form852
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) 
 
Michael A. Rosenberg, 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 
Date of reporting period:    5/31/08 


FORM N-CSR

Item 1. Reports to Stockholders.



Contents
 
    THE FUND 


2    A Letter from the CEO 
3    Discussion of Fund Performance 
6    Statement of Investments 
20    Statement of Assets and Liabilities 
21    Statement of Operations 
22    Statement of Changes in Net Assets 
23    Financial Highlights 
25    Notes to Financial Statements 
37    Officers and Directors 
    FOR MORE INFORMATION 


    Back Cover 


Dreyfus 
Strategic Municipal Bond Fund, Inc. 

The    Fund 

A LETTER FROM THE CEO

Dear Shareholder:

We present to you this semiannual report for Dreyfus Strategic Municipal Bond Fund, Inc., covering the six-month period from December 1, 2007, through May 31, 2008.

Although the U.S. economy has teetered on the brink of recession and the financial markets have encountered heightened volatility in an ongoing credit crisis, the Federal Reserve Board’s aggressive easing of monetary policy and innovative measures to inject liquidity into the banking system appear to have reassured many investors and economists. With that, 2008 has certainly proven to be one of the more memorable for the municipal markets. Despite concerns stemming from the Auction-Rate securities markets and the recent Supreme Court decision in support of the legality of state and local municipals’ tax-exempt status, the general municipal markets have rallied strongly over the last few months as price dislocations have dissipated.

At Dreyfus, we believe that the current economic downturn is likely to be relatively brief by historical standards, but the ensuing recovery may be gradual and prolonged as financial deleveraging and housing price deflation continue to weigh on economic activity.The implications of our economic outlook for the municipal bond market generally are positive, especially since, on a relative basis, municipal securities remain attractively valued compared to taxable alternatives. Your financial advisor can help you assess current risks and take advantage of these opportunities within the context of your overall investment portfolio.

For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.

Thank you for your continued confidence and support.

2


DISCUSSION OF FUND PERFORMANCE

For the period of December 1, 2007, through May 31, 2008, as provided by James Welch, Senior Portfolio Manager

Fund Performance Overview

For the six-month period ended May 31, 2008, Dreyfus Strategic Municipal Bond Fund achieved a total return of –0.96% on a net-asset-value basis.1 Over the same period, the fund provided aggregate income dividends of $0.24 per share, which reflects an annualized distribution rate of 5.98% .2

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.

The fund also has the ability to issue auction rate preferred stock and invests the proceeds in a manner consistent with its investment objective. This has the effect of “leveraging” the portfolio, which can increase the fund’s performance potential as well as, depending on market conditions, enhance net asset value losses during times of higher market risk.

Over time, many of the fund’s older, higher yielding bonds have matured or were redeemed by their issuers.We have attempted to replace those bonds with investments consistent with the fund’s investment policies. 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

The Fund 3


DISCUSSION OF FUND PERFORMANCE (continued)

bonds that are close to their optimal redemption date or maturity. In addition, we conduct credit analysis of the fund’s holdings in an attempt to avoid potential defaults on interest and principal payments.

Municipal Bonds Suffered in the Credit Crisis

The reporting period began amid a credit crisis originating in the sub-prime mortgage market, where an unexpectedly high number of homeowners defaulted on their loans.This development sent shock-waves throughout the financial markets as investors reassessed their attitudes toward risk.The sub-prime meltdown produced massive losses among bond insurers, many of which had written insurance on both mortgage-backed securities and municipal bonds. Municipal bond investors responded negatively when insurers came under financial pressure. In addition, selling pressure increased when highly leveraged institutional investors were forced to sell creditworthy investments, including municipal bonds, to meet margin calls.

The effects of the credit crisis were exacerbated by slower economic growth amid declining housing prices, soaring energy costs and a softer job market.Aggressive reductions of short-term interest rates by the Federal Reserve Board have not yet forestalled further economic deterioration, sparking concerns that states and municipalities may soon face greater fiscal pressures.

Defensive Positioning Supported Fund Performance

In this turbulent environment, the fund continued to generate competitive levels of income from its core holdings of seasoned bonds, which were acquired at higher yields than are available today. However, because some of those holdings have matured or have been redeemed early by their issuers, the fund’s Board approved a reduction of the fund’s dividend payout in February to a level that better reflects the fund’s current income generating ability.

In addition, we maintained the fund’s focus on higher-quality securities during bouts of heightened volatility. Indeed, at the start of the reporting period, yield differences along the credit quality spectrum were relatively

4


narrow compared to historical averages, and it made little sense to us to incur the risks of lower-rated bonds. Moreover, the work of our credit research analysts enabled the fund to avoid the full brunt of weakness affecting bonds issued by economically sensitive companies. Like other municipal bond funds, the fund’s holdings of bonds carrying third-party insurance3 performed relatively poorly.

The fund issued preferred shares on which dividend rates are periodically reset through bank-managed auctions. During the reporting period, several of these auctions failed to attract enough bidders, and the rate paid to preferred shareholders was consequently reset based on a Reference Rate as explained in the fund’s prospectus. The short-term rate paid to preferred shareholders during the reporting period did not affect the dividends paid to the fund’s common shareholders.

Maintaining Caution in a Distressed Market

As of the reporting period’s end, the financial markets have remained unsettled, and economic conditions have continued to falter.Therefore, we currently intend to maintain a defensive investment posture until we see clearer signs that the worst of the downturn is behind us.

June 16, 2008

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. Return figure provided reflects the 
    absorption of certain expenses by The Dreyfus Corporation pursuant to an undertaking in effect 
    through October 31, 2008. Had these expenses not been absorbed, the fund’s return would have 
    been lower. 
2    Annualized distribution rate per share is based upon dividends per share paid from net investment 
    income during the period, annualized, divided by the market price per share at the end of the 
    period, adjusted for any capital gain distributions. 
3    Third-party insurance on individual securities does not extend to the market value of the portfolio 
    securities or the value of the fund’s shares. 

