DREYFUS GLOBAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my pleasure to introduce the new manager of Dreyfus Global Bond
Fund, Christine Downton, who took over the portfolio in mid-September. In
addition to being a portfolio manager with The Dreyfus Corporation, Christine
is chief investment officer of our affiliate, Pareto Partners, a leading
investment firm based in London.
Christine's experience includes serving as an economic advisor to the
Bank of England and the Federal Reserve Bank of New York, as international
strategist for N. M. Rothschild and Sons Ltd. (London) and head of investment
operations for County Bank (U.K.), later renamed County NatWest Investment
Management Limited. Under her leadership that bank became an acknowledged
leader in quantitative global fund management.
Christine holds a BSc and PhD in Economics from the London School of
Economics as well as an MA in Economics from the New School of Social
Research.
We are delighted that Christine Downton is managing investor assets for
The Dreyfus Corporation and for investors in Dreyfus Global Bond Fund. Her
first letter to the Fund's shareholders follows.
Sincerely,
[Stephen Canter signature logo]
Stephen Canter
Chief Investment Officer
The Dreyfus Corporation
DREYFUS GLOBAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report that during a period marked by strong overseas
bond markets, but weak underlying currencies, the Dreyfus Global Bond Fund,
Inc. was able to deliver an exceptional U.S. dollar return to investors. Over
the third and fourth quarter, and for the entire fiscal year, the Fund was
able both to outperform its benchmark bond index and generate a return well
in excess of the U.S. bond market.
Economic Environment
Bond market participants have been impressed in recent months by the
benign economic and financial news that has appeared. Mostly, investors have
realized that the spike in U.S. economic activity earlier in the year would
not be sustained and that growth had actually leveled off and begun to slow.
Additionally, the generally weak economic performance within Continental
Europe, along with a downturn in the Japanese economy, offered further proof
that growth and inflation would not soon be on the rise in those markets
either. Lending further support to the markets were the relatively
restrictive fiscal policies being adopted by most European nations, as they
continue to work towards the Maastricht criteria for European Monetary Union.
Longer term, this trend should help to maintain a slow growth and low
inflation environment within these markets. In the shorter term, though, it
will cause an increase in overall volatility as proposed policies are
carefully scrutinized by the markets for credibility.
Market Environment
While global bond markets, due to concerns over accelerating U.S.
economic growth coupled with fears of rising inflation, got off to a less
than exciting start this year, bond markets during the second half of the
year not only settled down, but staged one of the most impressive rebounds in
quite some time. Led by strong rallies in the dollar bond markets of Canada
and Australia, along with the U.K. and the peripheral European markets of
Italy and Spain, most markets returned anywhere from 5% to 10% during the
second half of the year, in local currency terms.
At the same time that there were strong rallies in underlying markets,
the U.S. dollar was one of the best performing currencies and appreciated
from 2% to 4% against the Yen and most European currencies, with the notable
exception of the Pound. This dollar strength, left unchecked, would have
essentially reduced the value of your non-U.S. bond returns by the amount of
its appreciation. To counteract this effect and deliver strong underlying
bond market gains to our investors in U.S. dollar terms, we aggressively
hedged the portfolio back to the U.S. dollar over this period. Over the
six-month period, anywhere from 50% to 85% of the portfolio was hedged
against the U.S. dollar, thus ensuring that a significant portion of the
foreign bond gains were captured and delivered to shareholders.
Investment Philosophy and Process
The Dreyfus Global Bond Fund employs an allocation strategy that is based
on the belief that exploitable inefficiencies exist in global bond markets.
