,000 7,892,475
Carmel High School Building Corp., First Mortgage
5.25%, 1/15/2018 (Insured; MBIA).......................................... 5,525,000 5,258,916
Fort Wayne Hospital Authority, HR (Lutheran Hospital)
8%, 2/15/2003 (Prerefunded 2/15/1998) (b)................................. 7,000,000 7,414,890
Hamilton Southeastern Consolidated School Building Corp., First Mortgage
5.25%, 1/15/2017 (Insured; AMBAC)......................................... 5,000,000 4,782,750
Hammond Multi-School Building Corp., First Mortgage
7.10%, 1/15/2015 (Prerefunded 7/15/2001) (b).............................. 5,585,000 6,276,814
Indiana Health Facility Financing Authority, HR
(Clarian Health Partners, Inc.) 6%, 2/15/2021............................. 18,000,000 18,190,980
Indiana Transportation Finance Authority, Airport Facility LR:
6.50%, 11/1/2007 (Prerefunded 11/1/2002) (b).............................. 6,865,000 7,631,889
6.50%, 11/1/2007.......................................................... 5,635,000 6,110,932
Indianapolis Airport Authority, Special Facility Revenue (United Airlines
Project)
6.50%, 11/15/2031......................................................... 31,510,000 32,312,560
Indianapolis Local Public Improvement Bond Bank:
Refunding 5%, 1/1/2017.................................................... 14,575,000 13,692,046
8.50%, 2/1/2018 (Prerefunded 2/1/1998) (b)................................ 73,000,000 77,543,520
IPS School Building Corp., First Mortgage 6.10%, 1/15/2020.................. 11,000,000 11,481,910
Logansport Multi-Purpose School Building Corp., First Mortgage Refunding
6%, 1/1/2009.............................................................. 7,645,000 7,964,026
Iowa-.4%
Iowa Finance Authority, SFMR
(Mortgage Backed Securities Program)
6.65%, 7/1/2028........................................................... 12,070,000 12,500,295
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Kansas-1.0%
Wichita, HR 6.464%, 10/1/2022 (Insured; MBIA)............................... $ 31,300,000 $ 33,598,985
Kentucky-2.2%
City of Ashland, Sewage and Solid Waste Revenue
(Ashland Inc. Project) 7.125%, 2/1/2022................................... 13,170,000 14,268,115
Kenton County Airport Board, Airport Revenue:
(Greater Cincinnati International Airport)
8.25%, 3/1/2015......................................................... 10,945,000 11,547,194
Special Facilities (Delta Airlines Project):
7.125%, 2/1/2021........................................................ 8,455,000 9,002,546
6.125%, 2/1/2022........................................................ 10,000,000 9,831,400
Mount Sterling, LR (Kentucky League Cities Funding)
6.10%, 3/1/2018........................................................... 7,955,000 8,237,721
Pendleton County, Multi-County LR
(Kentucky Associates Counties Leasing Trust Program) 6.50%, 3/1/2019...... 18,500,000 19,593,165
Louisiana-1.1%
Parish of Saint Charles, PCR (Louisiana Power and Lighting Co. Project)
8.25%, 6/1/2014........................................................... 7,500,000 8,174,475
Parish of West Feliciana, PCR:
(Gulf States Utilities Co. Project) 9%, 5/1/2015.......................... 13,500,000 15,015,510
(Gulf States Utilities-I) 7.70%, 12/1/2014................................ 14,000,000 15,275,400
Maine-1.0%
Maine Financial Authority, Solid Waste Revenue
Recycling Facilities (Great Northern Paper, Inc. Project-Bowater Inc.