The Fund 5


STATEMENT OF INVESTMENTS 
May 31, 2008 (Unaudited) 

Long-Term Municipal    Coupon    Maturity    Principal     
Investments—147.1%    Rate (%)    Date    Amount ($)    Value ($) 





Alaska—4.1%                 
Alaska Housing Finance                 
Corporation, General Mortgage                 
Revenue (Insured; MBIA, Inc.)    6.05    6/1/39    11,915,000    12,002,575 
Alaska Housing Finance                 
Corporation, Single-Family                 
Residential Mortgage Revenue                 
(Veterans Mortgage Program)    6.25    6/1/35    4,180,000    4,259,295 
Arizona—1.5%                 
Apache County Industrial                 
Development Authority, PCR                 
(Tucson Electric Power Company                 
Project)    5.85    3/1/28    2,220,000    2,135,618 
Pima County Industrial Development             
Authority, Education Revenue                 
(American Charter Schools                 
Foundation Project)    5.50    7/1/26    4,000,000    3,808,400 
Arkansas—.6%                 
Arkansas Development Finance                 
Authority, SFMR (Mortgage                 
Backed Securities Program)                 
(Collateralized: FNMA and GNMA)    6.25    1/1/32    2,425,000    2,494,040 
California—6.0%                 
California,                 
GO (Various Purpose)    5.25    11/1/27    4,240,000    4,385,093 
California Department of Veteran                 
Affairs, Home Purchase Revenue    5.20    12/1/28    2,950,000    2,951,239 
California Educational Facilities                 
Authority, Revenue (University                 
of Southern California)    4.50    10/1/33    10,000,000    9,736,800 
California Enterprise Development                 
Authority, Sewage Facilities                 
Revenue (Anheuser-Busch                 
Project)    5.30    9/1/47    1,000,000    928,790 
California Health Facilities                 
Financing Authority, Revenue                 
(Cedars-Sinai Medical Center)    6.25    12/1/09    3,750,000 a    4,014,487 
Silicon Valley Tobacco                 
Securitization Authority,                 
Tobacco Settlement                 
Asset-Backed Bonds (Santa                 
Clara County Tobacco                 
Securitization Corporation)    0.00    6/1/36    15,290,000 b    1,945,347 

6


Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Colorado—4.0%                 
Colorado Health Facilities                 
Authority, Revenue (American                 
Baptist Homes of the Midwest                 
Obligated Group)    5.90    8/1/37    2,500,000    2,236,425 
Colorado Health Facilities                 
Authority, Revenue (American                 
Housing Foundation I, Inc. Project)    8.50    12/1/31    1,920,000    2,010,221 
Colorado Housing Finance Authority                 
(Single Family Program)                 
(Collateralized; FHA)    6.60    8/1/32    1,640,000    1,746,961 
Denver City and County,                 
Special Facilities Airport                 
Revenue (United Air Lines                 
Project)    5.75    10/1/32    3,000,000    2,236,350 
Northwest Parkway Public Highway                 
Authority, Revenue    7.13    6/15/11    7,000,000 a    7,904,190 
Connecticut—4.3%                 
Connecticut Development Authority,                 
PCR (Connecticut Light and                 
Power Company Project)    5.95    9/1/28    9,000,000    8,946,630 
Connecticut Resources Recovery                 
Authority, Special Obligation                 
Revenue (American REF-FUEL                 
Company of Southeastern                 
Connecticut Project)    6.45    11/15/22    4,985,000    4,984,651 
Mohegan Tribe of Indians of                 
Connecticut Gaming Authority,                 
Priority Distribution Payment                 
Public Improvement Revenue    6.25    1/1/31    3,470,000    3,318,396 
District of Columbia—2.3%                 
District of Columbia Tobacco                 
Settlement Financing                 
Corporation, Tobacco                 
Settlement Asset-Backed Bonds    0.00    6/15/46 104,040,000 b    6,115,471 
Metropolitan Washington Airports                 
Authority, Special Facility                 
Revenue (Caterair                 
International Corporation)    10.13    9/1/11    3,100,000    3,102,170 
Florida—5.6%                 
Escambia County,                 
EIR (International Paper                 
Company Project)    5.00    8/1/26    1,825,000    1,544,899 

The Fund 7


STATEMENT OF INVESTMENTS (Unaudited) (continued)

Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Florida (continued)                 
Florida Housing Finance                 
Corporation, Housing Revenue                 
(Seminole Ridge Apartments)                 
(Collateralized; GNMA)    6.00    4/1/41    6,415,000    6,466,320 
Highlands County Health Facilities                 
Authority, HR (Adventist                 
Health System/Sunbelt                 
Obligated Group)    5.25    11/15/36    5,000,000    4,938,000 
Jacksonville Economic Development             
Commission, Health Care                 
Facilities Revenue (Florida                 
Proton Therapy Institute Project)    6.25    9/1/27    2,095,000    2,127,829 
Orange County Health Facilities                 
Authority, HR (Orlando                 
Regional Healthcare System)    6.00    10/1/09    70,000 a    74,080 
Orange County Health Facilities                 
Authority, HR (Orlando                 
Regional Healthcare System)    6.00    10/1/26    3,675,000    3,760,113 
Orange County Health Facilities                 
Authority, Revenue (Adventist                 
Health System)    6.25    11/15/12    3,000,000 a    3,386,610 
Georgia—2.5%                 
Atlanta,                 
Airport Revenue (Insured; FSA)    5.25    1/1/25    3,000,000    3,024,720 
Augusta,                 
Airport Revenue    5.45    1/1/31    2,500,000    2,233,225 
Georgia Housing and Finance                 
Authority, SFMR    5.60    12/1/32    2,090,000    2,211,805 
Savannah Economic Development                 
Authority, EIR (International                 
Paper Company Project)    6.20    8/1/27    2,670,000    2,611,500 
Idaho—.1%                 
Idaho Housing and Finance                 
Association, SFMR                 
(Collateralized; FNMA)    6.35    1/1/30    290,000    293,434 
Illinois—9.5%                 
Chicago,                 
SFMR (Collateralized: FHLMC,                 
FNMA and GNMA)    6.25    10/1/32    1,605,000    1,648,078 

