PRESIDENT'S LETTER
Dear Shareholder:
As Dreyfus Strategic Municipals, Inc. completed its semi-annual
reporting period on March 31, 1994, the net asset value per share was
$9.91 and the market price was $9.875. When we reported to you in
September 1993, the figures were $10.43 and $11.125, respectively. The
figures are adjusted for capital gain distributions which occurred in the
final quarter of calendar 1993. In addition, total income dividends of
approximately $.35 per share were paid during the period, equivalent to an
annualized distribution rate of 7.08% per share, based on the closing
market price, adjusted for capital gain distributions. All dividends paid
from net investment income were exempt from Federal income tax.*
The municipal market, and indeed most of the securities markets, are
being roiled currently for various reasons, some real and others only
anticipated. When Alan Greenspan, the Federal Reserve Board's Chairman,
announced in early February that the Federal Reserve would raise the
Federal Funds rate (which it soon did), it took the markets by surprise.
Many economic indicators had shown strengthening, albeit still moderate,
economic improvement, and it appeared there was not much to warrant the
Federal Reserve's tightening of interest rates. When the first of a series
of increases occurred, the municipal market in concert with other fixed-
income markets sold off, as can be seen by the loss in LEO's share price
noted in the first paragraph. That rate increase has been followed by two
more (to 3.75%), and there is a very real possibility that in early May a
fourth increase could be effected, as the Federal Reserve takes steps now
to head off what it perceives to be the inflationary potential inherent in
our current economic recovery. Market participants continue to be wary.
We previously recognized the high price level to which the market had
risen and that a correction was a possibility; now, it seems that the
market may have adequately discounted the possibility of somewhat
higher inflation and higher interest rates and may have over-discounted
the end result. Several classes of buyers may consider current price levels
to be within a buying range; we continue to monitor our trading activity
while the air of uncertainty hangs over the economy's direction and its
ultimate effect on the rate of inflation. Right now, the most avid
supporters in the municipal marketplace are property/casualty insurance
companies, non-traditional buyers and individuals, with mutual funds and
unit investment trusts the lagging participants.
We have enclosed a Statement of Investments and recent financial
statements for your review. We continue, in the current market climate as
in those less volatile times, to work in your best interests.
Very truly yours,
(Richard J. Moynihan Signature Logo)
Richard J. Moynihan
President
April 25, 1994
New York, N.Y.
*Income may be subject to state and local taxes. Some income may be subject to
the Federal Alternative Minimum Tax for certain investors. Capital gains, if
any, are generally subject to Federal, state and local taxes.
<TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-100.0% AMOUNT VALUE
------------ ------------
<S> <C> <C>
ARIZONA-3.4%
Phoenix Industrial Development Authority, Revenue (Christian Care Retirement Apartments)
10.25%, 1/1/2018............................................................................... $ 9,765,000 $ 9,860,306
Tempe Industrial Development Authority, IDR (California Micro Devices Corp. Project)
10.50%, 3/1/2018............................................................................... 7,720,000 8,272,829
ARKANSAS-1.8%
Fayetteville Public Facilities Board, Revenue, Refunding (Butterfield Trail Village Project):
8.25%, 9/1/2000................................................................................ 1,475,000 1,481,475
9.50%, 9/1/2014................................................................................ 7,785,000 8,406,243
COLORADO-7.5%
Bent County, COP (Medium Security Correctional Facility Project) 9.50%, 7/15/2013.................. 14,600,000 15,001,500
Colorado Post-Secondary Educational Facilities Authority, Revenue (University of Denver Project)
9%, 12/1/2007 (Prerefunded 12/1/1997) (a)...................................................... 6,100,000 7,132,608
City and County of Denver, Airport Revenue:
8.50%, 11/15/2023.............................................................................. 11,500,000 12,479,340
8%, 11/15/2025................................................................................. 5,000,000 5,231,400
FLORIDA-8.3%
Florida Board of Education, Capital Outlay 9.893%, 6/1/2019 (b,c).................................. 20,000,000 20,400,000