Obligor)
7.75%, 10/1/2022.......................................................... 8,165,000 8,918,140
Maine Housing Authority, Mortgage Purchase
6.875%, 11/15/2023........................................................ 14,000,000 14,644,000
Skowhegan, SWDR (S.D. Warren Co. Project) 8.40%, 10/1/2015.................. 7,700,000 8,640,709
Maryland-1.9%
Community Development Administration,
Department of Housing and Community Development State of Maryland,
Single Family Program Bonds:
6.80%, 4/1/2024......................................................... 33,520,000 34,599,344
6.55%, 4/1/2026......................................................... 9,190,000 9,490,605
6.75%, 4/1/2026......................................................... 19,990,000 20,870,959
Massachusetts-2.2%
Massachusetts Consolidated Loan:
5%, 11/1/2011............................................................. 17,360,000 16,789,203
5.125%, 11/1/2013......................................................... 11,820,000 11,444,479
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Massachusetts (continued)
Massachusetts Housing Finance Agency, Revenue:
Housing:
6.65%, 7/1/2019 (Insured; AMBAC)........................................ $ 7,275,000 $ 7,608,704
6.50%, 7/1/2025 (Insured; AMBAC)........................................ 4,140,000 4,290,903
6.60%, 1/1/2037 (Insured; AMBAC)........................................ 7,100,000 7,379,598
Single Family Housing:
7.125%, 6/1/2025........................................................ 12,975,000 13,784,510
6.65%, 12/1/2027........................................................ 7,200,000 7,492,248
Massachusetts Industrial Finance Agency, Revenue
Museum (Norman Rockwell Stockbridge) 8.125%, 7/1/2011..................... 3,055,000 3,235,367
Michigan-3.4%
Charter County of Wayne, Special Airport Facilities Revenue, Refunding
(Northwest Airlines, Inc., Facilities) 6.75%, 12/1/2015................... 8,790,000 9,031,637
Detroit, Sewage Disposal System Revenue 5.25%, 7/1/2015 (Insured; MBIA)..... 8,700,000 8,435,433
East Grand Rapids Public School District 5%, 5/1/2020 (Insured; MBIA)....... 8,675,000 8,040,424
The Economic Development Corp. of the County of Gratiot,
Limited Obligation EDR
(Danly Die Set Project) 7.625%, 4/1/2007.................................. 3,200,000 3,376,800
Michigan Hospital Finance Authority, Revenue:
Hospital, Refunding:
(Genesys Health System Obligated Group):
8.125%, 10/1/2021..................................................... 15,000,000 17,145,450
7.50%, 10/1/2027...................................................... 15,300,000 16,707,294
(Henry Ford Health System)
5.25%, 11/15/2025..................................................... 10,000,000 9,360,100
(Metropolitan Hospital) 8.125%, 7/1/2018 (Prerefunded 7/1/1999) (b)....... 5,000,000 5,572,950
Michigan Housing Development Authority, SFMR
6.20%, 12/1/2027.......................................................... 25,240,000 25,404,565
Western Townships Utilities Authority, Sewer Disposal System
(Limited Tax GO) 8.125%, 1/1/2009......................................... 8,765,000 9,479,610
Minnesota-2.5%
Minneapolis, HR, Refunding (Lifespan Inc. Issue)
9.125%, 12/1/2014 (Prerefunded 12/1/1997) (b)............................. 4,000,000 4,241,240
Minnesota:
5%, 11/1/2014............................................................. 8,275,000 7,968,825
5%, 11/1/2015............................................................. 8,275,000 7,911,479
5%, 11/1/2016............................................................. 8,275,000 7,852,230
Minnesota Housing Finance Agency, Single Family Mortgage:
6.90%, 7/1/2022........................................................... 7,095,000 7,428,394
6.50%, 7/1/2024........................................................... 15,870,000 16,332,928
6.45%, 7/1/2025........................................................... 30,210,000 30,958,302
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Missouri-.8%
Kansas City Municipal Assistance Corp., Leasehold Refunding Revenue
(H. Roe Bartle Convention Center Project):
