DREYFUS MUNICIPAL INCOME, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus Municipal
Income, Inc. For its semi-annual reporting period ended March 31, 1996, your
portfolio produced a total return, including bond price changes and interest
income, of 2.32%, based on net asset value.* Income dividends exempt from
Federal personal income taxes of approximately $.312 per share were paid to
shareholders.** This is equivalent to an annualized tax-free distribution
rate per share of 6.44%.***
THE ECONOMY
Fresh signs of economic growth appeared in the first quarter of this
year. There were encouraging reports of strength in the housing market -
sales of new homes and new home construction surged in February. Factory
orders increased and order backlogs rose in January for the fifth consecutive
month. At present, there are indications that the labor market may be
tightening. Employment is rising and initial claims for unemployment
insurance are lessening. Some increases in real wages may result, a
possibility well worth noting since worker wages are emerging as a political
issue in this year's election. The surprisingly strong employment figures in
February caused a sharp rise in interest rates. As a result, fixed-income
returns for the first quarter of this year were negative.
Several factors that temporarily depressed economic activity have ended.
With the arrival of spring, the severe winter weather which suppressed
construction and discouraged consumer shopping is over. In addition, the
17-day strike at two General Motors brake-parts plants that nearly resulted
in a complete shutdown of GM North American manufacturing has been settled.
Apparently satisfied with the pace of economic growth, the Federal
Reserve Board left the Federal Funds rate unchanged in March. Over the past
12 months, the Fed has reduced the level of short-term interest rates three
times to spur the sluggish economy, the last reduction occurring on January
31, 1996.
Nevertheless, we are reluctant to paint an overly optimistic business
picture since much economic data still remains mixed. Business capital
spending has been an important stimulant to economic growth over the past few
years, particularly in light of the retrenchment in consumer spending. A
recent survey by the Commerce Department revealed that businesses plan only
modest increases in spending on new buildings and equipment this year
compared to 1995. Overall, the survey indicated that capital spending would
rise only 1.5% compared to last year's growth rate of 8.1%. The survey also
points out a significant divergence in the spending plans of manufacturing
companies relative to retailers and wholesalers. Influenced by strong export
growth, capital spending by manufacturers is estimated to rise 7.2%.
Conversely, weak consumer spending has resulted in retailers and wholesalers
cutting their capital spending estimates by 4%. The more cautious approach to
business spending may be an indication that overall economic growth in 1996
will be modest.
THE MARKET
Only a few months ago, the municipal market was viewing benign inflation
data, a soft economy and a very manageable supply of tax-exempt securities as
the necessary ingredients for sustaining last year's strong market gains.
While the technical condition (good demand for and moderate issuance of new
municipal bonds) continues to be a positive factor for the market, stronger
economic and inflation reports have exerted a negative effect on bond prices.
When compared to other bond markets, however, municipals have generally fared
relatively well. If the likelihood of an imminent major tax law change
continues to diminish, we believe that more investors will again realize the
value of tax-exempt funds.
THE PORTFOLIO
The portfolio continues to be structured defensively: bonds bearing high
coupons and premium prices comprise the majority of the portfolio's
structure. The duration (a measure of price risk) approximates that of a fund
which holds primarily intermediate-maturity bonds. In view of the recent
stronger economic and inflation readings, we believe this portfolio's current
structure, along with its focus on income versus capital appreciation, will
help lessen price volatility. In our view, this is evident in the relatively
narrow price band within which the stock price has been quoted.
We believe the portfolio's current posture can serve it well if still
higher interest rates lie ahead. However, we are mindful of both the
inherently limited supply of bonds available for purchase and also of the
market's general tendency to reach an oversold position followed by a
dramatic move the other way. We are focusing our efforts on seeking to
maximize the potential for generating tax-free income while selectively
selling those holdings which are nearing possible redemption.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
April 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
***Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the market
price per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
ALABAMA-1.3%
Courtland Industrial Development Board, SWDR
(Champion International Corp. Project) 6.50%, 9/1/2025.................. $ 2,500,000 $ 2,503,425
ARIZONA-1.5%
Tucson Airport Authority, Special Facility Revenue (Lockheed Aeromod Center
Inc.)
