STRATEGIC MUNICIPAL BOND FUND, INC.
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report the performance for the
Dreyfus Strategic Municipal Bond Fund, Inc. for the six-month reporting
period ended May 31, 1998. Your Fund produced a total return including share
price changes and dividend income generated of 3.80%.* During the reporting
period, the Fund produced income dividends exempt from Federal personal
income taxes of $0.314 per share.** This is equivalent to a Federally
tax-free annualized distribution rate per share of 6.48%.***
Economic Review
In recent months, economic developments overseas began to assert a more
vigorous influence on the U.S. economy. The first quarter of the 1998
calendar year saw the U.S. trade deficit rising to a new high. Exports
contracted due to reduced foreign demand for U.S. products, which resulted in
a marked rise in business inventories; that could create a drag on future
production as stockpiles are depleted. At the same time, imports surged.
Spurred by a strong U.S. Dollar and robust consumer spending, the increase in
cheaper imports helped dampen domestic inflation since American producers had
to restrain their prices in order to remain competitive. The suppressive
effect of the trade deficit on both domestic production and prices has been
fortuitously in concert with the direction of Federal Reserve Board (the
"Fed") monetary policy.
The financial difficulties that began in Asia last year have now spread
to Latin America and beyond. That tenuous situation and the continued
economic instability in Russia have contributed to the Fed's status quo
policy in monetary matters since the Fed is concerned that any increase in
short-term interest rates would further unsettle world markets. The last
increase in short-term rates came in March 1997 when the Federal Open Market
Committee (the policy-making arm of the Fed) raised the target rate for
Federal Funds by one quarter of a percent to 5.5%. (The Federal Funds rate is
the rate of interest that banks charge each other for the use of Federal
Funds.)
Consumers, spurred by real wage gains and a healthy job market,
continued to spend freely in the retail sector, giving retailers some of
their best months in a decade. In the early years of the current eight-year
economic expansion, the retail portion of our economy at times had lagged
since consumers feared job insecurity and a resurgence of inflation. The
buoyant stock market, low unemployment rate and absence of inflation,
however, encouraged consumers to spend. The market for so-called "big ticket"
items has been strong: the housing market was solid throughout the reporting
period and continues to be, while car and truck sales are at ten-year highs.
Unemployment (4.3% at the end of the reporting period) is at a 28-year
low. Inflation, at both consumer and producer levels, has been dormant.
Workers are benefiting from having their wages rise faster than inflation.
The most recently reported statistics on hourly wages (through April)
revealed that over the previous 12 months, wages rose 4.4% while the Consumer
Price Index increased but 1.4%. The tight labor market and upward pressure on
wages, because of their potential for rekindling inflation, have been major
concerns of the Federal Reserve. The wage rate increase of 4.4% (above),
compared to 3.7% and 3.1% in the two previous years, illustrates the upward
creep of wages.
Over the past few years, gains in worker productivity (output per hour
of work) have offset any incipient price pressures from rising wages.
Enhanced by the widespread use of technology, productivity rose 1.7% last
year and 1.9% in 1996, compared to an average increase of only 1% for the
period 1974-1995. These gains are a key factor in the continuation of our
high-growth, low-inflation economy. However, productivity gains slowed to
1.1% during the first quarter, the slowest pace in over a year. So far, our
economy has been in a charmed circle where even international financial
crises have proven supportive of our economic policies. As always, we remain
alert for warning signs that the delicate balance that now prevails in our
economy might be disturbed.
Market Environment
The market environment for bonds has been very constructive. During the
last six months, yields on long-term, high-grade tax-exempt bonds have
declined marginally, while U.S. Treasury bond yields fell by over one-quarter
of a percent. Certainly, it has been the uncertain impact of the Asian
financial crisis that has kept the Fed from pushing rates higher despite
strong domestic economic data. Spurred by the drop in rates, the issuance of
new municipal securities surged during the last several months. In fact, the
volume of new issuance in 1997 rose 20% over the previous year, marking it as
one of the most prolific years of issuance in history. So far, 1998 is on
course to eclipse last year's pace; through May, volume is up 50% from the
previous year.
