DREYFUS MUNICIPAL INCOME, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus Municipal
Income, Inc. for the six-month reporting period ended March 31, 1997. Your
Fund produced a total return of 2.89% based on changes in net asset value and
interest income.* During the reporting period, your Fund produced income
dividends exempt from Federal personal income taxes of $.318 per share.**
This is equivalent to an annualized federally tax-free distribution rate per
share of 6.40%.***
THE ECONOMY
With the economy in an almost ideal balance of strong growth, low
unemployment and stable prices, the Federal Open Market Committee (FOMC) of
the Federal Reserve Board (the "Fed") raised interest rates at the end of
March for the first time in over two years. Concerned that persistently
strong demand would increase the risk of a resurgence of inflation, the FOMC,
which is the policy-making arm of the Fed, voted to lift the Federal Funds
rate by a quarter of a percentage point to 5.5%. (The Federal Funds rate is
the rate that banks charge each other for overnight loans.) The move to raise
interest rates had been much discussed since early last year when the Fed
first became concerned about the inflationary potential of rising wage
demands resulting from the strong rate of growth in new jobs. Yet over that
time, there has been little evidence of inflation despite robust job growth
and an unemployment rate of less than 5.5%, a level that in the 1970s and
1980s contributed to an escalation in wages and prices. Instead, prices on
virtually all sectors of the economy have remained quiescent. The Consumer
Price Index has risen a modest 2.8% over the past 12 months, while increases
in producer prices have been equally modest and, of late, many prices have
actually fallen.
Not surprisingly, the consumer confidence index of the Conference
Board, a private research group, remains near all-time high territory. A
closely followed component of the index measures consumer sentiment about the
job market. The percentage of people reporting that jobs are plentiful has
recently reached an eight-year high, while the portion reporting that jobs
are hard to get was the lowest ever recorded. That positive attitude
regarding job security has been cited by Federal Reserve Board Chairman
Greenspan as a possible harbinger of higher wage pressures, which could
result in an acceleration in the rate of inflation.
Looking at the economy more generally, factory production _
particularly the durable goods sector _ has picked up lately after slumping
over the last two months of last year. Also suggesting renewed vigor in the
economy was the brisk pickup in retail sales from their relatively sluggish
pace over the last quarter of 1996. As a corollary to the surge in retail
sales, late payments on credit card debt have risen to the highest proportion
of accounts since 1980, the year the American Bankers Association first
monitored credit card delinquencies.
Effective monetary policy is formulated less on how conditions are
today than on how things may be in the future; hence the Fed's preemptive
move to tighten credit without significant direct evidence that inflation is
already on the rise is understandable. In recent testimony to Congress made
before the Fed's decision to raise the Federal Funds rate, Fed Chairman Alan
Greenspan said that the question "is not so much . . . where prices are or
have been, but rather what the state of the economy will be later this year
and into 1998 when any actions we may or may not have taken would become
effective." We continue to remain alert to any economic developments that
might indicate a further tightening by the Fed.
MARKET ENVIRONMENT
The municipal bond market endured a significant amount of volatility
during the past six months. Similar to today's market environment, last fall
interest rates were on the rise following a strong downward move last summer.
The financial markets were bracing for a possible tightening of interest
rates by the Federal Reserve. However, the difference between then and now is
that the economy slowed in the second half of 1996 and the Fed did not raise
rates. Today, the story is different and the bears are back in control: the
economy is clearly much stronger than it appeared at the beginning of the
year. Six months ago there was considerable debate over whether or not there
would be a tightening of short-term interest rates. The markets received the
answer last month when the Fed moved. Since then yields have continued to
ratchet higher, implying that at least one more rate hike is in the cards.
The political climate in Washington has been a further hindrance.
Investors had been counting on a bipartisan compromise on a balanced budget
agreement and a possible cut in the capital gains tax rate; today, the odds
of either happening in the near future seem remote. It looks as though this
year's budget wrangling could be a repeat performance of prior years. From
the financial markets' perspective, it appears that the only positive
influence from Washington has been the Administration's strong support for
the dollar. The strong relative position of the U.S. currency has engendered
significant foreign buying of U.S. Treasury securities. Without this foreign
support rates might be at higher levels.