Florida Housing Finance Agency, MFHR (Palm Aire) 10%, 1/1/2020 (d)................................. 4,960,795 2,976,477
Indian Trace Community Development District (Basin 1 Water Management Special Benefit):
9.25%, 5/1/2002 (Prerefunded 5/1/1997) (a)..................................................... 4,050,000 4,658,634
8.75%, 5/1/2007 (Prerefunded 5/1/1997) (a)..................................................... 6,000,000 6,816,420
Lake County Resource Recovery, IDR, Refunding (NRG/Recovery Group)
5.95%, 10/1/2013............................................................................... 1,000,000 911,430
Leon County Educational Facilities Authority, COP (Southgate Residence Hall Project):
3.75%, 12/1/1995............................................................................... 247,560 245,087
9%, 9/1/2014 (d)............................................................................... 5,000,000 3,500,000
Palm Beach County, Solid Waste IDR (Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015............................................................................... 5,000,000 4,682,850
GEORGIA-7.2%
Atlanta Urban Residential Finance Authority, Residential Housing Revenue (Carter Hall Project)
8.50%, 1/1/2018................................................................................ 11,055,000 10,946,772
Burke County Development Authority, PCR (Georgia Power Co. Plant Vogtle Project):
12.25%, 8/1/2014............................................................................... 11,000,000 11,542,850
12%, 10/1/2014................................................................................. 2,390,000 2,537,917
10.50%, 11/1/2015.............................................................................. 1,700,000 1,869,184
Private Colleges and Universities Facilities Authority, Revenue, Refunding
(Clark Atlanta University Project) 8.25%, 1/1/2015............................................. 11,000,000 11,225,500
HAWAII-1.2%
Hawaii Department of Transportation, Special Facility Revenue
(Caterair International Corp. Project) 10.125%, 12/1/2010...................................... 6,100,000 6,271,532
IDAHO-.5%
Idaho Health Facilities Authority, Revenue (Bannock County Nursing Lease Agreement)
9.23%, 4/1/2003 (Prerefunded 5/1/1995) (a).................................................... 2,502,659 2,644,585
ILLINOIS-4.9%
Chicago O'Hare International Airport, Special Facilities Revenue (United Airlines Inc. Project)
8.95%, 5/1/2018................................................................................ 9,876,000 10,948,929
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority, Revenue, Refunding
(Ravenswood Hospital Medical Center Project) 8.80%, 6/1/2006................................... $ 8,000,000 $ 8,834,800
Saint Clair County, East Saint Louis School District No. 189 9%, 11/1/2006......................... 5,500,000 6,084,925
INDIANA-.8%
Terre Haute, SWDR (International Minerals and Chemicals Corp.)
8.70%, 3/15/2003............................................................................... 4,200,000 4,558,722
KENTUCKY-2.2%
Kentucky Development Finance Authority, Hospital Improvement Revenue, Refunding
(Ashland Hospital-Kings Project):
9.75%, 8/1/2005............................................................................ 5,000,000 5,690,500
9.75%, 8/1/2011............................................................................ 3,000,000 3,554,460
9.875%, 2/1/2012 (Prerefunded 2/1/1998) (a)................................................ 2,000,000 2,397,920
LOUISIANA-4.4%
East Baton Rouge Sewage Commission, Sewer Revenue
9.25%, 9/1/2012 (Prerefunded 9/1/1997) (a)..................................................... 11,425,000 13,419,577
Saint James Parish, SWDR (Freeport-McMoran Partnership Project)
7.70%, 10/1/2022............................................................................... 10,000,000 10,136,800
MAINE-.7%
Maine Health and Higher Educational Facilities Authority, Revenue
(Waterville Osteopathic Hospital Project) 9.875%, 7/1/2013 (Prerefunded 7/1/1997) (a).......... 3,160,000 3,701,814
MASSACHUSETTS-1.5%
Massachusetts Health and Educational Facilities Authority, Revenue
(Beth Israel Hospital Issue) 9.232%, 7/1/2025 (Insured; AMBAC) (b)............................. 3,000,000 2,722,500
Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue, Refunding:
13%, 7/1/2018 (Callable 7/1/1994).............................................................. 5,000 5,116
13%, 7/1/2018 (Prerefunded 1/1/1995) (a)....................................................... 4,915,000 5,392,836
MICHIGAN-6.6%
Greater Detroit Resource Recovery Authority, Revenue:
9.25%, Series A, 12/13/2008.................................................................... 5,200,000 5,568,108
