DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus Strategic
Municipal Bond Fund, Inc. For its semi-annual reporting period ended May 31,
1996, your Fund produced a total return of 0.35% per share, based upon net
asset value per share.* Income dividends exempt from Federal personal income
taxes of $.312 per share were paid,** which is equivalent to an annualized
tax-free distribution rate per share of 6.84%.***
THE ECONOMY
Recent reports show that the economy continues to recover from its
year-end 1995 pause. Spurred by a surge in consumer and business spending,
the economy grew at a moderate 2.3% during the first quarter of this year.
Suggesting further strength, a major forecasting index, the index of leading
economic indicators, extended its string of increases for the third
consecutive month in April, the first such three-month advance since late
1993. Despite a sharp jump in energy prices, inflation remained in check. For
the 12 months ended in April, consumer prices rose 2.9%. Giving further
evidence of moderating prices, a survey released in May by the National
Business Council revealed greater difficulty for major industrial companies
to raise prices now than six months ago.
Despite the relatively benign level of inflation, the economy's expansion
has sparked concern that the Federal Reserve Board could eventually raise
short-term interest rates. In reaction to this possibility, long-term rates
have risen since the beginning of the year. Yet the Fed has refrained from
tightening monetary policy, apparently interpreting economic data to mean
that the economy remains on a path of moderate growth unaccompanied by a
surge in inflation. However, the strong May employment data has some
investors fearing that the Fed will not continue to stand pat.
Consumers, who account for over two-thirds of our country's Gross
Domestic Product (GDP), are vital contributors to economic growth. So far,
they have continued to spend, setting aside concerns about job security and
stagnating real wages in favor of current consumption. New-home sales, an
important component of consumer spending, continued to post gains throughout
the reporting period, and are up 28% since April of last year. Retail sales
in general are up 6% from year-ago levels. Additional encouragement to
consumers occurred when the Labor Department recently reported a continuation
of the declining trend in first-time jobless claims.
On the corporate side of the economy, capacity utilization inched higher
and is now at 83%. While still well below the peak level (85.1%) for this
economic expansion which was reached over a year ago, further growth in this
indicator may result in shortages that could produce higher prices.
Industrial production has risen following the GM strike-induced slowdown in
March, bringing the year-over-year gain to a solid 2.6% through April.
We remain alert to early signs of growing inflationary pressures. To
date, prices are still being kept under control. However, we are especially
watchful of the potential buildup in wage pressures, given the rising trend
in both corporate output and capacity utilization.
MARKET ENVIRONMENT
Not long after our last report to shareholders (November 30,1995), bond
yields began to rise. Today, six months later, tax exempt bond yields are
approximately 1/2% higher, reflecting the weakening in bond prices in
response to the strengthening domestic economy. With long-term U.S.
Government bond yields currently in excess of 7%, and municipal bonds
offering 6% (tax exempt), some investors are now beginning to take notice.
While the stock market continues to make new highs and attract the majority
of investment dollars, there are now some indications that, going forward,
bonds might again win favor with investors. Some market strategists believe
that bonds, rather than stocks, will prove to be the better performing
investment in the months ahead.
We believe that the fate of the markets rests in the hands of the Federal
Reserve Board. Will short-term rates be nudged higher in the months ahead as
the markets are currently anticipating, or will the economy begin this summer
to slow on its own? Whatever the answer, it is the general consensus that, if
the Fed acts sooner rather than later to undo the easing moves undertaken
last winter, the economy will slow and bond prices will rally. With the
Presidential election looming on the horizon, politics could play a role in
any Fed decision to change policy.
The "technical" picture of the municipal bond market looks very
encouraging at this time. Seasonally, we are now approaching a very heavy
period for bond maturities and redemptions. With little in the way of new
issues, there will be fewer bonds available for reinvestment. This fact is
currently reflected in the better price performance of tax exempts relative
to taxable securities. Because of this, we expect that municipal bond prices
should be less volatile in the weeks ahead compared to taxable bonds.