8


Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Illinois (continued)                 
Chicago O’Hare International                 
Airport, General Airport Third                 
Lien Revenue (Insured; XLCA)    6.00    1/1/29    5,000,000    5,179,250 
Chicago O’Hare International                 
Airport, Special Facility                 
Revenue (American Airlines,                 
Inc. Project)    5.50    12/1/30    4,000,000    2,176,640 
Illinois Educational Facilities                 
Authority, Revenue                 
(Northwestern University)    5.00    12/1/38    11,715,000    11,912,046 
Illinois Health Facilities                 
Authority, Revenue (Advocate                 
Health Care Network)    6.13    11/15/10    5,000,000 a    5,435,100 
Illinois Health Facilities                 
Authority, Revenue (OSF                 
Healthcare System)    6.25    11/15/09    10,900,000 a    11,603,050 
Indiana—1.6%                 
Franklin Township School Building             
Corporation, First Mortgage                 
Bonds    6.13    7/15/10    6,000,000 a    6,582,900 
Louisiana—6.2%                 
Lakeshore Villages Master                 
Community Development                 
District, Special Assessment                 
Revenue    5.25    7/1/17    1,987,000    1,790,128 
Louisiana Local Government                 
Environmental Facilities and                 
Community Development                 
Authority, Revenue (Westlake                 
Chemical Corporation Projects)    6.75    11/1/32    4,000,000    4,020,720 
Parish of Saint John the Baptist,                 
Revenue (Marathon Oil                 
Corporation Project)    5.13    6/1/37    12,000,000    11,343,120 
West Feliciana Parish,                 
PCR (Entergy Gulf States                 
Project)    7.00    11/1/15    3,000,000    3,029,790 
West Feliciana Parish,                 
PCR (Entergy Gulf States                 
Project)    6.60    9/1/28    4,700,000    4,702,773 

The Fund 9


STATEMENT OF INVESTMENTS (Unaudited) (continued)

Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Maryland—1.9%                 
Maryland Economic Development                 
Corporation, Senior Student                 
Housing Revenue (University of                 
Maryland, Baltimore Project)    5.75    10/1/33    2,550,000    2,221,433 
Maryland Industrial Development                 
Financing Authority, EDR                 
(Medical Waste Associates                 
Limited Partnership Facility)    8.75    11/15/10    3,710,000    3,167,301 
Prince Georges County,                 
Special Obligation Revenue                 
(National Harbor Project)    5.20    7/1/34    2,500,000    2,117,550 
Massachusetts—2.1%                 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Civic                 
Investments Issue)    9.00    12/15/12    2,000,000 a    2,422,260 
Massachusetts Health and                 
Educational Facilities                 
Authority, Revenue (Partners                 
HealthCare System Issue)    5.75    7/1/32    115,000    120,405 
Massachusetts Housing Finance                 
Agency, SFHR    5.00    12/1/31    6,000,000    5,697,900 
Michigan—4.5%                 
Kent Hospital Finance Authority,                 
Revenue (Metropolitan Hospital                 
Project)    6.00    7/1/35    4,000,000    4,018,040 
Michigan Strategic Fund,                 
SWDR (Genesee Power Station                 
Project)    7.50    1/1/21    8,120,000    7,724,962 
Michigan Tobacco Settlement                 
Finance Authority, Tobacco                 
Settlement Asset-Backed Bonds    6.00    6/1/48    6,900,000    6,152,730 
Minnesota—3.4%                 
Saint Paul Housing and                 
Redevelopment Authority,                 
Hospital Facility Revenue                 
(HealthEast Project)    6.00    11/15/25    1,405,000    1,429,854 
Saint Paul Housing and                 
Redevelopment Authority,                 
Hospital Facility Revenue                 
(HealthEast Project)    6.00    11/15/35    12,000,000    12,031,800 

10


Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Mississippi—1.1%                 
Mississippi Business Finance                 
Corporation, PCR (System                 
Energy Resources, Inc. Project)    5.90    5/1/22    4,260,000    4,237,805 
Missouri—2.1%                 
Missouri Health and Educational                 
Facilities Authority, Health                 
Facilities Revenue (BJC Health                 
System)    5.25    5/15/32    8,400,000    8,476,356 
Nebraska—.2%                 
Nebraska Investment Finance                 
Authority, SFMR    8.56    3/1/26    800,000 c,d    819,624 
Nevada—2.8%                 
Clark County,                 
IDR (Nevada Power Company                 
Project)    5.60    10/1/30    3,000,000    2,592,870 
Washoe County,                 
GO Convention Center Revenue                 
(Reno-Sparks Convention and                 
Visitors Authority) (Insured; FSA)    6.40    1/1/10    8,000,000 a    8,516,240 
New Hampshire—3.6%                 
New Hampshire Business Finance                 
Authority, PCR (Public Service                 
Company of New Hampshire                 
Project) (Insured; MBIA, Inc.)    6.00    5/1/21    2,690,000    2,747,835 
New Hampshire Business Finance                 
Authority, PCR (Public Service                 
Company of New Hampshire                 
Project) (Insured; MBIA, Inc.)    6.00    5/1/21    6,000,000    6,129,000 
New Hampshire Industrial                 
Development Authority, PCR                 
(Connecticut Light and Power                 
Company Project)    5.90    11/1/16    5,400,000    5,468,148 
New Jersey—3.9%                 
New Jersey Economic Development             
Authority, Special Facility                 
Revenue (Continental Airlines,                 
Inc. Project)    6.25    9/15/19    4,620,000    3,985,397 
Tobacco Settlement Financing                 
Corporation of New Jersey,                 
Tobacco Settlement                 
Asset-Backed Bonds    7.00    6/1/13    10,095,000 a    11,836,589 