We believe that it is still too early to draw any conclusions regarding
how much the Asian crisis will influence the U.S. economy. Until a clearer
picture emerges from Asia, we believe investors will continue to find
fixed-income investments attractive. The still strong and expanding economy
would normally be a cause for concern to inflation watchers. However, it is
generally believed that the Fed will refrain from taking any interest rate
actions that could exacerbate the Asian situation. We share this view. While
the most recent economic and employment data have been indicative of a
strengthening economy, inflation remains quiescent.
The fixed-income markets have now weathered the period of seasonal
price weakness that results from large debt issuance. Traditionally, as
summer approaches, the pressure from too much new-issue supply begins to
abate. Given this fact and the reasons cited above, we believe that the
current environment supports an outlook for steady monetary policy and
well-anchored interest rates. As long as inflation growth remains low, we
don't anticipate the Fed reacting to strong employment and economic data by
raising rates. Instead, we believe that the events in Asia, Russia and other
emerging countries will be more influential.
Portfolio Overview
As discussed in previous communications to shareholders, while the Fund
seeks to maximize Federally tax-exempt income, investment opportunities to
enhance the Fund's tax-exempt income have been limited. Quality spreads (the
yield differential between higher- and lower-quality bonds) continue to
narrow. While there are many possible reasons, the factor most cited is the
rising percentage of newly-issued bonds which carry the highest grade rating
(AAA). Today, over half of all new municipal bond issues come to market as
insured. The dearth of higher yielding bonds, coupled with strong investor
demand, has driven quality spreads to new lows.
Further impacting our attempt to add incremental income has been a
large decline in interest rates over the past few years. Many of the
portfolio securities that were purchased in a higher interest rate
environment are now being called by their issuers and replaced with
lower-coupon debt. Due principally to the lower interest rate environment, it
was necessary to reduce the distributed dividend earlier this year. In spite
of this modest adjustment, Dreyfus Strategic Municipal Bond Fund, Inc.
generated a current tax-free yield of 6.32%, based on the closing stock
price, as of the end of the reporting period.
Looking forward, our focus will continue to be on securities meeting
our investment criteria. The municipal market has not made any significant
moves in recent weeks. We believe that it is likely that this condition could
persist going forward until a clearer picture of the Asian impact emerges. In
the meantime, we continue to mine for those investment opportunities that
meet our investment criteria.
Very truly yours,
[Richard J. Moynihan signature logo]
Director, Municipal Portfolio Management
The Dreyfus Corporation
June 18, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid, based upon net asset value per share.
** 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>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
Statement of Investments May 31, 1998 (Unaudited)
Long-Term Municipal Investments-99.8%
Principal
Amount Value
_____________ _____________
<S> <C> <C>
Alabama-.7%
Alabama Industrial Development Authority, SWDR
(Pine City Fiber Co.) 6.45%, 12/1/2023.................................... $ 3,000,000 $ 3,258,540
Arkansas-.5%
Saline County, HR, Refunding, Improvement
7.875%, 9/1/2019 (Prerefunded 9/1/1999) (a)............................... 2,000,000 2,135,560
Arizona-1.1%
Apache County Industrial Development Authority, PCR, Refunding
(Tuscon Electric Power Co.) 5.85%, 3/1/2028............................... 5,000,000 5,046,350
Colorado-1.3%
Colorado Health Facilities Authority, Revenue
(American Housing Foundation 1 Inc. Project) 10.25%, 12/1/2020............ 5,700,000 5,566,278
Connecticut-.9%
Connecticut Housing Finance Authority, Housing Mortgage Finance Program
6%, 11/15/2027............................................................ 4,000,000 4,183,280
Delaware-1.5%
Delaware Health Facilities Authority, Revenue,
Refunding (Beebe Medical Center Project) 6.80%, 6/1/2024.................. 5,905,000 6,509,200
District of Columbia-1.8%
Metropolitan Washington Airports Authority, Special Facilities Revenue
(Caterair International Corp.) 10.125%, 9/1/2011.......................... 7,720,000 8,045,938
Florida-5.7%
Florida Board of Education, Capital Outlay 8.757%, 6/1/2019 (b,c)........... 15,000,000 17,400,000
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015 (d).................................................... 5,000,000 4,000,000
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022 (d)..................................................... 5,000,000 3,950,000
Georgia-2.8%
Private Colleges and Universities Facilities Authority, Revenue,
Refunding (Clark Atlanta University Project)
8.25%, 1/1/2015 (Prerefunded 1/1/2003) (a)................................ 10,245,000 12,361,412
Illinois-9.2%
Chicago-O'Hare International Airport, Special Facility Revenue
Refunding (Delta Airlines Project) 6.45%, 5/1/2018........................ 2,790,000 2,955,224
(United Airlines Inc. Project):
8.20%, 5/1/2018......................................................... 6,930,000 7,355,918
8.40%, 5/1/2018......................................................... 6,350,000 6,742,621
Dreyfus Strategic Municipal Bond Fund, Inc.