THE PORTFOLIO
This Fund continues to be positioned with a heavier emphasis on income
rather than price appreciation. In a "bull" market for bonds, such strategies
tend to underperform the general market. However, during periods of market
decline, this more conservative income approach usually does better. In fact,
this Fund, because it is less sensitive to changes in interest rates, has
performed very well during the last six months; its high coupon and premium
price structure provided a cushion as rates rose.
The high level of volatility exhibited by the markets in recent years
underscores, for us, the need to maintain a disciplined and long-term focus.
Solid market performance thus far in 1996 has rewarded the patient investor.
Your Fund's investment objective - to maximize current income exempt from
Federal income taxes to the extent that we believe it is consistent with
preservation of capital - continues to underscore our portfolio management
decisions.
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 greatly appreciate 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
June 14, 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 STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.7% AMOUNT VALUE
_______ _______
<S> <C> <C>
ARKANSAS-.5%
Saline County, HR, Refunding, Improvement
7.875%, 9/1/2019 (Prerefunded 9/1/1999) (a)............................. $ 2,000,000 $ 2,234,440
CALIFORNIA-.9%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
6.50%, 1/1/2032......................................................... 1,000,000 989,390
San Marcos Public Facilities Authority, Revenue, Refunding, Public Improvement
(Civic Center-Mission Boulevard Project) 6.20%, 8/1/2022................ 3,000,000 2,803,470
COLORADO-1.5%
Colorado Health Facilities Authority, Revenue
(American Housing Foundation 1 Inc. Project) 10.25%, 12/1/2020.......... 5,800,000 6,274,614
DELAWARE-1.4%
Delaware Health Facilities Authority, Revenue,
Refunding (Beebe Medical Center Project) 6.80%, 6/1/2024................ 5,845,000 5,853,417
DISTRICT OF COLUMBIA-2.1%
Metropolitan Washington Airports Authority, Special Facilities Revenue
(Caterair International Corp.) 10.125%, 9/1/2011........................ 8,720,000 8,640,648
FLORIDA-6.2%
Florida Board of Education, Capital Outlay 8.527%, 6/1/2019 (b,c)........... 15,000,000 15,975,000
North Miami Health Facilities Authority, Health Facilities Revenue
(Hallmark Homes Project) 10.50%, 8/1/2020 (d)........................... 3,985,193 401,349
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015...................................................... 5,000,000 4,915,700
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022....................................................... 5,000,000 4,929,650
GEORGIA-3.1%
Private Colleges and Universities Facilities Authority, Revenue,
Refunding (Clark Atlanta University Project)
8.25%, 1/1/2015 (Prerefunded 1/1/2003) (a).............................. 10,770,000 13,056,794
ILLINOIS-12.1%
Chicago-O'Hare International Airport, Special Facility Revenue
Refunding (Delta Airlines Project) 6.45%, 5/1/2018...................... 2,790,000 2,752,781
(United Airlines Inc. Project):
8.20%, 5/1/2018....................................................... 7,225,000 7,778,941
8.40%, 5/1/2018....................................................... 6,600,000 7,113,084
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facility Acquisition) 8.50%, 9/1/2010 5,000,000 5,281,150
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority, Revenue
(Ravenswood Hospital Medical Center Project) 8.25%, 11/1/2010........... $ 13,000,000 $ 13,811,851
Robbins, RRR (Robbins Resource Recovery Partners):
9.25%, 10/15/2014....................................................... 11,500,000 11,040,000
9.25%, 10/15/2016....................................................... 3,000,000 2,880,000
INDIANA-3.1%
Burns Harbor Industrial Solid Waste Disposal Facilities, Revenue
(Bethlehem Steel Corp. Project) 8%, 4/1/2024............................ 6,000,000 6,338,640
Indianapolis Airport Authority, Special Facility Revenue
(United Airlines Inc. Project) 6.50%, 11/15/2031........................ 7,000,000 6,769,630
