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 the 12-month period ended August 31, 1998. Your Fund produced a
total return, including share price changes and dividend income generated, of
8.36%,* and an annualized tax-free distribution rate per share of 4.96%.**
The Economy
Having consistently viewed inflation as the primary threat to our strong
growth, low unemployment economy, the Federal Reserve Board now has another
factor to ponder in setting monetary policy: the risk of global recession. The
wave of economic uncertainty that shook stock markets and caused currencies to
devalue, begun in Thailand on July 2, 1997 (the onset of the Asian financial
crisis) , has spread through Asia and around the world. By the end of the
reporting period, Russia had devalued its ruble. All this financial tumult has
underscored just how economically interrelated the world's nations are. In fact,
the fragility of global financial markets has been a key factor in the Fed's
reluctance to raise interest rates in an economy now in its seventh year of
economic expansion. It feared that a rise in rates might threaten the stability
of other currencies.
There were additional economic factors that stayed the Fed's hand. Inflation
has remained tame, comfortably below 2% on the consumer level, and is trivial on
the production level of the economy as well. One reason for the low inflation
rate is the strong dollar, which keeps imports cheap; domestic producers are
constrained from raising prices by competition from cheaper foreign goods. This
has all been good news for consumers, who account for two thirds of all economic
activity. Bolstered by solid wage gains and abundant jobs, consumers have been a
driving positive force in the economy. Whether it was housing, automobiles, big
ticket or small ticket items, their spending and their overall economic optimism
both were robust. But by the end of the reporting period, there were hints that
this could change. The political and economic instability in Russia jolted the
U.S. stock market in August. The stock market selloff could cause consumers to
grow less confident and curtail spending. Of course, the larger-scale economic
fundamentals for consumers remain positive: inflation is low and jobs plentiful
The wave of devaluations that began over a year ago in Southeast Asia has
become stronger. Collapsing currencies, the latest being the Russian ruble, have
triggered often violent reactions in foreign financial markets. The distant
financial turmoil has resulted in a reduced demand for U.S. exports, and has
begun to curtail domestic corporate profit growth. In the second quarter,
profits declined year-over-year for the first time in almost a decade. Mirroring
the slide in corporate profits, industrial production declined in June and July.
In addition to the profit pinch, second-quarter economic growth lessened to 1.6%
, the slowest rate in three years and dramatically below the 5.5% rate reported
for the first quarter. We remain alert for additional signs of the domestic
effects of global financial problems.
Market Environment
Despite the focus on equities as they continued their strong ascension for
much of our fiscal year, municipal prices moved higher, practically
uninterrupted: by the Fund's fiscal year-end, negative influences had affected
the equity markets, but municipal prices were moving toward the year's highs.
The market for municipal bonds was positive for several reasons. From an
economic standpoint, the year was one in which robust economic growth with low
unemployment co-existed with low inflation and low interest rates, ingredients
which helped create a "bond-friendly" atmosphere. A relatively heavy supply of
newly-issued bonds might have presented a serious offset, but demand from
various classes of buyers was substantial enough to successfully absorb the new
issuance without disrupting the market. Then, as the fiscal year progressed,
various crises around the globe and a reallocation of assets by some equity
investors resulted in an inflow of funds to U.S. Treasury Bonds as a safe haven.
That had an indirect, but nonetheless beneficial, effect on municipal bonds,
since it caused market interest rates to decline, pushing prices upward.
Municipal bonds, unlike Treasury bonds, are not purchased by foreigners as a
safe haven, so the market performance of municipals lagged behind that of U.S.
Treasuries; municipal yields vis-a-vis Treasury bond yields now are at yearly
high levels. The environment for municipal bonds still appears to be positive,
especially following the Federal Reserve Board Open Market Committee's reduction
in the target rate for federal funds to 5.25%.
The Portfolio
We made changes in the portfolio which we believe could be advantageous. To
accomplish that, we maintained a heightened sensitivity to global and domestic
events, and to the direction of interest rates which might result. To the extent
that the Fed, within a few months time, gravitated to the likelihood of an
easing in rates from what had been an inclination to raise rates, required that
we be nimble in managing the Fund's assets. We devoted much of our effort to
managing the portfolio' s sensitivity to interest rate changes as we strove to
properly position the Fund in the marketplace. The market's persistent upward
trend resulted in profitable trading activity, thereby incurring net realized
capital gains as reflected in the attached financial statements for the Fund. A
compression of yields across quality ratings allowed us to maintain a high
percentage of the portfolio in upper quality ratings as is reflected in the
financial data and statements which are a part of this report.
While we believe the outlook for municipal securities is still constructive,
we cannot overlook the fact that price levels are at their highs for the year.
For the previously mentioned reasons unique to their year's performance,
long-term (30-year) U.S. Treasury bonds' yields may fall further from today's
level; however, we doubt that municipals will match that decline, so we
currently are maintaining a near-neutral duration stance. We continue to
believe, as we have for many months, that the Fund's investment performance will
be derived largely from bonds which emphasize income production rather than
principal appreciation: that has been, and continues to be, our primary focus.
We hope that you will find the financial information in this report
beneficial, and we want you to know that we appreciate your continued investment
in this Fund.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
September 30, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
**Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset value
per share at the end of the period, adjusted for any capital gain distributions.
Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
DREYFUS MUNICIPAL BOND FUND, INC. AUGUST 31, 1998
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS MUNICIPAL BOND
FUND, INC. AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Dollars
$22,426
Lehman Brothers Municipal Bond Index*
$20,983
Dreyfus Municipal Bond Fund
*Source: Lehman Brothers
<TABLE>
<CAPTION>
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended Five Years Ended Ten Years Ended
August 31, 1998 August 31, 1998 August 31, 1998
____________________ ____________________ ____________________
<S> <C> <C>
8.36% 5.14% 7.69%
</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 8/31/88 to a $10,000 investment made in the Lehman Brothers
Municipal Bond Index on that date. All dividends and capital gain distributions
are reinvested.