These inefficiencies derive from a variety of sources, including the
differing behavior of domestic and global investors. Investors tend to desire
strong confirmation of fundamental developments prior to making investment
decisions, and frequently focus on only one or two factors at a time, rather
than assessing the whole environment for currencies and bonds. This can lead
to favorable or negative developments being ignored on a three- to six-month
time horizon. In consequence, markets frequently overreact to events, driving
bonds to extremes of value. To profit from these situations, multiple
variables, along with a number of dimensions pertaining to each variable,
must be analyzed. Assessing all of these variables across a wide range of
global markets involves a massive information-processing task. To achieve
consistent analysis across this huge array of information, the Dreyfus Global
Bond Allocation strategy utilizes advanced analytical techniques called
Knowledge Based Systems. The Knowledge Based System that we use encodes
investment rules developed by our senior investment professionals that facilit
ate the analysis of this huge array of information.
The output from this Knowledge Based System is composed of estimated
divergences from fair value in global bond markets, short-term interest
forecasts and an assessment of the environment for currencies. An
optimization process is then applied to build a portfolio with the optimum
risk/reward trade-off. This portfolio is rebalanced each month.
Currency risk is controlled by incorporating a proprietary Currency Risk
Modeling overlay strategy. This technology explicitly manages the currency
risk by protecting the portfolio back to the U.S. dollar in times of dollar
strength.
Our strategy is to invest only in sovereign bonds and, for
diversification purposes, high quality supranational, agency and corporate
issues, along with high credit quality money market instruments.
Portfolio Focus
During the six months ended November 30, 1996, your Fund had a total
return of +10.33%,* outperforming the Salomon Brothers World Government Bond
Index (unhedged) by +3.45% and the same index, fully hedged, by +2.19%.** For
the year ended November 30, 1996, the Fund was also able to outpace both
indexes with a total return of +10.96%. It outperformed the Salomon World
Government Bond Index (unhedged) by +5.39% and the same index, fully hedged,
by +.90%.
Over the second half of the year, the portfolio's average duration
(remaining length to maturity of fixed income securities) was increased and
continues to be slightly longer than the market average. Because of our
generally positive outlook for interest rates, we shifted the overall
maturity structure focus of the portfolio out of the three- to ten-year
maturity range and into securities with maturities of between five and
fifteen years. This maturity structure and longer than market duration were
positive contributors to the Fund's performance.
In addition to lengthening the Fund's maturity characteristics, we also
reduced the number of overall markets held in the portfolio from eleven at
the end of May to six currently. While there were good opportunities in most
bond markets, we began at the end of the third quarter to focus the holdings
in those markets which were relatively the most attractive, as indicated by
our value model. The portfolio held substantial positions over the last
quarter of the fiscal year in the U.K., Canadian and Australian markets,
which were three of the best performing markets in U.S. dollar terms over
this period. This decision was by far the single largest contributor to the
Fund's strong performance during the second half of the year.
The Fund continued its aggressive hedging policy to ensure that we
captured and delivered to shareholders, in U.S. dollars, the gains realized
in foreign bond markets. This hedging activity served the Fund very well
particularly during the second half of the year as the U.S. dollar
appreciated against most other currencies. At November's end, over 50% of the
Fund was hedged back to the U.S. dollar as part of our work to protect the
portfolio from adverse currency fluctuations.
Finally, we note that the Fund was able to end this fiscal year on a very
positive note. From both an absolute and relative basis compared to the
benchmark indices, the Fund performed well during this entire year. This
confirmed our shareholders' decision to add a component of global bonds to
their allocation mix.
Sincerely,
[Christine Downton signature logo]
Christine Downton
Portfolio Manager
December 20, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Unlike the Fund, which can
invest in both corporate and government bonds, the Salomon Brothers World
Government Bond Index is a market-capitalization weighted index consisting of
debt issues of 14 government bond markets.
DREYFUS GLOBAL BOND FUND, INC. NOVEMBER 30, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS GLOBAL BOND
FUND, INC. AND THE
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX
[Exhibit A:
Dollars
$13,041
Dreyfus Global
Bond Fund
$12,726
Salomon Brothers
World Government
Bond Index*
*Source: Lipper Analytical Services, Inc.]