Because of a relatively good technical position, municipal securities
have not lost as much in value this year as have taxable bonds. The supply of
new tax-exempt bond issues coming to market has not been overly burdensome,
while investor demand (primarily the casualty insurers) has been strong
enough to absorb most of the available supply. Individual interest has been
limited; however, we believe that yields are now approaching levels that
should prove attractive to investors.
PORTFOLIO OVERVIEW
The Fund continues to maintain a duration which is considerably shorter
than the Lehman Municipal Bond Index (5.6 years versus 7.2 years,
respectively). At the same time, we continue to purchase securities which
afford a relatively high tax-exempt yield, enabling management to increase
the monthly dividend to $ .054 per month (from $ .052) beginning in December
1996. A short relative duration and high dividend income have combined to
position the Fund well. The longer a fund's duration, the more volatile the
fund should be as interest rates move. In a declining interest rate
environment, a longer duration can be advantageous to a fund. The reverse can
be true in a rising interest rate environment.
We don't believe that the current condition of rising interest rates
will persist indefinitely, and think that attractive buying opportunities
will present themselves in the not too distant future. Because this Fund
maintains an income orientation, its high coupon holdings and less sensitive
posture to interest movements (e.g., low relative duration) will serve
shareholders better than a more interest-rate-sensitive portfolio.
The axiom of capital preservation is foremost in our decision-making at
present. The Fund's goal is to maximize current federally tax-exempt income
to the extent consistent with the preservation of capital. We do see the risk
of still higher interest rates. After a period of Fed restraint, we believe
that the economy can continue to grow at a moderate pace without significant
risk of higher inflation. For this reason we feel good about the prospects
for the bond markets going forward and continue to recommend that investors
maintain a long-term perspective.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
April 17, 1997
New York, NY
* 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.
*** Distribution rate per share is based upon dividends per share
paid from net investment income during the period (annualized), divided by
the market price per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS MARCH 31, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments_99.7% 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 $ 2,506,750
Arizona_1.5%
Tucson Airport Authority, Special Facility Revenue (Lockheed Aeromod Center Inc.)
8.70%, 9/1/2019........................................................... 2,500,000 2,808,250
California_3.7%
California Housing Finance Agency, MFHR
6.05%, 8/1/2038 (Insured; MBIA)........................................... 2,500,000 2,469,800
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2019..................................................... 18,000,000 4,487,220
Colorado_5.2%
City and County of Denver, Airport Revenue:
8.25%, 11/15/2012......................................................... 6,500,000 7,305,870
(Special Facilities-United Airlines Inc. Project) 6.875%, 10/1/2032....... 2,480,000 2,569,429
Florida_10.1%
Orange County Health Facilities Authority, Revenue
(Health Facility-Mental Health Services)
9.25%, 7/1/2020 (Prerefunded 7/1/2000) (a)................................ 4,785,000 5,502,176
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.85%, 2/15/2021........................................................ 7,450,000 6,165,844
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022......................................................... 2,700,000 2,257,632
Pinellas County Housing Finance Authority, SFMR (Multi-County Program)
6.70%, 2/1/2028........................................................... 5,000,000 5,170,300
Georgia_4.3%
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 8,205,512
Illinois_17.0%
Chicago-O'Hare International Airport, Special Facility Revenue:
(American Airlines Inc. Project):
7.875%, 11/1/2025....................................................... 2,000,000 2,161,820
Refunding 8.20%, 12/1/2024.............................................. 1,000,000 1,172,080
(United Airlines Inc. Project):
8.40%, 5/1/2018......................................................... 8,175,000 8,829,245
8.50%, 5/1/2018......................................................... 2,000,000 2,187,100
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facility Acquisition):
8.75%, 3/1/2010......................................................... 2,000,000 2,149,880