The Fund invests primarily in municipal securities and its performance shown in
the line graph takes into account fees and expenses. Unlike the Fund, the Lehman
Brothers Municipal Bond Index is an unmanaged total return performance benchmark
for the long-term, investment-grade tax exempt bond market, calculated by using
municipal bonds selected to be representative of the municipal market overall.
The Index does not take into account charges, fees and other expenses which can
contribute to the Index potentially outperforming the Fund. Further information
relating to Fund performance, including expense reimbursements, if applicable,
is contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
DREYFUS MUNICIPAL BOND FUND, INC.
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STATEMENT OF INVESTMENTS AUGUST 31, 1998
<TABLE>
<CAPTION>
Principal
Long-Term Municipal Investments--98.1% Amount Value
- ------------------------------------------------------- _______________ _______________
Alabama--1.9%
Alabama Housing Finance Authority, SFMR:
<S> <C> <C> <C> <C>
6.45%, 10/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,200,000 $ 7,698,096
6.10%, 10/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,975,000 10,573,600
Alabama Industrial Development Authority, SWDR (Pine City Fiber Co.)
6.45%, 12/1/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000,000 25,247,330
Industrial Development Board of the Town of Courtland, SWDR
(Champion International Corp. Project)
7%, 11/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100,000 8,909,271
The Industrial Development Board of the Town of McIntosh,
Environmental Facilities Refunding Revenue (Ciba Specialty Chemicals Corp.
Project)
5.375%, 6/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,855,000 10,034,755
Alaska--.5%
Alaska Housing Finance Corp.
(Collateralized Veterans Mortgage Program)
6.375%, 12/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,260,000 8,844,643
Anchorage, Electric Utility Revenue, Refunding
6.50%, 12/1/2015 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,135,000 7,402,000
Arizona--1.0%
The Industrial Development Authority of the County of Apache, PCR, Refunding
(Tucson Electric Power Co. Project) 5.875%, 3/1/2033 . . . . . . . . . . . . . . . . . . 17,550,000 17,668,462
Pima County Industrial Development Authority, Industrial Revenue
(Tucson Electric Power Co. Project) 6%, 9/1/2029 . . . . . . . . . . . . . . . . . . . . 15,500,000 15,753,115
Arkansas--.7%
Little River County, Revenue, Refunding (Georgia-Pacific Corp. Project)
5.60%, 10/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,600,000 22,883,630
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 11,195,042
California Health Facilities Financing Authority, Revenue, Refunding
(Stanford Health Care) 5%, 11/15/2028 . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000 19,737,600
California Higher Education Loan Authority, Inc.,
Student Loan Revenue, Refunding 6.50%, 6/1/2005 . . . . . . . . . . . . . . . . . . . . 19,250,000 21,108,972
California Statewide Communities Development Authority,
LR (Special Facilities--United Airlines):
5.70%, 10/1/2033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,500,000 42,858,295
5.625%, 10/1/2034 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,500,000 51,859,965
San Diego County, COP, Refunding (Interim Justice Facilities Project) 6.50%, 8/1/2007. . . 9,805,000 10,660,290
DREYFUS MUNICIPAL BOND FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Colorado--2.8%
City and County of Denver:
Airport Revenue:
7.25%, 11/15/2023 (Prerefunded 11/15/2002) (a) . . . . . . . . . . . . . . . . . . . . $ 6,390,000 $ 7,333,164
7.25%, 11/15/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,375,000 21,616,494
Special Facilities Airport Revenue (United Airlines Project)
6.875%, 10/1/2032 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,250,000 12,229,875
E-470 Public Highway Authority, Senior Revenue, Refunding:
5%, 9/1/2021 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000,000 6,976,270
4.75%, 9/1/2023 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,550,000 12,148,525
5%, 9/1/2026 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,530,000 31,271,769
Connecticut--1.6%
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
6.70%, 11/15/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,295,000 3,570,100
6.30%, 5/15/2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,240,000 7,684,826
6.50%, 5/15/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,060,000 12,927,235
Connecticut Resource Recovery Authority
(American Fuel Co. Project) 6.45%, 11/15/2022 . . . . . . . . . . . . . . . . . . . . . 7,325,000 7,892,394
Mashantucket Western Pequot Tribe, Special Revenue:
6.40%, 9/1/2011 (Prerefunded 9/1/2007) (a,b) . . . . . . . . . . . . . . . . . . . . . . 9,170,000 10,705,792
6.40%, 9/1/2011 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,330,000 10,360,685
Delaware--.5%
Delaware Economic Development Authority, Water Development Revenue
(Wilmington Suburban Water Corp. Project) 6.80%, 12/1/2023 . . . . . . . . . . . . . . . 8,000,000 8,674,880
Delaware Housing Authority, Senior SFMR
6.45%, 1/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,010,000 8,553,318
District of Columbia--2.1%
Metropolitan Washington Airports Authority, Airport System Revenue:
6.625%, 10/1/2012 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,400,000 44,536,556
6.625%, 10/1/2019 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,600,000 25,969,676
Florida--4.7%
Brevard County Housing Finance Authority, SFMR 6.80%, 3/1/2028 . . . . . . . . . . . . . . 5,845,000 6,324,407
Florida Community Services Corp. Walton County, Water and Sewer Revenue
(South Walton County Regional Utility) 7%, 3/1/2018 . . . . . . . . . . . . . . . . . . 3,500,000 3,889,970
Florida State Board of Education, Public Education Capital Outlay
4.75%, 6/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,340,000 15,819,734
Florida State Department Juvenile Justice Lease Certificate
(185 Bed Juvenile Residential) 5.20%, 6/15/2019 (Insured; MBIA) . . . . . . . . . . . . 14,000,000 14,096,460
Orlando Utilities Commission, Water and Electric Revenue, Refunding
6.75%, 10/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,875,000 19,612,451
DREYFUS MUNICIPAL BOND FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Florida (continued)
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project) 6.70%, 2/15/2015 (c) . . . . . . . . . . . $ 23,400,000 $ 18,720,000
(Osceola Power Limited Partnership) 6.95%, 1/1/2022 (c) . . . . . . . . . . . . . . . . 33,800,000 26,702,000
Polk County Industrial Development Authority, IDR
(IMC Fertilizer) 7.525%, 1/1/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,200,000 16,741,280
Tampa, Health System Revenue (Catholic Health East Issue)
4.875%, 11/15/2023 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,640,000 33,778,503
Georgia--.3%
Georgia Housing and Finance Authority, Single Family Mortgage
6.55%, 12/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,440,000 10,172,827
Idaho--.3%
Idaho Housing Agency, Multi-Family Housing Refunding
6.70%, 7/1/2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,050,000 10,696,416
Illinois--4.5%
Chicago, Midway Airport Revenue:
5%, 1/1/2031 (Insured; MBIA) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 9,756,600
5.125%, 1/1/2035 (Insured; MBIA) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 9,821,300
Chicago O'Hare International Airport, Revenue
Special Facilities (United Airlines Inc. Project):
8.50%, 5/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500,000 7,023,185
8.85%, 5/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,495,000 16,176,275
Cook County, Refunding 5%, 11/15/2022 (Insured; FGIC) (d). . . . . . . . . . . . . . . . . 16,000,000 15,744,960
Illinois Development Finance Authority, Revenue
Pollution Control, Refunding (Central Illinois Public Service Co.)
