Dreyfus
Strategic Municipal
Bond Fund, Inc.
SEMIANNUAL REPORT May 31, 2000
(reg.tm)
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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Financial Highlights
19 Notes to Financial Statements
25 Officers and Directors
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Strategic Municipal 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, 1999 through May
31, 2000. 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.
The U.S. economy grew strongly over the past six months in an environment
characterized by high levels of consumer spending and low levels of
unemployment. Concerns that inflationary pressures might reemerge caused the
Federal Reserve Board to raise short-term interest rates three times during the
reporting period. These rate hikes contributed to a total interest-rate increase
of 1.75 percentage points since June 1999. Despite an encouraging rally during
the first quarter of 2000, higher interest rates generally led to erosion of
municipal bond prices during the reporting period.
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,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
June 15, 2000
DISCUSSION OF FUND PERFORMANCE
Paul Disdier, Portfolio Manager
How did Dreyfus Strategic Municipal Bond Fund, Inc. perform during the period?
For the six-month reporting period ended May 31, 2000, the fund provided a total
return of -0.10% .(1) The fund produced income dividends of $0.2802 per share,
which is equal to an annualized distribution rate per share of 7.12% during the
reporting period.(2)
We attribute the fund's flat performance to a difficult investment environment.
More specifically, the fund was negatively influenced by higher interest rates
as the Federal Reserve Board (the "Fed") tightened monetary policy three times
during the reporting period in an attempt to relieve inflationary pressures.
What is the fund's investment approach?
The fund seeks high current income exempt from federal income taxes by investing
in long-term, tax-exempt municipal bonds.
In so doing, we look for bonds that we believe can provide high current income.
We strive to find such opportunities through 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.
Over time, many of the fund's older and higher yielding bonds have matured or
were redeemed by their issuers. We have generally attempted to replace those
bonds with new securities that offer higher than average income payments. We
have also sought to upgrade the fund with newly issued bonds that, in our
opinion, have better structural or income characteristics than existing
holdings. When such opportunities arise, we usually sell bonds that are close to
redemption or maturity. In addition, we conduct credit analysis of our holdings
in an attempt to avoid potential defaults on interest and principal payments.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
The fund was primarily influenced by the changing market conditions over the
past year. Although the first quarter of 2000 experienced an encouraging
municipal bond market rally, the months just preceding and following the first
quarter of 2000 saw more difficult investment environments. As a result, our
total return performance was generally flat over the full six-month period.
Consistent with our primary investment objective, however, we were able to
maintain a competitive yield during the six-month period.
When the reporting period began on December 1, 1999, investors had become
concerned that strong economic growth, low levels of unemployment and robust
consumer spending in the U.S. and worldwide might rekindle long-dormant
inflationary pressures, especially rising wages in a tight job market. In an
attempt to ease these pressures and forestall a reacceleration of inflation, the
Fed raised short-term interest rates three times during the reporting period,
causing most bond prices to fall.
In addition, the fund' s performance was affected by supply and demand
influences. During the first few months of 2000, issuance of municipal bonds
nationally declined sharply compared to the same period one year ago. This
supply reduction, combined with continued robust demand from individual
investors, helped support a brief rebound of municipal bond prices, from which
the fund' s holdings recently benefited, helping to offset some of the market's
previous declines.
The fund was also influenced by the continued investment of proceeds from last
September' s public issuance of auction preferred shares. By December, we had
completed the process of investing the cash proceeds of this transaction in
additional municipal bonds. These additional positions benefited the fund's
performance when the market subsequently rallied during the first quarter of
2000.
What is fund's current strategy?
We have continued to upgrade the fund's investment portfolio, with emphasis on
enhancing income, improving credit quality and protecting the fund's holdings
from the risks of early redemption. We found a number of such opportunities in
long-term municipal bonds issued to finance projects such as housing, utilities
and industrial development in a variety of states. These securities enabled us
to capture enough yield to maintain the fund's current dividend distribution.
Also in an effort to maximize income, we have maintained the fund's AVERAGE
DURATION -- a measure of sensitivity to changing interest rates -- toward the
long end of its range where we can purchase the best yielding bonds. While this
duration management strategy has enabled us to maintain a competitive income
stream, it may lead to heightened price volatility over the near term.
June 15, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BASED UPON NET ASSET VALUE PER SHARE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES AND SOME INCOME MAY BE
SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS.
CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) ANNUALIZED 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.