8.50%, 9/1/2010......................................................... 5,000,000 5,304,550
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
Illinois (continued)
Robbins, RRR (Robbins Resource Recovery Partners)
8.375%, 10/15/2016........................................................ $ 10,000,000 $ 10,384,200
Indiana_3.1%
Fishers Economic Development, First Mortgage Revenue
(United Student Aid Funds Inc. Project) 8.375%, 9/1/2014.................. 5,700,000 5,970,465
Kentucky_1.9%
Perry County, SWDR (TJ International Project)
7%, 6/1/2024.............................................................. 3,500,000 3,614,625
Massachusetts_3.1%
Massachusetts Industrial Finance Agency, Revenue
(Water Treatment-American Hingham) 6.95%, 12/1/2035....................... 5,640,000 5,831,083
Michigan_7.3%
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021....... 7,670,000 8,705,297
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021........................................................... 5,000,000 5,099,550
Nevada_2.9%
Clark County, IDR (Southwest Gas Corp.):
7.50%, 9/1/2032........................................................... 3,000,000 3,221,430
6.50%, 12/1/2033.......................................................... 2,300,000 2,315,617
New Hampshire_4.1%
New Hampshire Industrial Development Authority, PCR
(Public Service Co. Project) 7.65%, 5/1/2021.............................. 7,500,000 7,682,700
New York_4.8%
New York City:
8.25%, 11/15/2010......................................................... 240,000 269,237
8.25%, 11/15/2010 (Prerefunded 11/15/2001) (a)............................ 2,760,000 3,194,755
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines Inc. Project) 7.75%, 7/1/2019.......................... 3,390,000 3,587,535
New York State Mortgage Agency, Revenue, Homeowner Mortgage
6.05%, 4/1/2026........................................................... 2,000,000 1,991,860
North Dakota_.5%
North Dakota Housing Finance Agency, SFMR 8.30%, 1/1/2012................... 892,400 930,577
Pennsylvania_7.4%
Huntingdon County Industrial Development Authority, First Mortgage Revenue
(Presbyterian Homes-Woodland Retirement Center Project) 8%, 12/1/2020..... 3,000,000 3,191,940
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 2,247,340
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Pennsylvania (continued)
Montgomery County Higher Education and Health Authority, HR
(United Hospital Inc.- Saint Christopher)
8.50%, 11/1/2017 (Prerefunded 11/1/1997) (a).............................. $ 4,865,000 $ 5,090,833
Pennsylvania Economic Development Financing Authority, RRR
(Northampton Generating Project) 6.60%, 1/1/2019.......................... 3,500,000 3,452,645
South Carolina_1.1%
Piedmont Municipal Power Agency, Electric Revenue,
Refunding 6.55%, 1/1/2016................................................. 2,075,000 2,083,072
Texas_12.2%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc. Project) 7.50%, 12/1/2029......................... 2,375,000 2,528,900
Austin, Convention Center Revenue
8.25%, 11/15/2014 (Prerefunded 11/15/1999) (a)............................ 5,405,000 5,909,935
Bell County Health Facilities Development Corp., Revenue
(Southern Healthcare-Southview) 10.50%, 3/1/2020 (Prerefunded 3/1/2000) (a) 4,790,000 5,614,407
Montgomery County Health Facilities Development Corp., Hospital Mortgage Revenue,
Refunding (Woodlands Medical Center Project) 8.85%, 8/15/2014............. 5,095,000 5,603,379
Texas Housing Agency, Mortgage Revenue
Residential Development:
8.40%, 7/1/2020......................................................... 1,405,000 1,469,658
8.40%, 1/1/2021......................................................... 1,875,000 1,958,850
Utah_2.6%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration)
9.25%, 7/1/2018 (b)....................................................... 7,000,000 4,884,040
Washington_1.1%
Public Utility District No. 1 of Pend Orielle County, Electric Revenue
6.375%, 1/1/2015.......................................................... 2,000,000 2,006,220
West Virginia_2.8%
Braxton County, SWDR (Weyerhaeuser Co. Project)
6.50%, 4/1/2025........................................................... 5,000,000 5,233,800
Wyoming_1.7%
Sweetwater County, SWDR (FMC Corp. Project)
7%, 6/1/2024.............................................................. 3,000,000 3,187,770
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $179,100,807)....................................................... $188,515,178
==============
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1997 (UNAUDITED)
Principal
Short-Term Municipal Investments_.3% Amount Value
__________ __________
Texas;
Brazos River Authority, Revenue, VRDN
Refunding (Houston Lighting and Power Co.) 3.75% (Insured; AMBAC) (c)
(cost $600,000)........................................................... $ 600,000 $ 600,000
