UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5877
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC
(Exact name of Registrant as specified in charter)
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Address of principal executive offices) (Zip code)
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 922-6000
Date of fiscal year end: November 30
Date of reporting period: May 31, 2003
[PAGE]
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Dreyfus
Strategic Municipal
Bond Fund, Inc.
SEMIANNUAL REPORT May 31, 2003
DREYFUS STRATEGIC MUNICIPAL BOND FUND, INC.
PROTECTING YOUR PRIVACY
OUR PLEDGE TO YOU
THE FUND IS COMMITTED TO YOUR PRIVACY. On this page, you will find the Fund's
policies and practices for collecting, disclosing, and safeguarding "nonpublic
personal information," which may include financial or other customer
information. These policies apply to individuals who purchase Fund shares for
personal, family, or household purposes, or have done so in the past. This
notification replaces all previous statements of the Fund's consumer privacy
policy, and may be amended at any time. We'll keep you informed of changes as
required by law.
YOUR ACCOUNT IS PROVIDED IN A SECURE ENVIRONMENT. The Fund maintains physical,
electronic and procedural safeguards that comply with federal regulations to
guard nonpublic personal information. The Fund's agents and service providers
have limited access to customer information based on their role in servicing
your account.
THE FUND COLLECTS INFORMATION IN ORDER TO SERVICE AND ADMINISTER YOUR ACCOUNT.
The Fund collects a variety of nonpublic personal information, which may
include:
* Information we receive from you, such as your name, address, and social
security number.
* Information about your transactions with us, such as the purchase or sale
of Fund shares.
* Information we receive from agents and service providers, such as proxy
voting information.
THE FUND DOES NOT SHARE NONPUBLIC PERSONAL INFORMATION WITH ANYONE, EXCEPT AS
PERMITTED BY LAW.
THANK YOU FOR THIS OPPORTUNITY TO SERVE YOU.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period covered and do not necessarily represent the views
of Dreyfus or any other person in the Dreyfus organization. Any such views are
subject to change at any time based upon market or other conditions and Dreyfus
disclaims any responsibility to update such views. These views may not be relied
on as investment advice and, because investment decisions for a Dreyfus fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any Dreyfus fund.
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
--------------------------------------------------
2 Letter from the Chairman
3 Discussion of Fund Performance
6 Statement of Investments
15 Statement of Assets and Liabilities
16 Statement of Operations
17 Statement of Changes in Net Assets
18 Financial Highlights
20 Notes to Financial Statements
25 Proxy Results
29 Officers and Directors
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Strategic Municipal Bond Fund, Inc.
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This semiannual report for Dreyfus Strategic Municipal Bond Fund, Inc. covers
the six-month period from December 1, 2002, through May 31, 2003. 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, James Welch.
We have recently seen some signs of stability in the U.S. financial markets.
Perhaps most important, the war in Iraq wound down quickly, without disrupting
oil supplies or major incidents of terrorism. Many stock market indices have
posted encouraging gains since the start of 2003, although it is uncertain
whether such gains will continue. At the same time, an estimated $350 billion in
federal tax cuts were signed into law on May 28, and the evidence to date
suggests that any adverse impact on municipal bond yields should be minimal.
Indeed, rising state and local taxes may make municipal bonds more valuable for
investors seeking tax-exempt income.
Of course, problems and concerns remain. In the U.S. economy, unemployment has
risen to multiyear highs, and corporations remain reluctant to spend. Positive
factors appear to outweigh negative ones, however, and we believe that the U.S.
economy is on the path to recovery.
What are the implications for your investments? We believe that municipal bonds
may benefit as state and local tax rates rise, making tax-exempt yields more
attractive compared to taxable yields for many investors. At the same time,
because of ongoing fiscal pressures affecting many states and municipalities,
diversification remains important. As for stocks, we currently believe that
selectivity among individual companies can be a key factor in the equity
markets. However, no one can say for certain what direction the markets will
take over time. Your financial advisor can help you to ensure that your
portfolio reflects your investment needs, long-term goals and attitudes toward
risk.
Thank you for your continued confidence and support.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
June 16, 2003
DISCUSSION OF FUND PERFORMANCE
James Welch, Portfolio Manager
How did Dreyfus Strategic Municipal Bond Fund, Inc. perform during the period?
For the six-month period ended May 31, 2003, the fund achieved a total return of
9.59% .(1) During the same period, the fund provided aggregate income dividends
of $0.2974 per share, which is equal to a distribution rate of 6.57%.(2)
The fund and market's performance during the reporting period was primarily
influenced by declining interest rates, heightened investor demand for
tax-exempt fixed-income securities and mounting fiscal pressures on state and
local governments. The fund's investment returns were enhanced by our leveraging
strategy, which benefited from historically low borrowing rates.
What is the fund's investment approach?
The fund seeks to maximize current income exempt from federal income tax to the
extent believed by Dreyfus to be consistent with the preservation of capital. In
pursuing this goal, the fund invests at least 80% of its assets in municipal
bonds. Municipal bonds are classified as general obligation bonds, revenue bonds
and notes. Under normal market conditions, the fund invests at least 80% of its
net assets in investment-grade bonds.
