Dreyfus Strategic Municipal Bond Fund, Inc.
SEMIANNUAL REPORT
May 31, 1999
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
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2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
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Dreyfus Strategic Municipal The Fund
Bond Fund, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Strategic Municipal
Bond Fund, Inc., covering the six-month period from December 1, 1998 through May
31, 1999. Inside, you'll find valuable information about how the fund was
managed during the reporting period, including a discussion with the fund's
portfolio manager, Paul Disdier.
Lower short-term interest rates adopted by the Federal Reserve Board and other
central banks in the fall of 1998 appear to have helped many U.S. businesses
withstand the effects of economic weakness in Japan, Asia and Latin America. At
the same time, the U.S. economy entered its eighth year of expansion in an
environment characterized by low inflation and high levels of consumer spending.
Tax-exempt fixed-income securities provided good results in this economic
climate, especially relative to taxable U.S. Treasury securities. While prices
of U.S. Treasury securities declined significantly through most of the reporting
period, a lack of new issuance relative to robust investor demand supported most
municipal bond prices.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Strategic Municipal Bond Fund, Inc.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
June 14, 1999
2
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DISCUSSION OF FUND PERFORMANCE
Paul Disdier, Portfolio Manager
How did Dreyfus Strategic Municipal Bond Fund, Inc. perform during the period?
The fund produced a .67% total return over the six-month period ended May 31,
1999.1
We attribute the fund's performance to its focus on municipal bonds with
relatively low durations. Duration is a measure of sensitivity to changes in
interest rates. While we looked for higher-yielding, lower-rated securities,
these issues remained expensive compared to securities with higher credit
ratings during the period. Accordingly, we allocated some assets to
higher-rated, lower-yielding securities which tend to be more liquid than
lower-rated securities, making them easier to buy and sell as market conditions
change and giving the fund more flexibility to react in a weak market.
What is the fund's investment approach?
The fund seeks high current federally tax-exempt income from a diversified
portfolio of municipal bonds.
We look for bonds that we expect to provide consistently high income streams. We
strive to find such opportunities through rigorous analyses of individual bonds'
structures. Within the context of our bond structure analysis, we pay
particularly close attention to each bond's maturity and early redemption
features. If we identify bonds that are close to redemption but that offer
higher income payments than are generally available, we may hold them until they
are very close to final maturity or their call dates. This strategy is designed
to help us maximize income. If, on the other hand, we can find attractive income
alternatives elsewhere, we will usually sell bonds that are close to
redemption. This strategy is intended to protect the fund's total return from
the effects of declining bond prices.
The Fund 3
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What other factors influenced the fund's performance?
When the Asian currency and credit crisis spread to Latin America just prior to
the start of the reporting period, investors flocked to U.S. Treasury
securities. As a result, yields on taxable Treasuries fell to levels that were
roughly equivalent to yields on comparable tax-exempt bonds.
However, the Federal Reserve Board and other central banks moved quickly to
stimulate global economic growth by reducing key short-term interest rates.
Because lower short-term interest rates had the potential to reignite inflation
pressures, yields on intermediate- and long-term bonds rose. However, the extent
of that rise was much greater for taxable U.S. Treasury securities than for
tax-free municipal bonds. Yields of intermediate-term municipal bonds rose more
than yields of long-term municipal bonds, primarily because of supply-and-demand
factors.
Because of strong economic conditions throughout the United Stares, the nation's
states and municipalities have had less need to borrow. As a result, about 24%
fewer tax-exempt bonds were issued over the six-month reporting period than in
the same period one year ago. Yet, demand from individual investors seeking to
minimize their income tax liabilities remained high. This balance between supply
and demand helped municipal bond prices decline less than U.S. Treasury bond
prices.
What is the fund's current strategy?
During the reporting period, we maintained a relatively defensive posture in an
investment environment generally characterized by rising municipal bond yields.
Accordingly, over the past several months, we have emphasized municipal bonds
with relatively high coupon rates and short durations. This positioning was
designed to take full advantage of the higher-yielding securities held in the
portfolio.
Because of the diminished supply of new municipal issues and the attendant
narrowing of credit spreads, high-yielding bonds meeting our credit standards
were difficult to find. This scarcity has contributed to
4
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the fund's inability to maintain its previous dividend distribution rate.
