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: 11/30/03
Date of reporting period: 11/30/03
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Dreyfus
Strategic Municipal
Bond Fund, Inc.
ANNUAL REPORT November 30, 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
througFzh 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 Selected Information
7 Statement of Investments
17 Statement of Assets and Liabilities
18 Statement of Operations
19 Statement of Changes in Net Assets
20 Financial Highlights
22 Notes to Financial Statements
27 Report of Independent Auditors
28 Important Tax Information
29 Additional Information
32 Proxy Results
33 Board Members Information
35 Officers of the Fund
37 Officers and Directors
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Strategic Municipal Bond Fund, Inc.
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This annual report for Dreyfus Strategic Municipal Bond Fund, Inc. covers the
12-month period from December 1, 2002, through November 30, 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.
Recent reports of marked improvement in the growth of U.S. Gross Domestic
Product suggest to us that the economy has started to turn the corner. Tax cuts
and low mortgage rates have put cash in consumers' pockets, and corporations
have begun to increase spending and investment. As a result, after several years
of falling interest rates and rising bond prices, the municipal bond market
recently has become more volatile. As might be expected in a strengthening
economy, securities that are more sensitive to their issuers' credit quality
generally have outperformed those that tend to respond more to changes in
interest rates.
Of course, we have seen upturns before, only to be disappointed when growth
proved unsustainable over the longer term. However, based on recent data, we are
cautiously optimistic about the current economic environment. As always, we urge
you to speak regularly with your financial advisor, who may be in the best
position to suggest the Dreyfus funds designed to meet your current needs,
future 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
December 15, 2003
2
DISCUSSION OF FUND PERFORMANCE
James Welch, Portfolio Manager
How did Dreyfus Strategic Municipal Bond Fund, Inc. perform during the period?
For the 12-month period ended November 30, 2003, the fund achieved a total
return of 11.49%.(1) During the same period, the fund provided aggregate income
dividends of $0.6034 per share, which is equal to a distribution rate of
6.85%. (2)
The fund's return was enhanced during the first half of the reporting period by
declining interest rates. This was accomplished by our leveraging strategy,
which enabled the fund to lock in at low, prevailing interest rates for up to
one year on some of the fund's auction-rate preferred securities. During the
second half of the reporting period, the fund' s move toward greater
diversification and a shorter average effective maturity helped it avoid the
full extent of the heightened bond market volatility.
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. Under normal market conditions, the weighted average maturity of the
fund' s portfolio is expected to exceed 10 years. 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 municipal bonds
considered investment grade or the unrated equivalent as determined by Dreyfus.
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.
The Fund 3
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
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 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 look to 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?
By the time the reporting period began, persistent economic weakness had already
led to low interest rates and a sustained rally among high-quality bonds,
including most tax-exempt securities. Despite signs of stronger economic growth,
interest rates continued to fall in the winter of 2002 and spring of 2003 as
investors looked forward to another interest-rate reduction from the Federal
Reserve Board (the "Fed" ). At its meeting in late June, the Fed lowered the
federal funds rate to 1%, its lowest level since 1958.
However, municipal bond prices fell sharply in July and early August as new
evidence of economic strength emerged and investors turned their attention to
the risk of higher interest rates, leading to a surge of selling pressure.
Although the bond market subsequently regained much of its lost value in
September and October, it failed to recover fully by the reporting period's end.
In this more volatile environment, we moved toward a more diversified portfolio,
including a reduction in the fund's holdings of lower-rated, corporate-backed
bonds and an increase in higher-quality municipal securities. When making new
purchases, we generally focused on bonds in the intermediate-term range selling
at slight premiums to their face values. Such bonds historically have retained
more of their value during market declines, and the summer of 2003 was no
exception. During
4
this time we also reduced the fund's average effective maturity to approximately
21 years, which limited the effects of heightened market volatility in the
summer and fall.
In addition, the fund benefited from timely sales and purchases of bonds backed
by proceeds from the states' settlement of litigation with the nation's tobacco
companies. Tobacco bonds were hurt early in the spring after an adverse legal
ruling against one of the largest U.S. tobacco companies. We subsequently
purchased a number of these bonds at what we considered to be attractive prices,
and the fund enjoyed attractive total returns during the reporting period as the
legal issues were resolved and prices of tobacco bonds rebounded.
Finally, the fund's leveraging strategy continued to benefit from historically
low borrowing rates. In November, we extended the term of one of the fund's
issues of auction-rate preferred securities to one year, effectively locking in
low borrowing rates through most of 2004.
What is the fund's current strategy?
We have maintained the fund' s focus on premium-coupon bonds in the
intermediate-term range. Because yield differences in this range currently are
relatively steep, we believe that they can be potentially beneficial over time
as they move closer to their final maturities. In our judgment, these are
prudent strategies while investors continue to adjust to a stronger economic
environment.
December 15, 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 5
SELECTED INFORMATION
November 30, 2003 (Unaudited)
Market Price per share November 30, 2003 $8.81
Shares Outstanding November 30, 2003 48,107,332
New York Stock Exchange Ticker Symbol DSM
MARKET PRICE (NEW YORK STOCK EXCHANGE)
Fiscal Year Ended November 30, 2003
----------------------------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
FEBRUARY 28, 2003 MAY 31, 2003 AUGUST 31, 2003 NOVEMBER 30, 2003
----------------------------------------------------------------------------------------------------------------
High $8.35 $9.10 $9.21 $8.81
Low 7.68 8.19 8.09 8.44
Close 8.29 9.06 8.62 8.81
PERCENTAGE GAIN (LOSS) based on change in Market Price*
November 22, 1989 (commencement of operations)
through November 30, 2003 130.80%
December 1, 1993 through November 30, 2003 69.96
December 1, 1998 through November 30, 2003 20.85
December 1, 2002 through November 30, 2003 19.89
March 1, 2003 through November 30, 2003 11.98
June 1, 2003 through November 30, 2003 .70
September 1, 2003 through November 30, 2003 3.99
NET ASSET VALUE PER SHARE
November 22, 1989 (commencement of operations) $9.32
November 30, 2002 8.56
February 28, 2003 8.84
May 31, 2003 9.06
August 31, 2003 8.54
November 30, 2003 8.90
PERCENTAGE GAIN (LOSS) based on change in Net Asset Value*
November 22, 1989 (commencement of operations)
through November 30, 2003 150.18%
December 1, 1993 through November 30, 2003 77.25
December 1, 1998 through November 30, 2003 30.65
December 1, 2002 through November 30, 2003 11.49
March 1, 2003 through November 30, 2003 6.09
June 1, 2003 through November 30, 2003 1.73
September 1, 2003 through November 30, 2003 6.04
(*)WITH DIVIDENDS REINVESTED.