We look for bonds that we believe can provide high current income. We strive to
find such opportunities through analysis of individual bonds' structures. Within
the context of our bond structure analyses, we pay particularly close attention
to each bond's maturity and early redemption features.
Over time, many of the fund's older, higher-yielding bonds have matured or were
redeemed by their issuers. We have generally attempted to replace those bonds
with new securities that offered currently higher than average income payments.
We have also sought to
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
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 their optimal
redemption date or maturity. In addition, we conduct credit analysis of our
holdings in an attempt to avoid potential defaults on interest and principal
payments.
What other factors influenced the fund's performance?
The reporting period was characterized by persistent economic weakness, which
was aggravated by corporate scandals early in the reporting period and, later,
heightened international tensions culminating in the war in Iraq. Despite the
Federal Reserve Board's aggressively accommodative monetary policy, the economy
failed to gain much momentum after the Iraq war wound down in early April 2003,
and municipal bond yields continued to decline. Lower yields on newly issued
bonds produced price appreciation for seasoned bonds, contributing positively to
the fund' s total return. Lower yields and higher prices were also supported by
high levels of investor demand for relatively stable, tax-exempt investment
alternatives.
The weak economy also produced negative influences affecting the municipal bond
market. Most notably, revenues from personal income taxes, capital gains taxes
and sales taxes fell short of many states' and municipalities' projections,
creating budget deficits. State governments have attempted to bridge their
budget gaps through spending reductions and, in some cases, higher taxes.
Government entities have also turned to the municipal bond market to fund
ongoing operations and new projects. As a result, the supply of newly issued
bonds during the reporting period rose sharply compared to the same period one
year earlier. While a surge of new issuance historically has tended to produce
higher yields, the reporting period' s increased supply of bonds was easily
absorbed by robust investor demand, and municipal bond yields generally remained
low.
In this challenging fiscal environment, we have attempted to adopt a more
conservative investment posture. We reduced the fund' s holdings of
corporate-backed bonds and redeployed those assets primarily among high-quality,
income-oriented bonds that are more sensitive to interest-rate changes than to
investors' perception of credit quality.
Finally, the fund benefited from lower short-term interest rates and a widening
of the difference between short-term rates and long-term bond yields. As part of
the fund's leveraging strategy, we extended the term of one of the fund's series
of auction-rate preferred notes, effectively locking in today's low borrowing
rates for two years. By reinvesting the proceeds in municipal bonds with
long-term maturities, we have effectively enhanced the fund's income stream.
What is the fund's current strategy?
We continue to look for opportunities to upgrade the fund's credit quality
without sacrificing substantial amounts of current income. In the meantime, we
are cautiously optimistic about the prospects for municipal bonds in general and
the fund' s seasoned, core holdings in particular. In our current view, recent
federal tax cuts are likely to be offset by higher state and local taxes for
many taxpayers. New York and Connecticut have already raised taxes to cover
their budget deficits, and other states are considering doing so. As a result,
tax-exempt securities may become more attractive to investors seeking tax-free
income.
June 16, 2003
(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) DISTRIBUTION RATE PER SHARE IS BASED UPON DIVIDENDS PER SHARE PAID FROM NET
INVESTMENT INCOME DURING THE PERIOD, DIVIDED BY THE MARKET PRICE PER SHARE
AT THE END OF THE PERIOD.
The Fund
STATEMENT OF INVESTMENTS
May 31, 2003 (Unaudited)
Principal
LONG-TERM MUNICIPAL INVESTMENTS--138.7% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALASKA--4.7%
Alaska Housing Finance Corporation:
6.25%, 6/1/2035 7,145,000 7,761,613
6.05%, 6/1/2039 (Insured; MBIA) 11,915,000 12,655,160
ARIZONA--2.7%
Apache County Industrial Development Authority, PCR
(Tuscon Electric Power Co.) 5.85%, 3/1/2028 8,250,000 7,626,712
Maricopa County Pollution Control Corporation, PCR
(El Paso Electric Co.) 6.25%, 5/1/2037 4,000,000 4,075,720
ARKANSAS--2.5%
Arkansas Development Finance Authority, SFMR
6.25%, 1/1/2032 4,945,000 5,343,419
Little Rock School District
5.25%, 2/1/2030 (Insured; FSA) 5,000,000 5,445,450
CALIFORNIA--7.0%
California Department Water Resources,
Power Supply Revenue
6%, 5/1/2015 12,500,000 14,741,250
California Educational Facilities Authority, Revenue
(University of Southern California ) 5.50%, 10/1/2027 1,000,000 1,118,870
California Health Facilities Financing Authority,
Health Facility Financing Revenue
(Cedars-Sinai Medical Center) 6.25%, 12/1/2034 3,750,000 4,081,275
California Pollution Control Financing Authority, PCR
(Southern California Edison Company)
7%, 2/28/2008 5,000,000 5,090,650
Los Angeles 5%, 9/1/2021(Insured; MBIA) 5,000,000 5,405,300
COLORADO--1.2%
Colorado Health Facilities Authority, Revenue
(American Housing Foundation 1, Inc.)