Because of lower prevailing yields, we were forced to reduce the fund's
dividend in April. However, we continued to search the municipal bond market
for higher-yielding bonds. In the absence of such opportunities, we focused
selectively on higher-quality bonds because of the narrow spread yield between
higher-rated and lower-rated credits.
June 14, 1999
1 Total return includes reinvestment of dividends and any capital gains paid,
based upon net asset value per share. Income may be subject to state and local
taxes, and some income may be subject to the Federal Alternative Minimum Tax
(AMT) for certain shareholders. Capital gains, if any, are fully taxable.
The Fund 5
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STATEMENT OF INVESTMENTS
May 31, 1999 (Unaudited)
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Principal
Long-Term Municipal Investments--98.1% Amount ($) Value ($)
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Alabama--.7%
Alabama Industrial Development Authority, SWDR
(Pine City Fiber Co.) 6.45%, 12/1/2023 3,000,000 3,140,610
Arizona--1.8%
Apache County Industrial Development Authority, PCR
(Tuscon Electric Power Co. Project) 5.85%, 3/1/2028 8,000,000 7,895,040
Arkansas--.5%
Saline County, HR
7.875%, 9/1/2019 (Prerefunded 9/1/1999)a 2,000,000 2,062,180
California--1.1%
California Statewide Communities Development Authority,
COP (The Internext Group) 5.375%, 4/1/2030 5,000,000 4,871,100
Colorado--1.1%
Colorado Health Facilities Authority, Revenue
(American Housing Foundation 1, Inc. Project)
10.25%, 12/1/2020 5,600,000 5,025,888
Connecticut--2.1%
Connecticut Development Authority, PCR
(Connecticut Light and Power) 5.95%, 9/1/2028 5,000,000 4,967,200
Connecticut Housing Finance Authority,
Housing Mortgage Finance Program
6%, 11/15/2027 4,000,000 4,194,040
Delaware--1.4%
Delaware Health Facilities Authority, Revenue
(Beebe Medical Center Project) 6.80%, 6/1/2024 5,905,000 6,400,016
District of Columbia--1.7%
Metropolitan Washington Airports Authority,
Special Facilities Revenue
(Caterair International Corp.) 10.125%, 9/1/2011 7,320,000 7,538,429
Florida--5.9%
Florida Board of Education, Capital Outlay
8.733%, 6/1/2019b,c 15,000,000 17,177,700
Lee County Industrial Development Authority,
Health Care Facilities Revenue
(Shell Point Village Project) 5.50%, 11/15/2019 1,500,000 1,470,420
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015d 5,000,000 3,787,500
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022d 5,000,000 3,712,500
6
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Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
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Georgia--3.7%
Burke County Development Authority, PCR
(Georgia Power Co. Plant Vogtle) 5.45%, 5/1/2034 5,000,000 4,859,200
Private Colleges and Universities Facilities
Authority, Revenue
(Clark Atlanta University Project)
8.25%, 1/1/2015 (Prerefund 1/1/2003)a 9,950,000 11,729,557
Illinois--6.6%
Chicago-O'Hare International Airport,
Special Facility Revenue
(Delta Airlines Project) 6.45%, 5/1/2018 2,790,000 2,956,005
Illinois Development Finance Authority, Revenue:
(Community Rehabilitation Providers
Facilities Acquisition Program):
8.50%, 9/1/2010 1,710,000 1,792,661
8.50%, 9/1/2010 (Prerefunded 9/1/2000)a 3,290,000 3,546,488
6.05%, 7/1/2019 5,290,000 5,448,700
HR (Adventist Health Systems / Sunbelt) 5.50%,
11/15/2029 4,175,000 4,014,054
Illinois Health Facilities Authority, Revenue
(Ravenswood Hospital Medical Center Project)
8.25%, 11/1/2010 11,199,998 11,602,415
Indiana--2.6%
Burns Harbor Industrial Solid Waste
Disposal Facilities, Revenue
(Bethlehem Steel Corp. Project) 8%, 4/1/2024 6,000,000 6,540,900
Indianapolis Airport Authority, Revenue
9.105%, 11/15/2031b,c 4,375,000 5,070,450
Kentucky--2.1%
Kenton County Airport Board, Airport Revenue
(Special Facilities - Delta Airlines Project)
6.125%, 2/1/2022 5,000,000 5,094,300
Morgantown Health Care Facility, Revenue
(Southern Health Care System Project)
10.50%, 3/1/2020 (Prerefunded 3/1/2000)a 4,045,000 4,334,986
Louisiana--5.6%
Lake Charles Harbor and Terminal,
District Port Facilities Revenue
(Trunkline LNG Co. Project) 7.75%, 8/15/2022 15,000,000 16,902,750
Parish of De Soto, Environmental Improvement Revenue
(International Paper Co. Project) 6.55%, 4/1/2019 2,900,000 3,141,628
West Feliciana Parish, PCR (Gulf States) 5.80%,
12/1/2015 5,000,000 4,955,450
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
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Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
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Maryland--2.2%
Baltimore County, PCR (Bethlehem Steel Corp.