KENTUCKY-1.1%
Morgantown Health Care Facility, Revenue (Southern Health Care System Project)
10.50%, 3/1/2020........................................................ 4,195,000 4,507,360
LOUISIANA-4.7%
Lake Charles Harbor and Terminal, District Port Facilities Revenue,
Refunding (Trunkline LNG Co. Project) 7.75%, 8/15/2022.................. 15,000,000 16,676,400
Parish of De Soto, Environmental Improvement Revenue,
Refunding (International Paper Co. Project) 6.55%, 4/1/2019............. 2,900,000 2,949,561
MARYLAND-2.3%
Baltimore County, PCR,
Refunding (Bethlehem Steel Corp. Project) 7.50%, 6/1/2015............... 5,000,000 5,114,550
Maryland Industrial Development Financing Authority, EDR
(Medical Waste Associates Limited Partnership) 8.75%, 11/15/2010........ 4,465,000 4,465,000
MASSACHUSETTS-5.3%
Massachusetts Health and Educational Facilities Authority, Revenue
(Beth Israel Hospital Issue) 8.421%, 7/1/2025 (Insured; AMBAC) (b)...... 3,250,000 3,091,562
Massachusetts Housing Finance Agency, Residential Housing Revenue
8.40%, 8/1/2021......................................................... 3,415,000 3,603,132
Massachusetts Industrial Finance Agency, Revenue (Sturdy Memorial Hospital)
7.90%, 6/1/2009......................................................... 5,150,000 5,512,303
Massachusetts Port Authority, Special Project Revenue (Harborside Hyatt Project)
10%, 3/1/2026........................................................... 7,000,000 7,843,850
Pittsfield, SWDR (Vicon Recovery Associates Project) 7.95%, 11/1/2004....... 2,090,000 2,143,546
MICHIGAN-2.3%
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021..... 5,000,000 5,405,850
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MICHIGAN (CONTINUED)
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021......................................................... $ 4,000,000 $ 4,009,080
MINNESOTA-1.2%
Washington County Housing and Redevelopment Authority,
Governmental Housing Revenue (Woodland Park Apartments) 9.75%, 5/1/2020. 5,035,000 4,783,250
MISSISSIPPI-2.7%
Claiborne County, PCR (Middle South Energy Inc.) 9.875%, 12/1/2014.......... 10,000,000 11,192,100
MISSOURI-2.4%
Jackson County Industrial Development Authority, Health Facilities Revenue
(Carondelet Health Corp. Project) 9%, 7/1/2020.......................... 6,735,000 7,255,548
Missouri Health and Educational Facilities Authority, Health Facilities Revenue
(Lake of the Ozarks General Hospital Inc. Project) 7.875%, 2/1/2006..... 2,875,000 2,918,269
NEW JERSEY-1.3%
New Jersey Economic Development Authority, First Mortgage Revenue
(The Evergreens) 9.25%, 10/1/2022....................................... 5,000,000 5,404,550
NEW MEXICO-.8%
New Mexico Mortgage Finance Authority, SFMR 7.80%, 3/1/2021................. 3,380,000 3,516,214
NEW YORK-5.2%
New York City:
5.625%, 8/1/2013........................................................ 1,000,000 904,910
8%, 8/15/2018 (Prerefunded 8/15/2001) (a)............................... 1,485,000 1,720,699
New York City Industrial Development Agency, Civic Facility Revenue
(YMCA of Greater New York Project) 8%, 8/1/2016......................... 3,000,000 3,223,830
New York State Dormitory Authority, Revenue,
Judicial Facility Lease (Suffolk County Issue) 9.50%, 4/15/2014......... 6,000,000 6,998,100
New York State Mortgage Agency, Revenue 8.10%, 10/1/2017.................... 8,495,000 8,971,654
NORTH CAROLINA-1.6%
Halifax County Industrial Facilities and Pollution Control Financing Authority, SWDR
(Champion International Project) 8.15%, 11/1/2019....................... 1,000,000 1,086,480
Haywood County Industrial Facilities and Pollution Control Financing Authority, SWDR
(Champion International Project) 8.10%, 11/1/2009....................... 5,000,000 5,416,700
PENNSYLVANIA-7.7%
Langhorne Manor Borough Higher Education and Health Authority, Revenue
(Woods Schools) 8.75%, 11/15/2014 (Prerefunded 11/15/1999) (a).......... 6,000,000 6,909,300
Lehigh County General Purpose Authority, Revenue (Wiley House)
8.75%, 11/1/2014........................................................ 11,000,000 11,326,590
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
PENNSYLVANIA (CONTINUED)