Average Annual Total Returns
One Year Ended From Inception (3/18/94)
November 30, 1996 to November 30, 1996
___________ ______________
10.96% 10.31%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Global Bond
Fund, Inc. on 3/18/94 (Inception Date) to a $10,000 investment made in the
Salomon Brothers World Government Bond Index on that date. For comparative
purposes, the value of the Index on 3/31/94 is used as the beginning value on
3/18/94. All dividends and capital gain distributions are reinvested.
The Fund's performance shown in the line graph takes into account all
applicable fees and expenses. The Salomon Brothers World Government Bond
Index is a fixed-income index and is a market-capitalization weighted
benchmark that tracks the performance and covers debt issues of 14 government
bond markets. The Index measures the total rate-of-return performance for
government bond markets with a remaining maturity of at least one year and
does not take into account charges, fees and other expenses. Further
information relating to Fund performance, including expense reimbursements,
if applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF INVESTMENTS NOVEMBER 30, 1996
Principal
Bonds and Notes-89.9% Amount Value
______ ______
<S> <C> <C>
Banking-3.1% Bayerische Landesbank Girozentrale,
Sr. Bonds, 7 7/8%, 2006.............. $ 327,990 (a) $ 333,730
______
Chemicals-4.8% Imperial Chemical Industries,
Bonds, 9 3/4%, 2005.................. 462,550 (a) 513,141
______
Financial Services-5.9% Abbey National Treasury Services plc,
Bonds, 8%, 2003...................... 504,600 (a) 515,954
Baden-Wuerttembergische Landers-Finance NV,
Gtd. Bonds, 6 1/2%, 2008............. 114,434 (b) 118,497
______
634,451
______
Miscellaneous-3.8% Petroleos Mexicanos,
Gtd. Notes, 9%, 2003....................... 168,200 (a) 158,423
Treasury Corp. of Victoria,
Bonds (Gtd. by The Government of Victoria),
7 1/4%, 2003......................... 252,340 (c) 252,813
______
411,236
______
Pharamaceuticals-3.1% Glaxo Wellcome plc,
Sr. Notes, 8 3/4%, 2005.................. 319,580 (a) 338,156
______
Real Estate-4.6% Land Securities,
Deb., 9 1/2%, 2007............................... 454,140 (a) 497,283
______
Telecommunications-3.4% Telstra Ltd.,
Bonds, 6%, 2006.............................. 363,706 (d) 361,888
______
Transportation-3.6% Societe National des Chemins de fer Francais,
Deb., 7 1/2%, 2008................... 344,564 (d) 386,557
______
Foreign/
Governmental-52.8% Bundesrepublik Deutschland,
7 3/8%, 2005......................... 374,512 (b) 417,132
Commonwealth of Australia,
Bonds, 8 3/4%, 2008.................. 1,546,600 (c) 1,730,568
France O.A.T.,
Deb., 8 1/2%, 2008................... 665,773 (d) 819,034
Queensland Treasury,
Global Notes, 8%, 2003............... 171,754 (c) 179,590
Republic of Finland,
Deb., 8%, 2003....................... 504,600 (a) 518,477
Republic of Italy (Buoni del Tesoro Poliennali),
Bonds, 8 3/4%, 2006.................. 415,842 (e) 454,099
United Kingdom Gilt Edged Securities:
7 1/2%, 2006......................... 454,140 (a) 458,681
8 1/2%, 2007......................... 1,034,430 (a) 1,116,215
______
5,693,796
______
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1996
Principal
Bonds and Notes (continued) Amount Value
______ ______
Supranational-4.8% European Investment Bank,
Notes, 8%, 2003...................... $ 504,600 (a) $ 521,630
______
TOTAL BONDS AND NOTES
(cost $8,957,317).................... $ 9,691,868
======
Short-Term Investments-1.5%
U.S. Treasury Bills; 5.09%, 12/19/1996
(cost $158,595)............................. $ 159,000 $ 158,569
======
TOTAL INVESTMENTS (cost $9,115,912)......................................... 91.4% $ 9,850,437
==== ======
CASH AND RECEIVABLES (NET).................................................. 8.6% $ 928,575
==== ======
NET ASSETS.................................................................. 100.0% $10,779,012
==== ======
Notes to Statement of Investments:
(a) Denominated in British Pounds.