6.375%, 1/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000,000 14,934,220
Illinois Educational Facilities Authority, Revenue
(Illinois Institute of Technology)
Refunding 6.875%, 12/1/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,250,000 8,226,430
Illinois Health Facilities Authority, Revenue:
(Beverly Farm Foundation) 9.125%, 12/15/2015 (Prerefunded 12/15/2000) (a) . . . . . . . 3,730,000 4,262,346
Refunding:
(Evangelical Hospitals) 6.50%, 4/15/2009 (Insured; FSA) . . . . . . . . . . . . . . . 5,000,000 5,890,050
(Mercy Hospital and Medical Center) 7%, 1/1/2015 . . . . . . . . . . . . . . . . . . . 7,500,000 8,037,525
Illinois Housing Development Authority:
Homeowner Mortgage Revenue:
6.70%, 8/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,055,000 4,339,499
6.625%, 8/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,820,000 15,871,331
Multi-Family Housing (Lawndale Redevelopment Project) 6.90%, 12/1/2026 . . . . . . . . . 8,750,000 9,569,350
Multi-Family Program 6.75%, 9/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . 8,750,000 9,285,500
Section 8 Elderly Housing Revenue (Morningside North Development)
6.85%, 1/1/2021 (Prerefunded 1/1/2003) (a) . . . . . . . . . . . . . . . . . . . . . . 11,220,000 12,647,296
DREYFUS MUNICIPAL BOND FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Indiana--1.8%
Brownsburg School Building Corp., First Mortgage
6.10%, 2/1/2013 (Insured; FSA) (Prerefunded 2/1/2005) (a) . . . . . . . . . . . . . . . $ 7,500,000 $ 8,474,550
Hammond Multi-School Building Corp., First Mortgage
7.10%, 1/15/2015 (Prerefunded 7/15/2001) (a) . . . . . . . . . . . . . . . . . . . . . . 5,585,000 6,190,191
Indiana Health Facility Financing Authority, HR
(Clarian Health Partners, Inc.) 6%, 2/15/2021 . . . . . . . . . . . . . . . . . . . . . 18,000,000 19,550,160
Indiana Transportation Finance Authority, Airport Facility LR
6.50%, 11/1/2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,635,000 6,198,444
IPS School Building Corp., First Mortgage
6.10%, 1/15/2020 (Prerefunded 7/15/2004) (a) . . . . . . . . . . . . . . . . . . . . . . 11,000,000 12,375,110
Logansport Multi-Purpose School Building Corp., First Mortgage Refunding
6%, 1/1/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,645,000 8,168,835
Iowa--.4%
Iowa Finance Authority, SFMR (Mortgage Backed Securities Program)
6.65%, 7/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,885,000 11,651,739
Kansas--1.0%
Wichita, HR 6.464%, 10/1/2022 (Insured; MBIA). . . . . . . . . . . . . . . . . . . . . . . 31,300,000 34,420,297
Kentucky--1.9%
City of Ashland, Sewage and Solid Waste Revenue
(Ashland Inc. Project) 7.125%, 2/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . 13,170,000 14,970,866
Kenton County Airport Board, Airport Revenue,
Special Facilities (Delta Airlines Project):
7.125%, 2/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,455,000 9,208,256
6.125%, 2/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 10,282,500
Mount Sterling, LR (Kentucky League Cities Funding)
6.10%, 3/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,955,000 9,020,970
Pendleton County, Multi-County LR
(Kentucky Associates Counties Leasing Trust Program) 6.50%, 3/1/2019 . . . . . . . . . . 18,500,000 19,805,545
Louisiana--1.5%
Louisiana Public Facilities Authority, HR
(Francisan Missionaries) 5%, 7/1/2028 (Insured; MBIA) . . . . . . . . . . . . . . . . . 10,000,000 9,854,400
Parish of Saint Charles, PCR (Louisiana Power and Lighting Co. Project)
8.25%, 6/1/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500,000 7,914,975
Parish of West Feliciana, PCR:
(Gulf States Utilities Co. Project) 9%, 5/1/2015 . . . . . . . . . . . . . . . . . . . . 13,500,000 14,809,635
(Gulf States Utilities-I) 7.70%, 12/1/2014 . . . . . . . . . . . . . . . . . . . . . . . 14,000,000 15,659,420
Maine--.7%
Maine Financial Authority, Solid Waste Revenue
Recycling Facilities (Great Northern Paper, Inc. Project-Bowater Inc. Obligor)
7.75%, 10/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,165,000 9,183,584
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Maine (continued)
Maine Housing Authority, Mortgage Purchase
6.875%, 11/15/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,320,000 $ 13,250,160
Maryland--2.8%
Community Development Administration,
Department of Housing and Community Development State of Maryland:
6%, 7/1/2039 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 10,595,900
(Single Family Program):
6.80%, 4/1/2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,400,000 35,466,124
6.55%, 4/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,190,000 9,908,566
6.75%, 4/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,990,000 21,541,624
Maryland Health and Higher Educational Facilities Authority, Revenue
(Johns Hopkins Medicine--Howard County General Hospital Acquisition Issue)
5%, 7/1/2033 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500,000 17,341,800
Massachusetts--5.3%
Massachusetts Bay Transportation Authority, General Transportation System:
5%, 3/1/2027 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 9,902,500
Refunding 4.50%, 3/1/2026 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . 25,250,000 23,374,430
Massachusetts Housing Finance Agency, Revenue:
Housing:
6.50%, 7/1/2025 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,140,000 4,481,716
6.60%, 1/1/2037 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100,000 7,709,251
Single Family Housing:
7.125%, 6/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,975,000 13,918,282
6.65%, 12/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,200,000 7,781,904
Massachusetts Industrial Finance Agency, Revenue:
Museum (Norman Rockwell Stockbridge) 8.125%, 7/1/2011 . . . . . . . . . . . . . . . . . 2,825,000 3,015,518
(Tufts University) 4.75%, 2/15/2028 (Insured; MBIA) . . . . . . . . . . . . . . . . . . 36,730,000 35,266,677
Massachusetts Turnpike Authority, Metropolitan Highway System Revenue:
5%, 1/1/2027 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 14,853,150
5%, 1/1/2037 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,955,000 26,568,196
Massachusetts Water Resource Authority, Refunding
5%, 8/1/2024 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,000,000 30,709,530
Michigan--4.2%
Charter County of Wayne, Special Airport Facilities Revenue, Refunding
(Northwest Airlines, Inc., Facilities) 6.75%, 12/1/2015 . . . . . . . . . . . . . . . . 8,785,000 9,812,318
Detroit, Sewer Disposal Revenue
5%, 7/1/2027 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,500,000 21,287,795