The Fund 11


STATEMENT OF INVESTMENTS (Unaudited) (continued)

Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





New York—7.0%                 
Austin Trust                 
(Port Authority of New York                 
and New Jersey, Consolidated                 
Bonds, 151th Series)    6.00    9/15/28    10,000,000 d,e    10,911,650 
New York City Industrial                 
Development Agency, Special                 
Facility Revenue (American                 
Airlines, Inc. John F. Kennedy                 
International Airport Project)    8.00    8/1/28    3,000,000    2,935,560 
New York City Industrial                 
Development Agency, Special                 
Facility Revenue (American                 
Airlines, Inc. John F. Kennedy                 
International Airport Project)    7.75    8/1/31    10,000,000    9,500,100 
New York State Dormitory                 
Authority, Revenue (Marymount                 
Manhattan College) (Insured;                 
Radian)    6.25    7/1/29    4,000,000    4,127,240 
New York State Dormitory                 
Authority, Revenue (Suffolk                 
County Judicial Facility)    9.50    4/15/14    605,000    794,595 
North Carolina—1.3%                 
North Carolina Eastern Municipal                 
Power Agency, Power System                 
Revenue    6.70    1/1/19    2,500,000    2,616,650 
North Carolina Housing Finance                 
Agency, Home Ownership Revenue    5.88    7/1/31    2,635,000    2,643,722 
Ohio—5.2%                 
Buckeye Tobacco Settlement                 
Financing Authority, Tobacco                 
Settlement Asset-Backed Bonds    6.50    6/1/47    7,000,000    6,560,540 
Cuyahoga County,                 
Hospital Facilities Revenue                 
(UHHS/CSAHS-Cuyahoga, Inc. and                 
CSAHS/UHHS-Canton, Inc.                 
Project)    7.50    1/1/30    3,500,000    3,742,165 
Cuyahoga County,                 
Hospital Improvement Revenue                 
(The Metrohealth Systems Project)    6.15    2/15/09    8,115,000 a    8,420,692 

12


Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Ohio (continued)                 
Port of Greater Cincinnati                 
Development Authority, Tax                 
Increment Development Revenue             
(Fairfax Village Red Bank                 
Infrastructure Project)    5.63    2/1/36    2,530,000    2,235,432 
Oklahoma—1.9%                 
Oklahoma Development Finance             
Authority, Revenue (Saint John             
Health System)    6.00    2/15/29    2,250,000    2,306,993 
Oklahoma Industries Authority,                 
Health System Revenue                 
(Obligated Group) (Insured;                 
MBIA, Inc.)    5.75    8/15/09    2,105,000 a    2,217,323 
Oklahoma Industries Authority,                 
Health System Revenue                 
(Obligated Group) (Insured;                 
MBIA, Inc.)    5.75    8/15/09    2,895,000 a    3,049,477 
Pennsylvania—2.9%                 
Allegheny County Port Authority,             
Special Transportation Revenue             
(Insured; MBIA, Inc.)    6.13    3/1/09    4,750,000 a    4,944,180 
Pennsylvania Economic Development             
Financing Authority, SWDR (USG             
Corporation Project)    6.00    6/1/31    7,000,000    6,518,190 
Pennsylvania Housing Finance                 
Agency, Multi-Family                 
Development Revenue    8.25    12/15/19    241,000    241,465 
South Carolina—10.0%                 
Greenville County School District,             
Installment Purchase Revenue             
(Building Equity Sooner for                 
Tomorrow)    5.50    12/1/12    19,000,000 a,d,e    21,202,290 
Greenville Hospital System,                 
Hospital Facilities Revenue                 
(Insured; AMBAC)    5.50    5/1/26    7,000,000    7,342,790 
Medical University of South                 
Carolina, Hospital Facilities                 
Revenue    6.00    7/1/09    5,000,000 a    5,259,600 

The Fund 13


STATEMENT OF INVESTMENTS (Unaudited) (continued)

Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





South Carolina (continued)                 
Richland County,                 
EIR (International Paper                 
Company Project)    6.10    4/1/23    6,500,000    6,505,980 
Tennessee—4.9%                 
Johnson City Health and                 
Educational Facilities Board,                 
Hospital First Mortgage                 
Revenue (Mountain States                 
Health Alliance)    7.50    7/1/12    2,000,000 a    2,383,420 
Johnson City Health and                 
Educational Facilities Board,                 
Hospital First Mortgage                 
Revenue (Mountain States                 
Health Alliance)    7.50    7/1/12    4,875,000 a    5,809,586 
Knox County Health, Educational                 
and Housing Facility Board,                 
Revenue (University Health                 
System, Inc.)    5.25    4/1/36    5,000,000    4,774,600 
Memphis Center City Revenue                 
Finance Corporation, Sports                 
Facility Revenue (Memphis                 
Redbirds Baseball Foundation                 
Project)    6.50    9/1/28    6,000,000    5,302,140 
Tennessee Housing Development                 
Agency (Homeownership Program)    6.00    1/1/28    1,340,000    1,355,785 
Texas—25.3%                 
Brazos River Harbor Navigation                 
District, Revenue (The Dow                 
Chemical Company Project)    5.13    5/15/33    7,300,000    6,575,183 
Cities of Dallas and Fort Worth,                 
Dallas/Fort Worth                 
International Airport,                 
Facility Improvement                 
Corporation Revenue (Learjet                 
Inc. Project)    6.15    1/1/16    3,000,000    2,872,860 
Gregg County Health Facilities                 
Development Corporation, HR                 
(Good Shepherd Medical Center                 
Project) (Insured; Radian)    6.38    10/1/10    2,500,000 a    2,747,100 