8.50%, 12/1/2031 2,055,000 2,078,715
Denver City and County, Special Facilities Airport Revenue
(United Air Lines) 6.875%, 10/1/2032 2,700,000 (a) 981,450
Northwest Parkway Public Highway Authority, Revenue
(First Tier Subordinated) 7.125%, 6/15/2041 2,000,000 2,108,400
CONNECTICUT--2.6%
Connecticut Development Authority, PCR
(Connecticut Light and Power) 5.95%, 9/1/2028 6,000,000 6,381,960
Connecticut Resource Recovery Authority
(American Refunding-Fuel Company)
6.45%, 11/15/2022 4,985,000 5,080,363
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
DELAWARE--1.0%
Delaware Health Facilities Authority, Revenue
(Beebe Medical Center) 6.80%, 6/1/2024 3,905,000 4,175,421
DISTRICT OF COLUMBIA--1.4%
Metropolitan Washington Airports Authority,
Special Facilities Revenue
(Caterair International Corp.) 10.125%, 9/1/2011 6,120,000 6,107,638
FLORIDA--4.6%
Florida Board of Education, Lottery Revenue
6%, 7/1/2014 (Insured; FGIC) 5,000,000 5,987,950
Florida Housing Finance Corporation, Housing Revenue
(Seminole Ridge Apartments)
6%, 4/1/2041 (Collateralized; GNMA) 6,415,000 6,877,650
Orange County Health Facilities Authority, Revenue:
(Adventist Health System) 6.25%, 11/15/2024 3,000,000 3,299,970
(Orlando Regional Healthcare System) 6%, 10/1/2026 3,500,000 3,712,415
GEORGIA--1.0%
Private Colleges and Universities Facilities
Authority, Revenue (Clark Atlanta University)
8.25%, 1/1/2015 4,127,500 4,345,968
IDAHO--1.1%
Idaho Housing & Finance Association, SFMR
6.35%, 1/1/2030 (Collateralized; FNMA) 2,395,000 2,578,864
Power County Industrial Development Corporation,
SWDR (FMC Corporation Project)
6.45%, 8/1/2032 2,800,000 2,386,720
ILLINOIS--4.7%
Illinois Development Finance Authority
SWDR (Waste Management Inc.) 5.05%, 1/1/2010 2,000,000 2,063,160
Illinois Health Facilities Authority, Revenue:
(Advocate Network Health Care) 6.125%, 11/15/2022 5,000,000 5,663,750
(OSF Healthcare Systems) 6.25%, 11/15/2029 11,650,000 12,526,313
INDIANA--1.8%
Burns Harbor Industrial Solid Waste Disposal Facilities,
Revenue (Bethlehem Steel Corp.) 8%, 4/1/2024 6,000,000 (a) 372,000
Franklin Township School Building Corporporation
6.125%, 1/15/2022 (Prerefunded 7/15/2010) 6,000,000 (b) 7,460,460
LOUISIANA--5.9%
Lake Charles Harbor and Terminal, District Port Facilities,
Revenue (Trunkline LNG Co.) 7.75%, 8/15/2022 15,000,000 15,669,000
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA (CONTINUED)
Parish of De Soto, Environmental Improvement
Revenue (International Paper Co.)
6.55%, 4/1/2019 2,900,000 3,048,045
West Feliciana Parish, PCR:
(Entergy Gulf States) 6.60%, 9/1/2028 3,750,000 3,823,875
(Utility-Entergy Gulf States) 7%, 11/1/2015 3,000,000 3,074,040
MARYLAND--1.6%
Baltimore County, PCR (Bethlehem Steel Corp.)