East Grand Rapids Public School District 5%, 5/1/2020 (Insured; MBIA). . . . . . . . . . . 6,325,000 6,262,635
The Economic Development Corp. of the County of Gratiot,
Limited Obligation EDR
(Danly Die Set Project) 7.625%, 4/1/2007 . . . . . . . . . . . . . . . . . . . . . . . . 3,200,000 3,501,920
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Michigan (continued)
Michigan Hospital Finance Authority, Revenue:
Hospital, Refunding
(Genesys Health System Obligated Group):
8.125%, 10/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000,000 $ 18,908,700
7.50%, 10/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,300,000 18,474,444
(Metropolitan Hospital) 8.125%, 7/1/2018 (Prerefunded 7/1/1999) (a) . . . . . . . . . . 5,000,000 5,333,400
(Oakwood Obligation Group) Refunding 5%, 8/15/2031 (Insured; FSA) . . . . . . . . . . . 20,750,000 20,242,247
Michigan Housing Development Authority, SFMR
6.20%, 12/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,240,000 27,012,100
Western Townships Utilities Authority, Sewer Disposal System
(Limited Tax GO) 8.125%, 1/1/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,765,000 9,064,149
Minnesota--1.7%
Minnesota Housing Finance Agency, Single Family Mortgage:
6.90%, 7/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,810,000 7,301,001
6.50%, 7/1/2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,755,000 16,817,045
6.45%, 7/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,210,000 32,167,306
Missouri--.4%
Missouri Higher Education Loan Authority, Student Loan Revenue
6.75%, 2/15/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500,000 12,479,225
Nebraska--1.1%
Omaha Public Power District, Electric Revenue 5.50%, 2/1/2014. . . . . . . . . . . . . . . 32,000,000 34,949,760
Nevada--1.3%
Clark County, IDR, Refunding
(Nevada Power Co. Project) 5.90%, 10/1/2030 . . . . . . . . . . . . . . . . . . . . . . 15,500,000 15,856,965
Nevada Housing Division (Single Family Program)
6.80%, 4/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,960,000 10,642,360
Washoe County:
Gas Facilities Revenue (Sierra Pacific Power Co. Project)
6.70%, 11/1/2032 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 11,022,900
Gas and Water Facilities Revenue, Refunding (Sierra Pacific)
6.30%, 12/1/2014 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . 5,375,000 5,838,432
New Hampshire--4.0%
Business Finance Authority of the State of New Hampshire:
PCR, Refunding (Public Service Co. of New Hampshire Project)
6%, 5/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,500,000 15,965,620
State Guaranteed Airport Revenue (Manchester Airport Project):
6.50%, 1/1/2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,600,000 13,627,026
6.375%, 1/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,650,000 9,293,906
New Hampshire Housing Finance Authority:
Multi-Family Housing:
7.55%, 7/1/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,205,000 4,816,365
(Mariners Village Project) 6.60%, 1/1/2038 (Insured; FHA) . . . . . . . . . . . . . . 7,365,000 7,905,296
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
New Hampshire (continued)
New Hampshire Housing Finance Authority (continued):
Single Family Mortgage:
7.25%, 1/1/2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,965,000 $ 3,232,769
6.55%, 7/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,075,000 22,510,629
Single Family Residential Mortgage:
7.10%, 1/1/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,980,000 22,139,355
7.75%, 7/1/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,365,000 15,322,140
6.85%, 1/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,335,000 9,949,150
6.95%, 1/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,275,000 9,937,977
New Jersey--1.9%
New Jersey Economic Development Authority, PCR
(Public Service Electric and Gas Co. Project)
6.40%, 5/1/2032 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,040,000 35,355,499
New Jersey Housing and Mortgage Finance Agency, Revenue:
6%, 11/1/2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,218,000
6.45%, 11/1/2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,260,000 16,407,857
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 7,225,075
New Mexico--1.1%
Albuquerque, HR, Refunding (Presbyterian Health Care Services)
6.375%, 8/1/2007 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500,000 4,953,870
Farmington, PCR, Refunding (Public Service Co. San Juan)
6.30%, 12/1/2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,500,000 15,752,510
New Mexico Educational Assistance Foundation, Student Loan Revenue
7.45%, 3/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,130,000 9,074,869
New Mexico Mortgage Financing Authority
6.80%, 1/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500,000 6,279,625
New York--14.6%
Long Island Power Authority, Electric System General Revenue
5.50%, 12/1/2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,465,000 22,067,952
Metropolitan Transportation Authority, Dedicated Tax Fund
5%, 4/1/2023 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,420,000 22,184,366
New York City:
7.50%, 2/1/2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000,000 10,072,710
7.25%, 8/15/2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,790,000 16,620,535
6.375%, 8/15/2011 (Prerefunded 8/15/2005) (a) . . . . . . . . . . . . . . . . . . . . . 6,565,000 7,533,863
6.375%, 8/15/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,720,000 27,650,556
5.75%, 2/1/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,055,000 26,732,182
5.75%, 2/1/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,145,000 19,289,587
5.75%, 2/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,500,000 23,890,275
5.875%, 3/15/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000,000 24,615,750
5%, 8/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,775,000 39,254,743
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
New York (continued)
New York City (continued):
5.875%, 2/15/2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,715,000 $ 25,338,292
6%, 2/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,750,000 13,839,105
5%, 8/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,665,000 28,095,713
5.875%, 8/1/2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,510,000 25,198,488
5.125%, 8/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500,000 16,356,450
6.125%, 8/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,625,000 24,900,170
New York State Dormitory Authority, Revenue:
(City University):