14


Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Texas (continued)                 
Gulf Coast Industrial Development             
Authority, Environmental                 
Facilities Revenue (Microgy                 
Holdings Project)    7.00    12/1/36    5,000,000    4,347,200 
Harris County Health Facilities                 
Development Corporation, HR                 
(Memorial Hermann Healthcare                 
System)    6.38    6/1/11    7,000,000 a    7,745,010 
Harris County Hospital District,                 
Senior Lien Revenue (Insured;                 
MBIA, Inc.)    5.25    2/15/42    5,000,000    5,088,750 
Harris County-Houston Sports                 
Authority, Third Lien Revenue                 
(Insured; MBIA, Inc.)    0.00    11/15/31    9,685,000 b    2,425,511 
Katy Independent School District,                 
Unlimited Tax School Building                 
Bonds (Permanent School Fund                 
Guarantee Program)    6.13    2/15/09    10,000,000 a    10,296,600 
Lubbock Housing Financing                 
Corporation, SFMR                 
(Collateralized:                 
FNMA and GNMA)    6.70    10/1/30    1,065,000    1,083,137 
North Texas Tollway Authority,                 
System Revenue    5.75    1/1/40    15,000,000    15,456,000 
Sabine River Authority,                 
PCR (TXU Electric Company                 
Project)    6.45    6/1/21    4,900,000    4,370,996 
Texas                 
(Veterans Housing Assistance                 
Program) (Collateralized; FHA)    6.10    6/1/31    8,510,000    8,652,543 
Texas                 
(Veterans’ Land)    6.00    12/1/30    3,935,000    4,036,720 
Texas Department of                 
Housing and                 
Community Affairs, Home                 
Mortgage Revenue                 
(Collateralized: FHLMC, FNMA                 
and GNMA)    10.36    7/2/24    1,100,000 c    1,181,081 

The Fund 15


STATEMENT OF INVESTMENTS (Unaudited) (continued)

Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Texas (continued)                 
Texas Department of Housing and             
Community Affairs, Residential                 
Mortgage Revenue                 
(Collateralized: FHLMC, FNMA                 
and GNMA)    5.35    7/1/33    5,110,000    5,026,605 
Texas Turnpike Authority,                 
Central Texas Turnpike System                 
Revenue (Insured; AMBAC)    5.25    8/15/42    5,375,000    5,411,442 
Tomball Hospital Authority,                 
Revenue (Tomball Regional                 
Hospital)    6.00    7/1/25    4,650,000    4,704,405 
Tyler Health Facilities                 
Development Corporation, HR,                 
Refunding and Improvement                 
Bonds (East Texas Medical                 
Center Regional Healthcare                 
System Project)    5.25    11/1/32    6,915,000    6,109,402 
Willacy County Local Government                 
Corporation, Project Revenue    6.88    9/1/28    4,000,000    3,964,080 
Virginia—4.4%                 
Henrico County Industrial                 
Development Authority, Revenue             
(Bon Secours Health System)                 
(Insured; FSA)    7.26    8/23/27    7,500,000 c    8,866,800 
Virginia Housing Development                 
Authority, Rental Housing                 
Revenue    6.20    8/1/24    8,520,000    8,696,108 
Washington—2.6%                 
Washington Higher Educational                 
Facilities Authority, Revenue                 
(Whitman College)    5.88    10/1/09    10,000,000 a    10,496,500 
West Virginia—.2%                 
The County Commission of Pleasants             
County, PCR (Allegheny Energy                 
Supply Company, LLC Pleasants             
Station Project)    5.25    10/15/37    1,000,000    972,230 

16


Long-Term Municipal    Coupon    Maturity    Principal     
Investments (continued)    Rate (%)    Date    Amount ($)    Value ($) 





Wisconsin—7.5%                 
Badger Tobacco Asset                 
Securitization Corporation,                 
Tobacco Settlement                 
Asset-Backed Bonds    6.13    6/1/27    8,960,000 d,e    8,929,178 
Badger Tobacco Asset                 
Securitization Corporation,                 
Tobacco Settlement                 
Asset-Backed Bonds    7.00    6/1/28    14,570,000    15,086,944 
Wisconsin Health and Educational             
Facilities Authority, Revenue                 
(Aurora Health Care, Inc.)    6.40    4/15/33    5,500,000    5,667,090 
Wisconsin Health and Educational             
Facilities Authority, Revenue                 
(Marshfield Clinic)    5.38    2/15/34    500,000    482,740 





 
Total Investments (cost $597,488,178)        147.1%    590,267,758 
Liabilities, Less Cash and Receivables        (.7%)    (2,938,319) 
Preferred Stock, at redemption value        (46.4%)    (186,000,000) 
Net Assets Applicable to Common Shareholders        100.0%    401,329,439 

a These securities are prerefunded; the date shown represents the prerefunded date. Bonds which are prerefunded are 
collateralized by U.S. Government securities which are held in escrow and are used to pay principal and interest on 
the municipal issue and to retire the bonds in full at the earliest refunding date. 
b Security issued with a zero coupon. Income is recognized through the accretion of discount. 
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, 2008, these securities 
amounted to $41,862,742 or 10.4% of net assets applicable to Common Shareholders. 
e Collateral for floating rate borrowings. 

The Fund 17


STATEMENT OF INVESTMENTS (Unaudited) (continued)