8.70%, 9/1/2019......................................................... 2,500,000 2,848,675
CALIFORNIA-2.1%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2019................................................... 18,000,000 4,008,960
COLORADO-5.3%
City and County of Denver, Airport Revenue:
8.25%, 11/15/2012....................................................... 6,500,000 7,397,975
(Special Facilities - United Airlines Inc. Project) 6.875%, 10/1/2032... 2,480,000 2,540,016
FLORIDA-11.3%
Orange County Health Facilities Authority, Revenue
(Health Facility-Mental Health Services)
9.25%, 7/1/2020 (Prerefunded 7/1/2000) (a).............................. 4,840,000 5,752,679
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.85%, 2/15/2021...................................................... 7,450,000 7,524,202
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022....................................................... 2,700,000 2,722,788
Pinellas County Housing Finance Authority, SFMR (Multi-County Program)
6.70%, 2/1/2028......................................................... 5,000,000 5,083,750
GEORGIA-4.5%
Private Colleges and Universities Facilities Authority, Revenue,
Refunding (Clark Atlanta University Project)
8.25%, 1/1/2015 (Prerefunded 1/1/2003) (a).............................. 6,845,000 8,405,318
ILLINOIS-19.0%
Chicago-O'Hare International Airport, Special Facility Revenue
(American Airlines Inc. Project):
7.875%, 11/1/2025..................................................... 2,000,000 2,159,580
Refunding 8.20%, 12/1/2024............................................ 1,000,000 1,155,230
(United Airlines Inc. Project):
8.40%, 5/1/2018....................................................... 8,280,000 9,026,690
8.50%, 5/1/2018....................................................... 2,000,000 2,210,160
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facility Acquisition):
8.75%, 3/1/2010....................................................... 2,075,000 2,228,260
8.50%, 9/1/2010....................................................... 5,000,000 5,307,350
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority, Revenue, Refunding (Galesburg Cottage Hospital)
9.625%, 5/1/2011 (Prerefunded 5/1/1997) (a)............................. $ 5,000,000 $ 5,415,650
Robbins, RRR (Robbins Resource Recovery Partners)
9.25%, 10/15/2016....................................................... 10,000,000 8,000,000
INDIANA-3.2%
Fishers Economic Development, First Mortgage Revenue
(United Student Aid Funds Inc. Project) 8.375%, 9/1/2014................ 5,700,000 6,064,116
KENTUCKY-1.9%
Perry County, SWDR (TJ International Project)
7%, 6/1/2024............................................................ 3,500,000 3,572,205
MASSACHUSETTS-3.3%
Massachusetts Housing Finance Agency, Residential Housing Revenue
8.10%, 8/1/2023......................................................... 505,000 528,634
Massachusetts Industrial Finance Agency, Revenue
(Water Treatment-American Hingham) 6.95%, 12/1/2035..................... 5,640,000 5,708,921
MICHIGAN-7.2%
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021..... 7,670,000 8,408,851
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021......................................................... 5,000,000 5,055,950
NEVADA-2.9%
Clark County, IDR (Southwest Gas Corp.):
7.50%, 9/1/2032......................................................... 3,000,000 3,202,020
6.50%, 12/1/2033........................................................ 2,300,000 2,264,764
NEW HAMPSHIRE-4.2%
New Hampshire Industrial Development Authority, PCR
(Public Service Co. Project) 7.65%, 5/1/2021............................ 7,500,000 7,855,950
NEW YORK-3.8%
New York City:
8.25%, 11/15/2010....................................................... 240,000 269,554
8.25%, 11/15/2010 (Prerefunded 11/15/2001) (a).......................... 2,760,000 3,293,922
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines Inc. Project) 7.75%, 7/1/2019........................ 3,390,000 3,591,332
NORTH DAKOTA-.6%
North Dakota Housing Finance Agency, SFMR 8.30%, 1/1/2012................... 1,017,000 1,065,602
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
PENNSYLVANIA-6.9%
Huntingdon County Industrial Development Authority, First Mortgage Revenue
(Presbyterian Homes-Woodland Retirement Center Project) 8%, 12/1/2020... $ 3,000,000 $ 3,198,960
Lancaster County Hospital Authority, Revenue
(Health Center-United Church of Christ Homes Inc.)