Statement of Investments (continued) May 31, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Illinois (continued)
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facilities Acquisition Program)
6.05%, 7/1/2019......................................................... $ 5,290,000 $ 5,525,987
8.50%, 9/1/2010......................................................... 1,710,000 1,834,043
8.50%, 9/1/2010 (Prerefunded 9/1/2000) (a).............................. 3,290,000 3,661,441
Illinois Health Facilities Authority, Revenue
(Ravenswood Hospital Medical Center Project) 8.25%, 11/1/2010............. 11,800,000 12,588,830
Indiana-3.7%
Burns Harbor Industrial Solid Waste Disposal Facilities, Revenue
(Bethlehem Steel Corp. Project) 8%, 4/1/2024.............................. 6,000,000 6,828,840
Indianapolis Airport Authority, Special Facility Revenue
(United Airlines Inc. Project) 6.50%, 11/15/2031.......................... 8,750,000 9,525,337
Kentucky-2.2%
Kenton County Airport Board, Airport Revenue
(Special Facilities-Delta Airlines Project) 6.125%, 2/1/2022.............. 5,000,000 5,123,000
Morgantown Health Care Facility, Revenue (Southern Health Care System
Project)
10.50%, 3/1/2020 (Prerefunded 3/1/2000) (a)............................... . 4,100,000 4,617,297
Louisiana-5.7%
Lake Charles Harbor and Terminal, District Port Facilities Revenue,
Refunding (Trunkline LNG Co. Project) 7.75%, 8/15/2022.................... 15,000,000 17,191,500
Parish of De Soto, Environmental Improvement Revenue,
Refunding (International Paper Co. Project) 6.55%, 4/1/2019............... 2,900,000 3,211,228
West Feliciana Parish, PCR (Gulf States) 5.80%, 12/1/2015................... 5,000,000 5,059,850
Maryland-2.2%
Baltimore County, PCR,
Refunding (Bethlehem Steel Corp. Project) 7.50%, 6/1/2015................. 5,000,000 5,606,450
Maryland Industrial Development Financing Authority, EDR
(Medical Waste Associates Limited Partnership) 8.75%, 11/15/2010.......... 4,255,000 4,352,439
Massachusetts-4.9%
Massachusetts Health and Educational Facilities Authority, Revenue
Refunding (Beth Israel Hospital Issue) 8.268%, 7/1/2025 (Insured; AMBAC) (b) 3,250,000 3,684,687
Massachusetts Housing Finance Agency, Residential Housing Revenue
8.40%, 8/1/2021........................................................... 3,415,000 3,496,618
Massachusetts Industrial Finance Agency, Revenue (Sturdy Memorial Hospital)
7.90%, 6/1/2009........................................................... 4,700,000 4,948,630
Massachusetts Port Authority, Special Project Revenue (Harborside Hyatt
Project)
10%, 3/1/2026............................................................. 7,000,000 7,843,850
Dreyfus Strategic Municipal Bond Fund, Inc.