The Fund
STATEMENT OF INVESTMENTS
May 31, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
<TABLE>
Principal
LONG-TERM MUNICIPAL INVESTMENTS--98.1% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA--2.3%
Alabama Industrial Development Authority, SWDR
(Pine City Fiber Co.) 6.45%, 12/1/2023 3,000,000 2,811,090
Jefferson County, Sewer Revenue
5.75%, 2/1/2038 (Insured; FGIC) 11,000,000 10,410,290
ALASKA--4.6%
Alaska Housing Finance Corp.:
6.25%, 6/1/2035 (Insured; MBIA) 7,825,000 7,839,398
6.05%, 6/1/2039 (Insured; MBIA) 12,185,000 11,912,178
Valdez Marine Terminal, Revenue
(BP Pipeline, Inc. Project) 5.50%, 10/1/2028 7,750,000 6,967,715
ARIZONA--1.4%
Apache County Industrial Development Authority, PCR
(Tuscon Electric Power Co. Project) 5.85%, 3/1/2028 9,500,000 7,894,120
CALIFORNIA--2.7%
California Health Facilities Financing Authority,
Health Facility Financing Revenue
(Cedars-Sinai Medical Center) 6.25%, 12/1/2034 3,750,000 3,716,437
California Statewide Communities Development Authority, COP
(The Internext Group) 5.375%, 4/1/2030 5,000,000 3,951,600
Los Angeles Department of Water and Power,
Waterworks Revenue
6.10%, 10/15/2039 (Insured FGIC) 8,000,000 8,075,120
COLORADO--.6%
Colorado Health Facilities Authority, Revenue
(American Housing Foundation 1, Inc. Project)
10.25%, 12/1/2020 5,600,000 3,752,000
CONNECTICUT--2.8%
Connecticut Development Authority, PCR
(Connecticut Light and Power) 5.95%, 9/1/2028 14,000,000 12,168,100
Connecticut Housing Finance Authority,
Housing Mortgage Finance Program
5.85%, 11/15/2028 4,065,000 3,834,433
DELAWARE--.9%
Delaware Health Facilities Authority, Revenue
(Beebe Medical Center Project) 6.80%, 6/1/2024 5,905,000 5,469,565
DISTRICT OF COLUMBIA--1.2%
Metropolitan Washington Airports Authority,
Special Facilities Revenue
(Caterair International Corp.) 10.125%, 9/1/2011 7,120,000 7,039,117
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA--6.4%
Florida Housing Finance Corp., Housing Revenue
(Seminole Ridge Apartments) 6%, 4/1/2041 (Insured; GNMA) 6,415,000 6,142,170
Florida Board of Education, Capital Outlay 7.859%, 6/1/2019 15,000,000 (a,b) 15,943,350
Lee County Industrial Development Authority,
Health Care Facilities Revenue
(Shell Point Village Project) 5.50%, 11/15/2029 1,500,000 1,137,150
Orange County Health Facilities Authority, Revenue
(Orlando Regional Healthcare System) 6%, 10/1/2026 3,500,000 3,286,640
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015 5,000,000 (c) 2,687,500
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022 5,000,000 (c) 2,625,000
South Lake County Hospital District, Revenue
(South Lake Hospital, Inc.) 5.80%, 10/1/2034 6,000,000 5,331,900
GEORGIA--2.6%
Burke County Development Authority, PCR
(Georgia Power Co. Plant Vogtle) 5.45%, 5/1/2034 5,000,000 4,249,000
Private Colleges and Universities Facilities Authority, Revenue
(Clark Atlanta University Project)
8.25%, 1/1/2015 (Prerefunded 1/1/2003) 9,630,000 (d) 10,763,836
ILLINOIS--4.6%
Chicago-O'Hare International Airport, Special Facility Revenue
(Delta Airlines Project) 6.45%, 5/1/2018 2,790,000 2,697,930
Illinois Development Finance Authority, Revenue:
(Community Rehabilitation Providers Facilities
Acquisition Program):
8.50%, 9/1/2010 1,710,000 1,748,338
8.50%, 9/1/2010 (Prerefunded 9/1/2000) 3,290,000 (d) 3,383,864
6.05%, 7/1/2019 5,290,000 4,577,807
HR (Adventist Health Systems / Sunbelt) 5.50%, 11/15/2029 4,175,000 3,204,730