Montgomery County Higher Education and Health Authority, Revenue:
(Northwestern Corp.) 8.50%, 6/1/2016.................................... $ 4,390,000 $ 4,749,848
(Retirement Community-G.D.L. Farms)
9.50%, 1/1/2020 (Prerefunded 1/1/2000) (a)............................ 5,500,000 6,428,180
Pennsylvania Economic Development Financing Authority, RRR
(Northhampton Generating Project) 6.60%, 1/1/2019....................... 2,500,000 2,388,525
Pennsylvania Housing Finance Agency, Multi-Family Development Revenue
8.25%, 12/15/2019....................................................... 304,000 315,917
RHODE ISLAND-2.0%
Rhode Island Health and Educational Building Corp., Revenue,
Refunding, Hospital Financing (Landmark Medical Center)
8.125%, 7/1/2019 (Prerefunded 7/1/1999) (a)............................. 7,520,000 8,433,154
TENNESSEE-1.6%
Maury County Health and Educational Facilities Board, Health Care Facilities Revenue
(Southern Health Care-Heritage) 10.50%, 3/1/2020........................ 6,160,000 6,827,313
TEXAS-13.0%
Georgetown Hospital Authority, HR, Refunding, Improvement and First Mortgage
8.625%, 7/1/2015........................................................ 7,005,000 7,518,677
Mesquite Health Facilities Development Corp., Revenue (Christian Care Centers Inc.)
9.375%, 3/1/2020........................................................ 11,540,000 12,296,909
Metro Health Facilities Development Corp., HR,
Refunding (Wilson N. Jones Memorial Hospital Project)
7.875%, 1/1/2014 (Prerefunded 1/1/1997) (a)............................. 2,760,000 2,880,805
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue, Refunding 6.90%, 7/2/2024......... 13,700,000 14,293,073
Texas Health Facilities Development Corp., HR (All Saints Episcopal Hospitals)
7.80%, 8/15/2021 (Prerefunded 8/15/1999) (a)............................ 3,000,000 3,318,810
Texas Public Property Finance Corp., Revenue (Mental Health and Retardation Project):
8.625%, 9/1/2001........................................................ 2,100,000 2,281,209
8.875%, 9/1/2011 (Prerefunded 9/1/2001) (a) ............................ 5,100,000 6,129,333
Tyler Health Facilities Development Corp., HR, Refunding
(East Texas Medical Center Regional Health Care System Project)
6.75%, 11/1/2025........................................................ 5,850,000 5,626,003
UTAH-1.9%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018..... 10,000,000 7,933,200
VERMONT-.6%
Vermont Housing Finance Agency, Home Mortgage Purchase 8.10%, 6/1/2022...... 2,450,000 2,543,296
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
VIRGINIA-5.7%
Fairfax County Water Authority, Revenue 7.177%, 4/1/2029 (b,c).............. $ 4,000,000 $ 3,600,000
Henrico County Industrial Development Authority, Revenue
(Bon Secours Health Care System Project) 7.843%, 8/23/2027 (b).......... 7,500,000 7,368,750
Virginia Housing Development Authority, MFHR
7.05%, 5/1/2018 ........................................................ 12,000,000 12,622,080
WASHINGTON-1.8%
Pilchuck Development Public Corp., Special Facilities Airport Revenue
(Tramco Inc. Project) 6%, 8/1/2023...................................... 3,920,000 3,640,543
Public Utility District No. 1 of Pend Orielle County, Electric Revenue
6.375%, 1/1/2015........................................................ 3,755,000 3,710,503
WISCONSIN-2.6%
Wisconsin Housing and Economic Development Authority, Homeownership Revenue
8.676%, 7/1/2025 (b,c).................................................. 10,600,000 10,626,500
WYOMING-1.0%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024............................................................ 2,200,000 2,283,732
6.90%, 9/1/2024......................................................... 2,000,000 2,057,100
________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $410,132,905)..................................................... $416,664,397
=============
SHORT-TERM MUNICIPAL INVESTMENTS-.3%
CALIFORNIA-.2%
Santa Clara County, TRAN, VRDN
Refunding 3.70% (LOC; Sumitomo Bank) (e,f).............................. $ 700,000 $ 700,000
NEW YORK-.1%
New York City, VRDN 3.70% (LOC; State Street Bank and Trust Co.) (e,f)...... 300,000 300,000