Statement of Investments (continued) May 31, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Massachusetts (continued)
Pittsfield, SWDR (Vicon Recovery Associates Project) 7.95%, 11/1/2004....... $ 1,745,000 $ 1,814,922
Michigan-2.4%
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021....... 5,000,000 6,270,900
Michigan Strategic Fund, SWDR,
Refunding (Genesee Power Station Project) 7.50%, 1/1/2021................. 4,000,000 4,351,880
Minnesota-1.1%
Washington County Housing and Redevelopment Authority,
Governmental Housing Revenue (Woodland Park Apartments) 9.75%, 5/1/2020... 5,035,000 4,783,250
Mississippi-2.4%
Claiborne County, PCR (Middle South Energy Inc.) 9.875%, 12/1/2014.......... 10,000,000 10,544,400
Missouri-1.6%
Jackson County Industrial Development Authority, Health Facilities Revenue
(Carondelet Health Corp. Project) 9%, 7/1/2020............................ 6,735,000 7,174,189
New Hampshire-1.4%
New Hampshire Business Finance Authority, PCR, Refunding (Public Service Co.)
6%, 5/1/2021.............................................................. 6,000,000 6,113,220
New Jersey-1.4%
New Jersey Economic Development Authority, First Mortgage Revenue
(The Evergreens) 9.25%, 10/1/2022......................................... 5,000,000 6,050,700
New Mexico-.6%
New Mexico Mortgage Finance Authority, SFMR 7.80%, 3/1/2021................. 2,535,000 2,637,997
New York-5.2%
New York City,
8%, 8/15/2018 (Prerefunded 8/15/2001) (a)................................. 1,485,000 1,683,025
New York City Industrial Development Agency, Civic Facility Revenue
(YMCA of Greater New York Project) 8%, 8/1/2016 (Prerefunded 8/1/2001) (a) 3,000,000 3,391,920
New York State Dormitory Authority, Revenue,
Judicial Facility Lease (Suffolk County Issue) 9.50%, 4/15/2014........... 6,000,000 7,000,560
New York State Mortgage Agency, Revenue:
8.10%, 10/1/2017.......................................................... 8,495,000 8,677,558
Homeowner Mortgage, 6.05%, 4/1/2026....................................... 1,995,000 2,126,610
North Carolina-1.4%
Halifax County Industrial Facilities and Pollution Control Financing
Authority, SWDR
(Champion International Project) 8.15%, 11/1/2019......................... 1,000,000 1,065,300
Dreyfus Strategic Municipal Bond Fund, Inc.
Statement of Investments (continued) May 31, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
North Carolina (continued)
Haywood County Industrial Facilities and Pollution Control Financing Authority, SWDR
(Champion International Project) 8.10%, 11/1/2009......................... $ 4,820,000 $ 5,128,046
(Champion International Project) 8.10%, 11/1/2009 (Prerefunded 11/1/1999) (a) . 180,000 193,774
Pennsylvania-9.6%
Beaver County Industrial Development Authority, PCR,
Refunding (Cleveland Electric Project) 7.625%, 5/1/2025................... 8,800,000 10,050,568
Langhorne Manor Borough Higher Education and Health Authority, Revenue
(Woods Schools) 8.75%, 11/15/2014 (Prerefunded 11/15/1999) (a)............ 5,000,000 5,443,800
Lehigh County General Purpose Authority, Revenue (Wiley House)
8.75%, 11/1/2014.......................................................... 11,000,000 11,492,030
Montgomery County Higher Education and Health Authority, Revenue:
(Northwestern Corp.) 8.50%, 6/1/2016...................................... 4,390,000 4,689,749
(Retirement Community-G.D.L. Farms)
9.50%, 1/1/2020 (Prerefunded 1/1/2000) (a).............................. 5,500,000 6,058,745
Pennsylvania Economic Development Financing Authority, RRR
(Northhampton Generating Project) 6.60%, 1/1/2019......................... 4,200,000 4,502,484
Pennsylvania Housing Finance Agency, Multi-Family Development Revenue
8.25%, 12/15/2019......................................................... 299,000 313,164
Rhode Island-1.8
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 8,009,778
Tennessee-1.5%
Maury County Health and Educational Facilities Board, Health Care Facilities
Revenue
(Southern Health Care-Heritage) 10.50%, 3/1/2020 (Prerefunded 3/1/2000) (a) 6,025,000 6,784,090
Texas-12.4%
Georgetown Hospital Authority, HR, Refunding, Improvement and First Mortgage
8.625%, 7/1/2015 (Prerefunded 7/1/1999) (a)............................... 6,705,000 7,169,589
Houston Airport System, Special Facilities Revenue,
Airport Improvement (Continental Airlines) 6.125%, 7/15/2017.............. 2,875,000 3,022,373
Mesquite Health Facilities Development Corp., Revenue (Christian Care Centers
Inc.)