Illinois Health Facilities Authority, Revenue
(OSF Healthcare Systems) 6.25%, 11/15/2029 12,000,000 11,071,680
INDIANA--2.7%
Burns Harbor Industrial Solid Waste Disposal Facilities, Revenue
(Bethlehem Steel Corp. Project) 8%, 4/1/2024 6,000,000 6,174,000
Franklin SBC 6.125%, 1/15/2022 6,000,000 6,035,220
Indianapolis Airport Authority, Revenue 7.074%, 11/15/2031 4,375,000 (a,b) 3,605,787
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY--.5%
Kenton County Airport Board, Airport Revenue
(Special Facilities--Delta Airlines Project) 6.125%, 2/1/2022 3,000,000 2,771,790
LOUISIANA--4.7%
Lake Charles Harbor and Terminal,
District Port Facilities Revenue
(Trunkline LNG Co. Project) 7.75%, 8/15/2022 15,000,000 16,044,000
Parish of De Soto, Environmental Improvement Revenue
(International Paper Co. Project) 6.55%, 4/1/2019 2,900,000 2,848,931
West Feliciana Parish, PCR:
(Entergy Gulf States) 6.60%, 9/1/2028 4,000,000 3,808,280
(Gulf States) 5.80%, 12/1/2015 5,000,000 4,416,350
MARYLAND--1.4%
Baltimore County, PCR (Bethlehem Steel Corp. Project)
7.50%, 6/1/2015 5,000,000 5,053,900
Maryland Industrial Development Financing Authority, EDR
(Medical Waste Associates Limited Partnership)
8.75%, 11/15/2010 4,135,000 3,111,588
MASSACHUSETTS--2.7%
Massachusetts Health and Educational
Facilities Authority, Revenue
(Beth Israel Hospital) 7.508%, 7/1/2025 (Insured; AMBAC) 3,250,000 (a) 3,018,438
Massachusetts Industrial Finance Agency, Revenue
(Sturdy Memorial Hospital)
7.90%, 6/1/2009 4,180,000 4,231,414
Massachusetts Port Authority, Special Project Revenue
(Harborside Hyatt) 10%, 3/1/2026 7,000,000 7,295,050
Pittsfield, SWDR (Vicon Recovery Associates Project)
7.95%, 11/1/2004 1,340,000 1,349,621
MICHIGAN--1.7%
Michigan Hospital Finance Authority, HR
(Genesys Health System Obligated Group)
8.125%, 10/1/2021 (Prerefunded 10/1/2005) 5,000,000 (d) 5,757,950
Michigan Strategic Fund, SWDR
(Genesee Power Station Project) 7.50%, 1/1/2021 4,000,000 4,082,280
MISSISSIPPI--1.3%
Mississippi Business Finance Corp., PCR
(Systems Energy Resources, Inc. Project) 5.90%, 5/1/2022 9,070,000 7,691,269
MISSOURI--1.2%
Jackson County Industrial Development Authority,
Health Facilities Revenue
(Carondelet Health Corp. Project) 9%, 7/1/2020 6,735,000 6,876,704
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA--2.1%
Clark County, IDR (Nevada Power Company Project)
5.50%, 10/1/2030 5,000,000 4,060,950
Washoe County (Reno-Sparks Convention)
6.40%, 7/1/2029 (Insured; FSA) 8,000,000 8,159,520
NEW HAMPSHIRE--.9%
New Hampshire Business Finance Authority, PCR
(Public Service Co.) 6%, 5/1/2021 6,000,000 5,268,300
NEW JERSEY--2.1%
New Jersey Economic Development Authority:
First Mortgage Revenue
(The Evergreens) 9.25%, 10/1/2022 5,000,000 5,534,900
Special Facilities Revenue
(Continental Airlines, Inc. Project) 6.40%, 9/15/2023 7,000,000 6,363,700
NEW YORK--4.7%
Nassau Health Care Corp., Health System Revenue
5.75%, 8/1/2029 (Insured; FSA) 11,500,000 10,975,945
New York City 8%, 8/15/2018 (Prerefunded 8/15/2001) 1,485,000 (d) 1,563,245
New York City Industrial Development Agency, Civic Facility
Revenue (YMCA of Greater New York Project)
8%, 8/1/2016 (Prerefunded 8/1/2001) 3,000,000 (d) 3,161,250
New York State Dormitory Authority, Revenue:
Judicial Facility Lease (Suffolk County) 9.50%, 4/15/2014 605,000 692,156
(Marymount Manhattan College) 6.25%, 7/1/2029 4,000,000 4,017,200