9.25%, Series C, 12/13/2008.................................................................... 4,100,000 4,390,239
9.25%, Series D, 12/13/2008.................................................................... 2,000,000 2,141,580
9.25%, Series G, 12/13/2008.................................................................... 9,585,000 10,263,522
9.25%, Series H, 12/13/2008.................................................................... 8,920,000 9,551,447
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021................................................................................ 2,000,000 1,953,140
Monroe County, PCR (Detroit Edison Co.) 10.50%, 12/1/2016.......................................... 1,200,000 1,336,236
MISSISSIPPI-2.6%
Claiborne County, PCR (Middle South Energy Inc.):
9.50%, 12/1/2013............................................................................... 2,000,000 2,284,520
9.875%, 12/1/2014.............................................................................. 10,180,000 11,779,583
MISSOURI-.8%
Independence Industrial Development Authority, MFHR (Greenbriar Meadows Project)
10.25%, 8/1/2019 (d)........................................................................... 6,885,000 4,131,000
NEVADA-.8%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032............................................ 4,000,000 4,124,920
NEW HAMPSHIRE-1.0%
New Hampshire Industrial Development Authority, PCR (United Illumination Co. Project)
9.375%, 7/1/2012............................................................................... 4,950,000 5,505,341
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
NEW JERSEY-3.2%
New Jersey Health Care Facilities Financing Authority, Revenue (Christian Health Care Center)
8.75%, 7/1/2018 (Insured; MBIA)................................................................ $ 16,810,000 $ 16,810,000
NEW YORK-4.9%
Housing Corp. of New York, Revenue 9%, 11/1/2017 (Prerefunded 11/1/1997) (a)....................... 12,400,000 14,451,704
New York City Municipal Water Finance Authority, Water and Sewer System Revenue
9%, 6/15/2017 (Prerefunded 6/15/1997) (a)...................................................... 10,000,000 11,501,600
OHIO-3.3%
Ohio Air Quality Development Authority, Revenue (Dayton Power and Light Co. Project)
9.50%, 12/1/2015............................................................................... 12,000,000 13,101,600
Springdale Hospital Facilities, First Mortgage Revenue
(Southwestern Ohio Seniors' Services, Inc.) 6%, 11/1/2023...................................... 5,000,000 4,281,900
OKLAHOMA-3.4%
Tulsa Municipal Airport Trust, Revenue (American Airlines) 9.50%, 6/1/2020......................... 17,045,000 18,281,274
PENNSYLVANIA-9.2%
Beaver County Industrial Development Authority, PCR
(Cleveland Electric Illumination Co. Project):
11.125%, 11/15/2014........................................................................ 7,400,000 7,906,234
10.50%, 9/1/2015........................................................................... 2,500,000 2,707,725
Butler County Industrial Development Authority, First Mortgage Revenue
(Saint John Lutheran Care Center):
9.75%, Series A, 10/1/1998................................................................. 715,000 800,164
10%, Series A1, 10/1/2017.................................................................. 8,450,000 9,048,936
10%, Series A2, 10/1/2017.................................................................. 940,000 1,006,627
Cambria County Hospital Development Authority, HR, Refunding
(Conemaugh Valley Memorial Hospital) 8.875%, 7/1/2018.......................................... 7,000,000 7,695,030
Montgomery County Industrial Development Authority, First Mortgage Revenue
(Meadowood Corp. Project):
8.25%, 12/1/2018........................................................................... 3,750,000 3,634,350
Zero Coupon, 12/1/2020..................................................................... 225,187 16,437
10.25%, 12/1/2020.......................................................................... 5,000,000 5,481,350
Pennsylvania Housing Finance Agency, SFMR 9.18%, 4/1/2025 (b)...................................... 6,000,000 5,445,000
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016........................................................... 5,200,000 5,503,940
SOUTH CAROLINA-3.0%
South Carolina Housing Authority, Homeownership Mortgage Revenue 9%, 7/1/2018...................... 8,000,000 8,328,960
Spartanburg County, Hospital Facilities Revenue (Spartanburg General Hospital System)
10.039%, 4/13/2022 (b)......................................................................... 7,700,000 7,777,000
TENNESSEE-1.5%
Gatlinburg, COP (Gatlinburg Convention Center Inc.)