9.375%, 3/1/2020 (Prerefunded 3/1/2000) (a)............................... 11,540,000 12,889,834
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue, Refunding 6.90%, 7/2/2024........... 13,700,000 15,324,135
Texas Health Facilities Development Corp., HR (All Saints Episcopal
Hospitals)
7.80%, 8/15/2021 (Prerefunded 8/15/1999) (a).............................. 3,000,000 3,194,460
Dreyfus Strategic Municipal Bond Fund, Inc.
Statement of Investments (continued) May 31, 1998 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Texas (continued)
Texas Public Property Finance Corp., Revenue (Mental Health and Retardation Project):
8.625%, 9/1/2001.......................................................... $ 1,190,000 $ 1,262,959
8.875%, 9/1/2011 (Prerefunded 9/1/2001) (a)............................... 5,100,000 5,912,889
Tyler Health Facilities Development Corp., HR, Refunding
(East Texas Medical Center Regional Health Care System Project)
6.75%, 11/1/2025.......................................................... 5,850,000 6,288,516
Utah-2.5%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018 (d). 10,000,000 6,002,000
Tooele County, Hazardous Waste Treatment Revenue (Union Pacific Project)
5.70%, 11/1/2026.......................................................... 5,000,000 5,065,950
Vermont-.5%
Vermont Housing Finance Agency, Home Mortgage Purchase 8.10%, 6/1/2022...... 2,130,000 2,197,564
Virginia-6.0%
Fairfax County Water Authority, Revenue 7.14%, 4/1/2029 (b,c)............... 4,000,000 4,195,000
Henrico County Industrial Development Authority, Revenue
(Bon Secours Health Care System Project) 7.873%, 8/23/2027 (b)............ 7,500,000 9,525,000
Virginia Housing Development Authority, MFHR
7.05%, 5/1/2018........................................................... 12,000,000 12,845,880
Wisconsin-2.7%
Wisconsin Housing and Economic Development Authority, Homeownership Revenue
8.635%, 7/1/2025 (b,c).................................................... 10,600,000 11,752,750
Wyoming-1.1%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024.............................................................. 2,200,000 2,454,892
6.90%, 9/1/2024........................................................... 2,000,000 2,236,300
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $422,361,044)....................................................... $ 442,303,098
_____________
_____________
Short-Term Municipal Investments-.2%
Wyoming;
Lincoln County, PCR, VRDN (Exxon Project) 4.05% (e)
(cost $1,100,000)......................................................... $ 1,100,000 $ 1,100,000
_____________
_____________
TOTAL INVESTMENTS-100.0%
(cost$423,461,044)........................................................ $ 443,403,098
_____________
_____________
</TABLE>
<TABLE>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
<S> <C> <C> <C>
Summary of Abbreviations
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
MFHR Multi-Family Housing Revenue VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch (f) or Moody's or Standard & Poor's Percentage of Value
______ ________ ________________ _________________
AAA Aaa AAA 14.1%
AA Aa AA 12.5
A A A 7.0
BBB Baa BBB 26.2
BB Ba BB 6.5
B B B 1.1
F1 MIG1, VMIG1, P1 SP1, A1 .2
Not Rated (g) Not Rated (g) Not Rated (g) 32.4
_______
100.0%
_______
_______
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) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 1998,
these securities amounted to $33,347,750 or 7.4% of net assets.