7.50%, 6/1/2015 5,000,000 (a) 120,000
Maryland Economic Development Corporation,
Student Housing Revenue (University of Maryland)
5.75%, 10/1/2033 3,250,000 3,409,835
Maryland Industrial Development Financing
Authority, EDR (Medical Waste Associates
Limited Partnership) 8.75%, 11/15/2010 3,865,000 3,402,901
MASSACHUSETTS--1.8%
Massachusetts Bay Transportation Authority,
Assessment Revenue 5.25%, 7/1/2030 3,750,000 4,026,825
Massachusetts Health and Educational Facilities
Authority, Revenue (Beth Isreal)
10.57%, 7/1/2025 (Insured; AMBAC) 3,250,000 (c) 3,399,890
Pittsfield, SWDR (Vicon Recovery Associates)
7.95%, 11/1/2004 595,000 596,880
MICHIGAN--2.3%
Michigan Hospital Finance Authority, HR
(Genesys Health System Obligated Group)
8.125%, 10/1/2021 (Prerefunded 10/1/2005) 5,000,000 (b) 5,889,850
Michigan Strategic Fund, SWDR
(Genesee Power Station) 7.50%, 1/1/2021 4,150,000 3,990,557
MISSISSIPPI--1.4%
Mississippi Business Finance Corporation, PCR
(Systems Energy Resources, Inc.) 5.90%, 5/1/2022 6,070,000 6,075,281
MISSOURI--.8%
Saint Louis Industrial Development Authority
(Saint Louis Convention) 7.25%, 12/15/2035 3,250,000 3,300,310
NEBRASKA--1.0%
Nebraska Investment Finance Authority, SFMR
10.504%, 3/1/2026 3,500,000 (c,d) 4,402,615
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA--3.4%
Clark County, IDR
(Southwest Gas Corporation) 6.50%, 12/1/2033 5,000,000 5,074,200
Washoe County (Reno-Sparks Convention)
6.40%, 7/1/2029
(Insured; FSA, Prerefunded 1/1/2010) 8,000,000 (b) 9,815,440
NEW HAMPSHIRE--3.6%
New Hampshire Business Finance Authority, PCR
(Public Service Co.):
6%, Series D 5/1/2021 (Insured; MBIA) 2,690,000 3,070,581
6%, Series E 5/1/2021 (Insured; MBIA) 6,000,000 6,848,880
New Hampshire Industrial Development Authority, PCR
(Connecticut Light) 5.90%, 11/1/2016 5,400,000 5,585,004
NEW JERSEY--2.6%
New Jersey Economic Development Authority
Special Facilities Revenue (Continental Airlines, Inc.):
6.25%, 9/15/2019 3,620,000 2,770,277
7.20%, 11/15/2030 7,000,000 5,375,300
New Jersey Educational Facilities Authority, Revenue
Higher Education Capital Improvement
5.25%, 9/1/2019 (Insured; AMBAC) 3,000,000 3,362,610
NEW YORK--4.5%
New York City Transitional Finance Authority, Revenue
(Future Tax Secured) 5.375%, 11/15/2021 10,000,000 11,119,600
New York State Dormitory Authority, Revenue:
City University Systems
(Consolidated 4th General) 5.50%, 7/1/2017 3,060,000 3,458,932
Judicial Facility Lease
(Suffolk County) 9.50%, 4/15/2014 605,000 694,153
(Marymount Manhattan College) 6.25%, 7/1/2029 4,000,000 4,532,880
NORTH CAROLINA--.6%
North Carolina Eastern Municipal Power Agency,
Power Systems Revenue 6.70%, 1/1/2019 2,500,000 2,813,050
OHIO--6.5%
Cuyahoga County, HR (Metrohealth Systems)
6.15%, 2/15/2029 10,000,000 10,594,100
Cuyahoga County Hospital Facilities, Revenue
(UHHS/CSAHS Cuyahoga Inc. &
CSAHS/UHHS Canton Inc.) 7.50%, 1/1/2030 3,500,000 3,942,995
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
OHIO (CONTINUED)
Mahoning County Hospital Facilities, Revenue
(Forum Health Obligation Group)
6%, 11/15/2032 4,000,000 4,247,240
Ohio Air Quality Development Authority, PCR
(Cleveland Electric Illuminating Co.)
6.10%, 8/1/2020 2,400,000 2,564,592
Ohio Housing Finance Agency, Mortgage Revenue
10.61%, 3/1/2029 (Collateralized; GNMA) 2,345,000 (c,d) 2,663,709
Ohio Water Development Authority, PCR
(Cleavland Electric) 6.10%, 8/1/2020 4,000,000 4,274,320
OKLAHOMA--3.6%
Oklahoma Development Finance Authority, Revenue
(St. John Health System) 6%, 2/15/2029 9,000,000 10,092,330
Oklahoma Industries Authority, Health System
Revenue (Obligation Group)
5.75%, 8/15/2029 (Insured; MBIA) 5,000,000 5,549,950
OREGON--.6%
Umatilla County Hospital Facility Authority, Revenue
(Catholic Health Initiatives) 5.50%, 3/1/2022 2,500,000 2,693,100
PENNSYLVANIA--3.6%
Allegheny County Port Authority, Special Transportation
Revenue 6.125%, 3/1/2029 (Insured; MBIA,
Prerefunded 3/1/2009) 4,750,000 (b) 5,758,615
Beaver County Industrial Development Authority, PCR
(Cleveland Electric) 7.625%, 5/1/2025 8,800,000 9,468,888
Pennsylvania Housing Finance Agency,
Multi-Family Development Revenue
8.25%, 12/15/2019 277,000 277,723
RHODE ISLAND--1.5%
Rhode Island Health & Educational Building
Corporation Higher Educational Facilities
(University of Rhode Island)
5.875%, 9/15/2029 (Insured; MBIA) 5,910,000 6,869,784
SOUTH CAROLINA--4.7%
Greenville Hospital System, Hospital Facilities Revenue
5.50%, 5/1/2026 (Insured; AMBAC) 7,000,000 7,601,090
Richland County, Environmental Improvement Revenue
(International Paper Company) 6.10%, 4/1/2023 6,500,000 6,782,230
South Carolina Medical Facilities, Hospital Facilities
Revenue 6%, 7/1/2019 (Prerefunded 7/1/2009) 5,000,000 (b) 6,047,250
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE--3.6%
Memphis Center City Revenue Finance Corp.