6
STATEMENT OF INVESTMENTS
November 30, 2003
Principal
LONG-TERM MUNICIPAL INVESTMENTS--141.0% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALASKA--4.4%
Alaska Housing Finance Corporation:
6.25%, 6/1/2035 5,905,000 6,309,079
6.05%, 6/1/2039 (Insured; MBIA) 11,915,000 12,478,222
ARIZONA--3.4%
Apache County Industrial Development Authority, PCR
(Tuscon Electric Power Co.) 5.85%, 3/1/2028 3,920,000 3,692,483
Maricopa County Pollution Control Corporation, PCR
(El Paso Electric Co.) 6.25%, 5/1/2037 4,000,000 4,162,280
Maricopa County Unified School District
(No.48 Scottsdale)
5%, 7/1/2014 (Insured; FSA) 6,000,000 6,697,680
ARKANSAS--2.4%
Arkansas Development Finance Authority, SFMR
6.25%, 1/1/2032 4,625,000 4,906,061
Little Rock School District
5.25%, 2/1/2030 (Insured; FSA) 5,000,000 5,307,800
CALIFORNIA--7.0%
California Department of Water Resources,
Power Supply Revenue 6%, 5/1/2015 12,500,000 14,384,500
California Health Facilities Financing Authority, Revenue:
(Cedars-Sinai Medical Center) 6.25%, 12/1/2034 3,750,000 4,029,862
(Stanford Hospital and Clinics) 5%, 11/15/2023 1,900,000 1,903,648
California Pollution Control Financing Authority, PCR
(Southern California Edison Company)
7%, 2/28/2008 5,000,000 5,054,050
Los Angeles Department of Water and Power Revenue
(Power Systems) 5%, 7/1/2024 4,750,000 4,829,658
COLORADO--2.1%
Colorado Health Facilities Authority, Revenue
(American Housing Foundation 1, Inc.)
8.50%, 12/1/2031 2,055,000 2,042,382
Denver City and County, Special Facilities Airport Revenue
(United Air Lines) 6.875%, 10/1/2032 2,700,000 (a) 1,687,500
Northwest Parkway Public Highway Authority, Revenue
(First Tier Subordinated) 7.125%, 6/15/2041 5,500,000 5,635,410
CONNECTICUT--3.1%
Connecticut Development Authority, PCR
(Connecticut Light and Power) 5.95%, 9/1/2028 6,000,000 6,305,940
Connecticut Resource Recovery Authority
(American Refunding-Fuel Company)
6.45%, 11/15/2022 4,985,000 5,050,303
The Fund 7
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT (CONTINUED)
Mohegan Tribe Indians Gaming Authority
Public Improvement-Priority Distribution
5.25%, 1/1/2033 2,000,000 1,963,620
DELAWARE--1.0%
Delaware Health Facilities Authority, Revenue
(Beebe Medical Center) 6.80%, 6/1/2024 3,905,000 4,075,883
DISTRICT OF COLUMBIA--1.3%
Metropolitan Washington Airports Authority,
Special Facilities Revenue (Caterair International Corp.)
10.125%, 9/1/2011 5,820,000 5,746,144
FLORIDA--3.2%
Florida Housing Finance Corporation, Housing Revenue
(Seminole Ridge Apartments)
6%, 4/1/2041 (Collateralized; GNMA) 6,415,000 6,736,456
Orange County Health Facilities Authority, Revenue:
(Adventist Health System) 6.25%, 11/15/2024 3,000,000 3,226,680
(Orlando Regional Healthcare System) 6%, 10/1/2026 3,500,000 3,646,300
GEORGIA--3.8%
Georgia Road and Thruway Authority, Revenue
5.25%, 10/1/2012 8,185,000 9,349,398
Private Colleges and Universities Facilities
Authority, Revenue (Clark Atlanta University)
8.25%, 1/1/2015 4,127,500 4,336,599
Savannah Economic Development Authority,
Environmental Improvement Revenue
(International Paper Company) 6.20%, 8/1/2027 2,670,000 2,792,206
IDAHO--.4%
Idaho Housing & Finance Association, SFMR
6.35%, 1/1/2030 (Collateralized; FNMA) 1,720,000 1,824,077
ILLINOIS--5.5%
Chicago O'Hare International Airport
General Airport Revenue
(3rd Lien B-2 XLCA) 6%, 1/1/2029 5,000,000 5,502,550
Illinois Development Finance Authority
SWDR (Waste Management Inc.) 5.05%, 1/1/2010 1,000,000 1,034,090
Illinois Health Facilities Authority, Revenue:
(Advocate Network Health Care) 6.125%, 11/15/2022 5,000,000 5,529,800
(OSF Healthcare Systems) 6.25%, 11/15/2029 10,900,000 11,523,153
INDIANA--1.8%
Burns Harbor Industrial Solid Waste Disposal Facilities,
Revenue (Bethlehem Steel Corp.) 8%, 4/1/2024 6,000,000 (a) 358,800
8
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
Franklin Township School Building Corporation
6.125%, 1/15/2022 (Prerefunded 7/15/2010) 6,000,000 (b) 7,258,860
KENTUCKY--2.4%
Kenton County Airport Board
Airport Revenue (Special Facilities-Delta Airlines)
7.125%, 2/1/2021 4,000,000 3,851,400
Kentucky Property and Buildings
Commission Revenues
5.125%, 10/1/2019 (Insured; MBIA) 5,780,000 6,224,944
LOUISIANA--2.3%
Parish of De Soto, Environmental Improvement
Revenue (International Paper Co.)
6.55%, 4/1/2019 2,900,000 3,027,832
West Feliciana Parish, PCR:
(Entergy Gulf States) 6.60%, 9/1/2028 3,750,000 3,805,950
(Utility-Entergy Gulf States) 7%, 11/1/2015 3,000,000 3,112,560
MARYLAND--4.0%
Baltimore County, PCR (Bethlehem Steel Corp.)