(b) Denominated in German Deutsche Marks.
(c) Denominated in Australian Dollars.
(d) Denominated in French Francs.
(e) Denominated in Italian Lire.
See notes to financial statements.
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1996
Cost Value
______ ______
ASSETS: Investments in securities-See Statement of Investments $ 9,115,912 $ 9,850,437
Cash....................................... 6,881
Cash denominated in foreign currencies..... 1,279,321 1,292,404
Interest receivable........................ 328,951
Receivable for forward currency exchange contracts 14,924
Prepaid expenses........................... 42,401
Due from The Dreyfus Corporation and affiliates 1,412
______
11,537,410
______
LIABILITIES: Due to Distributor......................... 2,177
Payable for investment securities purchased and
forward currency exchange contracts 603,225
Net unrealized (depreciation) on forward currency
exchange contracts-Note 3(a) 100,784
Accrued expenses........................... 52,212
______
758,398
______
NET ASSETS.................................................................. $10,779,012
======
REPRESENTED BY: Paid-in capital............................ $10,064,044
Accumulated undistributed investment income-net 68,157
Accumulated net realized gain (loss) on investments
and foreign currency transactions (9,698)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 656,509
______
NET ASSETS.................................................................. $10,779,012
======
SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized)............. 817,857
NET ASSET VALUE, offering and redemption price per share.................... $13.18
======
See notes to financial statements.
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED NOVEMBER 30, 1996
INVESTMENT INCOME
INCOME Interest Income (net of $1,254 foreign taxes
withheld at source).................... $1,048,173
EXPENSES: Management fee-Note 2(a)................... $101,805
Shareholder servicing costs-Note 2(b)...... 44,679
Audit fees................................. 39,070
Directors' fees and expenses-Note 2(c)..... 24,247
Legal fees................................. 21,339
Registration fees.......................... 16,668
Prospectus and shareholders' reports....... 12,294
Custodian fees............................. 7,842
Miscellaneous.............................. 22,586
_____
Total Expenses....................... 290,530
Less-reduction in management fee due to
undertakings-Note 2(a)................. (96,116)
_____
Net Expenses......................... 194,414
______
INVESTMENT INCOME-NET....................................................... 853,759
______
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments and
foreign currency transactions.......... $647,416
Net realized gain (loss) on forward currency
exchange contracts..................... 165,101
_____
Net Realized Gain (Loss)............. 812,517
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions...... (391,286)
______
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 421,231
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,274,990
======
See notes to financial statements.