Sports Facility Revenue
(Memphis Redbirds) 6.50%, 9/1/2028 6,000,000 6,083,640
Tennessee Housing Development Agency
(Homeownership Program):
6%, 1/1/2028 4,615,000 4,897,623
6.40%, 7/1/2031 4,250,000 4,675,935
TEXAS--24.3%
Austin Convention Enterprises Inc.
(Convention Center Hotel) 6.70%, 1/1/2032 4,250,000 4,467,175
Dallas Fort Worth International Airport, Revenue:
5.50%, 11/1/2021 (Insured; FSA) 7,000,000 7,628,600
5%, 11/1/2032 (Insured; AMBAC) 12,000,000 12,111,120
Gregg County Health Facilities Development
Corporation, HR (Good Shepherd Medical Center)
6.375%, 10/1/2025 2,500,000 2,892,275
Harris County Health Facilities Development
Corporation, HR (Memorial Hermann Healthcare)
6.375%, 6/1/2029 7,000,000 7,702,310
Katy Independent School District
6.125%, 2/15/2032 11,360,000 13,131,706
Sabine River Authority, PCR (TXU Electric):
6.45%, 6/1/2021 2,900,000 2,947,212
5.50%, 5/1/2022 5,000,000 5,113,650
Springhill Courtland Heights Public Facility Corp. MFHR
5.85%, 12/1/2028 6,030,000 6,312,204
Texas:
(Veterans ) 6%, 12/1/2030 3,935,000 4,308,628
(Veterans Housing Assistance Program)
6.10%, 6/1/2031 8,510,000 9,266,794
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue
12.248%, 7/2/2024 4,900,000 (c) 6,477,996
Tomball Hospital Authority, Revenue:
6.125%, 7/1/2023 3,555,000 3,605,019
(Tomball Regional Hospital) 6%, 7/1/2025 3,400,000 3,520,972
Tyler Health Facilities Development Corp., HR
(East Texas Medical Center Regional Health Care System)
6.75%, 11/1/2025 5,850,000 5,756,693
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
Texas Turnpike Authority,
Central Texas Turnpike System Revenue:
5.50%, 8/15/2039 (Insured; AMBAC) 3,000,000 3,311,490
5.25%, 5/15/2042 (Insured; AMBAC) 6,875,000 7,335,625
UTAH--1.0%
Carbon County, SWDR (Sunnyside Cogeneration):
7.10%, 8/15/2023 4,532,000 4,394,001
VIRGINIA--5.4%
Henrico County Economic Development Authority,
Revenue (Bon Secours Health System)
5.60%, 11/15/2030 (Insured; FSA) 3,140,000 3,330,347
Henrico County Industrial Development Authority,
Revenue (Bon Secours Health System)
10.408%, 8/23/2027 7,500,000 (c) 10,841,925
Virginia Housing Development Authority
Rental Housing 6.20%, 8/1/2024 8,520,000 9,297,194
WASHINGTON--6.9%
Energy Northwest, Revenue:
Electric 10.14%, 7/1/2017 10,000,000 (c,d) 13,331,900
(Wind Project) 6%, 7/1/2023 3,670,000 3,987,528
Port Seattle Special Facilities Revenue
(Northwest Airlines Project) 7.25%, 4/1/2030 2,300,000 1,754,946
Washington Higher Education Facilities Authority,
Revenue (Whitman College) 5.875%, 10/1/2029 10,000,000 10,896,600
WISCONSIN--7.2%
Badger Tobacco Asset Securitization Corp.
Tobacco Settlement Revenue:
7%, 6/1/2028 13,500,000 13,288,725
6.375%, 6/1/2032 5,945,000 5,334,865
Wisconsin Health and Educational Facilities
Authority, Revenue (Aurora Health Care, Inc.)