Summary of Abbreviations         
 
ABAG    Association of Bay Area Governments    ACA    American Capital Access 
AGC    ACE Guaranty Corporation    AGIC    Asset Guaranty Insurance Company 
AMBAC    American Municipal Bond         
    Assurance Corporation    ARRN    Adjustable Rate Receipt Notes 
BAN    Bond Anticipation Notes    BIGI    Bond Investors Guaranty Insurance 
BPA    Bond Purchase Agreement    CGIC    Capital Guaranty Insurance Company 
CIC    Continental Insurance Company    CIFG    CDC Ixis Financial Guaranty 
CMAC    Capital Market Assurance Corporation    COP    Certificate of Participation 
CP    Commercial Paper    EDR    Economic Development Revenue 
EIR    Environmental Improvement Revenue    FGIC    Financial Guaranty Insurance 
            Company 
FHA    Federal Housing Administration    FHLB    Federal Home Loan Bank 
FHLMC    Federal Home Loan Mortgage    FNMA    Federal National 
    Corporation        Mortgage Association 
FSA    Financial Security Assurance    GAN    Grant Anticipation Notes 
GIC    Guaranteed Investment Contract    GNMA    Government National 
            Mortgage Association 
GO    General Obligation    HR    Hospital Revenue 
IDB    Industrial Development Board    IDC    Industrial Development Corporation 
IDR    Industrial Development Revenue    LOC    Letter of Credit 
LOR    Limited Obligation Revenue    LR    Lease Revenue 
MFHR    Multi-Family Housing Revenue    MFMR    Multi-Family Mortgage Revenue 
PCR    Pollution Control Revenue    PILOT    Payment in Lieu of Taxes 
RAC    Revenue Anticipation Certificates    RAN    Revenue Anticipation Notes 
RAW    Revenue Anticipation Warrants    RRR    Resources Recovery Revenue 
SAAN    State Aid Anticipation Notes    SBPA    Standby Bond Purchase Agreement 
SFHR    Single Family Housing Revenue    SFMR    Single Family Mortgage Revenue 
SONYMA    State of New York Mortgage Agency    SWDR    Solid Waste Disposal Revenue 
TAN    Tax Anticipation Notes    TAW    Tax Anticipation Warrants 
TRAN    Tax and Revenue Anticipation Notes    XLCA    XL Capital Assurance 

18


Summary of Combined Ratings (Unaudited)     
 
Fitch    or    Moody’s    or    Standard & Poor’s    Value (%) 






AAA        Aaa        AAA    25.9 
AA        Aa        AA    16.0 
A        A        A    14.8 
BBB        Baa        BBB    24.7 
BB        Ba        BB    4.3 
B        B        B    5.0 
CCC        Caa        CCC    .4 
Not Rated f        Not Rated f        Not Rated f    8.9 
                    100.0 

    Based on total investments. 
f    Securities which, while not rated by Fitch, Moody’s and Standard & Poor’s, have been determined by the Manager to 
    be of comparable quality to those rated securities in which the fund may invest. 
See notes to financial statements. 

The Fund 19


STATEMENT OF ASSETS AND LIABILITIES

May 31, 2008 (Unaudited)

    Cost    Value 



Assets ($):         
Investments in securities—See Statement of Investments    597,488,178    590,267,758 
Interest receivable        10,939,512 
Receivable for investment securities sold        6,249,246 
Prepaid expenses        7,240 
        607,463,756 



Liabilities ($):         
Due to The Dreyfus Corporation and affiliates—Note 3(a)        328,090 
Cash overdraft due to Custodian        409,105 
Payable for floating rate notes issued—Note 4        18,980,000 
Interest and expense payable related to floating rate notes issued—Note 4    230,567 
Dividends payable to Preferred Shareholders        30,233 
Commissions payable        16,493 
Accrued expenses and other liabilities        139,829 
        20,134,317 



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 ($)        401,329,439 



Composition of Net Assets ($):         
Common Stock, par value, $.001 per share         
(48,495,729 shares issued and outstanding)        48,496 
Paid-in capital        438,512,524 
Accumulated undistributed investment income—net        123,208 
Accumulated net realized gain (loss) on investments        (30,134,369) 
Accumulated net unrealized appreciation         
(depreciation) on investments        (7,220,420) 



Net Assets applicable to Common Shareholders ($)        401,329,439 



Common Shares Outstanding         
(110 million shares of $.001 par value Common Stock authorized)    48,495,729 


Net Asset Value per share of Common Stock ($)        8.28 

See notes to financial statements.

20


STATEMENT OF OPERATIONS 
Six Months Ended May 31, 2008 (Unaudited) 

Investment Income ($):     
Interest Income    17,968,902 
Expenses:     
Investment advisory fee—Note 3(a)    1,484,038 
Administration fee—Note 3(a)    742,019 
Commission fees—Note 1    246,294 
Interest and expense related to floating rate notes issued—Note 4    228,997 
Professional fees    39,891 
Directors’ fees and expenses—Note 3(b)    30,643 
Shareholders’ reports    29,458 
Registration fees    21,449 
Custodian fees—Note 3(a)    11,099 
Shareholder servicing costs    10,468 
Miscellaneous    38,194 
Total Expenses    2,882,550 
Less—reduction in investment advisory fee due to undertaking—Note 3(a)    (296,808) 
Less—reduction in fees due to earnings credits—Note 1(b)    (6,589) 
Net Expenses    2,579,153 
Investment Income—Net    15,389,749 


Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): 
Net realized gain (loss) on investments    (461,434) 
Net realized gain (loss) on financial futures    172,237 
Net Realized Gain (Loss)    (289,197) 
Net unrealized appreciation (depreciation) on investments    (16,092,450) 
Net Realized and Unrealized Gain (Loss) on Investments    (16,381,647) 
Dividends on Preferred Stocks    (3,362,386) 
Net (Decrease) in Net Assets Resulting from Operations    (4,354,284) 

See notes to financial statements.

The Fund 21


STATEMENT OF CHANGES IN NET ASSETS

    Six Months Ended     
    May 31, 2008    Year Ended 
    (Unaudited)    November 30, 2007 



Operations ($):         
Investment income—net    15,389,749    30,270,973 
Net realized gain (loss) on investments    (289,197)    (1,701,613) 
Net unrealized appreciation         
(depreciation) on investments    (16,092,450)    (26,819,891) 
Dividends on Preferred Stocks    (3,362,386)    (6,818,806) 
Net Increase (Decrease) in Net Assets         
Resulting from Operations    (4,354,284)    (5,069,337) 



Dividends to Common Shareholders from ($):     
Investment income—net    (11,493,488)    (24,269,212) 



Capital Stock Transactions ($):         
Dividends reinvested—Note 1(c)        1,916,979 
Total Increase (Decrease) in Net Assets    (15,847,772)    (27,421,570) 



Net Assets ($):         
Beginning of Period    417,177,211    444,598,781 
End of Period    401,329,439    417,177,211 
Undistributed (distributions in         
excess of) investment income—net    123,208    (410,667) 



Capital Share Transactions (Common Shares):     
Increase in Common Shares Outstanding         
as a Result of Dividends Reinvested        210,887 

See notes to financial statements.