(d) Non-income producing security, interest payments in default.
(e) 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.
(f) Fitch currently provides creditworthiness information for a limited number
of investments.
(g) 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.
(h) At May 31, 1998, the Fund had $142,353,351 (31.5% of net assets) invested
in securities whose payment of principal and interest is dependent upon
revenues generated from health care projects.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
Statement of Assets and Liabilities
May 31, 1998 (Unaudited)
Cost Value
___________________________________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of In $423,461,044 $443,403,098
Interest receivable........................ 8,068,195
Prepaid expenses and other assets.......... 221,490
____________
451,692,783
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 286,589
Cash overdraft due to Custodian............ 42,402
Accrued expenses........................... 109,738
____________
438,729
____________
NET ASSETS.................................................................. $451,254,054
____________
____________
REPRESENTED BY: Paid-in capital............................ $442,964,394
Accumulated undistributed investment income-net 2,306,770
Accumulated net realized gains (loss) on investments (13,959,164)
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 4 19,942,054
____________
NET ASSETS.................................................................. $451,254,054
____________
____________
SHARES OUTSTANDING
(110 million shares of $.001 par value Common Stock authorized)............. 47,266,143
NET ASSET VALUE per share................................................... $9.55
______
______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
Statement of Operations Six Months Ended May 31, 1998 (Unaudited)
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income............................ $15,915,890
EXPENSES: Investment advisory fee-Note 3(a).......... $ 1,123,475
Administration fee-Note 3(a)............... 561,737
Shareholders' reports...................... 41,273
Professional fees.......................... 22,432
Shareholder servicing costs................ 18,711
Directors' fees and expenses-Note 3(b)..... 17,979
Registration fees.......................... 10,935
Custodian fees............................. 408
Miscellaneous.............................. 14,557
____________
Total Expenses....................... 1,811,507
____________
INVESTMENT INCOME-NET....................................................... 14,104,383
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... $ 158,887
Net unrealized appreciation (depreciation)
on investments......................... 2,972,966
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 3,131,853
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $17,236,236
____________
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
Statement of Changes in Net Assets
Six Months Ended
May 31, 1998 Year Ended
(Unaudited) November 30, 1997
________________ _________________
OPERATIONS:
<S> <C> <C>
Investment income-net............................................... $ 14,104,383 $ 28,832,146
Net realized gain (loss) on investments............................. 158,887 161,700
Net unrealized appreciation (depreciation) on investments........... 2,972,966 (698,707)
________________ _________________
Net Increase (Decrease) in Net Assets Resulting from Operations... 17,236,236 28,295,139
________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................... (14,805,298) (30,573,584)
________________ _________________
CAPITAL STOCK TRANSACTIONS:
Dividends reinvested-Note 1(c)...................................... 2,670,914 7,749,563
________________ _________________
Total Increase (Decrease) in Net Assets........................... 5,101,852 5,471,118
NET ASSETS:
Beginning of Period................................................. 446,152,202 440,681,084
________________ _________________
End of Period....................................................... $451,254,054 $446,152,202
________________ _________________
________________ _________________
Undistributed investment income-net..................................... $ 2,306,770 $ 3,007,685
________________ _________________
Shares Shares
________________ _________________
CAPITAL SHARE TRANSACTIONS:
Increase in Shares Outstanding as a Result of Dividends Reinvested.. 270,836 799,653
________________ _________________
________________ _________________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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 Fund's financial statements and market
price data for the Fund's shares.