7.50%, 7/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 12,269,300
5%, 7/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 14,580,000
(New York and Presbyterian Hospital) Refunding
5%, 8/1/2032 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,400,000 9,271,032
(State University Educational Facilities)
4.75%, 5/15/2025 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,500,000 13,052,880
New York State Energy, Research and Development Authority,
Electric Facilities Revenue
(Con Edison Co. Project) 7.50%, 1/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 15,781,050
New York State Housing Finance Agency, Revenue, Refunding (Housing Project
Mortgage)
6.125%, 11/1/2020 (Insured; FSA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,960,000 13,035,084
New York State Local Government Assistance Corp.
Refunding 5.25%, 4/1/2016 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 10,609,600
New York State Mortgage Agency, Revenue (Homeowner Mortgage)
6.65%, 10/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,865,000 23,820,168
North Carolina--1.1%
City of Charlotte, Charlotte/Douglas International Airport,
Special Facility Refunding Revenue (US Airways, Inc. Project)
5.60%, 7/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,280,000 12,374,065
North Carolina Housing Finance Agency, Single Family Revenue
6.50%, 9/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,980,000 6,414,387
Pitt County, Revenue (Pitt County Memorial Hospital)
6.90%, 12/1/2021 (Prerefunded 12/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . 12,000,000 13,360,200
Winston Salem, COP 6.90%, 6/1/2011 (Prerefunded 6/1/2001) (a). . . . . . . . . . . . . . . 5,245,000 5,767,926
North Dakota--.2%
North Dakota Housing Finance Agency
(Housing Mortgage Finance Program) 6.75%, 7/1/2025 . . . . . . . . . . . . . . . . . . . 5,935,000 6,386,832
Ohio--1.4%
Cleveland, Airport Revenue Special (Continental Airlines Inc. Project)
5.375%, 9/15/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,600,000 27,498,708
Cuyahoga County, HR (Meridia Health System)
7%, 8/15/2023 (Prerefunded 8/15/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . 7,000,000 7,757,190
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Ohio (continued)
County of Hamilton, Sales Tax Bonds (Hamilton County Football Project)
5%, 12/1/2027 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,000,000 $ 11,916,960
Oklahoma--.9%
Claremore Industrial and Redevelopment Authority, EDR
(Yuba Project) 8.375%, 7/1/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500,000 8,161,050
Southern Oklahoma Memorial Hospital Authority, HR
6.60%, 12/1/2012 (Prerefunded 12/1/2002) (a) . . . . . . . . . . . . . . . . . . . . . . 5,725,000 6,418,126
Tulsa Municipal Airport Trust, Revenue
(AMR Corp.) 7.60%, 12/1/2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,390,000 15,714,312
Pennsylvania--2.2%
Delaware County Authority, Health System Revenue
(Catholic Health East Issue) 4.875%, 11/15/2026 (Insured; AMBAC) . . . . . . . . . . . . 18,250,000 17,558,872
Delaware County Industrial Development Authority, Water Facilities Revenue
(Philadelphia Suburban Water) 6.35%, 8/15/2025 (Insured; FGIC) . . . . . . . . . . . . . 10,000,000 11,110,700
Geisinger Authority, Health System Revenue
(Penn State Geisinger Health System) 5%, 8/15/2028 . . . . . . . . . . . . . . . . . . . 13,000,000 12,713,220
Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue (MacMillan Ltd. Partnership Project)
7.60%, 12/1/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500,000 5,005,575
Quakertown General Authority, Revenue (Community Mental Health/Retardation):
8.875%, 11/1/2010 (Prerefunded 11/1/2000) (a) . . . . . . . . . . . . . . . . . . . . . 2,640,000 2,966,647
8.875%, 11/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,615,000 3,933,771
Ridley Park Hospital Authority, Revenue (Taylor Hospital)
8.625%, 12/1/2020 (Prerefunded 12/1/2000) (a) . . . . . . . . . . . . . . . . . . . . . 10,000,000 11,211,600
Saint Mary Hospital Authority, Bucks County Revenue
(Catholic Health Initiatives) 5%, 12/1/2028 . . . . . . . . . . . . . . . . . . . . . . 10,125,000 9,900,225
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) (a) . . . . . . . 11,000,000 12,000,670
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity):
6.95%, 4/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,250,000 9,967,985
6.60%, 10/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,270,000 10,997,835
6.50%, 4/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,835,000 12,531,845
6.85%, 4/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,995,000 5,395,000
South Carolina--2.7%
Piedmont Municipal Power Agency, Electric Revenue, Refunding:
6.60%, 1/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,650,000 24,685,742
4.75%, 1/1/2025 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,550,000 39,014,777
Richland County, Solid Waste Disposal Facilities Revenue
(Union Camp Corp. Project) 7.125%, 9/1/2021 . . . . . . . . . . . . . . . . . . . . . . 6,250,000 6,834,437
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
South Carolina (continued)
South Carolina Housing Finance and Development Authority,
Mortgage Revenue:
6.55%, 7/1/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,950,000 $ 4,254,268
6.75%, 7/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,565,000 7,054,552
6.70%, 7/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,275,000 7,844,705
Tennessee--1.0%
Montgomery County Health, Educational and Housing Facility Board,
HR, Refunding and Improvement (Clarksville Regional Health System)
5.375%, 1/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,250,000 6,238,313
Tennessee Housing Development Agency, Mortgage Finance
6.55%, 7/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,850,000 25,672,379
Texas--6.6%
Alliance Airport Authority Inc., Special Facilities Revenue:
(American Airlines Inc. Project)
7%, 12/1/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,330,000 14,657,411
(Federal Express Corp. Project)
6.375%, 4/1/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,075,000 61,102,124
Angelina and Neches River Authority, SWDR (Champion International Corp. Project
7.375%, 5/1/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,570,000 6,141,092
Bell County Health Facilities Development Corp., Retirement Facility Revenue
(Buckner Retirement Services, Inc. Obligated Group Project)
5.25%, 11/15/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000,000 24,533,750
Gulf Coast Waste Disposal Authority, Revenue:
(Champion International Corp.)