Tsasc Inc.:
6.25%, 7/15/2027 2,500,000 2,466,050
6.375%, 7/15/2039 4,500,000 4,453,515
NORTH CAROLINA--.4%
North Carolina Eastern Municipal Power Agency,
Power Systems Revenue 6.70%, 1/1/2019 2,500,000 2,494,550
OHIO--1.6%
Cuyahoga County, HR (Metrohealth Systems Project)
6.15%, 2/15/2029 10,000,000 9,170,200
OKLAHOMA--2.3%
Oklahoma Development Finance Authority, Revenue
(St. John Health System) 6%, 2/15/2029 9,000,000 8,895,780
Oklahoma Health
5.75%, 8/15/2029 5,000,000 4,720,050
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--5.6%
Allegheny County Port Authority,
Special Transportation Revenue
6.125%, 3/1/2029 (Insured; MBIA) 4,750,000 4,777,170
Beaver County Industrial Development Authority, PCR
(Cleveland Electric Project) 7.625%, 5/1/2025 8,800,000 9,192,128
Montgomery County Higher Education and
Health Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016 4,390,000 4,477,800
Pennsylvania Economic Development Financing Authority:
Exempt Facilities Revenue
(National Gypsum Company) 6.125%, 11/1/2027 5,000,000 4,333,850
RRR (Northhampton Generating Project) 6.60%, 1/1/2019 4,200,000 3,976,518
Pennsylvania Housing Finance Agency,
Multi-Family Development Revenue
8.25%, 12/15/2019 292,000 301,715
Washington County Authority, Capital Funding Revenue
(Capital Projects & Equipment Program)
6.15%, 12/1/2029 (Insured; AMBAC) 5,000,000 5,106,650
RHODE ISLAND--1.0%
Rhode Island Health & Educational Building Corp.,
Higher Educational Facilities (University of Rhode Island)
5.875%, 9/15/2029 (Insured; MBIA) 5,910,000 5,717,157
SOUTH CAROLINA--1.3%
Piedmont Municipal Power Agency, Electric Revenue
5.25%, 1/1/2021 3,000,000 2,406,810
South Carolina Medical Facilities, Hospital Facilities Revenue
6%, 7/1/2019 5,000,000 4,913,350
TENNESSEE--3.0%
Memphis Center City Revenue Finance Corp.
Sports Facility Revenue
(Memphis Redbirds) 6.50%, 9/1/2028 6,000,000 5,337,300
Tennessee Housing Development Agency
(Homeownership Program):
6%, 1/1/2028 7,160,000 6,916,488
6.40%, 7/1/2031 (Collateralized; GNMA) 5,000,000 5,044,250
TEXAS--8.3%
Gregg County Health Facilities Development Corp., HR
(Good Shepherd Medical Center) 6.375%, 10/1/2025 2,500,000 2,459,625
Houston Airport System, Special Facilities Revenue,
Airport Improvement (Continental Airlines)
6.125%, 7/15/2017 2,875,000 2,544,979
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
Katy Independent School District
6.125%, 2/15/2032 11,360,000 11,384,538
Springhill Courtland Heights Public Facility Corp., MFHR
5.85%, 12/1/2028 6,030,000 5,374,961
Texas (Veterans Housing Assistance Program)
6.10%, 6/1/2031 8,510,000 8,369,245
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue 8.446%, 7/2/2024 6,850,000 (a) 7,235,313
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation Project):
8.625%, 9/1/2001 650,000 666,725
8.875%, 9/1/2011 (Prerefunded 9/1/2001) 5,100,000 (c) 5,432,265
Tyler Health Facilities Development Corp., HR
(East Texas Medical Center Regional
Health Care System Project)
6.75%, 11/1/2025 5,850,000 4,703,751
UTAH--1.6%
Carbon County, SWDR (Sunnyside Cogeneration):
7.10%, 8/15/2023 5,070,000 4,773,760
Zero Coupon 8/15/2024 1,545,000 240,155
Tooele County, Hazardous Waste Treatment Revenue
(Union Pacific Project) 5.70%, 11/1/2026 5,000,000 4,190,550
VIRGINIA--5.5%
Fairfax County Water Authority, Revenue 6.777%, 4/1/2029 4,000,000 (a,b) 3,873,040