Six Months Ended
May 31, 1998 Year Ended November 30,
_____________________________________________
PER SHADATA: (Unaudited) 1997 1996 1995 1994 1993
__________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 9.49 $ 9.54 $ 9.60 $ 8.68 $ 9.93 $ 9.78
_______ ______ ______ ______ ______ ______
Investment operations:
Investment income-net................. .30 .62 .64 .66 .65 .70
Net realized and unrealized gain (loss)
on investments...................... .07 (.01) (.08) .90 (1.16) .17
_______ ______ ______ ______ ______ ______
Total from Investment Operations...... .37 .61 .56 1.56 (.51) .87
_______ ______ ______ ______ ______ ______
Distributions:
Dividends from net investment income-net (.31) (.66) (.62) (.64) (.67) (.68)
Dividends from net realized gains on investments .- .- .- .- .- (.04)
Dividends in excess of net realized gains
on investments...................... .- .- .- .- (.07) .-
_______ ______ ______ ______ ______ ______
Total Distributions................... (.31) (.66) (.62) (.64) (.74) (.72)
_______ ______ ______ ______ ______ ______
Net asset value, end of period........ $ 9.55 $ 9.49 $ 9.54 $ 9.60 $ 8.68 $ 9.93
_______ ______ ______ ______ ______ ______
_______ ______ ______ ______ ______ ______
Market value, end of period........... $9 11\16 $10 5\8 $9 3\4 $9 1\4 $8 5\8 $10 1\4
________ ______ ______ ______ ______ ______
________ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN(1)................ (11.75%)(2) 16.60% 12.61% 15.12% (8.97%) 7.37%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .81%(2) .81% .82% .84% .86% .85%
Ratio of net investment income
to average net assets............... 6.28%(2) 6.55% 6.82% 7.12% 6.94% 7.05%
Portfolio Turnover Rate............... 4.61%(3) 2.95% 13.47% 13.19% 10.96% 13.87%
Net assets, end of period (000's Omitted) $451,254 $446,152 $440,681 $439,192 $396,316 $447,691
(1) Calculated based on market value.
(2) Annualized.
(3) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles and 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 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.
Dreyfus Strategic Municipal Bond Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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
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 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 29, 1998, the Board of Directors declared a cash dividend of $.051
per share from investment income-net, payable on June 26, 1998 to
shareholders of record as of the close of business on June 12, 1998.
(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
$14,118,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to November 30,
1997. If not applied, $4,805,000 of the carryover expires in fiscal 2002 and
$9,313,000 expires in fiscal 2003.
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, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds in effect at the time of
borrowings. During the period ended May 31, 1998, the Fund did not borrow
under the line of credit.
NOTE 3-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.
Dreyfus Strategic Municipal Bond Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 4-Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended May 31, 1998
amounted to $24,985,000 and $20,311,250, respectively.
At May 31, 1998, accumulated net unrealized appreciation on investments
was $19,942,054, consisting of $33,928,976 gross unrealized appreciation and
$13,986,922 gross unrealized depreciation.
At May 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
<TABLE>
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
Proxy Results (Unaudited)
Stockholders voted on the following proposals presented at the annual
stockholders' meeting held on May 15, 1998. The description of each proposal
and the number of shares voted are as follows:
For Authority Withheld
__________________ __________________
<S> <C> <C>
1.To elect two Class II Directors:*
Ehud Houminer................................................. 43,430,599 947,316
Robin A. Smith................................................ 43,418,776 959,139
For Against Abstained
_______________ _____________ ____________
2.To ratify the selection of Ernst & Young LLP
as independent auditors of the Fund................ 43,742,552 297,949 607,414
* The terms of these Class II Directors expire in 2001.
</TABLE>
OFFICERS AND DIRECTORS
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
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 Treasurer
Michael S. Petrucelli
Vice President and Assistant Treasurer
Douglas C. Conroy
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President and Assistant Treasurer
Joseph F. Tower, III
Vice President and Assistant Secretary
Richard W. Ingram
Portfolio Managers
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
Samuel J. Weinstock
Monica S. Wieboldt
Investment Adviser
and Administrator
The Dreyfus Corporation
Custodian
Boston Safe Deposit and Trust Company
Counsel
Stroock & Stroock & Lavan LLP
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.
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 Strategic Municipal Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
Manager
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. 852SA985
Strategic
Municipal
Bond Fund, Inc.
Semi-Annual Report
May 31, 1998
[Registration Mark]
[Dreyfus lion/2hres logo]