Project)
7.50% 6/1/2015 5,000,000 5,412,950
Maryland Industrial Development Financing Authority,
EDR
(Medical Waste Associates Limited Partnership)
8.75%, 11/15/2010 4,135,000 4,174,200
Massachusetts--3.9%
Massachusetts Health and Educational
Facilities Authority, Revenue
(Beth Isreal Hospital) 8.674%, 7/1/2025
(Insured; AMBAC)b 3,250,000 3,652,187
Massachusetts Industrial Finance Agency, Revenue
(Sturdy Memorial Hospital)
7.90%, 6/1/2009 4,450,000 4,553,774
Massachusetts Port Authority, Special Project Revenue
(Harborside Hyatt)
10%, 3/1/2026 7,000,000 7,618,800
Pittsfield, SWDR (Vicon Recovery Associates Project)
7.95%, 11/1/2004 1,550,000 1,590,548
Michigan--2.3%
Michigan Hospital Finance Authority, HR
(Genesys Health System Obligated Group)
8.125%, 10/1/2021 (Prerefunded 10/1/2005)a 5,000,000 6,134,200
Michigan Strategic Fund, SWDR
(Genesee Power Station Project) 7.50%, 1/1/2021 4,000,000 4,282,400
Mississippi--1.8%
Mississippi Business Finance Corporation, PCR
(Systems Energy Resources, Inc. Project) 5.875%,
4/1/2022 8,000,000 8,016,000
Missouri--1.6%
Jackson County Industrial Development Authority,
Health Facillities Revenue
(Carondelet Health Corp. Project) 9%, 7/1/2020 6,735,000 6,980,356
New Hampshire--1.4%
New Hampshire Business Finance Authority, PCR
(Public Service Co.) 6%, 5/1/2021 6,000,000 5,963,520
New Jersey--1.3%
New Jersey Economic Development Authority,
First Mortgage Revenue
(The Evergreens) 9.25%, 10/1/2022 5,000,000 5,918,650
New Mexico--.4%
New Mexico Mortgage Finance Authority,
SFMR 7.80%, 3/1/2021 1,775,000 1,818,044
8
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Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
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New York--3.4%
New York City 8%, 8/15/2018 (Prerefunded 8/15/2001)a 1,485,000 1,640,450
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 3,306,690
New York State Dormitory Authority, Revenue,
Judicial Facility Lease (Suffolk County) 9.50%,
4/15/2014 6,000,000 6,985,860
New York State Mortgage Agency, Revenue
8.10%, 10/1/2017 2,945,000 2,981,812
North Carolina--2.5%
Halifax County Industrial Facilities and
Pollution Control Financing Authority, SWDR
(Champion International Project) 8.15%, 11/1/2019 1,000,000 1,034,970
Haywood County Industrial Facilities and Pollution
Control Financing Authority, SWDR
(Champion International Project):
8.10%, 11/1/2009 4,820,000 4,983,350
8.10%, 11/1/2009 (Prerefunded 11/1/1999)a 180,000 187,049
North Carolina Eastern Municipal Power Agency,
Power Systems Revenue
5.75%, 1/1/2024 5,000,000 4,976,900
Pennsylvania--9.4%
Beaver County Industrial Development Authority, PCR
(Cleveland Electric Project) 7.625%, 5/1/2025 8,800,000 9,935,728
Langhorne Manor Borough Higher Education and
Health Authority, Revenue
(Woods Schools) 8.75%, 11/15/2014
(Prerefunded 11/15/1999)a 5,000,000 5,220,700
Lehigh County General Purpose Authority,
Revenue (Wiley House)
8.75%, 11/1/2014 11,000,000 11,467,170
Montgomery County Higher Education and
Health Authority, Revenue:
(Northwestern Corp.) 8.50%, 6/1/2016 4,390,000 4,698,705
(Retirement Community-G.D.L. Farms)
9.50%, 1/1/2020 (Prerefunded 1/1/2000)a 5,500,000 5,801,345
Pennsylvania Economic Development Financing Authority,
RRR (Northhampton Generating Project)
6.60%, 1/1/2019 4,200,000 4,460,106
Pennsylvania Housing Finance Agency,
Multi-Family Development Revenue
8.25%, 12/15/2019 295,000 306,033
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
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Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------
South Carolina--.6%
Piedmont Municipal Power Agency, Electric Revenue
5.25%, 1/1/2021 3,000,000 2,845,860
Tennessee--2.8%
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 5,950,000 6,376,079
Memphis Center City Revenue Finance Corp.