==============
TOTAL INVESTMENTS_100.0%
(cost $179,700,807)....................................................... $189,115,178
==============
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation PCR Pollution Control Revenue
HR Hospital Revenue RRR Resources Recovery Revenue
IDR Industrial Development Revenue SFMR Single Family Mortgage Revenue
MBIA Municipal Bond Investors Assurance SWDR Solid Waste Disposal Revenue
Insurance Corporation VRDN Variable Rate Demand Notes
MFHR Multi-Family Housing Revenue
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Summary of Combined Ratings
Fitch (d) or Moody's or Standard & Poor's Percentage of Value
____ ______ _________ ______________________
AAA Aaa AAA 11.5%
AA Aa AA 3.4
A A A 5.3
BBB Baa BBB 37.6
BB Ba BB 4.1
F1 MIG1, VMIG1, P1 SP1, A1 .3
Not Rated (e) Not Rated (e) Not Rated (e) 37.8
______
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) Non-income accruing security.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) 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 INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1997 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $179,700,807 $189,115,178
Cash....................................... 13,562
Interest receivable........................ 3,914,069
Prepaid expenses........................... 12,319
_____________
193,055,128
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 137,915
Accrued expenses........................... 74,505
_____________
212,420
_____________
NET ASSETS.................................................................. $192,842,708
==============
REPRESENTED BY: Paid-in capital............................ $187,932,494
Accumulated undistributed investment income_net 1,432,951
Accumulated net realized gain (loss) on investments (5,937,108)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4................... 9,414,371
_____________
NET ASSETS ................................................................. $192,842,708
==============
SHARES OUTSTANDING
(110 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............. 20,179,863
NET ASSET VALUE per share................................................... $9.56
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $7,022,067
EXPENSES: Management fee_Note 3(a)................... $ 677,519
Shareholder servicing costs_Note 3(b)...... 40,379
Shareholders' reports...................... 26,285
Directors' fees and expenses_Note 3(c)..... 21,439
Professional fees.......................... 13,204
Registration fees.......................... 7,250
Custodian fees_Note 3(b)................... 7,059
Miscellaneous.............................. 7,210
__________
Total Expenses......................... 800,345
____________
INVESTMENT INCOME_NET....................................................... 6,221,722
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 387,474
Net unrealized appreciation (depreciation) on investments (1,143,087)
__________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (755,613)
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $5,466,109
=============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
March 31, 1997 Year Ended
(Unaudited) September 30, 1996
_______________ ___________________
OPERATIONS:
Investment income_net............................................ $ 6,221,722 $ 12,834,123
Net realized gain (loss) on investments.......................... 387,474 659,153
Net unrealized appreciation (depreciation) on investments........ (1,143,087) (3,620,880)
_________________ ___________________
Net Increase (Decrease) in Net Assets Resulting from Operations 5,466,109 9,872,396
_________________ ___________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net............................................ (6,402,971) (12,536,499)
_________________ ___________________
CAPITAL STOCK TRANSACTIONS:
Dividends reinvested_Note 1(c)................................... 614,237 312,857
_________________ ___________________
Total Increase (Decrease) in Net Assets........................ (322,625) (2,351,246)
NET ASSETS:
Beginning of Period.............................................. 193,165,333 195,516,579
_________________ ___________________
End of Period.................................................... $192,842,708 $193,165,333
================ ===================
UNDISTRIBUTED INVESTMENT INCOME_NET................................ $ 1,432,951 $ 1,614,200
_________________ ___________________
Shares Shares
_______________ ___________________
CAPITAL SHARE TRANSACTIONS:
Increase In Shares Outstanding As A Result Of Dividends Reinvested 63,413 32,900
================ ===================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
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.