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
November 30, 1996 November 30, 1995
__________ __________
OPERATIONS:
Investment income-net......................................... $ 853,759 $ 1,079,380
Net realized gain (loss) on investments....................... 812,517 59,595
Net unrealized appreciation (depreciation) on investments..... (391,286) 1,277,458
______ ______
Net Increase (Decrease) in Net Assets Resulting from Operations 1,274,990 2,416,433
______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net......................................... (1,458,377) (1,115,679)
______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold................................. 1,086,523 2,400,052
Dividends reinvested.......................................... 1,257,808 928,971
Cost of shares redeemed....................................... (7,861,858) (3,425,344)
______ ______
Increase (Decrease) in Net Assets from Capital Stock Transactions (5,517,527) (96,321)
______ ______
Total Increase (Decrease) in Net Assets................. (5,700,914) 1,204,433
NET ASSETS:
Beginning of Period........................................... 16,479,926 15,275,493
______ ______
End of Period................................................. $10,779,012 $16,479,926
====== ======
UNDISTRIBUTED INVESTMENT INCOME-NET............................... $ 68,157 $ 68,497
______ ______
Shares Shares
______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................... 86,181 195,310
Shares issued for dividends reinvested........................ 100,387 74,302
Shares redeemed............................................... (630,010) (277,215)
______ ______
Net Increase (Decrease) in Shares Outstanding............... (443,442) (7,603)
====== ======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GLOBAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
Year Ended November 30,
________________________________
PER SHARE DATA: 1996 1995 1994(1)
____ ____ ____
<S> <C> <C> <C>
Net asset value, beginning of period.................................. $13.07 $12.04 $12.50
____ ____ ____
Investment Operations:
Investment income-net................................................. .77(2) .85 .65
Net realized and unrealized gain (loss)
on investments...................................................... .55(2) 1.06 (.54)
____ ____ ____
Total from Investment Operations...................................... 1.32(2) 1.91 .11
____ ____ ____
Distributions:
Dividends from investment income-net.................................. (1.21) (.88) (.57)
____ ____ ____
Net asset value, end of period........................................ $13.18 $13.07 $12.04
==== ==== ====
TOTAL INVESTMENT RETURN................................................... 10.96% 16.47% 1.29%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... 1.34% .81% -
Ratio of net investment income
to average net assets............................................... 5.87% 6.76% 7.83%(3)
Decrease reflected in above expense ratios
due to undertakings by Dreyfus...................................... .66% 1.12% 2.49%(3)
Portfolio Turnover Rate............................................... 81.34% 20.46% 4.16%(4)
Net Assets, end of period (000's Omitted)............................. $10,779 $16,480 $15,275
(1) From March 18, 1994 (commencement of operations) to November 30, 1994.
(2) Based on average shares outstanding.
(3) Annualized.
(4) Not annualized.
See notes to financial statements.
</TABLE>
DREYFUS GLOBAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Global Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company. The Fund's investment objective is to seek
total return. The Dreyfus Corporation ("Dreyfus") serves as the Fund's
investment adviser. Prior to September 12, 1996, M&G Investment Management
Limited ("M&G") served as the Fund's sub-investment adviser. Dreyfus is a
direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation. Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales charge.
As of November 30, 1996, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 504,642 shares of the Fund.
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 are valued each
business day 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. Securities 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. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(C) 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, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(D) 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 normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
On November 29, 1996, the Board of Directors declared a cash dividend of
$.063 per share from undistributed investment income-net, payable on December
2, 1996 (ex-dividend date), to shareholders of record as of the close of
business on November 29, 1996.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions
DREYFUS GLOBAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise
taxes.
The Fund has an unused capital loss carryover of approximately $17,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to November 30, 1996. If not
applied, $10,000 of the carryover expires in fiscal 2003 and $7,000 of the
carryover expires in fiscal 2004.
As of November 30, 1996, the Fund reclassified certain components of net
assets. The reclassifications resulted in a net increase to distribution in
excess of investment income-net and a decrease in accumulated net realized
losses on investments and foreign currency transactions of $573,085. This
reclassification was the result of permanent book to tax differences,
primarily from foreign currency transactions. In addition, the Fund
reclassified $31,193 from paid-in capital to undistributed investment
income-net. Net assets were not affected by these reclassifications.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a Management Agreement ("Agreement") with Dreyfus, the
management fee is computed at the annual rate of .70 of 1% of the value of
the Fund's average daily net assets and is payable monthly. The Manager has
undertaken from December 1, 1995 through December 17, 1995 to reduce other
expenses paid by the Fund, to the extent that the Fund's aggregate expenses
(exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses) exceeded specified annual percentages of the Fund's average daily
net assets. The Manager has currently undertaken from December 18, 1995
through November 30, 1997 to reduce the management fee paid by the Fund, to
the extent that the Fund's aggregate annual expenses (exclusive of certain
expenses as described above) exceed an annual rate of 1.35% of the value of
the Fund's average daily net assets. The reduction in management fee,
pursuant to the undertakings, amounted to $96,116 during the period ended
November 30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Prior to September 12, 1996, pursuant to a Sub-Investment Advisory
Agreement between Dreyfus and M&G, the sub-advisory fee was computed at the
annual rate of .28 of 1% of the value of the Fund's average daily net assets
and was payable monthly by Dreyfus.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund pays the
Distributor an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for the provision of certain services. 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. The Distributor may make payments to Service Agents (a securities
dealer, financial institution or other industry professional) in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents. During the period ended November 30, 1996, the Fund was charged by
the Distributor an aggregate of $36,359 pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $5,734 during the period ended
November 30, 1996.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS GLOBAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the period ended November 30, 1996 amounted to $11,084,601 and
$17,533,555, respectively.