7.50%, 6/1/2015 5,000,000 (a) 20,000
Maryland Economic Development Corporation,
Student Housing Revenue (University of Maryland)
5.75%, 10/1/2033 3,250,000 3,269,110
Maryland Industrial Development Financing
Authority, EDR (Medical Waste Associates
Limited Partnership) 8.75%, 11/15/2010 3,710,000 3,343,007
Maryland State and Local Facilities Loan
5%, 8/1/2017 10,000,000 10,908,400
MASSACHUSETTS--1.4%
Massachusetts Health and Educational Facilities
Authority, Revenue:
(Beth Israel) 10.653%,
7/1/2025 (Insured; AMBAC) 3,250,000 (c) 3,337,652
(Civic Investments) 9%, 12/15/2015 2,000,000 2,328,760
Pittsfield, SWDR (Vicon Recovery Associates)
7.95%, 11/1/2004 310,000 310,676
MICHIGAN--2.3%
Michigan Hospital Finance Authority, HR
(Genesys Health System Obligated Group)
8.125%, 10/1/2021 (Prerefunded 10/1/2005) 5,000,000 (b) 5,711,550
Michigan Strategic Fund, SWDR
(Genesee Power Station) 7.50%, 1/1/2021 4,150,000 3,954,328
The Fund 9
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI--.7%
Mississippi Business Finance Corporation, PCR
(Systems Energy Resources, Inc.) 5.90%, 5/1/2022 3,160,000 3,167,584
MISSOURI--.6%
Saint Louis Industrial Development Authority
(Saint Louis Convention) 7.25%, 12/15/2035 2,625,000 2,603,213
NEBRASKA--.9%
Nebraska Investment Finance Authority, SFMR
10.706%, 3/1/2026 3,050,000 (c,d) 3,705,536
NEVADA--3.4%
Clark County, IDR
(Southwest Gas Corporation) 6.50%, 12/1/2033 5,000,000 5,040,050
Washoe County (Reno-Sparks Convention)
6.40%, 7/1/2029
(Insured; FSA, Prerefunded 1/1/2010) 8,000,000 (b) 9,575,200
NEW HAMPSHIRE--3.6%
New Hampshire Business Finance Authority, PCR
(Public Service Co.):
6%, Series D 5/1/2021 (Insured; MBIA) 2,690,000 3,005,994
6%, Series E 5/1/2021 (Insured; MBIA) 6,000,000 6,704,820
New Hampshire Industrial Development Authority, PCR
(Connecticut Light) 5.90%, 11/1/2016 5,400,000 5,577,012
NEW JERSEY--5.2%
New Jersey Economic Development Authority
Special Facilities Revenue (Continental Airlines, Inc.):
6.25%, 9/15/2019 3,620,000 3,180,098
7.20%, 11/15/2030 7,000,000 6,566,840
New Jersey Educational Facilities Authority, Revenue
Higher Education Capital Improvement
5.25%, 9/1/2019 (Insured; AMBAC) 3,000,000 3,248,070
Tobacco Settlement Financing Corporation
7%, 6/1/2041 9,095,000 9,064,987
NEW YORK--6.8%
New York City 5.75%, 8/1/2014 5,000,000 5,602,650
New York City Transitional Finance Authority, Revenue
(Future Tax Secured) 5.375%, 11/15/2021 5,000,000 5,421,400
New York State Dormitory Authority, Revenue:
City University Systems
(Consolidated 4th General) 5.50%, 7/1/2017 3,060,000 3,358,901
Judicial Facility Lease
(Suffolk County) 9.50%, 4/15/2014 605,000 751,773
(Marymount Manhattan College) 6.25%, 7/1/2029 4,000,000 4,399,680
10
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
Port Authority of New York and New Jersey Consolidated
5%, 9/1/2025 5,050,000 5,169,231
Triborough Bridge and Tunnel Authority Revenue
5.125%, 11/15/2029 4,500,000 4,626,900
NORTH CAROLINA--.7%
North Carolina Eastern Municipal Power Agency,
Power Systems Revenue 6.70%, 1/1/2019 2,500,000 2,812,400
OHIO--6.4%
Cuyahoga County, HR (Metrohealth Systems)
6.15%, 2/15/2029 10,000,000 10,424,100
Cuyahoga County Hospital Facilities, Revenue
(UHHS/CSAHS Cuyahoga Inc. &
CSAHS/UHHS Canton Inc.) 7.50%, 1/1/2030 3,500,000 3,877,230
Mahoning County Hospital Facilities, Revenue
(Forum Health Obligation Group)
6%, 11/15/2032 4,000,000 4,156,400
Ohio Air Quality Development Authority, PCR
(Cleveland Electric Illuminating Co.)
6.10%, 8/1/2020 2,400,000 2,536,848
Ohio Housing Finance Agency, Mortgage Revenue
10.738%, 3/1/2029 (Collateralized; GNMA) 1,925,000 (c,d) 2,132,630
Ohio Water Development Authority, PCR
(Cleveland Electric) 6.10%, 8/1/2020 4,000,000 4,228,080
OKLAHOMA--3.6%
Oklahoma Development Finance Authority, Revenue
(St. John Health System) 6%, 2/15/2029 9,000,000 9,865,350
Oklahoma Industries Authority, Health System
Revenue (Obligation Group)
5.75%, 8/15/2029 (Insured; MBIA) 5,000,000 5,437,400
OREGON--1.4%
Umatilla County Hospital Facility Authority, Revenue
(Catholic Health Initiatives)
5.50%, 3/1/2022 2,500,000 2,620,575
Western Generation Agency
Cogeneration Project Revenue
(Wauna Cogeneration) 7.40%, 1/1/2016 3,250,000 3,334,370
PENNSYLVANIA--1.4%
Allegheny County Port Authority, Special Transportation
Revenue 6.125%, 3/1/2029
(Insured; MBIA, Prerefunded 3/1/2009) 4,750,000 (b) 5,621,815
The Fund 11
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania Housing Finance Agency,
Multi-Family Development Revenue
8.25%, 12/15/2019 274,000 274,617
RHODE ISLAND--1.6%
Rhode Island Health & Educational Building
Corporation Higher Educational Facilities
(University of Rhode Island)
5.875%, 9/15/2029 (Insured; MBIA) 5,910,000 6,642,663
SOUTH CAROLINA--8.3%
Berkeley County School District
Installment Purchase Revenue
(Securing Assets For Education)
5%, 12/1/2028 5,000,000 4,891,750
Greenville County School District
Installment Purchase Revenue
(Building Equity Sooner Tomorrow)
5.50%, 12/1/2028 10,000,000 10,531,000
Greenville Hospital System, Hospital Facilities Revenue
5.50%, 5/1/2026 (Insured; AMBAC) 7,000,000 7,448,210
Richland County, Environmental Improvement Revenue
(International Paper Company) 6.10%, 4/1/2023 6,500,000 6,861,660
South Carolina Medical Facilities, Hospital Facilities
Revenue 6%, 7/1/2019 (Prerefunded 7/1/2009) 5,000,000 (b) 5,898,200
TENNESSEE--5.4%
Johnson City Health and Educational Facilities Board, HR
(1st Mortgage-Mountain State Health):
7.50%, 7/1/2025 2,000,000 2,184,700
7.50%, 7/1/2033 3,000,000 3,263,850
Memphis Center City Revenue Finance Corp.