Six Months Ended
March 31, 1997 Year Ended September 30,
________________________________________________________________
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
_______________ _________ _________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 9.60 $ 9.74 $ 9.41 $ 10.45 $ 10.06 $ 9.83
________ ________ _________ _________ _________ _________
Investment Operations:
Investment income_net................. .31 .64 .65 .67 .71 .71
Net realized and unrealized gain (loss)
on investments...................... (.03) (.16) .35 (.93) .44 .30
________ ________ _________ _________ _________ _________
Total from Investment Operations...... .28 .48 1.00 (.26) 1.15 1.01
________ ________ _________ _________ _________ _________
Distributions:
Dividends from investment income_net.. (.32) (.62) (.67) (.70) (.70) (.70)
Dividends from net realized gain __ __ __ (.08) (.06) (.08)
on investments
________ ________ _________ _________ _________ _________
Total Distributions................... (.32) (.62) (.67) (.78) (.76) (.78)
________ ________ _________ _________ _________ _________
Net asset value, end of period........ $ 9.56 $ 9.60 $ 9.74 $ 9.41 $10.45 $10.06
======== ======== ======== ======== ======== ========
Market value, end of period.......... $ 9 15\16 $ 9 9\16 $ 9 3\8 $ 8 7\8 $ 10 3\4 $ 10 1\2
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN (1)............... 14.78%(2) 8.83% 13.48% (10.77%) 10.30% 13.61%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .83%(2) .83% .85% .84% .83% .86%
Ratio of net investment income
to average net assets............... 6.43%(2) 6.61% 6.86% 6.76% 7.01% 7.20%
Portfolio Turnover Rate............ 8.28%(3) 8.56% 36.09% 14.41% 11.94% 22.75%
Net Assets, end of period (000's Omitted) $192,843 $193,165 $195,517 $188,730 $206,999 $195,991
- - -------------------------------
(1) Calculated based on market value.
(2) Annualized.
(3) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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. ("Mellon").
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 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 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.
On March 31, 1997, the Board of Directors declared a cash dividend of
$.054 per share from investment income-net, payable on April 28, 1997 to
shareholders of record as of the close of business on April 14, 1997.
DREYFUS MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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 $6,325,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1996. If not
applied, $734,000 of the carryover expires in fiscal 2003 and $5,591,000
expires in fiscal 2004.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes. Interest is charged to the Fund at rates which are related to the
Federal Funds rate in effect at the time of borrowings. For the period ended
March 31, 1997, the Fund did not borrow under the line of credit.
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 .70 of 1% of the value
of the Fund's average weekly net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, interest on borrowings, brokerage and extraordinary
expenses, exceed the expense limitation of any state having jurisdiction over
the Fund, the Fund may deduct from payments to be made to the Manager, or the
Manager will bear the amount of such excess to the extent required by state
law. There was no expense reimbursement for the period ended March 31, 1997.
(B) The Fund compensates Mellon under a transfer agency agreement for
providing personnel and facilities to perform transfer agency services for
the Fund. Such compensation amounted to $40,379 during the period ended March
31, 1997.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended March 31, 1997,
$7,059 was charged by Mellon pursuant to the custody agreement.
(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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended March 31, 1997,
amounted to $15,798,860 and $15,760,110, respectively.
At March 31, 1997, accumulated net unrealized appreciation on investments
was $9,414,371, consisting of $12,818,632 gross unrealized appreciation and
$3,404,261 gross unrealized depreciation.
At March 31, 1997, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS MUNICIPAL INCOME, INC.
PROXY RESULTS (UNAUDITED)
Stockholders voted on the following proposals presented at the annual
stockholders' meeting held on December 6, 1996. 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 III Directors*:
Joseph S. DiMartino........................................... 17,377,416 165,981
George L. Perry............................................... 17,399,677 143,720
Paul Wolfowitz................................................ 17,391,813 151,584
</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................ 17,315,358 59,022 169,017
- - -------------------------------
*The terms of these Class III Directors expire in 1999.
</TABLE>
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
Richard W. Ingram
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President and Assistant Treasurer
Michael Petrucelli
Vice President and Assistant Treasurer
Joseph F. Tower, III
Vice President and Assistant Secretary
Mark A. Karpe
Vice President and Assistant Secretary
Elizabeth Keeley
Vice President and Assistant Secretary
Douglas C. Conroy
Portfolio Managers
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
Samual J. Weinstock
Monica S. Wieboldt
Investment Adviser
The Dreyfus Corporation
Custodian
Mellon Bank, N.A.
Counsel
Stroock & Stroock & Lavan LLP
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]
Registration Mark
DREYFUS MUNICIPAL INCOME, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
AND REGISTRAR
Mellon Bank, N.A.
85 Challenger Road
Ridgefield Park, NJ 07660
Printed in U.S.A. 856SA973
[Dreyfus logo]
Registration Mark
Municipal
Income, Inc.
Semi-Annual
Report
March 31, 1997