22


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 distri-butions.These figures have been derived from the fund’s financial statements, with respect to common stock and market price data for the fund’s common shares.

                     
    Six Months Ended
May 31, 2008
 
      Year Ended November 30,     



    (Unaudited)    2007    2006    2005    2004    2003 







Per Share Data ($):                         
Net asset value,                         
beginning of period    8.60    9.21    8.88    8.79    8.90    8.56 
Investment Operations:                         
Investment income—net a    .32    .62    .64    .63    .61    .64 
Net realized and unrealized                         
gain (loss) on investments    (.33)    (.59)    .34    .13    (.06)    .36 
Dividends on Preferred Stock                         
from investment income—net    (.07)    (.14)    (.13)    (.08)    (.05)    (.06) 
Total from                         
Investment Operations    (.08)    (.11)    .85    .68    .50    .94 
Distributions to                         
Common Shareholders:                         
Dividends from investment                         
income—net    (.24)    (.50)    (.52)    (.59)    (.61)    (.60) 
Net asset value, end of period    8.28    8.60    9.21    8.88    8.79    8.90 
Market value, end of period    7.93    7.77    9.29    8.16    8.41    8.81 







Total Return (%) b    5.11c    (1.17)    9.94    3.78    2.48    19.89 

The Fund 23


FINANCIAL HIGHLIGHTS (continued)

                     
    Six Months Ended
May 31, 2008
 
      Year Ended November 30,     



    (Unaudited)    2007    2006    2005    2004    2003 







Ratios/Supplemental Data (%):                     
Ratio of total expenses                         
to average net assets                         
applicable to Common Stock d    1.41e    1.43    1.38    1.26    1.26    1.28 
Ratio of net expenses                         
to average net assets                         
applicable to Common Stock d    1.27e    1.28    1.24    1.12    1.25    1.28 
Ratio of net investment                         
income to average net assets                         
applicable to Common Stock d    7.55e    7.01    7.16    6.98    6.96    7.35 
Ratio of total expenses to                         
total average net assets    .97e    1.00    .97    .88    .88    .86 
Ratio of net expenses to                         
total average net assets    .87e    .90    .87    .78    .86    .86 
Ratio of net investment income                         
to total average net assets    5.19e    4.90    5.01    4.88    4.84    5.10 
Portfolio Turnover Rate    25.16c    55.89    57.12    44.20    39.94    77.92 
Asset coverage of                         
Preferred Stock,                         
end of period    316    324    339    330    328    330 







Net Assets, net of Preferred Stock,                     
end of period ($ x 1,000)    401,329    417,177    444,599    428,466    423,556    428,301 
Preferred Stock outstanding,                         
end of period ($ x 1,000)    186,000    186,000    186,000    186,000    186,000    186,000 

a    Based on average common shares outstanding at each month end. 
b    Calculated based on market value. 
c    Not annualized. 
d    Does not reflect the effect of dividends to Preferred Stock shareholders. 
e    Annualized. 
See notes to financial statements. 

24


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 (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. 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 Trust Company Americas, 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. Melvin and John E. Zuccotti to represent holders of APS on the fund’s Board of Directors.

The Fund 25


NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.

The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.

(a) Portfolio valuation: Investments in municipal debt 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.

The Financial Accounting Standards Board (“FASB”) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements.The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.

26


Various inputs are used in determining the value of the fund’s investments relating to FAS 157.

These inputs are summarized in the three broad levels listed below.

Level 1—quoted prices in active markets for identical securities.

Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3—significant unobservable inputs (including fund’s own assumptions in determining the fair value of investments).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of May 31, 2008 in valuing the fund’s investments carried at fair value:

    Investments in    Other Financial 
Valuation Inputs    Securities ($)    Instruments ($)  



Level 1—Quoted Prices    0    0 
Level 2—Other Significant         
Observable Inputs    590,267,758    0 
Level 3—Significant         
Unobservable Inputs    0    0 
Total    590,267,758    0 

Other financial instruments include derivative instruments such as futures, forward currency exchange contracts and swap contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.

(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Interest income, adjusted for accretion of discount and amortization of 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 27


NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

The fund has an arrangement with the custodian bank whereby the fund receives earnings credits from the custodian when positive cash balances are maintained, which are used to offset custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.

(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 gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.

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 asset 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.

28


On May 29, 2008, the Board of Directors declared a cash dividend of $.0385 per share from investment income-net, payable on June 30, 2008 to Common Shareholders of record as of the close of business on June 12, 2008.

(d) Dividends to Shareholders of APS: Dividends which are cumulative, are generally reset every 7 days for each Series of APS pursuant to a process specified in related fund charter documents. Dividends rates as of May 31, 2008 for each Series of APS were as follows: Series A—2.59%, Series B—2.48% and Series C—2.59% .These rates reflect the “maximum rates” under the governing instruments as a result of “failed auctions” in which sufficient clearing bids are not received.

(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 Code and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.

During the current year, the fund adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. The adoption of FIN 48 had no impact on the operations of the fund for the period ended May 31, 2008.

As of and during the period ended May 31, 2008, the fund did not have any liabilities for any unrecognized tax benefits.The fund recog-

The Fund 29


NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

nizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.

Each of the tax years in the three-year period ended November 30, 2007, remains subject to examination by the Internal Revenue Service and state taxing authorities.