Sports Facility Revenue
(Memphis Redbirds) 6.50%, 9/1/2028 6,000,000 6,032,220
Memphis Electric Systems Revenue
5%, 12/1/2012 (Insured; MBIA) 5,000,000 5,559,700
Tennessee Housing Development Agency
(Homeownership Program):
6%, 1/1/2028 3,245,000 3,396,606
6.40%, 7/1/2031 2,400,000 2,586,816
TEXAS--20.1%
Brazos River Authority, PCR
(TXU Energy Company LLC) 6.75%, 4/1/2038 2,000,000 2,201,260
12
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
Dallas Fort Worth International Airport, Revenue
5.50%, 11/1/2021 (Insured; FSA) 7,000,000 7,454,160
Gregg County Health Facilities Development
Corporation, HR (Good Shepherd Medical Center)
6.375%, 10/1/2025 2,500,000 2,866,050
Harris County Health Facilities Development
Corporation, HR (Memorial Hermann Healthcare)
6.375%, 6/1/2029 7,000,000 7,510,650
Katy Independent School District 6.125%, 2/15/2032 11,360,000 12,798,062
Sabine River Authority, PCR (TXU Electric):
6.45%, 6/1/2021 2,900,000 2,999,876
5.50%, 5/1/2022 5,000,000 5,256,850
Springhill Courtland Heights Public Facility Corp. MFHR
5.85%, 12/1/2028 6,030,000 6,203,302
Texas:
(Veterans ) 6%, 12/1/2030 3,935,000 4,226,505
(Veterans Housing Assistance Program)
6.10%, 6/1/2031 8,510,000 9,103,487
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue
12.522%, 7/2/2024 3,950,000 (c) 4,333,822
Tomball Hospital Authority, Revenue:
6.125%, 7/1/2023 3,680,000 3,690,230
(Tomball Regional Hospital) 6%, 7/1/2025 4,650,000 4,716,123
Tyler Health Facilities Development Corporation, HR
(East Texas Medical Center Regional
Health Care System) 6.75%, 11/1/2025 5,850,000 5,744,642
Texas Turnpike Authority,
Central Texas Turnpike System Revenue
5.25%, 8/15/2042 (Insured; AMBAC) 6,875,000 7,104,075
UTAH--1.0%
Carbon County, SWDR (Sunnyside Cogeneration)
7.10%, 8/15/2023 4,327,000 4,098,188
VIRGINIA--5.5%
Henrico County Economic Development Authority,
Revenue (Bon Secours Health System)
5.60%, 11/15/2030 (Insured; FSA) 3,140,000 3,227,889
Henrico County Industrial Development Authority,
Revenue (Bon Secours Health System)
10.610%, 8/23/2027 7,500,000 (c) 10,029,975
The Fund 13
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA (CONTINUED)
Peninsula Ports Authority
Coal Terminal Revenue
(Dominion Terminal Associates) 6%, 4/1/2033 1,300,000 1,339,780
Virginia Housing Development Authority
Rental Housing 6.20%, 8/1/2024 8,520,000 9,082,576
WASHINGTON--3.4%
Energy Northwest, Revenue
(Wind Project) 6%, 7/1/2023 3,670,000 3,894,971
Washington Higher Education Facilities Authority,
Revenue (Whitman College) 5.875%, 10/1/2029 10,000,000 10,696,100
WISCONSIN--5.7%
Badger Tobacco Asset Securitization Corp.
Tobacco Settlement Revenue:
7%, 6/1/2028 13,500,000 13,512,690
6.375%, 6/1/2032 2,650,000 2,442,081
Wisconsin Health and Educational Facilities
Authority, Revenue (Aurora Health Care)
6.40%, 4/15/2033 4,500,000 4,705,110
Wisconsin Housing and Economic Development
Authority Homeownership Revenue
11.251%, 7/1/2025 3,450,000 (c,d) 3,577,512
WYOMING--3.5%
Sweetwater County, SWDR (FMC Corp.):
7%, 6/1/2024 1,805,000 1,809,693
6.90%, 9/1/2024 2,465,000 2,465,567
Wyoming Student Loan Corporation,
Student Loan Revenue:
6.20%, 6/1/2024 5,000,000 5,326,700
6.25%, 6/1/2029 5,000,000 5,313,300
TOTAL LONG-TERM INVESTMENTS
(cost $591,207,635) 603,707,998
14
Principal
SHORT-TERM MUNICIPAL INVESTMENTS--2.2% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA--.4%
East Baton Rouge Parish, PCR, VRDN
(Exxon Project) 1.05% 1,900,000 (e) 1,900,000
NEW YORK--1.5%
New York City, VRDN
(Insured; FSA) 1.08% 6,500,000 (e) 6,500,000
TEXAS--.3%
Lower Neches Valley Authority, IDC
Exempt Facilities Revenue, VRDN
(ExxonMobil Project) 1.05% 1,400,000 (e) 1,400,000
TOTAL SHORT-TERM INVESTMENTS
(cost $9,800,000) 9,800,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $601,007,635) 143.2% 613,507,998
CASH AND RECEIVABLES (NET) .2% 793,019
PREFERRED STOCK, AT REDEMPTION VALUE (43.4%) (186,000,000)
NET ASSETS 100.0% 428,301,017
The Fund 15
STATEMENT OF INVESTMENTS (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond Assurance
Corporation
EDR Economic Development Revenue
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
HR Hospital Revenue
IDC Industrial Development Corporation
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 30.3
AA Aa AA 19.6
A A A 21.7
BBB Baa BBB 12.7
BB Ba BB 6.5
B B B 2.2
CC Ca CC .3
F MIG1/P1 SP1/A1 1.6
Not Rated( f) Not Rated( f) Not Rated( f) 5.1
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 NOVEMBER 30, 2003,
THESE SECURITIES AMOUNTED TO $9,415,678 OR 2.2% OF NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS.
(E) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
(F) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S,
HAVE BEEN DETERMINED BY THE INVESTMENT ADVISOR TO BE OF COMPARABLE QUALITY TO
THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
16
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 601,007,635 613,507,998
Interest receivable 10,234,545
Prepaid expenses 360,836
624,103,379
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 376,723
Cash overdraft due to Custodian 1,573,493
Payable for investment securities purchased 7,542,979
Dividends payable to Preferred shareholders 92,405
Commissions payable 40,957
Accrued expenses 175,805
9,802,362
--------------------------------------------------------------------------------
AUCTION PREFERRED STOCK, Series A, B and C, par value
$.001 per share (7,440 shares issued and outstanding
at $25,000 per share liquidation value)--Note 1 186,000,000
--------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ($) 428,301,017
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Common Stock, par value, $.001 per share
(48,107,332 shares issued and outstanding) 48,107
Paid-in capital 434,962,068
Accumulated undistributed investment income--net 5,467,776
Accumulated net realized gain (loss) on investments (24,677,297)
Accumulated net unrealized appreciation
(depreciation) on investments 12,500,363
--------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ($) 428,301,017
--------------------------------------------------------------------------------
COMMON SHARES OUTSTANDING
(110 million shares of $.001 par value Common Stock authorized) 48,107,332
NET ASSET VALUE PER SHARE OF COMMON STOCK ($) 8.90
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 17
STATEMENT OF OPERATIONS
Year Ended November 30, 2003
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 36,294,089
EXPENSES:
Management fee--Note 3(a) 3,034,059
Administration fee--Note 3(a) 1,517,030
Commission fees--Note 1 489,881
Professional fees 86,780
Shareholders' reports 62,716
Shareholder servicing costs 48,259
Registration fees 45,253
Directors' fees and expenses--Note 3(b) 43,194
Custodian fees 5,556
Miscellaneous 39,942
TOTAL EXPENSES 5,372,670
INVESTMENT INCOME--NET 30,921,419
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (5,523,575)
Net unrealized appreciation (depreciation) on investments 22,529,434
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 17,005,859
DIVIDENDS ON PREFERRED STOCK (2,664,167)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 45,263,111
SEE NOTES TO FINANCIAL STATEMENTS.