9.125%, 10/1/2014 (Prerefunded 10/1/1999) (a)........................... 2,000,000 2,334,960
Montgomery County Higher Education and Health Authority, HR
(United Hospital Inc.- Saint Christopher) 8.50%, 11/1/2017.............. 4,865,000 5,055,173
Pennsylvania Economic Development Financing Authority, RRR
(Northampton Generating Project) 6.60%, 1/1/2019........................ 2,500,000 2,423,925
TEXAS-12.5%
Alliance Airport Authority Inc., Special Facilities Revenue (American
Airlines Inc. Project)
7.50%, 12/1/2029........................................................ 2,375,000 2,534,006
Austin, Convention Center Revenue
8.25%, 11/15/2014 (Prerefunded 11/15/1999) (a).......................... 5,465,000 5,992,810
Bell County Health Facilities Development Corp., Revenue
(Southern Healthcare-Southview) 10.50%, 3/1/2020........................ 4,840,000 5,376,611
Montgomery County Health Facilities Development Corp., Hospital Mortgage
Revenue,
Refunding (Woodlands Medical Center Project) 8.85%, 8/15/2014........... 5,205,000 5,653,879
Texas Housing Agency, Mortgage Revenue
Residential Development:
8.40%, 7/1/2020....................................................... 1,545,000 1,630,871
8.40%, 1/1/2021....................................................... 2,070,000 2,181,283
UTAH-4.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration)
9.25%, 7/1/2018......................................................... 7,000,000 7,454,090
WEST VIRGINIA-2.8%
Braxton County, SWDR (Weyerhaeuser Co. Project)
6.50%, 4/1/2025......................................................... 5,000,000 5,150,500
WYOMING-1.7%
Sweetwater County, SWDR (FMC Corp. Project)
7%, 6/1/2024............................................................ 3,000,000 3,141,840
_______
TOTAL INVESTMENTS
(cost $175,593,621)..................................................... $187,301,437
=======
</TABLE>
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
HR Hospital Revenue RRR Resources Recovery Revenue
IDR Industrial Development Revenue SFMR Single Family Mortgage Revenue
PCR Pollution Control Revenue SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ ___________ ____________
<S> <C> <C> <C>
AAA Aaa AAA 10.6%
AA Aa AA 2.6
A A A 4.3
BBB Baa BBB 36.8
BB Ba BB 6.9
Not Rated (c) Not Rated (c) Not Rated (c) 38.8
____
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 bonds in full at the
earliest refunding date.
(b) Fitch currently provides creditworthiness information for a limited
number of investments.
(c) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $175,593,621)-see statement..................................... $187,301,437
Cash.................................................................... 2,488,509
Interest receivable..................................................... 4,214,560
Prepaid expenses........................................................ 13,236
_______
194,017,742
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $115,395
Accrued expenses........................................................ 134,226 249,621
______ _____
NET ASSETS.................................................................. $193,768,121
=======
REPRESENTED BY:
Paid-in capital......................................................... $187,005,400
Accumulated undistributed investment income-net......................... 1,457,815
Accumulated net realized (loss) on investments.......................... (6,402,910)
Accumulated net unrealized appreciation on investments-Note 3........... 11,707,816
_______
NET ASSETS at value, applicable to 20,083,550 outstanding shares of
Common Stock, equivalent to $9.65 per share
(110 million shares of $.001 par value authorized)...................... $193,768,121
=======
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 7,262,946
EXPENSES:
Management fee-Note 2(a).............................................. $ 689,526
Professional fees..................................................... 46,081
Shareholders' reports................................................. 39,189
Shareholder servicing costs-Note 2(b)................................. 36,717
Directors' fees and expenses-Note 2(c)................................ 18,454
Custodian fees........................................................ 10,383
Registration fees..................................................... 9,063
Miscellaneous......................................................... 6,229
______
TOTAL EXPENSES.................................................. 855,642
______
INVESTMENT INCOME-NET........................................... 6,407,304
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 3:
Net realized gain on investments.................................... $ 580,825
Net unrealized (depreciation) on investments............................ (2,470,522)
______
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (1,889,697)
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 4,517,607
=======
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1996
1995 (UNAUDITED)
_______ ___________
<S> <C> <C>
OPERATIONS:
Investment income-net............................................. $ 12,974,805 $ 6,407,304
Net realized gain (loss) on investments........................... (6,240,533) 580,825
Net unrealized appreciation (depreciation) on investments for the period 13,217,463 (2,470,522)
_______ _______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 19,951,735 4,517,607
_______ _______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net............................................. (13,407,003) (6,266,065)
_______ _______
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c).................................... 241,835 __