5.125%, 4/15/2015 (Insured; MBIA)....................................... $ 11,055,000 $10,685,652
5%, 4/15/2020 (Insured; MBIA)........................................... 5,500,000 5,091,350
Missouri Higher Education Loan Authority, Student Loan Revenue
6.75%, 2/15/2009.......................................................... 11,500,000 11,973,685
Nebraska-.6%
Omaha Public Power District, Electric Revenue 5.50%, 2/1/2014............... 20,000,000 20,408,800
Nevada-.8%
Nevada Housing Division (Single Family Program)
6.80%, 4/1/2027........................................................... 9,960,000 10,334,795
Washoe County:
Gas Facilities Revenue (Sierra Pacific Power Co. Project)
6.70%, 11/1/2032 (Insured; MBIA)........................................ 10,000,000 10,849,200
Gas and Water Facilities Revenue, Refunding (Sierra Pacific)
6.30%, 12/1/2014 (Insured; AMBAC)....................................... 4,375,000 4,651,325
New Hampshire-3.8%
Business Finance Authority of the State of New Hampshire,
State Guaranteed Airport Revenue (Manchester Airport Project):
6.50%, 1/1/2019......................................................... 12,600,000 13,198,374
6.375%, 1/1/2022........................................................ 8,650,000 8,970,915
New Hampshire Housing Finance Authority:
Multi-Family Housing:
7.55%, 7/1/2013......................................................... 4,205,000 4,671,965
(Mariners Village Project)
6.60%, 1/1/2038 (Insured; FHA)........................................ 7,365,000 7,567,906
Single Family Mortgage:
7.25%, 1/1/2016......................................................... 3,375,000 3,604,568
6.55%, 7/1/2026......................................................... 22,190,000 22,960,659
Single Family Residential Mortgage:
7.10%, 1/1/2023......................................................... 24,435,000 25,662,126
7.75%, 7/1/2023......................................................... 16,665,000 17,640,402
6.85%, 1/1/2025......................................................... 10,395,000 10,762,775
6.95%, 1/1/2026......................................................... 10,210,000 10,708,656
New Jersey-5.1%
Howell Township Municipal Utilities Authority, Revenue
8.60%, 1/1/2014 (Prerefunded 7/1/1998) (b)................................ 4,000,000 4,318,640
New Jersey Economic Development Authority, PCR
(Public Service Electric and Gas Co. Project)
6.40%, 5/1/2032 (Insured; MBIA)........................................... 32,040,000 34,295,296
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
New Jersey (continued)
New Jersey Educational Facilities Authority, Revenue:
(Trenton State College Issue):
5.10%, 7/1/2021 (Insured; MBIA)......................................... $ 11,000,000 $ 10,349,570
5.125%, 7/1/2024 (Insured; MBIA)........................................ 16,500,000 15,529,140
New Jersey Housing and Mortgage Finance Agency, Revenue:
6%, 11/1/2002............................................................. 5,000,000 5,191,500
6.45%, 11/1/2007.......................................................... 15,260,000 16,117,154
New Jersey Transportation Trust Fund Authority
(Transportation System):
5.25%, 6/15/2014........................................................ 20,000,000 19,586,800
5%, 6/15/2017........................................................... 41,000,000 38,437,090
Refunding 5.25%, 6/15/2014 (Insured; MBIA).............................. 13,500,000 13,250,790
New Jersey Wastewater Treatment Trust, Insured Loan Revenue
9%, 9/1/2007 (Prerefunded 9/1/1997) (b)................................... 6,000,000 6,282,180
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 6,861,400
New Mexico-1.0%
Albuquerque, HR, Refunding (Presbyterian Health Care Services)
6.375%, 8/1/2007 (Insured; MBIA).......................................... 4,500,000 4,898,745
Farmington, PCR, Refunding (Public Service Co. San Juan)
5.70%, 12/1/2016 (Insured; AMBAC)......................................... 9,390,000 9,425,025
New Mexico Educational Assistance Foundation, Student Loan Revenue 7.45%, 3/1/2010 12,045,000 12,799,860
New Mexico Mortgage Financing Authority