18
STATEMENT OF CHANGES IN NET ASSETS
Year Ended November 30,
-----------------------------------
2003 2002
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 30,921,419 33,831,139
Net realized gain (loss) on investments (5,523,575) (9,058,484)
Net unrealized appreciation (depreciation)
on investments 22,529,434 (3,417,992)
Dividends on Preferred Stock (2,664,167) (3,420,665)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 45,263,111 17,933,998
-------------------------------------------------------------------------------
DIVIDENDS TO COMMON SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (29,005,474) (26,911,287)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
DIVIDENDS REINVESTED--NOTE 1(C) 674,711 337,170
TOTAL INCREASE (DECREASE) IN NET ASSETS 16,932,348 (8,640,119)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 411,368,669 420,008,788
END OF PERIOD 428,301,017 411,368,669
Undistributed investment income--net 5,467,776 6,286,357
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (COMMON SHARES):
INCREASE IN COMMON SHARES OUTSTANDING
AS A RESULT OF DIVIDENDS REINVESTED 75,996 39,069
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 19
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.
Year Ended November 30,
-------------------------------------------------------------------
2003 2002(a) 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 8.56 8.75 8.60 8.56 9.52
Investment Operations:
Investment income--net .64(b) .70(b) .72 .70 .58
Net realized and unrealized
gain (loss) on investments .36 (.26) .11 .06 (.90)
Dividends on Preferred Stock
from net investment income (.06) (.07) (.12) (.16) (.02)
Total from Investment Operations .94 .37 .71 .60 (.34)
Distributions to Common Shareholders:
Dividends from investment income--net (.60) (.56) (.56) (.56) (.58)
Capital Stock transactions--net
effect of Preferred Stock Offering -- -- -- (.00)(c) (.04)
Net asset value, end of period 8.90 8.56 8.75 8.60 8.56
Market value, end of period 8.81 7.88 8.45 81_8 711_16
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(D) 19.89 (.36) 10.72 13.30 (19.36)
20
Year Ended November 30,
-------------------------------------------------------------------
2003 2002(a) 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets applicable
to Common Shareholders(e,f) 1.28 1.28 1.27 1.34 .91
Ratio of net investment income to
average net assets applicable
to Common Shareholders(e,f) 7.35 8.10 8.10 8.25 6.64
Portfolio Turnover Rate 77.92 44.71 13.36 27.58 32.58
Asset coverage of Preferred Stock,
end of period 330 321 326 321 320
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, net of Preferred Stock,
end of period ($ x 1,000) 428,301 411,369 420,009 411,081 408,958
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 PREMIUM 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) DOES NOT REFLECT THE EFFECT OF DIVIDENDS TO PREFERRED STOCK SHAREHOLDERS.
(F) THE RATIO OF EXPENSES TO TOTAL AVERAGE NET ASSETS AND THE RATIO OF NET
INVESTMENT INCOME TO TOTAL AVERAGE NET ASSETS WERE .86% AND 5.10%, RESPECTIVELY,
FOR THE YEAR ENDED NOVEMBER 30, 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, .92% AND 5.64%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30,
2000 AND .84% AND 6.13%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund 21
NOTES TO FINANCIAL STATEMENTS
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 desig-
22
nated 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 23
NOTES TO FINANCIAL STATEMENTS (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) as defined in the dividend reinvestment plan.
On November 26, 2003, the Board of Directors declared a cash dividend to Common
Shareholders of $.051 per share from investment income-net, payable on December
26, 2003 to Common Shareholders of record as of the close of business on
December 11, 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 rates in
effect at November 30, 2003 were as follows: Series A --1.55%, Series B--1.25%
and Series C--.95%.
(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.
At November 30, 2003, the components of accumulated earnings on a tax basis were
as follows: undistributed tax exempt income $5,652,357, accumulated capital
losses $24,677,297 and unrealized appreciation $12,596,664.
24
The accumulated capital loss carryover is available to be applied against future
net securities profits, if any, realized subsequent to November 30, 2003. If not
applied, $3,964,163 of the carryover expires in fiscal 2007, $5,542,712 expires
in fiscal 2008, $442,201 expires in fiscal 2009, $9,253,314 expires in fiscal
2010 and $5,474,907 expires in fiscal 2011.
The tax character of distributions paid to shareholders during the fiscal
periods ended November 30, 2003 and November 30, 2002, respectively, were as
follows: tax exempt income of $31,669,641 and $30,331,952.
During the period ended November 30, 2003, as a result of permanent book to tax
differences, the fund decreased accumulated undistributed investment income-net
by $70,359, increased net realized gain (loss) on investments by $9,360,898 and
decreased paid-in capital by $9,290,539. Net assets were not affected by this
reclassification.
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 November 30, 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
The Fund 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Board member also serves as a Board member of other funds within the
Dreyfus complex. Effective January 27, 2003, annual retainer fees and attendance
fees are allocated to each fund based on net assets. Prior to January 27, 2003,
each director who is not an "affiliated person" as defined in the Act, received
from the fund an annual fee of $2,500 and an attendance fee of $500 per meeting
for services to the fund. The Chairman of the Board received an additional 25%
of such compensation and continues to do so under the new compensation
structure.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended November 30, 2003, amounted to
$472,508,605 and $461,019,789, respectively.
At November 30, 2003, the cost of investments for federal income tax purposes
was $600,911,334; accordingly, accumulated net unrealized appreciation on
investments was $12,596,664, consisting of $32,614,082 gross unrealized
appreciation and $20,017,418 gross unrealized depreciation.
26
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors Dreyfus Strategic Municipal Bond Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Dreyfus
Strategic Municipal Bond Fund, Inc., including the statement of investments, as
of November 30, 2003, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of November
30, 2003 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Strategic Municipal Bond Fund, Inc. at November 30, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with accounting principles generally
accepted in the United States.
Ernst & Young LLP
New York, New York
January 21, 2004
The Fund 27
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund hereby designates all the dividends
paid from investment income-net during the fiscal year ended November 30, 2003
as "exempt-interest dividends" (not generally subject to regular federal income
tax).
As required by federal tax law rules, shareholders will receive notification of
their portion of the fund' s taxable ordinary dividends and capital gain
distributions paid for the 2003 calendar year on Form 1099-DIV which will be
mailed by January 31, 2004.
28
ADDITIONAL INFORMATION (Unaudited)
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Under the fund' s Dividend Reinvestment Plan (the "Plan"), a holder of Common
Stock (" Common Shareholder" ) who has fund shares registered in his name will
have all dividends and distributions reinvested automatically by PFPC Global
Fund Services, as Plan agent (the "Agent"), in additional shares of the fund at
the lower of prevailing market price or net asset value (but not less than 95%
of market value at the time of valuation) unless such Common Shareholder elects
to receive cash as provided below. If market price is equal to or exceeds net
asset value, shares will be issued at net asset value. If net asset value
exceeds market price or if a dividend or other distribution payable only in cash
is declared, the Agent, as agent for the Plan participants, will buy fund shares
in the open market. A Plan participant is not relieved of any income tax that
may be payable on such dividends or distributions.