Henrico County Industrial Development Authority, Revenue
(Bon Secours Health Care System Project)
7.315%, 8/23/2027 7,500,000 (a) 7,293,750
Virginia Housing Development Authority:
MFHR 7.05%, 5/1/2018 12,000,000 12,522,720
Rental Housing 6.20%, 8/1/2024 8,520,000 8,455,844
WASHINGTON--1.7%
Washington Higher Education Facilities Authority, Revenue
(Whitman College Project) 5.875%, 10/1/2029 10,000,000 9,607,900
WISCONSIN--5.6%
Wisconsin Housing and Economic Development Authority
Homeownership Revenue:
7.338%, 7/1/2025 10,600,000 (a,b) 10,762,286
6.25%, 9/1/2027 13,300,000 13,042,645
Wisconsin Health and Educational Facilities Authority, Revenue
(Aurora Health Care, Inc.) 5.60%, 2/15/2029 10,800,000 8,453,700
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
WYOMING--2.4%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024 2,200,000 2,200,000
6.90%, 9/1/2024 2,000,000 1,977,440
Wyoming Student Loan Corp., Student Loan Revenue:
6.20%, 6/1/2024 5,000,000 4,968,500
6.25%, 6/1/2029 5,000,000 4,990,050
U.S. RELATED--1.7%
Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
5%, 7/1/2038 (Insured; MBIA) 12,000,000 10,139,640
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $600,096,354) 569,026,509
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--2.1%
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA--.4%
Maricopa County Pollution Control Corp., PCR, VRDN
(Arizona Public Service Co.) 4.35%
(LOC; Morgan Guaranty Trust Co.) 2,000,000 (e) 2,000,000
INDIANA--.2%
Indianapolis Airport Authority, Revenue 4.55% 1,100,000 (e) 1,100,000
MICHIGAN--.4%
Midland County Economic Development Corp.
Economic Development Limited Obligation Revenue, VRDN
(Dow Chemical Co. Project) 4.60% 2,400,000 (e) 2,400,000
PENNSYLVANIA--.3%
Geisinger Authority, Health System Revenue, VRDN
(Geisinger Health B) 4.35% 1,900,000 (e) 1,900,000
TEXAS--.8%
Brazo River Authority, PCR, VRDN
(Texas Utilities Electric Co.) 4.55%
(LOC; Morgan Guaranty Trust Co.) 1,800,000 (e) 1,800,000
Gulf Coast Waste Disposal Authority, SWDR, VRDN
(Amoco Oil Co.) 4.55% 2,900,000 (e) 2,900,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $12,100,000) 12,100,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $612,196,354) 100.2% 581,126,509
LIABILITIES, LESS CASH AND RECEIVABLES (.2%) (888,691)
NET ASSETS 100.0% 580,237,818
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
COP Certificate of Participation
EDR Economic Development Revenue
FGIC Financial Guaranty Insurance
Company
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
HR Hospital Revenue
IDR Industrial Development Revenue
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
RRR Resources Recovery Revenue
SWDR Solid Waste Disposal Revenue
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 24.7
AA Aa AA 24.8
A A A 12.1
BBB Baa BBB 13.8
BB Ba BB 8.0
B B B .8
F-1+, F-1 VMIG1, MIG1, P1 SP1, A1 2.1
Not Rated(f) Not Rated(f) Not Rated(f) 13.7
100.0
(A) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(B) 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, 2000,
THESE SECURITIES AMOUNTED TO $34,184,463 OR 5.9% OF NET ASSETS.
(C) NON-INCOME PRODUCING SECURITY, INTEREST PAYMENTS IN DEFAULT.
(D) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND
INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE
EARLIEST REFUNDING DATE.
(E) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE SUBJECT TO PERIODIC
CHANGE.