6.80%, 1/1/2026........................................................... 5,500,000 5,926,910
New York-13.9%
Metropolitan Transportation Authority, Dedicated Tax Fund
5.25%, 4/1/2026 (Insured; MBIA)........................................... 12,375,000 11,747,464
New York City:
7.50%, 2/1/2003........................................................... 9,000,000 10,018,530
8.25%, 6/1/2006........................................................... 2,750,000 3,294,362
7.25%, 8/15/2007.......................................................... 13,790,000 15,617,451
6.25%, 8/1/2008........................................................... 10,000,000 10,508,100
6.375%, 8/15/2011......................................................... 31,285,000 32,456,936
5.75%, 2/1/2014........................................................... 25,055,000 24,393,548
5.75%, 2/1/2015........................................................... 18,145,000 17,505,389
5.75%, 2/1/2017........................................................... 20,000,000 19,164,600
5.875%, 3/15/2018......................................................... 20,000,000 19,366,400
5.875%, 2/15/2019......................................................... 23,715,000 22,948,057
6%, 2/1/2022.............................................................. 12,750,000 12,530,955
5.875%, 8/1/2024.......................................................... 15,210,000 14,667,916
6.125%, 8/1/2025.......................................................... 22,625,000 22,503,051
6%, 10/15/2026............................................................ 4,915,000 4,817,880
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
New York (continued)
New York City Municipal Water Finance Authority, Water and Sewer System Revenue:
5.50%, 6/15/2023.......................................................... $ 10,000,000 $ 9,551,400
5.50%, 6/15/2024.......................................................... 27,000,000 25,805,250
New York State Dormitory Authority, Revenue:
(City University) 7.50%, 7/1/2010......................................... 10,000,000 11,608,700
(Department of Health) 5.50%, 7/1/2025.................................... 27,000,000 25,431,030
(State University Educational Facilities) 5.40%, 5/15/2023................ 10,000,000 9,205,200
New York State Energy, Research and Development Authority,
Electric Facilities Revenue
(Con Edison Co. Project) 7.50%, 1/1/2026.................................. 15,000,000 16,070,550
New York State Housing Finance Agency, Revenue, Refunding (Housing Project
Mortgage)
6.125%, 11/1/2020 (Insured; FSA).......................................... 12,000,000 12,306,360
New York State Local Government Assistance Corp., Refunding
5.25%, 4/1/2016 (Insured; AMBAC).......................................... 10,000,000 9,769,800
New York State Mortgage Agency, Revenue (Homeowner Mortgage)
6.65%, 10/1/2025.......................................................... 22,200,000 23,261,382
New York State Thruway Authority, Service Contract Revenue (Local Highway and
Bridge)
5.75%, 4/1/2016........................................................... 15,000,000 14,836,500
New York State Urban Development Corp., Revenue:
(Correctional Capital Facilities):
5.375% 1/1/2025 (Insured; AMBAC)........................................ 32,550,000 31,189,084
5.70%, 1/1/2027......................................................... 22,860,000 21,987,434
(Sports Facility Assistance Program)
5.50%, 4/1/2019 (Insured; MBIA)......................................... 10,745,000 10,522,471
North Carolina-1.1%
Charlotte, Water and Sewer 5.60% 5/1/2021................................... 9,625,000 9,797,384
North Carolina Housing Finance Agency, Single Family Revenue
6.50%, 9/1/2026........................................................... 6,080,000 6,223,549
Pitt County, Revenue (Pitt County Memorial Hospital)
6.90%, 12/1/2021 (Prerefunded 12/1/2001) (b).............................. 12,000,000 13,472,160
Winston Salem, COP 6.90%, 6/1/2011 (Prerefunded 6/1/2001) (b)............... 5,245,000 5,836,898
North Dakota-.2%
North Dakota Housing Finance Agency