5.60%, 2/15/2029 5,595,000 5,645,802
Wisconsin Housing and Economic Development
Authority Homeownership Revenue
12.651%, 7/1/2025 7,000,000 (c,d) 7,296,310
WYOMING--3.4%
Sweetwater County, SWDR (FMC Corp.):
7%, 6/1/2024 1,805,000 1,690,455
6.90%, 9/1/2024 2,465,000 2,281,653
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
WYOMING (CONTINUED)
Wyoming Student Loan Corporation,
Student Loan Revenue:
6.20%, 6/1/2024 5,000,000 5,403,300
6.25%, 6/1/2029 5,000,000 5,389,600
U.S.RELATED--.6%
Puerto Rico Public Finance Corporation
6%, 8/1/2026 2,000,000 2,414,100
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $583,211,856) 603,839,231
SHORT-TERM MUNICIPAL INVESTMENTS--2.8%
------------------------------------------------------------------------------------------------------------------------------------
ALASKA--2.0%
Valez, Marine Terminal Revenue, VRDN
(Exxon Pipeline Company Project):
Project B, 1.30% 2,600,000 (e) 2,600,000
Project C, 1.30% 6,100,000 (e) 6,100,000
LOUISIANA--.5%
East Baton Rouge Parish, PCR, VRDN
(Exxon Project) 1.25% 2,200,000 (e) 2,200,000
WYOMING--.3%
Unita County, PCR, VRDN 1,500,000 (e) 1,500,000
(Amoco Project) 1.30%
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $12,400,000) 12,400,000
TOTAL INVESTMENTS (cost $595,611,856) 141.5% 616,239,231
CASH AND RECEIVABLES (NET) 1.2% 5,163,669
PREFERRED STOCK, AT REDEMPTION VALUE (42.7%) (186,000,000)
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS 100.0% 435,402,900
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
EDR Economic Development Revenue
FGIC Financial Guaranty Insurance
Company
FNMA Federal National Mortgage
Association
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
SFMR Single Family Mortgage 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 31.7
AA Aa AA 18.0
A A A 20.0
BBB Baa BBB 15.9
BB Ba BB 6.2
B B B 1.3
CC Ca CC .2
F1 MIG1/P1 SP1/A1 2.0
Not Rated (f) Not Rated (f) Not Rated (f) 4.7
100.0
(A) NON-INCOME PRODUCING SECURITY, INTEREST PAYMENTS IN DEFAULT.
(B) 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.
(C) INVERSE FLOATER SECURITY---THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(D) 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, 2003,
THESE SECURITIES AMOUNTED TO $27,694,534 OR 6.4% OF NET ASSETS APPLICABLE
TO COMMON SHAREHOLDERS.
(E) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
(F) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S,
HAVE BEEN DETERMINED BY THE INVESTMENT ADVISOR TO BE OF COMPARABLE QUALITY
TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 595,611,856 616,239,231
Cash 83,305
Interest receivable 10,134,425
Receivable for investment securities sold 446,561
Prepaid expenses 389,264
627,292,786
-------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 393,147
Payable for investment securities purchased 5,053,472
Dividends payable to preferred shareholders 177,237
Commissions payable 52,054
Accrued expenses and other liabilities 213,976
5,889,886
-------------------------------------------------------------------------------
AUCTION PREFERRED STOCK, Series A, B and C, par value
$.001 per share (7,440 shares issued and outstanding
at $25,000 per share liquidation) value--Note 1 186,000,000
-------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ($) 435,402,900
-------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Common Stock, par value, $.001 per share
(48,070,337 shares issued and outstanding) 48,070
Paid-in capital 443,761,562
Accumulated undistributed investment income--net 6,619,636
Accumulated net realized gain (loss) on investments (35,653,743)
Accumulated net unrealized appreciation
(depreciation) on investments 20,627,375
-------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ($) 435,402,900
-------------------------------------------------------------------------------
COMMON SHARES OUTSTANDING
(110 million shares of $.001 par value Common Stock authorized) 48,070,337
NET ASSET VALUE PER SHARE OF COMMON STOCK ($) 9.06
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2003 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 18,455,243
EXPENSES:
Management fee--Note 3(a) 1,511,955
Administration fees--Note 3(a) 755,977
Commission fees--Note 1 246,969
Professional fees 40,501
Shareholders' reports 38,287
Shareholder servicing costs 24,754
Registration fees 24,432
Directors' fees and expenses--Note 3(b) 22,805
Custodian fees 2,292
Miscellaneous 18,375
TOTAL EXPENSES 2,686,347
INVESTMENT INCOME--NET 15,768,896
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (7,035,298)
Net unrealized appreciation (depreciation) on investments 30,656,446
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 23,621,148
DIVIDENDS ON PREFERRED STOCK (1,405,881)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 37,984,163
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
May 31, 2003 Year Ended
(Unaudited) November 30, 2002
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 15,768,896 33,831,139
Net realized gain (loss) on investments (7,035,298) (9,058,484)
Net unrealized appreciation
(depreciation) on investments 30,656,446 (3,417,992)
Dividends on Preferred Stock (1,405,881) (3,420,665)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 37,984,163 17,933,998
-------------------------------------------------------------------------------
DIVIDENDS TO COMMON SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (14,286,513) (26,911,287)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
DIVIDENDS REINVESTED--NOTE 1(C) 336,581 337,170
TOTAL INCREASE (DECREASE) IN NET ASSETS 24,034,231 (8,640,119)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 411,368,669 420,008,788
END OF PERIOD 435,402,900 411,368,669
Undistributed investment income--net 6,619,636 6,286,357
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (COMMON SHARES):
INCREASE IN COMMON SHARES OUTSTANDING
AS A RESULT OF DIVIDENDS REINVESTED 39,001 39,069
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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.