Port Authority of New York and New Jersey, Special Obligation Revenue, VRDN
(Versatile Structure Obligation) 3.55% (LOC; Morgan Guaranty Trust Co.) (e,f) 100,000 100,000
________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $1,100,000)....................................................... $ 1,100,000
=============
TOTAL INVESTMENTS-100.0%
(cost $411,232,905)..................................................... $417,764,397
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation PCR Pollution Control Revenue
EDR Economic Development Revenue RRR Resources Recovery Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit TRAN Tax and Revenue Anticipation Notes
MFHR Multi-Family Housing Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- - --------- -------- ----------------- -------------------
<S> <C> <S> <C>
AAA Aaa AAA 10.7%
AA Aa AA 13.3
A A A 3.7
BBB Baa BBB 27.8
BB Ba BB 3.3
F1 MIG1, VMIG1, P1 SP1, A1 .3
Not Rated (h) Not Rated (h) Not Rated (h) 40.9
_______
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31,
1996, these securities amounted to $30,201,500 or 7.1% of net assets.
(d) Non-income producing security; interest payment in default.
(e) Secured by letters of credit.
(f) 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.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Investment Adviser to be of comparable
quality to those rated securities in which the Fund may invest.
(i) At May 31, 1996, the Fund had $141,449,755 (33.1% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $411,232,905)-see statement..................................... $417,764,397
Cash.................................................................... 1,763,384
Interest receivable..................................................... 8,665,357
Prepaid expenses........................................................ 36,805
__________
428,229,943
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $268,930
Accrued expenses........................................................ 184,990 453,920
__________ __________
NET ASSETS.................................................................. $427,776,023
==============
REPRESENTED BY:
Paid-in capital......................................................... $429,776,513
Accumulated undistributed investment income-net......................... 4,306,275
Accumulated net realized (loss) on investments.......................... (12,838,257)
Accumulated net unrealized appreciation on investments-Note 3........... 6,531,492
__________
NET ASSETS at value applicable to 45,900,494 shares outstanding
(110 million shares of $.001 par value Common Stock authorized)......... $427,776,023
==============
NET ASSET VALUE per share
($427,776,023 / 45,900,494)............................................. $9.32
=======
See independent accountants' review report and notes to financial statements.
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 16,493,980
EXPENSES:
Investment advisory fee-Note 2(a)..................................... $ 1,083,662
Administration fee-Note 2(a).......................................... 541,831
Professional fees..................................................... 110,288
Registration fees..................................................... 21,415
Directors' fees and expenses-Note 2(b)................................ 19,756
Shareholder servicing costs........................................... 13,378
Shareholders' reports................................................. 6,576
Custodian fees........................................................ 1,290
Miscellaneous......................................................... 9,961
________
TOTAL EXPENSES.................................................. 1,808,157
____________
INVESTMENT INCOME-NET........................................... 14,685,823
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 2,290,263
Net unrealized (depreciation) on investments............................ (15,546,750)
_____________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (13,256,487)
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 1,429,336
=============
See independent accountants' review report and notes to financial statements.