7.375%, 10/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000,000 13,385,040
Solid Waste Disposal (Occidental Petroleum Corp. Project) 7%, 11/1/2020 . . . . . . . . 7,725,000 8,489,080
Harris County, Refunding (Toll Road--Senior Lien)
5%, 8/15/2016 (Insured; FGIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100,000 4,111,890
Harris County Hospital District, Mortgage Revenue, Refunding
7.40%, 2/15/2010 (Insured; AMBAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,355,000 10,087,409
Houston Hotel Occupancy Tax, Revenue 7%, 7/1/2009 (Insured; FGIC)
(Prerefunded 7/1/2001) (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,225,000 13,284,419
Rio Grande Valley Health Facilities Development Corp., HR, Refunding
(Valley Baptist Medical Center Project) 6.40%, 8/1/2016 . . . . . . . . . . . . . . . . 11,200,000 12,273,296
Tarrant County Health Facilities Development Corp., Health System Revenue,
Refunding
(Texas Health Resources System):
5.75%, 2/15/2014 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,470,000 10,492,855
5%, 2/15/2026 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 9,845,600
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Texas (continued)
Texas, GO (Veterans Housing Assistance Fund):
7%, 12/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,580,000 $ 10,403,018
Refunding 6.45%, 12/1/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,210,000 16,380,105
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation Project)
8.75%, 11/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,745,000 5,032,832
Utah--2.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018 (c). . . . . . . . 20,000,000 12,004,000
Intermountain Power Agency, Power Supply Revenue, Refunding
6.15%, 7/1/2014 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 16,810,200
Tooele County, Hazardous Waste Treatment Revenue
(Union Pacific Project) 5.70%, 11/1/2026 . . . . . . . . . . . . . . . . . . . . . . . . 13,500,000 13,705,200
Utah Housing Finance Agency, Single Family Mortgage:
6.55%, 1/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,395,000 4,702,782
6.40%, 1/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,525,000 6,969,940
6.65%, 7/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,590,000 8,172,153
7%, 7/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,595,000 2,798,889
Vermont--.3%
Vermont Housing Finance Agency, Single Family Housing 6.875%, 5/1/2025 . . . . . . . . . . 10,500,000 11,195,415
Virginia--1.7%
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,715,000 9,487,933
Henrico County Industrial Development Authority, Revenue
(Maryview Hospital Project) 7.50%, 9/1/2011 (Prerefunded 8/1/2000) (a) . . . . . . . . . 5,010,000 5,426,281
Virginia Housing Development Authority, Commonwealth Mortgage:
6.70%, 1/1/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,950,000 7,410,021
6.40%, 7/1/2022 (Insured; MBIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000,000 25,911,840
6.85%, 1/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,855,000 8,197,949
Washington--1.3%
Public Utility District No. 1 of Chelan County,
Chelan Hydro Consolidated System Revenue 6.55%, 7/1/2023 . . . . . . . . . . . . . . . . 10,000,000 10,968,800
Washington 5%, 7/1/2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,335,000 32,043,662
West Virginia--1.3%
Braxton County, SWDR (Weyerhaeuser Co. Project):
6.50%, 4/1/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000,000 8,862,240
Refunding 5.40%, 5/1/5025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,700,000 21,923,076
West Virginia, GO State Road Bonds 4.50%, 6/1/2023 (Insured; FGIC) . . . . . . . . . . . . 14,000,000 13,002,080
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ _______________
Wisconsin--.3%
Madison, IDR (Madison Gas and Electric Co. Project)
6.75%, 4/1/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000,000 $ 10,822,100
Wyoming--1.1%
Sweetwater County:
PCR, Refunding (Idaho Power Co. Project) 6.05%, 7/15/2026 . . . . . . . . . . . . . . . 17,000,000 18,164,500
SWDR (FMC Corp. Project) 6.90%, 9/1/2024 . . . . . . . . . . . . . . . . . . . . . . . . 16,225,000 17,976,002
U.S. Related--1.2%
Puerto Rico Electric Power Authority, Power Revenue
5%, 7/1/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,100,000 29,707,195
Puerto Rico Highway And Transportation Authority, Transportation Revenue
5%, 7/1/2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 9,838,000
_______________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $3,075,335,593) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,269,436,489
===============
Short-Term Municipal Investments--1.7%
- -------------------------------------------------------
Alabama--.3%
Stevenson Industrial Development Board, Environmental Improvement Revenue
VRDN (Mead Corp. Project) 3.35% (LOC; First National Bank of Chicago) (e) . . . . . . . $ 8,900,000 $ 8,900,000
Minnesota--1.3%
Beltrami County, Environmental Control Revenue, Refunding
VRDN (Northwood Panelboard) 3.30% (LOC; Union Bank of Switzerland) (e) . . . . . . . . . 2,800,000 2,800,000
Cohasset, Revenue, Refunding, VRDN (Minnesota Power and Light Co. Project)
3.30% (LOC; ABN Amro Bank N.V.) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . 6,200,000 6,200,000
Duluth Economic Development Authority, Health Care Facilities, Revenue,
Refunding
VRDN (Miller Dwan Medical Center Project)
3.65% (LOC; Credit Local De France) (e) . . . . . . . . . . . . . . . . . . . . . . . . 7,300,000 7,300,000
Duluth, Tax Increment Revenue,
VRDN (Lake Superior Paper) 3.25% (LOC; Wachovia Bank of Georgia) (e) . . . . . . . . . . 2,800,000 2,800,000
Golden Valley, IDR, VRDN (Unicare Homes Project)
3.47% (LOC; Banque Paribas) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,000,000
Mankato, Multifamily Revenue, Refunding
VRDN (Highland Hills Project) 3.50% (LOC; First Bank National Association) (e) . . . . . 3,000,000 3,000,000
Minneapolis and Saint Paul Housing and Redevelopment Authority,
Health Care Systems Revenue, Refunding VRDN (Childrens' Health Care)
3.35% (Insured; FSA) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,610,000 13,610,000
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1998
Principal
Short-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------- _______________ ______________
Minnesota (continued)
Minneapolis, VRDN 3.20% (LOC; Bayerische Vereinsbank AG) (e) . . . . . . . . . . . . . . . $ 1,900,000 $ 1,900,000
Minneapolis Community Development Agency, PCR,
VRDN (Northern States Power Co. Project) 3.45% (e) . . . . . . . . . . . . . . . . . . . 1,010,000 1,010,000
Minnesota Higher Education Facilities Authority, Revenue,
VRDN (Bethel College) 3.15% (LOC; Allied Irish Banks) (e) . . . . . . . . . . . . . . . 3,345,000 3,345,000
Saint Cloud Health Care Facilities, Revenue, VRDN (The Saint Cloud Hospital)