9.25%, 12/1/2012 (Prerefunded 12/1/1997) (a)................................................... 6,715,000 7,931,084
TEXAS-7.7%
Harris County Health Facilities Development Corp., HR (Hermann Trust)
9%, 10/1/2017 (Prerefunded 10/1/1997) (a)...................................................... 15,000,000 17,430,750
Port of Corpus Christi Industrial Development Corp., Revenue
(Valero Refinancing and Marketing Co.) 10.25%, 6/1/2017........................................ 6,450,000 7,291,145
Texas Department of Housing and Community Affairs, Home Mortgage Revenue, Refunding
10.90%, 7/2/2024 (b)........................................................................... 8,500,000 8,776,250
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
TEXAS (CONTINUED)
Texas Housing Agency, SFMR 9.375%, 9/1/2016........................................................ $ 4,680,000 $ 4,737,330
Tyler Health Facilities Development Corp., HR, Refunding (East Texas Medical Center
Regional Healthcare System Project) 6.75%, 11/1/2025........................................... 3,000,000 2,808,180
UTAH-2.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018............................ 10,000,000 10,739,800
VIRGINIA-.8%
Fairfax County Water Authority, Revenue 8.497%, 4/1/2029 (b,c)..................................... 5,000,000 4,131,250
WEST VIRGINIA-2.2%
West Virginia Water Development Authority, Water Development Revenue (Loan Program)
9.50%, 11/1/2025 (Prerefunded 11/1/1994) (a)................................................... 10,905,000 11,519,061
WISCONSIN-1.8%
Wisconsin Housing and Economic Development Authority, Home Ownership Revenue
9.961%, 7/1/2025 (b,c)......................................................................... 10,000,000 9,425,000
U.S. RELATED-.8%
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue
8.118%, 7/1/2008 (b)........................................................................... 4,700,000 4,335,750
---------
TOTAL INVESTMENTS
(cost $515,318,269)............................................................................ $532,478,905
============
</TABLE>
<TABLE>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MFHR Multi-Family Housing Revenue
COP Certificate of Participation PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
MBIA Municipal Bond Insurance Association
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- --------------------
<S> <C> <C> <C>
AAA Aaa AAA 16.6%
AA Aa AA 9.9
A A A 5.5
BBB Baa BBB 33.9
BB Ba BB .5
Not Rated (f) Not Rated (f) Not Rated (f) 33.6
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
(b) Inverse floater security-the interest rate is subject to change
periodically.
(c) Security 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 March 31,
1994, these securities amounted to $33,956,250 or 6.2% of net assets.
(d) Non-income producing security; interest payment in default.
(e) Fitch currently provides creditworthiness information for a limited
amount of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may invest.
See independent accountants' review report and notes to financial
statements.
<TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $515,318,269)-see statement.......................................................... $532,478,905
Interest receivable............................................................................ 13,274,024
Prepaid expenses............................................................................... 49,891
------------
545,802,820
LIABILITIES:
Due to The Dreyfus Corporation................................................................. $ 351,330
Due to Custodian............................................................................... 985,819
Accrued expenses............................................................................... 243,856 1,581,005
------------ ------------
NET ASSETS......................................................................................... $544,221,815
============
REPRESENTED BY:
Paid-in capital................................................................................ $519,347,561
Accumulated undistributed investment income-net................................................ 8,349,621
Accumulated distributions in excess of net realized gain on investments-Note 1(c).............. (636,003)
Accumulated net unrealized appreciation on investments-Note 3.................................. 17,160,636
------------
NET ASSETS at value applicable to 54,919,605 outstanding shares of
Common Stock, equivalent to $9.91 per share (500 million shares of
$.001 par value authorized).................................................................... $544,221,815
============
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME................................................................................ $ 22,933,303
EXPENSES:
Management fee-Note 2(a)................................................................... $ 2,101,347
Shareholder servicing costs................................................................ 85,495
Shareholders' reports...................................................................... 80,269
Custodian fees............................................................................. 44,942
Registration fees.......................................................................... 26,324
Professional fees.......................................................................... 24,108
Directors' fees and expenses-Note 2(b)..................................................... 20,542
Miscellaneous.............................................................................. 14,560
------------
TOTAL EXPENSES......................................................................... 2,397,587
------------
INVESTMENT INCOME-NET.................................................................. 20,535,716
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3...................................................... $ (204,392)
Net unrealized (depreciation) on investments................................................... (28,824,026)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS...................................... (29,028,418)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................. $ (8,492,702)
============
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1994
1993 (UNAUDITED)
------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income-net...................................................... $ 40,412,167 $ 20,535,716
Net realized gain (loss) on investments.................................... 3,218,304 (204,392)
Net unrealized appreciation (depreciation) on investments for the period... 13,172,468 (28,824,026)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ 56,802,939 (8,492,702)
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net...................................................... (39,149,106) (19,101,922)
Net realized gain on investments........................................... _ (217,821)
Excess net realized gain on investments.................................... _ (636,003)
------------ ------------
TOTAL DIVIDENDS........................................................ (39,149,106) (19,955,746)
------------ ------------
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c)............................................. 14,784,837 7,080,885
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................................ 32,438,670 (21,367,563)
NET ASSETS:
Beginning of period........................................................ 533,150,708 565,589,378
------------ ------------
End of period (including undistributed investment income-net:
$6,915,827 in 1993 and $8,349,621 in 1994)............................. $565,589,378 $544,221,815
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED......... 1,436,357 674,710
============ ============
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from information provided in the financial statements and
market price data for the Fund's shares.
<TABLE>
YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED
--------------------------------------------------- MARCH 31, 1994
PER SHARE DATA: 1989 1990 1991 1992 1993 (UNAUDITED)
------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 9.91 $ 9.97 $ 9.79 $ 9.96 $ 10.10 $ 10.43
------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............................... .78 .78 .78 .75 .75 .37
Net realized and unrealized gain (loss)
on investments.................................. .21 (.15) .27 .17 .31 (.52)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS................ .99 .63 1.05 .92 1.06 (.15)
------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net................ (.78) (.76) (.76) (.75) (.73) (.35)
Dividends from net realized gain on investments..... (.15) (.05) (.12) (.03) -- --
Dividends from excess net realized gain
on investments.................................. -- -- -- -- -- (.02)
------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS............................. (.93) (.81) (.88) (.78) (.73) (.37)
------- ------- ------- ------- ------- -------
Net asset value, end of period...................... $ 9.97 $ 9.79 $ 9.96 $ 10.10 $ 10.43 $ 9.91
======= ======= ======= ======= ======= =======
Market Value, end of period......................... $10 5/8 $ 10 $10 1/2 $10 5/8 $11 1/8 $ 9 7/8
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(1) 15.12% 1.98% 14.80% 9.14% 12.40% (16.22%)(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............. .91% .89% .88% .88% .87% .86%(2)
Ratio of net investment income to
average net assets.............................. 7.88% 7.94% 7.99% 7.56% 7.40% 7.33%(2)
Portfolio Turnover Rate............................. 11.43% 10.51% 6.43% 21.80% 11.59% .74%(3)
Net assets, end of period (000's Omitted)........... $474,556 $482,515 $510,120 $533,151 $565,589 $544,222
- -------------------------------------
(1) Calculated based on market value.
(2) Annualized.
(3) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a diversified closed-end management investment company. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser.
(A) PORTFOLIO VALUATION: Investments in municipal debt securities
(excluding options and financial futures on municipal and U.S. treasury
securities) are valued on the last business day of each week and month by
an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices in the judgment of the
Service are readily available and are representative of the bid side of the
market 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 and U.S. treasury securities are
valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market on the last business day of each week and month.