Six Months Ended
May 31, 2003 Year Ended November 30,
------------------------------------------------------------------
(Unaudited) 2002(a) 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 8.56 8.75 8.60 8.56 9.52 9.49
Investment Operations:
Investment income--net .33(b) .70(b) .72 .70 .58 .60
Net realized and unrealized
gain (loss) on investments .50 (.26) .11 .06 (.90) .05
Dividends on Preferred Stock
from net investment income (.03) (.07) (.12) (.16) (.02) --
Total from
Investment Operations .80 .37 .71 .60 (.34) .65
Distributions to
Common Shareholders:
Dividends from investment
income--net (.30) (.56) (.56) (.56) (.58) (.62)
Capital Stock transactions--net
effect of Preferred
Stock Offering -- -- -- (.00)(c) (.04) --
Net asset value, end of period 9.06 8.56 8.75 8.60 8.56 9.52
Market value, end of period 9.06 7.88 8.45 8-1/8 7-11/16 10-3/16
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(D) 19.05(e) (.36) 10.72 13.30 (19.36) 2.23
Six Months Ended
May 31, 2003 Year Ended November 30,
------------------------------------------------------------------
(Unaudited) 2002(a) 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/
SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets applicable to
Common Shareholders 1.28(f,g,h) 1.28(g,h) 1.27(g,h) 1.34(g,h) .91(g,h) .81
Ratio of net investment
income to average
net assets applicable to
Common Shareholders 7.52(f,g,h) 8.10(g,h) 8.10(g,h) 8.25(g,h) 6.64(g,h) 6.26
Portfolio Turnover Rate 34.90(e) 44.71 13.36 27.58 32.58 6.33
Asset, coverage of Preferred
Stock, end of period 334 321 326 321 320 --
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of
Preferred Stock,
end of period ($ x 1,000) 435,403 411,369 420,009 411,081 408,958 453,893
Preferred Stock outstanding,
end of period ($ x 1,000) 186,000 186,000 186,000 186,000 186,000 --
(A) AS REQUIRED, EFFECTIVE DECEMBER 1, 2001, THE FUND HAS ADOPTED THE
PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES
AND BEGAN AMORTIZING DISCOUNT OR PERMIUM ON A SCIENTIFIC BASIS FOR DEBT
SECURITIES ON A DAILY BASIS. THE EFFECT OF THIS CHANGE FOR THE PERIOD ENDED
NOVEMBER 30, 2002 WAS TO INCREASE NET INVESTMENT INCOME PER SHARE AND
DECREASE NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS BY LESS
THAN $.01 AND INCREASE THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS APPLICABLE TO COMMON SHAREHOLDERS FROM 8.08% TO 8.10%. PER SHARE
DATA AND RATIOS/SUPPLEMENTAL DATA FOR PERIODS PRIOR TO DECEMBER 1, 2001
HAVE NOT BEEN RESTATED TO REFLECT THIS CHANGE IN PRESENTATION.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(D) CALCULATED BASED ON MARKET VALUE.
(E) NOT ANNUALIZED.
(F) ANNUALIZED.
(G) DOES NOT REFLECT THE EFFECT OF DIVIDENDS ON PREFERRED STOCK SHAREHOLDERS.
(H) THE RATIO OF EXPENSES TO TOTAL AVERAGE NET ASSETS AND THE RATIO OF NET
INVESTMENT INCOME TO TOTAL AVERAGE NET ASSETS WERE .89% AND 5.21%,
RESPECTIVELY, FOR THE SIX MONTHS ENDED MAY 31, 2003, .89% AND 5.61%,
RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 2002, .89% AND 5.64%,
RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 2001, .84% AND 6.13%,
RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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 wholly-owned 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. PFPC Global Fund Services
("PFPC"), a subsidiary of PNC Bank ("PNC"), serves as the fund's transfer agent,
dividend-paying agent, registrar and plan agent. The fund's Common Stock trades
on the New York Stock Exchange under the ticker symbol DSM.
The fund has outstanding 2,480 shares of Series A, Series B and Series C for a
total of 7,440 shares of 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 are determined pursuant to
periodic auctions. Deutsche Bank, 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 vote as a separate
class on certain other matters, as required by law. The fund has 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 accounting
principles generally accepted in the United States, which 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 (the "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
(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 discount and premium 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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 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, PFPC 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, 2003, the Board of Directors declared a cash dividend to Common
Shareholders of $.051 per share from investment income-net, payable on June 27,
2003 to Common Shareholders of record as of the close of business on June 13,
2003.
(d) Dividends to Shareholders of APS: For APS, dividends are currently reset
annually for Series A and B and every 7 days for series C. The dividend rate in
effect at May 31, 2003 were as follows: Series A --1.55%, Series B--1.625% and
Series C--1.05%.
(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 $28,514,620
available for federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to November 30, 2002. If not
applied, $9,312,230 of the carryover expires in fiscal 2003, $3,964,163 expires
in fiscal 2007, $5,542,712 expires in fiscal 2008, $442,201 expires in fiscal
2009 and $9,253,314 expires in fiscal 2010.
The tax character of distributions paid to shareholders during the fiscal year
ended November 30, 2002 was as follows: tax exempt income $30,331,952. The tax
character of current year distributions will be determined at the end of the
current fiscal year.