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
NOVEMBER 30, MAY 31, 1996
1995 (UNAUDITED)
_______ _________
OPERATIONS:
Investment income-net................................................ $ 30,149,319 $ 14,685,823
Net realized gain (loss) on investments................................ (9,312,230) 2,290,263
Net unrealized appreciation (depreciation) on investments for the period 50,574,314 (15,546,750)
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. 71,411,403 1,429,336
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................. (29,353,820) (14,276,627)
_____________ _____________
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c)......................................... 819,049 1,431,062
_____________ _____________
TOTAL INCREASE (DECREASE) IN NET ASSETS.............................. 42,876,632 (11,416,229)
NET ASSETS:
Beginning of period.................................................... 396,315,620 439,192,252
_____________ _____________
End of period (including undistributed investment income-net:
$3,897,079 in 1995 and $4,306,275 in 1996)........................... $439,192,252 $427,776,023
=============== ===============
SHARES SHARES
___________ ___________
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED..... 90,204 155,045
=============== ===============
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the financial statements and market price
data for the Fund's shares.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED NOVEMBER 30, MAY 31, 1996
-----------------------------------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED)
------ ----- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 9.44 $ 9.61 $ 9.78 $ 9.93 $ 8.68 $ 9.60
------ ----- ----- ----- ----- --------
INVESTMENT OPERATIONS:
Investment income-net................. .69 .70 .70 .65 .66 .32
Net realized and unrealized gain (loss)
on investments...................... .19 .18 .17 (1.16) .90 (.29)
------ ----- ----- ----- ----- --------
TOTAL FROM INVESTMENT OPERATIONS.... .88 .88 .87 (.51) 1.56 .03
------ ----- ----- ----- ----- --------
DISTRIBUTIONS:
Dividends from investment income-net.. (.71) (.71) (.68) (.67) (.64) (.31)
Dividends from net realized gain
on investments...................... -- -- (.04) -- -- --
Dividends in excess of net realized
gain on investments................. -- -- -- (.07) -- --
------ ----- ----- ----- ----- --------
TOTAL DISTRIBUTIONS................. (.71) (.71) (.72) (.74) (.64) (.31)
------ ----- ----- ----- ----- --------
Net asset value, end of period........ $ 9.61 $ 9.78 $ 9.93 $ 8.68 $ 9.60 $ 9.32
======= ======= ======= ======= ======== ========
Market value, end of period........... $ 9 7/8 $ 10 1/4 $ 10 1/4 $ 8 5/8 $ 9 1/4 $ 9 1/8
======= ======= ======= ======= ======== ========
TOTAL INVESTMENT RETURN(1)................ 12.02% 11.65% 7.37% (8.97%) 15.12% 3.93%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .88% .84% .85% .86% .84% .83%(2)
Ratio of net investment income to
average net assets.................. 7.27% 7.16% 7.05% 6.94% 7.12% 6.76%(2)
Portfolio Turnover Rate............... 22.41% 8.58% 13.87% 10.96% 13.19% 3.98%(3)
Net Assets, end of period (000's Omitted) $408,314 $428,824 $447,691 $396,316 $439,192 $427,776
(1) Calculated based on market value.
(2) Annualized.
(3) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Strategic Municipal Bond Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a diversified closed-end
management investment company. The Fund's investment objective is to maximize
current income exempt from Federal income tax to the extent believed by the
Fund's investment adviser to be consistent with the preservation of capital.