A Common Shareholder who owns fund shares registered in the name of his
broker/dealer or other nominee (i.e., in "street name") may not participate in
the Plan, but may elect to have cash dividends and distributions reinvested by
his broker/dealer or other nominee in additional shares of the fund if such
service is provided by the broker/dealer or other nominee; otherwise such
dividends and distributions will be treated like any other cash dividend or
distribution.
A Common Shareholder who has fund shares registered in his name may elect to
withdraw from the Plan at any time for a $5.00 fee and thereby elect to receive
cash in lieu of shares of the fund. Changes in elections must be by direct mail
to PFPC Global Fund Services, Attention: Closed-End funds, Post Office Box 8030,
Boston, Massachusetts 02266, or by telephone at 1-800-331-1710, and should
include the shareholder' s name and address as they appear on the Agent's
records. Elections received by the Agent will be effective only if received
prior to the record date for any distribution.
The Agent maintains all Common Shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account. Shares in the account
of each Plan participant will be held by the
The Fund 29
ADDITIONAL INFORMATION (Unaudited) (CONTINUED)
Agent in non-certificated form in the name of the participant, and each such
participant's proxy will include those shares purchased pursuant to the Plan.
The fund pays the Agent's fee for reinvestment of dividends and distributions.
Plan participants pay a pro rata share of brokerage commissions incurred with
respect to the Agent's open market purchases in connection with the reinvestment
of dividends or distributions.
The fund reserves the right to amend or terminate the Plan as applied to any
dividend or distribution paid subsequent to written notice of the change sent to
Plan participants at least 90 days before the record date for such dividend or
distribution. The Plan also may be amended or terminated by the Agent on at
least 90 days' written notice to Plan participants.
MANAGED DIVIDEND POLICY
The fund' s dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more consistent yield to the current trading price of shares
of Common Stock of the fund, the fund may at times pay out less than the entire
amount of net investment income earned in any particular month and may at times
in any month pay out such accumulated but undistributed income in addition to
net investment income earned in that month. As a result, the dividends paid by
the fund for any particular month may be more or less than the amount of net
investment income earned by the fund during such month. The fund's current
accumulated but undistributed net investment income, if any, is disclosed in the
Statement of Assets and Liabilities, which comprises part of the Financial
Information included in this report.
BENEFITS AND RISKS OF LEVERAGING
The fund utilizes leverage to seek to enhance the yield and net asset value of
its Common Stock. These objectives cannot be achieved in all interest rate
environments. To leverage, the fund issues Preferred Stock, which pays dividends
at prevailing short-term interest rates, and invests
30
the proceeds in long-term municipal bonds. The interest earned on these
investments is paid to Common Shareholders in the form of dividends, and the
value of these portfolio holdings is reflected in the per share net asset value
of the fund's Common Stock. In order to benefit Common Shareholders, the yield
curve must be positively sloped: that is, short-term interest rates must be
lower than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit Common Shareholders. If either of these
conditions change, then the risk of leveraging will begin to outweigh the
benefits.
SUPPLEMENTAL INFORMATION
During the period ended November 30, 2003, shareholders approved changes in the
fund' s fundamental investment policies to permit the fund to engage in swap
transactions and to permit the fund to invest in other investment companies.
Otherwise, during the period, there were: (i) no material changes in the fund's
investment objectives or policies, (ii) no changes in the fund's charter or
by-laws that would delay or prevent a change of control of the fund, (iii) no
material changes in the principal risk factors associated with investment in the
fund, and (iv) no changes in the person primarily responsible for the day-to-day
management of the fund's portfolio.
The Fund 31
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.
32
BOARD MEMBERS INFORMATION (Unaudited)
JOSEPH S. DIMARTINO (60)
CHAIRMAN OF THE BOARD (1995) CURRENT TERM EXPIRES IN 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Corporate Director and Trustee
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* The Muscular Dystrophy Association, Director
* Levcor International, Inc., an apparel fabric processor, Director
* Century Business Services, Inc., a provider of outsourcing functions for small
and medium size companies, Director
* The Newark Group, a provider of a national market of paper recovery
facilities, paperboard mills and paperboard converting plants, Director
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 191
--------------
DAVID W. BURKE (67)
BOARD MEMBER (1994) CURRENT TERM EXPIRES IN 2005
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Corporate Director and Trustee.
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* John F. Kennedy Library Foundation, Director
* U.S.S. Constitution Museum, Director
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 87
--------------
WILLIAM HODDING CARTER, III (68)
BOARD MEMBER (1988) CURRENT TERM EXPIRES IN 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* President and Chief Executive Officer of the John S. and James L. Knight
Foundation (1998-present)
* President and Chairman of MainStreet TV (1985-1998)
* Knight Professor in Journalism at the University of Maryland (1995-1998)
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* Independent Sector, Director
* The Century Foundation, Director
* The Enterprise Corporation of the Delta, Director
* Foundation of the Mid-South, Director
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
EHUD HOUMINER (63)
BOARD MEMBER (1996) CURRENT TERM EXPIRES IN 2004
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Executive-in-Residence at the Columbia Business School, Columbia University
* Principal of Lear, Yavitz and Associates, a management consulting firm, from
1996 through 2001
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* Avnet Inc., an electronics distributor, Director
* International Advisory Board to the MBA Program School of Management, Ben
Gurion University, Chairman
* Explore Charter School, Brooklyn, NY, Chairman
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 25
The Fund 33
BOARD MEMBERS INFORMATION (Unaudited) (CONTINUED)
RICHARD C. LEONE (63)
BOARD MEMBER (1976) CURRENT TERM EXPIRES IN 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* President of The Century Foundation (formerly, The Twentieth Century Fund,
Inc.), a tax exempt research foundation engaged in the study of economic,
foreign policy and domestic issues
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
HANS C. MAUTNER (66)
BOARD MEMBER (1978) CURRENT TERM EXPIRES IN 2005
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* President--International Division and an Advisory Director of Simon Property
Group, a real estate investment company (1998-present)
* Director and Vice Chairman of Simon Property Group (1998-2003)
* Chairman and Chief Executive Officer of Simon Global Limited (1999-present)
* Chairman, Chief Executive Officer and a Trustee of Corporate Property
Investors, which merged into Simon Property Group in 1998 (1972-1998)
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
ROBIN A. PRINGLE (40)
BOARD MEMBER (1995) CURRENT TERM EXPIRES IN 2004
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Senior Vice President of Mentor/National Mentoring Partnership, a national
non-profit organization that is leading the movement to connect America's young
people with caring adult mentors
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
JOHN E. ZUCCOTTI (66)
BOARD MEMBER (1984) CURRENT TERM EXPIRES IN 2005
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Chairman of Brookfield Financial Properties, Inc.
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
THE ADDRESS OF EACH BOARD MEMBER IS C/O THE DREYFUS CORPORATION, 200 PARK
AVENUE, NEW YORK, NEW YORK 10166.
34
OFFICERS OF THE FUND (Unaudited)
STEPHEN E. CANTER, PRESIDENT SINCE MARCH 2000.