_______ _______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 6,786,567 (1,748,458)
NET ASSETS:
Beginning of period............................................... 188,730,012 195,516,579
_______ _______
End of period (including undistributed investment income-net:
$1,316,576 in 1995 and $1,457,815 in 1996)...................... $195,516,579 $193,768,121
======= =======
SHARES SHARES
_______ _______
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED 25,537 __
======= =======
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS MUNICIPAL INCOME, 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 financial statements and market price
data for the Fund's shares.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31, 1996
__________________________________________________
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED)
____ ____ ____ ____ ____ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 9.34 $ 9.83 $10.06 $10.45 $ 9.41 $ 9.74
____ ____ ____ ____ ____ ____
INVESTMENT OPERATIONS:
Investment income-net................. .72 .71 .71 .67 .65 .32
Net realized and unrealized gain (loss)
on investments...................... .49 .30 .44 (.93) .35 (.10)
____ ____ ____ ____ ____ ____
TOTAL FROM INVESTMENT OPERATIONS.... 1.21 1.01 1.15 (.26) 1.00 .22
____ ____ ____ ____ ____ ____
DISTRIBUTIONS:
Dividends from investment income-net.. (.68) (.70) (.70) (.70) (.67) (.31)
Dividends from net realized gain
on investments...................... (.04) (.08) (.06) (.08) - -
____ ____ ____ ____ ____ ____
TOTAL DISTRIBUTIONS................. (.72) (.78) (.76) (.78) (.67) (.31)
____ ____ ____ ____ ____ ____
Net asset value, end of period........ $ 9.83 $10.06 $10.45 $ 9.41 $ 9.74 $ 9.65
____ ____ ____ ____ ____ ____
____ ____ ____ ____ ____ ____
Market value, end of period........... $ 10 $ 10 1\2 $ 10 3\4 $ 8 7\8 $ 9 3\8 $ 9 11\16
____ ____ ____ ____ ____ ____
____ ____ ____ ____ ____ ____
TOTAL INVESTMENT RETURN(1)................ 16.61% 13.61% 10.30% (10.77%) 13.48% 13.40%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .88% .86% .83% .84% .85% .87%(2)
Ratio of net investment income to
average net assets.................. 7.61% 7.20% 7.01% 6.76% 6.86% 6.49%(2)
Portfolio Turnover Rate............... 36.40% 22.75% 11.94% 14.41% 36.09% 5.19%(3)
Net Assets, end of period (000's Omitted) $188,441 $195,991 $206,999 $188,730 $195,517 $193,768
- ---------------------------------------
(1) Calculated based on market value.
(2) Annualized.
(3) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Municipal Income, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified closed-end
management investment company. The Fund's investment objective is to maximize
current income exempt from Federal income tax to the extent consistent with
the preservation of capital. The Dreyfus Corporation ("Manager") serves as
the Fund's investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A.
(A) PORTFOLIO VALUATION: Investments in municipal debt securities
(excluding options and financial futures on municipal and U.S. treasury
securities) are valued on the last business day of each week and month by an
independent pricing service ("Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Options and financial futures on
municipal and U.S. treasury securities are valued at the last sales price on
the securities exchange on which such securities are primarily traded or at
the last sales price on the national securities market on the last business
day of each week and month. 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: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid monthly.
Dividends from net realized capital gain, are declared and paid at least
annually. To the extent that net realized capital gain can be offset by
capital loss carryovers, it is the policy of the Fund not to distribute such
gain.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less than
95% of the market price) based on the record date's respective prices. If the
net asset value per share on the record date is lower than the market price
per share, shares will be issued by the Fund at the record date's net asset
value on the payable date of the distribution. If the net asset value per
share is less than 95% of the market value, shares will be issued by the Fund
at 95% of market value. If the market price is lower than the net asset value
per share on the record date, Mellon Bank, N.A. will purchase Fund shares in
the open market commencing on the payable date, and reinvest those shares
accordingly. As a result of purchasing Fund shares in the open market, Fund
shares outstanding will not be affected by this form of reinvestment.
DREYFUS MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
On March 27, 1996, the Board of Directors declared a cash dividend of
$.052 per share from investment income-net, payable on April 25, 1996 to
shareholders of record as of the close of business on April 11, 1996.
(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.
The Fund has an unused capital loss carryover of approximately $734,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through September 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .70 of 1% of the value
of the Fund's average weekly net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. There was no expense
reimbursement for the six months ended March 31, 1996.