3.20% (LOC; Rabobank Nederland) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,850,000 1,850,000
Ohio--.1%
Twinsburg, IDR, VRDN (United Stationers Supply Co.)
3.50% (LOC; PNC Bank) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100,000 4,100,000
_______________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $57,815,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,815,000
===============
TOTAL INVESTMENTS
(cost $3,133,150,593) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.8% $3,327,251,489
======= ===============
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2% $ 7,731,882
======= ===============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $3,334,983,371
======= ===============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
Summary of Abbreviations
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
COP Certificate of Participation LOC Letter of Credit
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
VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
- -----------------------------------------------------------------------------
Fitch or Moody's or Standard & Poor's Percentage of Value
____ ________ _________________ ___________________
<S> <C> <C> <C>
AAA Aaa AAA 30.7%
AA Aa AA 21.1
A A A 21.6
BBB Baa BBB 17.9
BB Ba BB 1.8
B B B 1.0
F1 MIG1/P1 SP1/A1 1.6
Not Rated (f) Not Rated (f) Not Rated (f) 4.3
_______
100.0%
=======
</TABLE>
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a)Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and interest
on the municipal issue and to retire the bonds in full at the earliest
refunding date.
(b)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 August 31, 1998,
these securities amounted to $21,066,477 or .6% of net assets.
(c) Non-income producing security; interest payment in default.
(d) Purchased on a delayed delivery basis.
(e)Securities payable on demand. Variable interest rate--subject to periodic
change.
(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 AUGUST 31, 1998
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $3,133,150,593 $3,327,251,489
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 4,719,564
Interest receivable . . . . . . . . . . . . . . . . . . . 47,734,962
Receivable for investment securities sold . . . . . . . . 99,517
Receivable for shares of Common Stock subscribed . . . . 1,171
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 364,667
_______________
3,380,171,370
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 1,754,224
Payable for investment securities purchased . . . . . . . 43,057,715
Payable for shares of Common Stock redeemed . . . . . . . 69,725
Accrued expenses . . . . . . . . . . . . . . . . . . . . 306,335
_______________
45,187,999
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,334,983,371
===============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $3,097,773,963
Accumulated net realized gain (loss) on investments . . . 43,108,512
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 . . . . . . . . . . . . . . . . 194,100,896
_______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,334,983,371
===============
SHARES OUTSTANDING
(600 MILLION SHARES OF $.01 PAR VALUE COMMON STOCK AUTHORIZED) . . . . . . . . . . . . . . 259,447,340
NET ASSET VALUE, offering and redemption price per share--Note 3(d). . . . . . . . . . . . $12.85
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1998
INVESTMENT INCOME
INCOME Interest Income . . . . . . . . . . . . . . . . . . . . . $194,274,577
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . $19,991,724
Shareholder servicing costs--Note 3(b) . . . . . . . . . 4,123,726
Custodian fees . . . . . . . . . . . . . . . . . . . . . 166,793
Registration fees . . . . . . . . . . . . . . . . . . . . 149,216
Prospectus and shareholders' reports . . . . . . . . . . 78,710
Directors' fees and expenses--Note 3(c) . . . . . . . . . 63,752
Professional fees . . . . . . . . . . . . . . . . . . . . 63,406
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 22,584
Interest expense--Note 2 . . . . . . . . . . . . . . . . 4,661
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 51,793
____________
Total Expenses . . . . . . . . . . . . . . . . . . 24,716,365
Less--reduction in management fee due to
undertakings--Note 3(a) . . . . . . . . . . . . . . . (214,400)
____________
Net Expenses . . . . . . . . . . . . . . . . . . . 24,501,965
_____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,772,612
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . $49,477,334
Net unrealized appreciation (depreciation) on investments . . 53,807,416
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 103,284,750
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $273,057,362
=============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
August 31, 1998 August 31, 1997
_______________ _______________
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 169,772,612 $ 191,516,599
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . 49,477,334 13,999,819
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . 53,807,416 84,621,882
_______________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . 273,057,362 290,138,300
_______________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (170,739,421) (191,083,751)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,847,051) (2,336,419)
_______________ _______________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (189,586,472) (193,420,170)
_______________ _______________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,928,492,791 7,505,432,633
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,802,455 118,861,845
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,250,558,450) (7,838,522,911)
_______________ _______________
Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . . . (203,263,204) (214,228,433)
_______________ _______________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . (119,792,314) (117,510,303)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,454,775,685 3,572,285,988
_______________ _______________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,334,983,371 $3,454,775,685
=============== ===============
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . --- $ 966,809
_______________ _______________
Shares Shares
_______________ _______________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,496,991 605,975,892
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . 9,353,598 9,552,652
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (177,759,994) (632,151,616)
_______________ _______________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . (15,909,405) (16,623,072)
=============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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.