Chairman of the Board, Chief Executive Officer and Chief Operating Officer
of Dreyfus, and an officer of 95 investment companies (comprised of 186
portfolios) managed by Dreyfus. Mr. Canter also is a Board member and, where
applicable, an Executive Committee Member of the other investment management
subsidiaries of Mellon Financial Corporation, each of which is an affiliate of
Dreyfus. He is 58 years old and has been an employee of Dreyfus since May 1995.
STEPHEN R. BYERS, EXECUTIVE VICE PRESIDENT SINCE NOVEMBER 2002.
Chief Investment Officer, Vice Chairman and a Director of Dreyfus, and an
officer of 95 investment companies (comprised of 186 portfolios) managed by
Dreyfus. Mr. Byers also is an officer, director or an Executive Committee Member
of certain other investment management subsidiaries of Mellon Financial
Corporation, each of which is an affiliate of Dreyfus. He is 50 years old and
has been an employee of Dreyfus since January 2000. Prior to joining Dreyfus, he
served as an Executive Vice President-Capital Markets, Chief Financial Officer
and Treasurer at Gruntal & Co., L.L.C.
A. PAUL DISDIER, EXECUTIVE VICE PRESIDENT SINCE MARCH 2000.
Executive Vice President of the Fund, Director of Dreyfus Municipal
Securities, and an officer of 3 other investment companies (comprised of 3
portfolios) managed by Dreyfus. He is 48 years old and has been an employee of
Dreyfus since February 1988.
MARK N. JACOBS, VICE PRESIDENT SINCE MARCH 2000.
Executive Vice President, Secretary and General Counsel of Dreyfus, and an
officer of 96 investment companies (comprised of 202 portfolios) managed by
Dreyfus. He is 57 years old and has been an employee of Dreyfus since June 1977
JOHN B. HAMMALIAN, SECRETARY SINCE MARCH 2000.
Associate General Counsel of Dreyfus, and an officer of 37 investment
companies (comprised of 46 portfolios) managed by Dreyfus. He is 40 years old
and has been an employee of Dreyfus since February 1991.
MICHAEL A. ROSENBERG, ASSISTANT SECRETARY SINCE MARCH 2000.
Associate General Counsel of Dreyfus, and an officer of 93 investment
companies (comprised of 195 portfolios) managed by Dreyfus. He is 43 years old
and has been an employee of Dreyfus since October 1991.
STEVEN F. NEWMAN, ASSISTANT SECRETARY SINCE MARCH 2000.
Associate General Counsel and Assistant Secretary of Dreyfus, and an
officer of 96 investment companies (comprised of 202 portfolios) managed by
Dreyfus. He is 54 years old and has been an employee of Dreyfus since July
1980.
The Fund 35
OFFICERS OF THE FUND (Unaudited) (CONTINUED)
JAMES WINDELS, TREASURER SINCE NOVEMBER 2001.
Director - Mutual Fund Accounting of Dreyfus, and an officer of 96
investment companies (comprised of 202 portfolios) managed by Dreyfus. He is 45
years old and has been an employee of Dreyfus since April 1985.
GREGORY S. GRUBER, ASSISTANT TREASURER SINCE MARCH 2000.
Senior Accounting Manager - Municipal Bond Funds of Dreyfus, and an officer
of 29 investment companies (comprised of 58 portfolios) managed by Dreyfus. He
is 44 years old and has been an employee of Dreyfus since August 1981.
KENNETH J. SANDGREN, ASSISTANT TREASURER SINCE NOVEMBER 2001.
Mutual Funds Tax Director of Dreyfus, and an officer of 96 investment
companies (comprised of 202 portfolios) managed by Dreyfus. He is 49 years old
and has been an employee of Dreyfus since June 1993.
WILLIAM GERMENIS, ANTI-MONEY LAUNDERING COMPLIANCE OFFICER SINCE SEPTEMBER 2002.
Vice President and Anti-Money Laundering Compliance Officer of the
Distributor, and the Anti-Money Laundering Compliance Officer of 91 investment
companies (comprised of 197 portfolios) managed by Dreyfus. He is 33 years old
and has been an employee of the Distributor since October 1998. Prior to joining
the Distributor, he was a Vice President of Compliance Data Center, Inc.
36
OFFICERS AND DIRECTORS
Dreyfus Strategic Municipal Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
DIRECTORS
Joseph S. DiMartino
David W. Burke
William 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 Presidents
Stephen R. Byers
A. 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
Compliance Officer
William Germenis
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Douglas J. Gaylor
PORTFOLIO MANAGERS (CONTINUED)
Joseph A. Irace
Colleen A. Meehan
W. Michael Petty
Scott Sprauer
James Welch
Monica S. Wieboldt
Bill Vasiliou
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 37
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) 2004 Dreyfus Service Corporation 852AR1103
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board has determined that Joseph S. DiMartino, a member
of the Audit Committee of the Board, is an audit committee financial expert as
defined by the Securities and Exchange Commission (the "SEC"). Joseph S.
DiMartino is "independent" as defined by the SEC for purposes of audit committee
financial expert determinations.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
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) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Registrant's disclosure controls and procedures are reasonably designed to
ensure that information required to be disclosed by the Registrant on Form N-CSR
is recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the reports
that it files or submits on Form N-CSR is accumulated and communicated to the
Registrant's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.
(b) There were no changes to the Registrant's internal control over financial
reporting that occurred during the Registrant's most recently ended fiscal
half-year that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as
required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certification of principal executive and principal financial officers as
required by Rule 30a-2(b) under the Investment Company Act of 1940.
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.
Dreyfus Strategic Municipal Bond Fund, Inc.
By: _/S/STEPHEN E. CANTER_
Stephen E. Canter
President
Date: January 23, 2004
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: January 23, 2004
By: /S/JAMES WINDELS
James Windels
Chief Financial Officer
Date: January 23, 2004
EXHIBIT INDEX
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial
officers as required by Rule 30a-2(a) under the Investment Company Act of
1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers
as required by Rule 30a-2(b) under the Investment Company Act of 1940.
(EX-99.906CERT)
Exhibit (a)(1) Exhibit (a)(1)
THE DREYFUS FAMILY OF FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE
AND SENIOR FINANCIAL OFFICERS
1. Covered Officers/Purpose of the Code
This code of ethics (the "Code") for the investment companies within the
complex (each, a "Fund") applies to each Fund's Principal Executive Officer,
Principal Financial Officer, Principal Accounting Officer or Controller, or
other persons performing similar functions, each of whom is listed on Exhibit A
(the "Covered Officers"), for the purpose of promoting:
o honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
o full, fair, accurate, timely and understandable disclosure in reports and
documents that the Fund files with, or submits to, the Securities and
Exchange Commission (the "SEC") and in other public communications made by
the Fund;
o compliance with applicable laws and governmental rules and regulations;
o the prompt internal reporting of violations of the Code to an appropriate
person or persons identified in the Code; and
o accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business ethics
and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.
2. Covered Officers Should Handle Ethically Actual and Apparent Conflicts
of Interest
OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private
interest interferes with the interests of, or his service to, the Fund. For
example, a conflict of interest would arise if a Covered Officer, or a member of
his family, receives improper personal benefits as a result of his position with
the Fund.