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. Interest is charged to the fund based on prevailing market rates in
effect at the time of borrowings. During the period ended May 31, 2003, 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 fund also
has an Administration Agreement with Dreyfus, a Custody Agreement with the
Custodian and a Transfer Agency and Registrar Agreement with PFPC. 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
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
fund' s average weekly net assets; out-of pocket transfer agency and custody
expenses are paid separately by the fund.
(b) Through January 27th, 2003, each director who is not an "affiliated person"
as defined in the Act received from the fund an annual fee of $4,500 and an
attendance fee of $500 per meeting. Each such director also serves as a board
member of other Funds within the Dreyfus complex (collectively, the "Fund
Group" ). After January 27th, 2003, Board compensation was changed from a "Fund
by Fund" basis to a "Fund Group" basis, such that each such director now
receives an annual fee of $30,000, an attendance fee of $4,000 for each
in-person meeting and $500 for telephone meetings. These fees are allocated
among the funds in the Fund Group in proportion to each fund's relative net
assets. The Chairman of the Board receives an additional 25% of such
compensation. Subject to the fund's Emeritus Program Guidelines, Emeritus Board
members, if any, receive 50% of the annual retainer fee and per meeting fee paid
at the time the Board member achieves emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended May 31, 2003, amounted to
$210,612,156 and $206,010,437, respectively.
At May 31, 2003, accumulated net unrealized appreciation on investments was
$20,627,375, consisting of $43,601,261 gross unrealized appreciation and
$22,973,886 gross unrealized depreciation.
At May 31, 2003, 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).
PROXY RESULTS (Unaudited)
At the annual shareholders' meeting held on May 16, 2003, the Fund's Common
Stockholders and Auction Preferred Stockholders voted together as a single class
with respect to each of the three proposals below as follows:
Shares
------------------------------------------------
For Authority Withheld
------------------------------------------------
1. To elect three Class I Directors:((+))
Joseph S. DiMartino 23,656,525 563,297
William Hodding Carter, III 23,656,525 563,297
Richard C. Leone 23,656,525 563,297
Shares
----------------------------------------------------------------
For Against Abstained
----------------------------------------------------------------
2. To approve a change to the fundamental
investment policies and investment
restrictions of the Fund to permit
the Fund to engage in swap transactions 18,325,117 1,646,963 917,689
3. To approve a change to the fundamental
investment policies and investment
restrictions of the fund to expand
the Fund's ability to invest in
other investment companies 18,266,712 1,780,756 842,301
((+)) THE TERMS OF THESE CLASS I DIRECTORS EXPIRE IN 2006.
The Fund
NOTES
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 ((+)
((+)) AUCTION PREFERRED STOCK DIRECTORS
OFFICERS
President
Stephen E. Canter
Executive Vice President
Paul Disdier
Vice President
Mark N. Jacobs
Secretary
John B. Hammalian
Assistant Secretaries
Steven F. Newman
Michael A. Rosenberg
Treasurer
James Windels
Assistant Treasurers
Gregory S. Gruber
Kenneth J. Sandgren
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Douglas J. Gaylor
Joseph A. Irace
PORTFOLIO MANAGERS (CONTINUED)
Colleen A. Meehan
W. Michael Petty
Scott Sprauer
James Welch
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 DISBURSING AGENT
PFPC Global Fund Services
(Common Stock)
Deutsche Bank (Auction Preferred Stock)
AUCTION AGENT
Deutsche Bank (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
PFPC Global Fund Services
(Common Stock)
101 Federal Street
Boston, MA 02110
(c) 2003 Dreyfus Service Corporation 852SA0503
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the Disclosure Controls and Procedures (as
defined in Rule 30a-2(c) under the Investment Company Act of 1940, the
"Disclosure Controls") as of a date within 90 days prior to the filing date
(the "Filing Date") of this Form N-CSR (the "Report"), the Disclosure
Controls are effectively designed to ensure that information required to be
disclosed by the Registrant in the Report is recorded, processed, summarized
and reported by the Filing Date, including ensuring that information required
to be disclosed in the Report is accumulated and communicated to the
Registrant's management, including the Registrant's principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.
(b) There were no significant changes in the Registrant's internal controls
or in other factors that could significantly affect these controls subsequent
to the date of their evaluation, and there were no corrective actions with
regard to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b)(1) Certifications of principal executive officer and principal
financial officer as required by Rule 30a-2 under the Investment Company Act
of 1940.
[PAGE]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
[NAME OF FUND]
By: /S/STEPHEN E. CANTER
--------------------
Stephen E. Canter
President
Date: July 30, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /S/ STEPHEN E. CANTER
Stephen E. Canter
Chief Executive Officer
Date: July 30, 2003
By: /S/ JAMES WINDELS
James Windels
Chief Financial Officer
Date: July 30, 2003
EXHIBIT INDEX
(b)(1) Certifications of principal executive officer and
principal financial officer as required by Rule 30a-2 under the
Investment Company Act of 1940.
(b)(2) Certification of principal executive officer and
principal financial officer as required by Section 906 of the
Sarbanes-Oxley Act of 2002.