Investments not listed on an exchange or the national securities market,
or securities for which there were no transactions, are valued at the
average of the most recent bid and asked prices. Bid price is used when no
asked price is available. Securities for which there are no such valuations
are valued at fair value as determined in good faith under the direction of
the Board of Directors.
(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 is earned from settlement date and recognized on the
accrual basis. Securities purchased or sold on a when-issued or delayed-
delivery basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-
dividend date. Dividends from investment income-net are declared and
paid monthly. Dividends from net realized capital gain are normally
declared and paid at least annually. To the extent that net realized capital
gain can be offset by capital loss carryovers, if any, it is the policy of the
Fund not to distribute such gain.
Dividends in excess of net realized gains on investment for financial
statement purposes result primarily from losses from securities
transactions during the six months ended March 31, 1994 which are
treated for Federal income tax purposes as arising in Fiscal 1995.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less than
95% of the market price) based on the record date's respective price. If the
net asset value per share on the record date is lower than the market price
per share, shares will be issued by the Fund at the record date's net asset
value on the payable date of the distribution. If the net asset value per share
is less than 95% of market value, shares will be issued by the Fund at 95% of
market value. If the market price is lower than the net asset value per share
on the record date, The Bank of New York will purchase Fund shares in the open
market commencing on the payable date, and reinvest those shares accordingly.
As a result of purchasing Fund shares in the open market, Fund shares
outstanding will not be affected by this form of reinvestment.
On March 29, 1994, the Board of Directors declared a cash dividend of
$.061 per share from investment income-net, payable on April 27, 1994 to
shareholders of record as of the close of business on April 13, 1994.
<TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS:
NET INCREASE
NET REALIZED & (DECREASE)
TOTAL NET UNREALIZED GAIN IN NET ASSETS
INVESTMENT INVESTMENT (LOSS) ON RESULTING FROM
INCOME INCOME INVESTMENTS OPERATIONS
--------------- ---------------- ---------------- -----------------
(000'S) PER (000'S) PER (000'S) PER (000'S) PER
QUARTER ENDED OMITTED SHARE OMITTED SHARE OMITTED SHARE OMITTED SHARE
-------- ------ -------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1992................ $ 10,915 $ 0.21 $ 9,749 $ 0.18 $ (2,161) $(0.04) $ 7,588 $ 0.14
March 31, 1993................... 11,385 0.21 10,219 0.19 8,591 0.16 18,810 0.35
June 30, 1993.................... 9,844 0.18 10,163 0.19 6,928 0.13 17,091 0.32
September 30, 1993............... 13,012 0.24 10,281 0.19 3,033 0.06 13,314 0.25
-------- ------ -------- ------ -------- ------ -------- ------
TOTAL........................ $ 45,156 $ 0.84 $ 40,412 $ 0.75 $ 16,391 $ 0.31 $ 56,803 $ 1.06
======== ====== ======== ====== ======== ====== ======== ======
December 31, 1993................ $ 11,425 $ 0.21 $ 10,188 $ 0.18 $ (2,944) $(0.05) $ 7,243 $ 0.13
March 31, 1994................... 11,508 0.21 10,348 0.19 (26,084) (0.47) (15,736) (0.28)
-------- ------ -------- ------ -------- ------ -------- ------
TOTAL........................ $ 22,933 $ 0.42 $ 20,536 $ 0.37 $(29,028) $(0.52) $ (8,493) $(0.15)
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
(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 provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from all, or substantially all, Federal income
taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .75 of 1%
of the average weekly value of the Fund's net assets and is payable
monthly. The Agreement provides for an expense reimbursement from the
Manager should the Fund's aggregate expenses, exclusive of taxes, interest
on borrowings, brokerage and extraordinary expenses, in any full fiscal
year exceed the lesser of (1) the expense limitation of any state having
jurisdiction over the Fund or (2) 2% of the first $10 million, 1 1/2% of the
next $20 million and 1% of the excess over $30 million of the average
value of the Fund's net assets. There was no expense reimbursement for
the six months ended March 31, 1994.