The fund has an unused capital loss carryover of $29,836,167 available for federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to November 30, 2007. If not applied, $2,280,744 of the carryover expires in fiscal 2008, $442,201 expires in fiscal 2009, $9,253,314 expires in fiscal 2010, $5,474,907 expires in fiscal 2011, $10,957,023 expires in fiscal 2012 and $1,427,978 expires in fiscal 2015.

The tax character of distributions paid to shareholders during the fiscal year ended November 30, 2007 was as follows: tax exempt income $31,088,018. The tax character of current year distributions will be determined at the end of the current fiscal year.

NOTE 2—Bank Line of Credit:

Effective May 1, 2008, the fund participates with other Dreyfus-managed funds in a $300 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 borrowing. Prior to May 1, 2008, the fund participated with other Dreyfus-managed funds in a $100 million unsecured line of credit. During the period ended May 31, 2008, 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 the value of the fund’s average

30


weekly net assets (including net assets representing auction preferred stock outstanding). 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 the value of the fund’s average weekly net assets (including net assets representing auction preferred stock outstanding); out-of pocket transfer agency and custody expenses are paid separately by the fund.

Dreyfus has agreed through October 31, 2008, to waive receipt of a portion of the fund’s investment advisory fee, in the amount of .10% of the value of the fund’s average weekly net assets (including net assets representing auction preferred stock outstanding). The reduction in investment advisory fee, pursuant to the undertaking, amounted to $296,808 during the period ended May 31, 2008.

The fund compensates Mellon Bank, N.A. (“Mellon Bank”), a subsidiary of BNY Mellon and a Dreyfus affiliate, under a custody agreement for providing custodial services for the fund. During the period ended May 31, 2008, the fund was charged $11,099 pursuant to the custody agreement.

During the period ended May 31, 2008, the fund was charged $2,820 for services performed by the Chief Compliance Officer.

The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: investment advisory fees $373,331, custodian fees $2,186 and chief compliance officer fees $2,350, which are offset against an expense reimbursement currently in effect in the amount of $49,777.

(b) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.

The Fund 31


NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)

NOTE 4—Securities Transactions:

The aggregate amount of purchases and sales of investment securities, excluding short-term securities and financial futures during the period ended May 31, 2008, amounted to $149,781,483 and $164,714,542, respectively.

The fund may participate in secondary inverse floater structures in which fixed-rate, tax-exempt municipal bonds purchased by the fund are transferred to a trust. The trust subsequently issues two or more variable rate securities that are collateralized by the cash flows of the fixed-rate, tax-exempt municipal bonds. One or more of these variable rate securities pays interest based on a short-term floating rate set by a remarketing agent at predetermined intervals. A residual interest tax-exempt security is also created by the trust, which is transferred to the fund, and is paid interest based on the remaining cash flow of the trust, after payment of interest on the other securities and various expenses of the trust.

The fund accounts for the transfer of bonds to the trust as secured borrowings, with the securities transferred remaining in the fund’s investments, and the related floating rate certificate securities reflected as fund liabilities under the caption, “Payable for floating rate notes issued” in the Statement of Assets and Liabilities.

The fund may invest in financial futures contracts in order to gain exposure to or protect against changes in the market. The fund is exposed to market risk as a result of changes in the value of the underlying financial instruments. Investments in financial futures require the fund to “mark to market” on a daily basis, which reflects the change in market value of the contracts at the close of each day’s trading. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses.When the contracts are closed, the fund recognizes a realized gain or loss.These investments require initial margin deposits with a broker, which consist of cash or cash equivalents.

32


The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. At May 31, 2008, there were no financial futures contracts outstanding.

At May 31, 2008, accumulated net unrealized depreciation on investments was $7,220,420, consisting of $18,764,123 gross unrealized appreciation and $25,984,543 gross unrealized depreciation.

At May 31, 2008, 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).

In March 2008, the FASB released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements.The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years.At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.

NOTE 5—Subsequent Event:

Effective July 1, 2008, BNY Mellon has reorganized and consolidated a number of its banking and trust company subsidiaries. As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of New York, which has changed its name to The Bank of New York Mellon.

The Fund 33


NOTES

34

The Fund 35


NOTES

36



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.    Audit Committee of Listed Registrants. 
    Not applicable. 
Item 6.    Schedule of Investments. 
(a)    Not applicable. 
Item 7.    Disclosure of Proxy Voting Policies and Procedures for Closed-End Management 
    Investment Companies. 
    Not applicable. 
Item 8.    Portfolio Managers of Closed-End Management Investment Companies. 
    Not applicable. 
Item 9.    Purchases of Equity Securities by Closed-End Management Investment Companies and 
    Affiliated Purchasers. 
    None. 
Item 10.    Submission of Matters to a Vote of Security Holders. 

The Registrant has a Nominating Committee (the "Committee"), which is responsible for selecting and nominating persons for election or appointment by the Registrant's Board as Board members. The Committee has adopted a Nominating Committee Charter (the "Charter"). Pursuant to the Charter, the Committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Registrant, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8th Floor East, New York, New York 10166. A nomination submission must include information regarding the recommended nominee as specified in the Charter. This information includes all information relating to a recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Board members, as well as information sufficient to evaluate the factors to be considered by the Committee, including character and integrity, business and professional experience, and whether the person has the ability to apply sound and independent business judgment and would act in the interests of the Registrant and its shareholders.


Nomination submissions are required to be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.

(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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Exhibits.

(a)(1)    Not applicable. 
(a)(2)    Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) 
under the Investment Company Act of 1940. 
(a)(3)    Not applicable. 
(b)    Certification of principal executive and principal financial officers as required by Rule 30a-2(b) 
under the Investment Company Act of 1940. 

Item 11. Controls and Procedures.


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/ J. David Officer 
    J. David Officer 
    President 
 
Date:    July 23, 2008 
 
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/ J. David Officer 
    J. David Officer 
    President 
 
Date:    July 23, 2008 
 
By:    /s/ James Windels 
    James Windels 
    Treasurer 
 
Date:    July 23, 2008 
 
EXHIBIT INDEX
 
    (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)