(Housing Mortgage Finance Program) 6.75%, 7/1/2025........................ 6,045,000 6,273,078
Ohio-.2%
Cuyahoga County, HR (Meridia Health System) 7%, 8/15/2023................... 7,000,000 7,550,620
Oklahoma-.9%
Claremore Industrial and Redevelopment Authority, EDR
(Yuba Project) 8.375%, 7/1/2011........................................... 7,500,000 7,977,300
Southern Oklahoma Memorial Hospital Authority, HR 6.60%, 12/1/2012.......... 5,725,000 6,001,747
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Oklahoma (continued)
Tulsa Municipal Airport Trust, Revenue
(AMR Corp.) 7.60%, 12/1/2030.............................................. $ 14,390,000 $ 15,577,031
Pennsylvania-2.2%
Allegheny County Hospital Development Authority, Revenue (Health
Center-University of
Pittsburgh Medical Center System) 5.375%, 12/1/2025 (Insured; MBIA)....... 11,280,000 10,634,558
Delaware County Industrial Development Authority, Water Facilities Revenue
(Philadelphia Suburban Water) 6.35%, 8/15/2025 (Insured; FGIC)............ 10,000,000 10,640,500
Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue (MacMillan Ltd. Partnership Project)
7.60%, 12/1/2020.......................................................... 4,500,000 5,031,090
Pennsylvania Higher Educational Facilities Authority,
Health Services Revenue, Refunding (Allegheny Delaware Valley Obligation):
5.40%, 11/15/2007 (Insured; MBIA)....................................... 5,000,000 5,155,550
5.60%, 11/15/2009 (Insured; MBIA)....................................... 9,475,000 9,768,346
Pittsburgh, Refunding 5.125%, 3/1/2009 (Insured; FGIC)...................... 13,655,000 13,555,865
Quakertown General Authority, Revenue (Community Mental Health/Retardation)
8.875%, 11/1/2010......................................................... 6,255,000 6,649,691
Ridley Park Hospital Authority, Revenue (Taylor Hospital)
8.625%, 12/1/2020 (Prerefunded 12/1/2000) (b)............................. 10,000,000 11,618,700
Rhode Island-1.5%
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 12,451,890
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity):
6.95%, 4/1/2022......................................................... 9,250,000 9,692,798
6.60%, 10/1/2025........................................................ 10,270,000 10,605,110
6.50%, 4/1/2027......................................................... 11,835,000 12,249,107
6.85%, 4/1/2027......................................................... 5,485,000 5,765,009
South Carolina-1.7%
Piedmont Municipal Power Agency, Electric Revenue, Refunding
6.60%, 1/1/2021........................................................... 24,650,000 24,792,230
Richland County, Solid Waste Disposal Facilities Revenue
(Union Camp Corp. Project) 7.125%, 9/1/2021............................... 6,250,000 6,721,750
South Carolina Housing Finance and Development Authority,
Mortgage Revenue:
6.55%, 7/1/2015......................................................... 3,950,000 4,100,298
6.75%, 7/1/2026......................................................... 7,000,000 7,269,150
6.70%, 7/1/2027......................................................... 8,000,000 8,284,000
Spartanburg County, Hospital Facilities Improvement Revenue, Refunding
(Mary Black Memorial Project) 8.25%, 10/1/2008 (Prerefunded 10/1/1998) (b) 5,000,000 5,422,200
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Tennessee-1.0%
Tennessee Housing Development Agency, Mortgage Finance
6.55%, 7/1/2026........................................................... $ 31,735,000 $ 32,815,259
Texas-5.3%
Alliance Airport Authority Inc., Special Facilities Revenue:
(American Airlines Inc. Project)
7%, 12/1/2011........................................................... 12,330,000 13,706,891
(Federal Express Corp. Project)
6.375%, 4/1/2021........................................................ 53,415,000 53,956,628
Angelina and Neches River Authority, SWDR (Champion International Corp.
Project)
7.375%, 5/1/2015.......................................................... 5,570,000 6,008,192
Gulf Coast Waste Disposal Authority, Revenue:
(Champion International Corp.)