In addition, the following summarizes open forward currency exchange
contracts at November 30, 1996:
<TABLE>
<CAPTION>
Foreign Unrealized
Currency Appreciation
Forward Currency Contracts: Amount Proceeds Value (Depreciation)
______________ ________ _______ _______ _______
<S> <C> <C> <C> <C>
Sales:
___
Australian Dollars, expiring 1/16/97. 2,913,000 $2,301,271 $2,368,560 $ (67,289)
British Pounds, expiring 1/16/97..... 1,270,000 2,042,093 2,134,235 (92,142)
French Francs, expiring 1/16/97...... 8,250,000 1,616,491 1,583,250 33,241
German Deutsche Marks, expiring 1/16/97 3,200,580 2,125,559 2,086,563 38,996
Purchases: Cost
_____ _______
Dutch Guilders, expiring 1/16/97..... 1,000,000 591,980 581,801 (10,179)
Italian Lire, expiring 1/16/97....... 770,000,000 502,896 507,146 4,250
Japanese Yen, expiring 1/16/97....... 36,000,000 325,682 318,021 (7,661)
______
TOTAL.............................. $(100,784)
======
</TABLE>
The Fund enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency
exchange rates on its foreign portfolio holdings. When executing forward
currency exchange contracts, the Fund is obligated to buy or sell a foreign
currency at a specified rate on a certain date in the future. With respect to
sales of forward currency exchange contracts, the Fund would incur a loss if
the value of the contract increases between the date the forward contract is
opened and the date the forward contract is closed. The Fund realizes a gain
if the value of the contract decreases between those dates. With respect to
purchase of forward currency exchange contracts, the Fund would incur a loss
if the value of the contract decreases between the date the forward contract
is opened and the date the forward contract is closed. The Fund realizes a
gain if the value of the contract increases between those dates. The Fund is
also exposed to credit risk associated with counter party nonperformance on
these forward currency exchange contracts which is typically limited to the
unrealized gains on such contracts that are recognized in the Statement of
Assets and Liabilities.
(B) At November 30, 1996, accumulated net unrealized appreciation on
investments and forward currency exchange contracts was $633,741, consisting
of $827,179 gross unrealized appreciation and $193,438 gross unrealized
depreciation.
At November 30, 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 GLOBAL BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS GLOBAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Global Bond Fund, Inc., including the statement of investments, as of
November 30, 1996, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1996 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Global Bond Fund, Inc. at November 30, 1996, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
[ERNST & YOUNG LLP signature logo]
New York, New York
January 10, 1997
[Dreyfus lion "d" logo]
DREYFUS GLOBAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
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. 098AR9611
[Dreyfus logo]
Global Bond
Fund, Inc.
Annual Report
November 30, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS GLOBAL BOND FUND, INC. AND THE SALOMON
BROTHERS WORLD GOVERNMENT BOND INDEX
EXHIBIT A:
SALOMON BROTHERS DREYFUS
PERIOD WORLD GOVERNMENT GLOBAL
BOND INDEX* BOND FUND
3/18/94 10,000 10,000
11/30/94 10,206 10,091
11/30/95 12,056 11,753
11/30/96 12,726 13,041
* Source: Lipper Analytical Services, Inc.