(B) The Fund compensates Mellon Bank, N.A., an affiliate 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
$36,717 for the six months ended March 31, 1996.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the six months ended March 31, 1996,
amounted to $9,989,525 and $12,216,629, respectively.
At March 31, 1996, accumulated net unrealized appreciation on investments
was $11,707,816, consisting of $13,707,816 gross unrealized appreciation and
$2,000,000 gross unrealized depreciation.
At March 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS MUNICIPAL INCOME, INC.
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS MUNICIPAL INCOME, INC.
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Municipal Income, Inc., including the statement of investments, as of
March 31, 1996, and the related statements of operations and changes in net
assets and financial highlights for the six month period ended March 31,
1996. These financial statements and financial highlights are the
responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
September 30, 1995 and financial highlights for each of the five years in the
period ended September 30, 1995 and in our report dated November 3, 1995, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
[Ernst & Young LLP signature logo]
New York, New York
May 3, 1996
DREYFUS MUNICIPAL INCOME, INC.
PROXY RESULTS (UNAUDITED)
During the fiscal year ended September 30, 1995, stockholders voted on
the following proposals presented at the annual stockholders' meeting held on
August 18, 1995. The description of each proposal and the number of shares
voted are as follows:
<TABLE>
<CAPTION>
FOR AUTHORITY WITHHELD
_______ ____________
<S> <C> <C>
1.TO ELECT THREE CLASS II AND ONE CLASS III DIRECTORS:*
CLASS II
Whitney I. Gerard................................... 16,632,036 357,660
Robert R. Glauber................................... 16,626,838 362,858
Arthur A. Hartman................................... 16,613,239 376,457
CLASS III
Joseph S. DiMartino................................. 16,613,379 376,317
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
______ _______ ______
<S> <C> <C> <C>
2.TO RATIFY THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS OF THE FUND....................... 16,989,696 75,304 238,618
</TABLE>
* The terms of these Class II and Class III Directors expire in 1998 and
1996, respectively. Lucy Wilson Benson, David W. Burke and Martin D. Fife are
Class I Directors whose terms expire in 1997, and George L. Perry and Paul
Wolfowitz are also Class III Directors whose terms expire in 1996.
OFFICERS AND DIRECTORS
DREYFUS MUNICIPAL INCOME, INC.
200 Park Avenue
New York, NY 10166
DIRECTORS
Joseph S. DiMartino, Chairman
Lucy Wilson Benson
David W. Burke
Martin D. Fife
Whitney I. Gerard
Robert R. Glauber
Arthur A. Hartman
George L. Perry
Paul Wolfowitz
OFFICERS
President and Treasurer
Marie E. Connolly
Vice President and Secretary
John E. Pelletier
Vice President and Assistant Treasurer
Frederick C. Dey
Vice President and Assistant Secretary
Eric B. Fischman
Vice President and Assistant Secretary
Elizabeth Bachman
Assistant Treasurer
John J. Pyburn
Assistant Treasurer
Joseph F. Tower, III
Assistant Secretary
Margaret M. Pardo
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
L. Lawrence Troutman
Samuel J. Weinstock
Monica S. Wieboldt
INVESTMENT ADVISER
The Dreyfus Corporation
CUSTODIAN
The Bank of New York
COUNSEL
Stroock & Stroock & Lavan
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
Mellon Bank, N.A.
STOCK EXCHANGE LISTING
AMEX Symbol: DMF
INITIAL SEC EFFECTIVE DATE
10/21/88
The Net Asset Value appears in the following publications: Barron's,
Closed-End Bond Funds section under the heading "Municipal Bond Funds" every
Monday; Wall Street Journal, Mutual Funds section under the heading
"Closed-End Bond Funds" every Monday; New York Times,
Money and Business Section under the heading "Closed-End Bond Funds-National
Municipal Bond Funds" every Sunday.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase shares of its
common stock in the open market when it can do so at prices below the then
current net asset value per share.
[Dreyfus lion "d" logo]
DREYFUS MUNICIPAL INCOME, 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 DISTRIBUTION AGENT
AND REGISTRAR
Mellon Bank, N.A.
85 Challenger Road
Ridgefield Park, NJ 07660
Printed in U.S.A. 856SA963
[Dreyfus logo]
Municipal
Income, Inc.
Semi-Annual
Report
March 31, 1996