Certain conflicts of interest arise out of the relationships between
Covered Officers and the Fund and already are subject to conflict of interest
provisions in the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"). For example, Covered Officers may not individually
engage in certain transactions (such as the purchase or sale of securities or
other property) with the Fund because of their status as "affiliated persons" of
the Fund. The compliance programs and procedures of the Fund and the Fund's
investment adviser (the "Adviser") are designed to prevent, or identify and
correct, violations of these provisions. The Code does not, and is not intended
to, repeat or replace these programs and procedures, and the circumstances they
cover fall outside of the parameters of the Code.
Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Fund and the Adviser of which the Covered Officers are also officers
or employees. As a result, the Code recognizes that the Covered Officers, in the
ordinary course of their duties (whether formally for the Fund or for the
Adviser, or for both), will be involved in establishing policies and
implementing decisions that will have different effects on the Adviser and the
Fund. The participation of the Covered Officers in such activities is inherent
in the contractual relationship between the Fund and the Adviser and is
consistent with the performance by the Covered Officers of their duties as
officers of the Fund and, if addressed in conformity with the provisions of the
Investment Company Act and the Investment Advisers Act, will be deemed to have
been handled ethically. In addition, it is recognized by the Fund's Board that
the Covered Officers also may be officers or employees of one or more other
investment companies covered by this or other codes of ethics.
Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Investment Advisers Act. Covered Officers should keep in mind that
the Code cannot enumerate every possible scenario. The overarching principle of
the Code is that the personal interest of a Covered Officer should not be placed
improperly before the interest of the Fund.
Each Covered Officer must:
o not use his personal influence or personal relationships improperly to
influence investment decisions or financial reporting by the Fund whereby
the Covered Officer would benefit personally to the detriment of the Fund;
o not cause the Fund to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the benefit
of the Fund; and
o not retaliate against any employee or Covered Officer for reports of
potential violations that are made in good faith.
3. Disclosure and Compliance
o Each Covered Officer should familiarize himself with the disclosure
requirements generally applicable to the Fund within his area of
responsibility;
o each Covered Officer should not knowingly misrepresent, or cause others to
misrepresent, facts about the Fund to others, whether within or outside
the Fund, including to the Fund's Board members and auditors, and to
governmental regulators and self-regulatory organizations; and
o each Covered Officer should, to the extent appropriate within his area of
responsibility, consult with other officers and employees of the Fund and
the Adviser with the goal of promoting full, fair, accurate, timely and
understandable disclosure in the reports and documents the Fund files
with, or submits to, the SEC and in other public communications made by
the Fund; and
o it is the responsibility of each Covered Officer to promote compliance
with the standards and restrictions imposed by applicable laws, rules and
regulations.
4. Reporting and Accountability
Each Covered Officer must:
o upon adoption of the Code (or thereafter, as applicable, upon becoming a
Covered Officer), affirm in writing to the Board that he has received,
read, and understands the Code;
o annually thereafter affirm to the Board that he has complied with the
requirements of the Code; and
o notify the Adviser's General Counsel (the "General Counsel") promptly if
he knows of any violation of the Code. Failure to do so is itself a
violation of the Code.
The General Counsel is responsible for applying the Code to specific
situations in which questions are presented under it and has the authority to
interpret the Code in any particular situation. However, waivers sought by any
Covered Officer will be considered by the Fund's Board.
The Fund will follow these procedures in investigating and enforcing the
Code:
o the General Counsel will take all appropriate action to investigate any
potential violations reported to him;
o if, after such investigation, the General Counsel believes that no
violation has occurred, the General Counsel is not required to take any
further action;
o any matter that the General Counsel believes is a violation will be
reported to the Board;
o if the Board concurs that a violation has occurred, it will consider
appropriate action, which may include: review of, and appropriate
modifications to, applicable policies and procedures; notification to
appropriate personnel of the Adviser or its board; or dismissal of the
Covered Officer;
o the Board will be responsible for granting waivers, as appropriate; and
o any waivers of or amendments to the Code, to the extent required, will be
disclosed as provided by SEC rules.
5. Other Policies and Procedures
The Code shall be the sole code of ethics adopted by the Fund for purposes
of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms
applicable to registered investment companies thereunder. The Fund's, its
principal underwriter's and the Adviser's codes of ethics under Rule 17j-1 under
the Investment Company Act and the Adviser's additional policies and procedures,
including its Code of Conduct, are separate requirements applying to the Covered
Officers and others, and are not part of the Code.
6. Amendments
The Code may not be amended except in written form which is specifically
approved or ratified by a majority vote of the Fund's Board, including a
majority of independent Board members.
7. Confidentiality
All reports and records prepared or maintained pursuant to the Code will
be considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or the Code, such matters shall not be
disclosed to anyone other than the appropriate Funds and their counsel, the
appropriate Boards (or Committees) and their counsel and the Adviser.
8. Internal Use
The Code is intended solely for the internal use by the Fund and does not
constitute an admission, by or on behalf of the Fund, as to any fact,
circumstance, or legal conclusion.
Dated as of: JULY 1, 2003
------------------
EXHIBIT A
Persons Covered by the Code of Ethics
Stephen E. Canter President (Principal Executive Officer)
(Principal Financial and
James Windels Treasurer Accounting Officer)
[EX-99.CERT]
Exhibit (a)(2)
SECTION 302 CERTIFICATIONS
I, Stephen E. Canter, certify that:
1. I have reviewed this report on Form N-CSR of Dreyfus Strategic Municipal Bond
Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations, changes in net assets, and cash
flows (if the financial statements are required to include a statement of cash
flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal half-year (the registrant's second fiscal half-year in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
By: /S/STEPHEN E. CANTER
----------------------------
Stephen E. Canter
Chief Executive Officer
Date: January 23, 2004
SECTION 302 CERTIFICATIONS
I, James Windels, certify that:
1. I have reviewed this report on Form N-CSR of Dreyfus Strategic Municipal Bond
Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations, changes in net assets, and cash
flows (if the financial statements are required to include a statement of cash
flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing date of this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal half-year (the registrant's second fiscal half-year in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
By: /S/JAMES WINDELS
James Windels
Chief Financial Officer
Date: January 23, 2004
[EX-99.906CERT]
Exhibit (b)
SECTION 906 CERTIFICATIONS
In connection with this report on Form N-CSR for the Registrant as
furnished to the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned hereby certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as applicable; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.
By: /S/STEPHEN E. CANTER
-------------------------
Stephen E. Canter
Chief Executive Officer
Date: January 23, 2004
By: /S/JAMES WINDELS
James Windels
Chief Financial Officer
Date: January 23, 2004
THIS CERTIFICATE IS FURNISHED PURSUANT TO THE REQUIREMENTS OF FORM N-CSR AND
SHALL NOT BE DEEMED "FILED" FOR PURPOSES OF SECTION 18 OF THE SECURITIES
EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF THAT SECTION, AND
SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 OR THE EXCHANGE ACT OF 1934.