Sports Facility Revenue
(Memphis Redbirds) 6.50%, 9/1/2028 6,000,000 6,015,300
Texas--11.7%
Georgetown Hospital Authority, HR,
Improvement and First Mortgage
8.625%, 7/1/2015 (Prerefunded 7/1/1999)a 6,535,000 6,695,173
Houston Airport System, Special Facilities Revenue,
Airport Improvement (Continental Airlines)
6.125%, 7/15/2017 2,875,000 2,944,949
Mesquite Health Facilities Development Corp.,
Revenue (Christian Care Centers, Inc.)
9.375%, 3/1/2020 (Prerefunded 3/1/2000)a 11,540,000 12,383,343
Springhill Courtland Heights Public Facility Corp.
MFHR
5.85%, 12/1/2028 6,030,000 6,004,734
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue
10.119%, 7/2/2024b 6,850,000 8,279,938
Texas Health Facilities Development Corp.,
HR (All Saints Episcopal Hospitals)
7.80%, 8/15/2021 (Prerefunded 8/15/1999)a 3,000,000 3,086,670
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation Project):
8.625%, 9/1/2001 935,000 992,521
8.875%, 9/1/2011 (Prerefunded 9/1/2001)a 5,100,000 5,733,522
Tyler Health Facilities Development Corp., HR
(East Texas Medical Center Regional
Health Care System Project)
6.75%, 11/1/2025 5,850,000 5,566,802
Utah--2.5%
Carbon County, SWDR (Sunnyside Cogeneration)
9.25%, 7/1/2018d 10,000,000 6,000,000
Tooele County, Hazardous Waste Treatment Revenue
(Union Pacific Project)
5.70%, 11/1/2026 5,000,000 4,921,400
10
<PAGE>
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Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------
Virginia--6.0%
Fairfax County Water Authority, Revenue 7.546%,
4/1/2029b,c 4,000,000 4,299,160
Henrico County Industrial Development Authority,
Revenue
(Bon Secours Health Care System Project)
8.289%, 8/23/2027b 7,500,000 9,131,250
Virginia Housing Development Authority,
MFHR 7.05%, 5/1/2018 12,000,000 13,002,480
Wisconsin--3.7%
Wisconsin Housing and Economic Development
Authority, Homeownership Revenue
8.49%, 7/1/2025b,c 10,600,000 11,717,240
Wisconsin Health and Educational Facilities
Authority, Revenue (Aurora Health Care, Inc.)