(F) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE
RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 612,196,354 581,126,509
Cash 16,389
Interest receivable 11,405,722
Receivable for investment securities sold 6,782,298
Prepaid expenses 32,286
599,363,204
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 399,130
Payable for investment securities purchased 18,402,754
Dividends payable to preferred shareholders 85,703
Accrued expenses 237,799
19,125,386
--------------------------------------------------------------------------------
NET ASSETS ($) 580,237,818
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Auction Preferred Stock, Series A, B and C, par value $.001 per share
(7,440 shares issued and outstanding at
$25,000 per share liquidation preference)--Note 1 186,000,000
Common Stock, par value, $.001 per share (47,783,925 shares
issued and outstanding) 47,784
Paid-in capital 445,665,876
Accumulated undistributed investment income--net 1,559,486
Accumulated net realized gain (loss) on investments (21,965,483)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (31,069,845)
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS 394,237,818
--------------------------------------------------------------------------------
NET ASSETS ($) 580,237,818
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(110 million shares of $.001 par value Common Stock authorized) 47,783,925
NET ASSET VALUE PER COMMON STOCK, offering and redemption price per share ($)
8.25
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
Interest Income 19,496,134
EXPENSES:
Management fee--Note 3(a) 1,461,099
Administration fee--Note 3(a) 730,549
Commission fees--Note 1 267,807
Professional fees 84,510
Directors' fees and expenses--Note 3(b) 27,573
Shareholders' reports 27,455
Shareholder servicing costs 22,452
Registration fees 21,187
Custodian fees 3,248
Interest expense--Note 2 2,556
Miscellaneous 14,798
TOTAL EXPENSES 2,663,234
INVESTMENT INCOME--NET 16,832,900
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (3,320,050)
Net unrealized appreciation (depreciation) on investments (10,978,969)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (14,299,019)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,533,881
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
May 31, 2000 Year Ended
(Unaudited) November 30, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 16,832,900 28,853,202
Net realized gain (loss) on investments (3,320,050) (4,834,127)
Net unrealized appreciation (depreciation)
on investments (10,978,969) (39,136,429)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,533,881 (15,117,354)
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Common Stock (13,389,056) (27,789,863)
Preferred Stock (3,752,127) (1,147,008)
TOTAL DIVIDENDS (17,141,183) (28,936,871)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Proceeds from issuance of Preferred Stock -- 186,000,000
Dividends reinvested--Note 1(c) -- 1,179,838
Offering costs charged to paid-in
capital resulting
from issuance of Preferred Stock (113,370) (2,060,000)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS (113,370) 185,119,838
TOTAL INCREASE (DECREASE) IN NET ASSETS (14,720,672) 141,065,613
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 594,958,490 453,892,877
END OF PERIOD 580,237,818 594,958,490
Undistributed investment income--net 1,559,486 1,867,769
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (COMMON SHARES):
INCREASE IN COMMON SHARES OUTSTANDING AS A
RESULT OF DIVIDENDS REINVESTED -- 124,560
SEE NOTES TO FINANCIAL STATEMENTS.
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 and market price data for the fund's shares.
<TABLE>
Six Months Ended
May 31, 2000 Year Ended November 30,
-----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 8.56 9.52 9.49 9.54 9.60 8.68
Investment Operations:
Investment income--net .35 .58 .60 .62 .64 .66
Net realized and unrealized
gain (loss) on investments (.30) (.90) .05 (.01) (.08) .90
Total from Investment
Operations .05 (.32) .65 .61 .56 1.56
Distributions:
Dividends from
investment income--net:
Common Stock (.28) (.58) (.62) (.66) (.62) (.64)
Preferred Stock (.08) (.02) -- -- -- --
Total Distributions (.36) (.60) (.62) (.66) (.62) (.64)
Capital Stock transactions--
net effect of
Preferred Stock offering (.00)(a) (.04) -- -- -- --
Net asset value, end of period 8.25 8.56 9.52 9.49 9.54 9.60
Market value, end of period 77_8 711_16 103_16 105_8 93_4 91_4
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 12.33 (19.36) 2.23 16.60 12.61 15.12
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Six Months Ended
May 31, 2000 Year Ended November 30,
----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets
applicable to Common Stock .91(c,d) .90(d) .81 .81 .82 .84
Ratio of net investment
income to average net assets
applicable to Common Stock 5.74(c,d) 6.63(d) 6.26 6.55 6.82 7.12
Portfolio Turnover Rate 18.94(e) 32.58 6.33 2.95 13.47 13.19
Net Assets, net of
Preferred Stock,
end of period ($ x 1,000) 394,238 408,958 453,893 446,152 440,681 439,192
Preferred Stock outstanding,
end of period ($ x 1,000) 186,000 186,000 -- -- -- --
Asset coverage of
Preferred Stock,
end of period (%) 312 320 -- -- -- --
(A) AMOUNT REPRESENTS LESS THAN $.01.
(B) CALCULATED BASED ON MARKET VALUE.
(C) ANNUALIZED.
(D) DOES NOT REFLECT THE EFFECT OF DIVIDENDS TO PREFERRED STOCK SHAREHOLDERS.