7.375%, 10/1/2025....................................................... 12,000,000 12,931,920
Solid Waste Disposal (Occidental Petroleum Corp. Project) 7%, 11/1/2020... 7,725,000 8,109,937
Harris County Hospital District, Mortgage Revenue, Refunding
7.40%, 2/15/2010 (Insured; AMBAC)......................................... 5,000,000 5,995,300
Houston, Water and Sewer System Revenue, Refunding, Junior Lien
5.25%, 12/1/2025 (Insured; FGIC).......................................... 11,680,000 10,994,968
Houston Hotel Occupancy Tax, Revenue 7%, 7/1/2009 (Insured; FGIC)
(Prerefunded 7/1/2001) (b)................................................ 12,225,000 13,490,654
Rio Grande Valley Health Facilities Development Corp., HR, Refunding
(Valley Baptist Medical Center Project) 6.40%, 8/1/2016................... 11,200,000 11,972,464
Texas, GO (Veterans Housing Assistance Fund):
7%, 12/1/2025............................................................. 9,580,000 10,119,258
Refunding 6.45%, 12/1/2020................................................ 15,210,000 15,548,423
Texas College Student Loan 5%, 8/1/2021..................................... 8,000,000 7,174,080
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation Project):
8.625%, 11/1/2000....................................................... 1,425,000 1,543,418
8.75%, 11/1/2010........................................................ 4,745,000 5,173,901
Utah-1.9%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018 (c). 20,000,000 14,058,000
Intermountain Power Agency, Power Supply Revenue, Refunding:
6.15%, 7/1/2014 (Insured; MBIA)........................................... 15,000,000 15,866,550
5%, 7/1/2021 (Insured; MBIA).............................................. 6,300,000 5,780,943
Utah Housing Finance Agency, Single Family Mortgage:
6.55%, 1/1/2022........................................................... 5,340,000 5,507,302
6.40%, 1/1/2027........................................................... 6,650,000 6,847,040
6.65%, 7/1/2027........................................................... 9,880,000 10,245,165
7%, 7/1/2027.............................................................. 3,840,000 4,052,160
Vermont-.3%
Vermont Housing Finance Agency, Single Family Housing 6.875%, 5/1/2025...... 10,500,000 10,913,910
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------- --------
Virginia-2.8%
Chesapeake Bay Bridge and Tunnel Commission, General Resolution, Revenue,
Refunding 5%, 7/1/2022 (Insured; MBIA).................................... $ 12,035,000 $ 11,009,618
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022......................................................... 8,715,000 9,181,427
Henrico County Industrial Development Authority, Revenue
(Maryview Hospital Project) 7.50%, 9/1/2011 (Prerefunded 8/1/2000) (b).... 5,180,000 5,792,898
Industrial Development Authority of the City of Fredericksburg,
Hospital Facilities Revenue, Refunding (Medicorp Health System Obligation)
5.25%, 6/15/2023 (Insured; AMBAC)......................................... 16,850,000 15,810,860
Virginia Housing Development Authority, Commonwealth Mortgage:
6.70%, 1/1/2022........................................................... 6,950,000 7,202,424
6.40%, 7/1/2022 (Insured; MBIA)........................................... 24,000,000 24,677,520
6.85%, 1/1/2027........................................................... 8,000,000 8,285,520
Virginia Public School Authority, School Financing
5.125%, 8/1/2017.......................................................... 13,000,000 12,306,580
Washington-.5%
Public Utility District No. 1 of Chelan County,
Chelan Hydro Consolidated System Revenue 6.55%, 7/1/2023.................. 10,000,000 10,399,000
Washington Public Power Supply, Revenue, Refunding (Nuclear Project No. 1)
5.75%, 7/1/2011 (Insured; MBIA)........................................... 7,500,000 7,662,375
West Virgina-.2%
Braxton County, Solid Waste Disposal Revenue (Weyerhaeuser Co. Project)
6.50%, 4/1/2025........................................................... 8,000,000 8,455,280
Wisconsin-.6%
Madison, IDR (Madison Gas and Electric Co. Project)
6.75%, 4/1/2027........................................................... 10,000,000 10,610,800
Wisconsin Health and Educational Facilities Authority, Revenue, Refunding
(Waukesha Memorial Hospital, Inc.)