(B) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager. Each director who is not an
"affiliated person" receives an annual fee of $4,500 and an attendance fee
of $500 per meeting.
(C) On December 5, 1993, the Manager entered into an Agreement and
Plan of Merger (the "Merger Agreement") providing for the merger of the
Manager with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including receipt of certain regulatory approvals
and approvals of the stockholders of the Manager and of Mellon. The merger
is expected to occur in mid-1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's board
and shareholders before completion of the merger. Shareholder approval
will be solicited by a proxy statement.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $34,122,560 and
$25,578,531, respectively, for the six months ended March 31, 1994, and
consisted entirely of municipal bonds and short-term municipal
investments.
At March 31, 1994, for Federal income tax purposes, the cost of
investments was $511,115,959 and accumulated net unrealized
appreciation on investments was $21,362,945, consisting of $32,408,859
gross unrealized appreciation and $11,045,914 gross unrealized
depreciation.
At March 31, 1994, for financial reporting purposes, the cost of
investments was $515,318,269 and accumulated net unrealized
appreciation on investments was $17,160,636, consisting of $30,425,037
gross unrealized appreciation and $13,264,401 gross unrealized
depreciation.
DREYFUS STRATEGIC MUNICIPALS, INC.
REVIEW REPORT OF ERNST & YOUNG, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS STRATEGIC MUNICIPALS, INC.
We have reviewed the accompanying statement of assets and liabilities
of Dreyfus Strategic Municipals, Inc., including the statement of
investments, as of March 31, 1994, and the related statements of
operations and changes in net assets and financial highlights for the six
month period ended March 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than
an audit conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the objective of
expressing an opinion regarding the financial statements and financial
highlights taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements and financial
highlights referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year
ended September 30, 1993 and financial highlights for each of the five
years in the period ended September 30, 1993 and in our report dated
November 5, 1993, we expressed an unqualified opinion on such statement
of changes in net assets and financial highlights.
(Ernst & Young Signature Logo)
New York, New York
May 5, 1994
(Dreyfus Logo)
Strategic
Municipals, Inc.
Semi-Annual
Report
March 31, 1994
OFFICERS AND DIRECTORS
DREYFUS STRATEGIC MUNICIPALS, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
DIRECTORS
David Burke
Hodding Carter III
Ehud Houminer
Richard C. Leone
Hans C. Mautner
Richard J. Moynihan
Robert B. Rivel
John E. Zuccotti
OFFICERS
President and
Chief Investment Officer
Richard J. Moynihan
Vice President-Financial
Jeffrey N. Nachman
Vice President
Mark N. Jacobs
Treasurer
John J. Pyburn
Secretary
Daniel C. Maclean III
Assistant Secretary
Christine Pavalos
Controller
Jean Farley
Vice Presidents and
Investment Officers:
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Jill C. Shaffro
L. Lawrence Troutman
Samuel J. Weinstock
Monica S. Wieboldt
INVESTMENT ADVISER
The Dreyfus Corporation
CUSTODIAN
Boston Safe Deposit and Trust Company
COUNSEL
Stroock & Stroock & Lavan
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
The Bank of New York
STOCK EXCHANGE LISTING
NYSE Symbol: LEO
INITIAL SEC EFFECTIVE DATE
9/23/87
The Net Asset Value appears in the
following publications: Barron's,
Closed-End Bond Funds section under
the heading "Municipal Bond Funds"
every Monday; Wall Street Journal,
Mutual Funds section under the
heading "Closed-End Bond Funds"
every Monday; New York Times,
Business section under the heading
"Closed-End Bond Funds" every Monday.
- ----------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase shares of
its common stock in the open market when it can do so at prices below the
then current net asset value per share.
- ----------------------------------------------------------------------------
(Dreyfus `D' Logo)
DREYFUS STRATEGIC MUNICIPALS, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
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 DISTTIBUTION AGENT &
REGISTRAR
The Bank of New York
101 Barclay Street
New York, NY 10286
Printed in U.S.A 853SA943