(E) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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. Dreyfus is a direct subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Financial Corporation ("Mellon"). Boston Safe
Deposit and Trust Company (the "Custodian") acts as the fund's custodian. The
Custodian is a wholly-owned subsidiary of Mellon. 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.
On September 22, 1999, the fund issued 2,480 shares of each Series A, Series B
and Series C Auction Preferred Stock ("APS"), with a liquidation preference of
$25,000 per share (plus an amount equal to accumulated but unpaid dividends upon
liquidation) . APS dividend rates will be determined pursuant to periodic
auctions. Bankers Trust Company, as Auction Agent, receives a fee from the fund
for its services in connection with such auctions. The fund also compensates
broker-dealers generally at an annual rate of .25% of the purchase price of the
shares of APS placed by the broker-dealer in an auction.
The fund is subject to certain restrictions relating to the APS. Failure to
comply with these restrictions could preclude the fund from declaring any
distributions to common shareholders or repurchasing common shares and/or could
trigger the mandatory redemption of APS at liquidation value.
The holders of the APS, voting as a separate class, have the right to elect at
least two directors. The holders of the APS will vote as a separate class on
certain other matters, as required by law. The fund has
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
designated Robin A. Pringle and John E. Zuccotti to represent holders of APS on
the fund's Board of Directors.
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.
(c) Dividends to shareholders of Common Stock ("Common Shareholder(s)"):
Dividends are recorded on the ex-dividend date. Dividends from investment
income-net are declared and paid monthly. Dividends from net realized capital
gain, if any, 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 common 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, 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, 2000, the Board of Directors declared a cash dividend to Common
Shareholders of $.0467 per share from investment income-net, payable on June 28,
2000 to Common Shareholders of record as of the close of business on June 14,
2000.
(d) Dividends to APS shareholders: For APS, dividends are currently reset every
7 days. The dividend rates for the period ended May 31, 2000 were 4.39% for
Series A payable on June 6, 2000, 4.70% for Series B payable on June 1, 2000 and
4.39% for Series C payable on June 5, 2000.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(e) 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 $17,775,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to November 30, 1999. This
amount is calculated based on Federal income tax regulations which may differ
from financial reporting in accordance with generally accepted accounting
principles. If not applied, $4,499,000 of the carryover expires in fiscal 2002,
$9,312,000 expires in fiscal 2003 and $3,964,000 expires in fiscal 2007.
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.
The average daily amount of borrowings outstanding under the line of credit
during the period ended May 31, 2000, was approximately $4,900 with a related
weighted average annualized interest rate of 6.25%.
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 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, 2000, amounted to
$111,412,866 and $109,531,445, respectively.
At May 31, 2000, accumulated net unrealized depreciation on investments was
$31,069,845, consisting of $7,138,164 gross unrealized appreciation and
$38,208,009 gross unrealized depreciation.
At May 31, 2000, 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).
The Fund
NOTES
OFFICERS AND DIRECTORS
Dreyfus Strategic Municipal Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
DIRECTORS
Joseph S. DiMartino
David W. Burke
Hodding Carter, III
Ehud Houminer
Richard C. Leone
Hans C. Mautner
Robin A. Pringle
John E. Zuccotti
OFFICERS
President
Stephen E. Canter
Vice President and Treasurer
Joseph Connolly
Executive Vice President
Paul Disdier
Vice President
Mark N. Jacobs
Secretary
John B. Hammalian
Assistant Secretary
Steven F. Newman
Assistant Secretary
Michael A. Rosenberg
Assistant Treasurer
Gregory S. Gruber
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Douglas J. Gaylor
Joseph A. Irace
Colleen A. Meehan
PORTFOLIO MANAGERS (CONTINUED)
Richard J. Moynihan
W. Michael Petty
Jill C. Shaffro
Scott Sprauer
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. (Common Stock)
Bankers Trust (Auction Preferred Stock)
AUCTION AGENT
Bankers Trust (Auction Preferred Stock)
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 FUNDS" EVERY
MONDAY; NEW YORK TIMES, BUSINESS SECTION UNDER THE HEADING "CLOSED-END BOND
FUNDS--MUNICIPAL 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
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 Disbursing Agent
First Data Investor Services Group, Inc.
(Common Stock)
One Exchange Place
Boston, MA 02109
(c) 2000 Dreyfus Service Corporation 852SA005