5.50%, 8/15/2015 (Insured; AMBAC)......................................... 8,545,000 8,360,684
Wyoming-1.3%
Sweetwater County:
PCR, Refunding (Idaho Power Co. Project) 6.05%, 7/15/2026................. 17,000,000 17,228,990
SWDR (FMC Corp. Project) 6.90% 9/1/2024................................... 16,225,000 17,319,863
Uinta County Hospital Facility, Revenue, Refunding
(IHC Hospitals Inc.) 7.25%, 2/15/2019 (Prerefunded 2/15/1999) (b)......... 7,350,000 7,932,561
U.S. Related-.3%
Puerto Rico Aqueduct and Sewer Authority, Revenue, Refunding 5%, 7/1/2019... 10,000,000 9,080,000
--------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $3,210,108,711)..................................................... $3,322,534,744
========
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
Principal
Short-Term Municipal Investments-.1% Amount Value
-------- --------
Florida
Florida Board of Education, Capital Outlay 3.58% (a,d)
(cost $3,000,000)......................................................... $ 3,000,000 $ 3,000,000
========
TOTAL INVESTMENTS-100.0%
(cost $3,213,108,711)..................................................... $3,325,534,744
========
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation HR Hospital Revenue
COP Certificate of Participation IDR Industrial Development 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
SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings
Fitch (e) or Moody's or Standard & Poor's Percentage of Value
- -------- -------- ------------------ --------------------
<S> <C> <C> <C>
AAA Aaa AAA 32.0%
AA Aa AA 24.9
A A A 21.2
BBB Baa BBB 15.2
BB Ba BB .5
Not Rated (f) Not Rated (f) Not Rated (f) 6.2
----
100.0%
====
</TABLE>
Notes to Statement of Investments:
(a) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
February 28, 1997, these securities amounted to $18,601,050 or .5% of net
assets.
(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) Non-accrual status.
(d) Inverse Floater Security-the interest rate is subject to change
periodically.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) 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.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
Cost Value
--------- ---------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $3,213,108,711 $3,325,534,744
Cash....................................... 17,941,304
Interest receivable........................ 51,514,677
Receivable for investment securities sold.. 25,175,619
Receivable for shares of Common Stock subscribed 10,000
Prepaid expenses........................... 85,395
---------
3,420,261,739
---------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 1,887,753
Payable for shares of Common Stock redeemed 71,705
Accrued expenses........................... 206,501
---------
2,165,959
---------
NET ASSETS.................................................................. $3,418,095,780
=========
REPRESENTED BY: Paid-in capital............................ $3,299,979,675
Accumulated net realized gain (loss) on investments 5,690,072
Accumulated net unrealized appreciation (depreciation)
.................... on investments-Note 4(b) 112,426,033
---------
NET ASSETS.................................................................. $3,418,095,780
=========
SHARES OUTSTANDING
(600 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED).............. 274,983,819
NET ASSET VALUE, offering and redemption price per share.................... $12.43
=========
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $109,413,896
EXPENSES: Management fee-Note 3(a)................... $10,550,484
Shareholder servicing costs-Note 3(b)...... 1,789,321
Custodian fees............................. 92,417
Professional fees.......................... 68,760
Registration fees.......................... 55,948
Directors' fees and expenses-Note 3(c)..... 40,814
Prospectus and shareholders' reports....... 38,434
Miscellaneous.............................. 14,109
-------
Total Expenses......................... 12,650,287
-------
INVESTMENT INCOME-NET....................................................... 96,763,609
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... $12,110,277
Net realized gain (loss) on financial futures (4,898,615)
-------
Net Realized Gain (Loss)............... 7,211,662
Net unrealized appreciation (depreciation) on investments 56,754,435
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 63,966,097
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $160,729,706
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
---------- ---------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................. $ 96,763,609 $ 209,578,223
Net realized gain (loss) on investments............................... 7,211,662 45,170,613
Net unrealized appreciation (depreciation) on investments............. 56,754,435 (86,386,337)
--------- ---------
Net Increase (Decrease) in Net Assets Resulting from Operations..... 160,729,706 168,362,499
--------- ---------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................. (97,297,570) (209,044,262)
Net realized gain on investments...................................... (2,336,419) ---
--------- ---------
Total Dividends..................................................... (99,633,989) (209,044,262)
--------- ---------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold......................................... 4,212,985,650 6,426,888,270
Dividends reinvested.................................................. 61,711,677 128,954,048
Cost of shares redeemed............................................... (4,489,983,252) (6,879,608,434)
--------- ---------
Increase (Decrease) in Net Assets from Capital Stock Transactions... (215,285,925) (323,766,116)
--------- ---------
Total Increase (Decrease) in Net Assets........................... (154,190,208) (364,447,879)
NET ASSETS:
Beginning of Period................................................... 3,572,285,988 3,936,733,867
--------- ---------
End of Period......................................................... $ 3,418,095,780 $3,572,285,9
88
========= =========
UNDISTRIBUTED INVESTMENT INCOME-NET..................................... --- $ 533,961
--------- ---------
Shares Shares
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................... 339,831,163 519,000,847
Shares issued for dividends reinvested................................ 4,957,130 10,376,060
Shares redeemed....................................................... (361,784,291) (554,619,976)
--------- ---------
Net Increase (Decrease) in Shares Outstanding....................... (16,995,998) (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 period indicated. This
information has been derived from the Fund's financial statements.