5.60%, 2/15/2029 5,000,000 4,827,750
Wyoming--1.0%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024 2,200,000 2,413,312
6.90%, 9/1/2024 2,000,000 2,191,300
U.S. Related-2.7%
Puerto Rico;
Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
6.451%, 7/1/2038 (Insured; MBIA)b,c 12,500,000 11,752,000
Total Long-Term Municipal Investments
(cost $427,687,452) 435,515,447
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Short-Term Municipal Investments--1.1%
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Alabama--.9%
Stevenson IDB,
Environmental Improvement Revenue
(Mead Corp. Project) VRDN
3.35% (LOC; First National Bank of Chicago)e 3,800,000 3,800,000
New York--.2%
New York City, VRDN 3.30% (Insured; FGIC)e 900,000 900,000
Total Short-Term Municipal Investments
(cost $4,700,000) 4,700,000
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Total Investments (cost $432,387,452) 99.2% 440,215,447
Cash and Receivables (Net) .8% 3,600,841
Net Assets 100.0% 443,816,288
The Fund 11
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (continued)
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Summary of Abbreviations
AMBAC American Municipal Bond Assurance MBIA Municipal Bond Investors
Corporation Assurance Insurance
COP Certificate of Participation Corporation
EDR Economic Development Revenue MFHR Multi-Family Housing
FGIC Financial Guaranty Insurance Revenue
Company PCR Pollution Control Revenue
HR Hosptial Revenue RRR Resources Recovery Revenue
IDB Industrial Development Board SFMR Single Family Mortgage
IDR Industrial Development Revenue Revenue
LOC Letter of Credit SWDR Solid Waste Disposal Revenue
VRDN Variable Rate Demand Notes
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Summary of Combined Ratings
Fitch or Moody's or Standard & Poor's Value (%)
- --------------------------------------------------------------------------------
AAA Aaa AAA 14.5
AA Aa AA 11.9
A A A 10.1
BBB Baa BBB 21.7
BB Ba BB 6.5
B B B 3.1
F-1, F -1+ VMIG1, MIG1, P1 SP1, A1 1.1
Not Ratede Not Ratede Not Ratede 31.1
100.0
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 trans actions exempt from
registration, normally to qualified institutional buyers. At May 31, 1999,
these securities amounted to $50,016,550 or 11.3% of net assets.
d Non-income producing security, interest payments in default.
e Securities which, while not rated by Fitch, Moody's and Standard & Poor's
have been determined by the Manager to be of comparable quality to those
rated securities in which the fund may invest.
f At May 31, 1999, the fund had $138,230,136 (31.1% of net assets) invested in
securities whose payment of principal and interest is dependent upon revenues
generated from housing projects.
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999 (Unaudited)
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Cost Value
- --------------------------------------------------------------------------------
Assets ($):
Investments in securities--See Statement of
Investments 432,387,452 440,215,447
Cash 46,793
Interest receivable 7,959,374
Prepaid expenses 4,616
448,226,230
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Liabilities ($):
Due to The Dreyfus Corporation and affiliates 283,277
Payable for investment securities purchased 3,989,774
Accrued expenses 136,891
4,409,942
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Net Assets ($) 443,816,288
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Composition of Net Assets ($):
Paid-in capital 447,887,030
Accumulated undistributed investment income-net 1,536,351
Accumulated net realized gain (loss) on investments (13,435,088)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 7,827,995
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Net Assets ($) 443,816,288
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Shares Outstanding
(110 million shares of $.001 par value Common Stock authorized) 47,783,925
Net Asset Value, per share ($) 9.29
See notes to financial statements.
The Fund 13
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income ($):
- --------------------------------------------------------------------------------
Interest income 15,809,735
Expenses:
Investment Advisory fee--Note 3(a) 1,121,015
Administration fee-Note 3(a) 560,507
Shareholders' reports 36,489
Shareholder servicing costs 32,448
Directors' fees and expenses--Note 3(b) 30,085
Professional fees 21,190
Registration fees 10,936
Custodian fees 960
Miscellaneous 10,385
Total Expenses 1,824,015
Investment Income-Net 13,985,720
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Realized and Unrealized Gain (Loss) on Investments--Note 4 ($):
Net realized gain (loss) on investments 376,218
Net unrealized appreciation (depreciation) on investments (11,217,558)
Net Realized and Unrealized Gain (Loss) on Investments (10,841,340)
Net Increase in Net Assets Resulting from Operations 3,144,380
See notes to financial statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months Ended
May 31, 1999 Year Ended
(Unaudited) November 30, 1998
- --------------------------------------------------------------------------------
Operations ($):
Investment income--net 13,985,720 28,262,772
Net realized gain (loss) on investments 376,218 306,745
Net unrealized appreciation (depreciation)
on investments (11,217,558) 2,076,465
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,144,380 30,645,982
- --------------------------------------------------------------------------------
Dividends to Shareholders From ($):
Investment income--net (14,400,807) (29,319,019)
- --------------------------------------------------------------------------------
Capital Stock Transactions ($):
Dividends reinvested-Note 1(c) 1,179,838 6,413,712
Total Increase (Decrease) in Net Assets (10,076,589) 7,740,675
- --------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 453,892,877 446,152,202
End of Period 443,816,288 453,892,877
Undistributed investment income--net 1,536,351 1,951,438
- --------------------------------------------------------------------------------
Capital Share Transactions (Shares):
Increase in Shares Outstanding as a Result
of Dividends Reinvested 124,559 664,058
See notes to financial statements.
The Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
- --------------------------------------------------------------------------------
Six Months Ended
May 31, 1999 Year Ended November 30,
- --------------------------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------
Per Share Data ($):
Net asset value,
beginning of period 9.52 9.49 9.54 9.60 8.68 9.93
Investment Operations:
Investment income-net .29 .60 .62 .64 .66 .65
Net realized and unrealized
gain (loss) on investments (.22) .05 (.01) (.08) .90 (1.16)
Total from Investment Operations .07 .65 .61 .56 1.56 (.51)
Distributions:
Dividends from investment
income -net (.30) (.62) (.66) (.62) (.64) (.67)
Dividends in excess of net
realized gain on investments - - - - - (.07)
Total Distributions (.30) (.62) (.66) (.62) (.64) (.74)
Net asset value, end of period 9.29 9.52 9.49 9.54 9.60 8.68
Market value, end of period 9 1/8 10 3/16 10 5/8 9 3/4 9 1/4 8 5/8
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Total Return (%)a (15.02)b 2.23 16.60 12.61 15.12 (8.97)
- --------------------------------------------------------------------------------
Ratios/Supplemental Data: (%)
Ratio of expenses to average
net assets .81b .81 .81 .82 .84 .86
Ratio of net investment income
to average net assets 6.24b 6.26 6.55 6.82 7.12 6.94
Portfolio Turnover Rate 16.60c 6.33 2.95 13.47 13.19 10.96
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Net Assets, end of period
($ x 1,000) 443,816 453,893 446,152 440,681 439,192 396,316
a Calculated based on market value.
b Annualized.
c Not annualized.
See notes to financial statements.
16
<PAGE>
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, as amended (the "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 (the "Custodian") is 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;
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 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 assets value per
share on the record date,
18
<PAGE>
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 28, 1999, the Board of Directors declared a cash dividend of $.0467 per
share from investment income-net, payable on June 28, 1999 to shareholders of
record as of the close of business on June 14, 1999.
(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 of 1986 as
amended, 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 $13,811,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to November 30, 1998. If not
applied, $4,498,000 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 rate in effect at the time
of borrowings. During the period ended May 31, 1999, 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 aver-
The Fund 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
age weekly net assets. The fund also has an Administration Agreement with
Dreyfus, Custody Agreement with the Custodian and a Transfer Agency and
Registrar Agreement with FDIS. The fund pays in the aggregate for
administration, custody and transfer agency services a monthly fee based on an
annual rate of .25 of 1% of the value of the fund's average weekly net assets;
out-of-pocket transfer agency and custody expenses are paid separately by the
fund.
(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, 1999, amounted to
$73,682,032 and $79,850,142, respectively.
At May 31, 1999, accumulated net unrealized appreciation on investments was
$7,827,995, consisting of $23,857,519 gross unrealized appreciation and
$16,029,524 gross unrealized depreciation.
At May 31, 1999, 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).
20
<PAGE>
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. Pringle
John E. Zuccotti
Officers
President and Treasurer
Marie E. Connolly
Vice President and Secretary
Margart W. Chambers
Vice President and Assistant Treasurer
John P. Cavino
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President and Assistant Treasurer
George A. Rio
Vice President and Assistant Treasurer
Joseph F. Tower
Vice President, Assistant Treasurer
and Assistant Secretary
Frederic C. Dey
Vice President, Assistant Treasurer
and Assistant Secretary
Stephanie Pierce
Vice President and Assistant Secretary
Douglas C. Conroy
Vice President and Assistant Secretary
Karen Jacoppo-Wood
Vice President and Assistant Secretary
Christopher J. Kelly
Officers (continued)
Vice President and Assistant Secretary
Kathleen K. Morrisey
Vice President and Assistant Secretary
Elba Vasquez
Portfolio Managers:
Joseph P. Darcy
A. Paul Disdier
Douglas Gaylor
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, Business section under the heading "Closed-End
Bond Funds" every Monday.
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.
The Fund 21
<PAGE>
For More Information
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
To obtain information:
(c) 1999 Dreyfus Service Corporation 852SA995