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment adviser
and administrator. Boston Safe Deposit and Trust Company ("Custodian") acts
as the Fund's custodian. The Custodian is an indirect wholly-owned subsidiary
of Mellon Bank Corporation ("Mellon"). Dreyfus is a direct subsidiary of
Mellon Bank, N.A. First Data Investor Services Group, Inc. ("FDIS"), a
subsidiary of First Data Corporation ("FDC"), serves as the Fund's transfer
agent, dividend-paying agent, registrar and plan agent.
(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 securities 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 normally 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
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
share is less than 95% of the market value, shares will be issued by the Fund
at 95% of the market value. If the market price is lower than the net asset
value per share on the record date, FDIS 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 May 31, 1996, the Board of Directors declared a cash dividend of $.052
per share from investment income-net, payable on June 28, 1996 to
shareholders of record as of the close of business on June 14, 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
$15,129,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to November 30,
1995. If not applied, $5,816,000 of the carryover expires in fiscal 2002 and
$9,313,000 expires in fiscal 2003.
NOTE 2-INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH
AFFILIATES:
(A) The fee payable by the Fund, pursuant to the provisions of an
Investment Advisory Agreement with Dreyfus, is payable monthly based on an
annual rate of .50 of 1% of the value of the Fund's average weekly net
assets. The fee payable by the Fund, pursuant to the provisions of an
Administration Agreement with Dreyfus, is payable monthly based on an annual
rate of .25 of 1% of the value of the Fund's average weekly net assets.
(B) 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 $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation and the Director Emeritus receives 50% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the six months ended May 31, 1996
amounted to $16,966,601 and $20,284,555, respectively.
At May 31, 1996, accumulated net unrealized appreciation on investments
was $6,531,492, consisting of $21,682,423 gross unrealized appreciation and
$15,150,931 gross unrealized depreciation.
At May 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 STRATEGIC MUNICIPAL BOND FUND, INC.
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Strategic Municipal Bond Fund, Inc., including the statement of
investments, as of May 31, 1996, and the related statements of operations and
changes in net assets and financial highlights for the six month period ended
May 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
November 30, 1995 and financial highlights for each of the five years in the
period ended November 30, 1995 and in our report dated January 11, 1996, 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
July 10, 1996
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
PROXY RESULTS (UNAUDITED)
During the fiscal year ending November 30, 1996, stockholders voted on
the following proposals presented at the annual stockholders' meeting held on
May 3, 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:*
David W. Burke...................................... 36,951,475 603,915
Hans C. Mautner..................................... 37,000,285 555,105
John E. Zuccotti.................................... 36,990,169 565,221
</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....................... 36,715,655 189,396 650,339
* The terms of these Class III Directors expire in 1999.
</TABLE>
OFFICERS AND DIRECTORS
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
AND ADMINISTRATOR
The Dreyfus Corporation
CUSTODIAN
Boston Safe Deposit and Trust Company
COUNSEL
Stroock & Stroock & Lavan
TRANSFER AGENT,
DIVIDEND PAYING AGENT,
REGISTRAR AND PLAN AGENT
First Data Investor Services Group, Inc.
STOCK EXCHANGE LISTING
NYSE Symbol: DSM
INITIAL SEC EFFECTIVE DATE
11/22/89
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.
DIRECTORS
Joseph S. DiMartino, Chairman
David W. Burke
Hodding Carter, III
Ehud Houminer
Richard C. Leone
Hans C. Mautner
Robin A. Smith
John E. Zuccotti
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
Elizabeth Bachman
Vice President and Assistant Secretary
Eric B. Fischman
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
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 STRATEGIC MUNICIPAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER AND ADMINISTRATOR
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
TRANSFER AGENT,
DIVIDEND-PAYING AGENT,
REGISTRAR AND PLAN AGENT
First Data Investor Services Group, Inc.
One Exchange Place
Boston, MA 02109
Printed in U.S.A. 852SA965
[Dreyfus logo]
Strategic
Municipal
Bond Fund, Inc.
Semi-Annual
Report
May 31, 1996