Six Months Ended
February 28, 1997 Year Ended August 31,
-----------------------------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $12.23 $12.41 $12.39 $13.68 $13.17 $12.68
---- ---- ---- ---- ---- ----
Investment Operations:
Investment income-net................. .34 .69 .72 .75 .79 .84
Net realized and unrealized gain (loss)
on investments...................... .21 (.18) .09 (.96) .79 .49
---- ---- ---- ---- ---- ----
Total from Investment Operations...... .55 .51 .81 (.21) 1.58 1.33
---- ---- ---- ---- ---- ----
Distributions:
Dividends from investment income-net.. (.34) (.69) (.72) (.75) (.79) (.84)
Dividends from net realized gain
on investments...................... (.01) .- (.07) (.33) (.28) .-
---- ---- ---- ---- ---- ----
Total Distributions................... (.35) (.69) (.79) (1.08) (1.07) (.84)
---- ---- ---- ---- ---- ----
Net asset value, end of period........ $12.43 $12.23 $12.41 $12.39 $13.68 $13.17
==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN................... 9.01%(1) 4.16% 6.93% (1.63%) 12.62% 10.82%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .71%(1) .71% .70% .68% .69% .68%
Ratio of net investment income
to average net assets............... 5.42%(1) 5.57% 5.94% 5.80% 5.96% 6.49%
Portfolio Turnover Rate............... 43.49%(2) 64.48% 51.55% 36.25% 45.37% 67.86%
Net Assets, end of period (000's Omitted) $3,418,096 $3,572,286 $3,936,734 $4,008,477 $4,724,389 $4,272,679
(1) Annualized.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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. 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: 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. Financial futures on municipal and
U.S. treasury securities are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market on each business day. Investments not
listed on an exchange or the national securities market, or securities for
which there were no transactions, are valued at the average of the most
recent bid and asked prices. Bid price is used when no asked price is
available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, 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-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates
DREYFUS MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
based on prevailing market rates in effect at the time of borrowings. For the
period ended February 28, 1997, the Fund did not borrow under the Facility.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. 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 period
ended February 28, 1997 was reduced by $162,500 pursuant to the settlement of
litigation.
The Agreement provides that if in any full fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and extraordinary expenses, exceed 11\2% of the value of the Fund's average
daily net assets, the Fund may deduct from the payment to be made to the
Manager, or the Manager will bear, the amount of such excess expense. No
expense reimbursement was required for the period ended February 28, 1997.
(B) Under the 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 period ended February 28, 1997, the Fund was charged an aggregate
of $980,000 pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $546,494 during the period ended February 28, 1997.
(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 4-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1997
amounted to $1,505,454,213 and $1,557,338,575, 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. Typicallly, variation margin
payments are received or made to reflect daily unrealized gains or losses.
When the contracts are closed, the Fund recognizes a realized gain or loss.
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board
of Trade on which the contract is traded and is subject to change. At
February 28, 1997, there were no financial futures contracts outstanding.
DREYFUS MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(B) At February 28, 1997, accumulated net unrealized appreciation on
investments was $112,426,033, consisting of $128,470,537
gross unrealized appreciation and $16,044,504 gross unrealized depreciation.
At February 28, 1997, 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 lion "d" logo]
Registration Mark
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. 054SA972
[Dreyfus logo]
Registration Mark
Municipal
Bond Fund, Inc.
Semi-Annual
Report
February 28, 1997