Year Ended August 31,
____________________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . $12.55 $12.23 $12.41 $12.39 $13.68
______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .64 .67 .69 .72 .75
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . .37 .33 (.18) .09 (.96)
______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . 1.01 1.00 .51 .81 (.21)
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . (.64) (.67) (.69) (.72) (.75)
Dividends from net realized gain on investments . . (.07) (.01) -- (.07) (.33)
______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . (.71) (.68) (.69) (.79) (1.08)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . $12.85 $12.55 $12.23 $12.41 $12.39
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . 8.36% 8.24% 4.16% 6.93% (1.63%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . .73% .71% .71% .70% .68%
Ratio of net investment income
to average net assets . . . . . . . . . . . . 5.04% 5.39% 5.57% 5.94% 5.80%
Decrease reflected in above expense ratios
due to undertakings by the Manager . . . . . .01% -- -- -- --
Portfolio Turnover Rate . . . . . . . . . . . . . 63.07% 66.89% 64.48% 51.55% 36.25%
Net Assets, end of period (000's Omitted) . . . . $3,334,983 $3,454,776 $3,572,286 $3,936,734 $4,008,477
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
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, as amended (the "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 (the
" 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: Investments in securities (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. Under the terms of the custodian
agreement, the Fund received net earnings credits of $92,053 during the period
ended August 31, 1998 based on available cash balances left on deposit. Income
earned under this arrangement is included in interest income.
(c) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). To the extent that net realized capital gain can be offset
by capital loss carryovers, 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 Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
DREYFUS MUNICIPAL BOND FUND, INC.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended
August 31, 1998 was approximately $37,000, with a related weighted average
annualized interest rate of 12.60%.
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 August 31, 1998 was reduced
by $200,000 pursuant to the settlement of litigation.
The Manager had undertaken from September 1, 1997 through January 14, 1998, to
reduce the management fees paid by, or reimburse such excess expenses of the
Fund, to the extent that the Fund's aggregate annual expenses (excluding 12b-1
distribution plan fees, taxes, brokerage, interest on borrowings, commitment
fees and extraordinary expenses) exceeded an annual rate of 1.50% of the value
of the Fund's average daily net assets. The Manager had undertaken from January
15, 1998 through August 31, 1998 to reduce the management fees paid by, or
reimburse such excess expenses of the Fund, to the extent that the Fund's
aggregate annual expenses (excluding certain expenses as described above)
exceeded an annual rate of .74 of 1% of the value of the Fund's average daily
net assets. The reduction in management fee, pursuant to the undertakings,
amounted to $214,400 during the period ended August 31, 1998.
(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
August 31, 1998, the Fund was charged $2,643,704 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. During the period
ended August 31, 1998, the Fund was charged $1,004,670 pursuant to the transfer
agency agreement.
(c) Each director who is not an affiliated person as defined in the Act
receives from the Fund an annual fee of $4,500 and an attendance fee of $500 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation and the Director Emeritus receives 50% of such compensation.
DREYFUS MUNICIPAL BOND FUND, INC.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) A .10% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemption through use of the Fund
Exchanges service) where the redemption or exchange occurs less than fifteen
days following the date of issuance. During the period ended August 31, 1998,
the redemption fees amounted to $116,859.
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended August 31, 1998
amounted to $2,064,605,903 and $2,147,323,151, respectively.
At August 31, 1998, accumulated net unrealized appreciation on investments was
$194,100,896, consisting of $213,135,338 gross unrealized appreciation and
$19,034,442 gross unrealized depreciation.
At August 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS MUNICIPAL BOND FUND, INC.
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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, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1998 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Municipal Bond Fund, Inc. at August 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated years, in conformity with generally accepted accounting
principles.
New York, New York
October 1, 1998
DREYFUS MUNICIPAL BOND FUND, INC.
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IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended August 31, 1998:
--all the dividends paid from investment income-net are exempt-interest
dividends (not generally subject to regular Federal income tax), and
--the Fund hereby designates $.012 per share as a long-term capital gain
distribution (of which 61.69% is subject to the 20% maximum Federal tax rate) of
the $.0679 per share paid on December 4, 1997.
As required by Federal tax law rules, shareholders will receive notification
of their portion of the Fund's taxable ordinary dividends (if any) and capital
gain distributions (if any) paid for the 1998 calendar year on Form 1099-DIV
which will be mailed by January 31, 1999.
Dreyfus lion "d" logo (reg.tm)
Dreyfus logo (reg.tm)
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. 054AR988
Municipal Bond
Fund, Inc.
Annual Report
August 31, 1998
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
BROTHERS DREYFUS
PERIOD MUNICIPAL MUNICIPAL
BOND INDEX * BOND FUND
8/31/88 10,000 10,000
8/31/89 11,099 11,159
8/31/90 11,811 11,774
8/31/91 13,203 13,082
8/31/92 14,678 14,497
8/31/93 16,469 16,327
8/31/94 16,492 16,061
8/31/95 17,953 17,173
8/31/96 18,894 17,888
8/31/97 20,641 19,363
8/31/98 22,426 20,983
* Source: Lehman Brothers
