LETTER TO SHAREHOLDERS
Dear Shareholder:
Dreyfus Strategic Municipals, Inc. completed its latest fiscal year on
September 30, 1994. At that time, each share had a net asset value of $9.73
compared to $10.43 a year earlier, and the shares were traded on the New York
Stock Exchange at a closing price of $9.875, versus $11.125 a year ago.
During the 12-month period, tax-free income dividends of more than $.71 per
share were paid in addition to a capital gain of better than $.01, which was
also disbursed, for a total of $.732 per share.* This equates to a
distribution rate per share of 7.24%, based on the closing market price per
share on September 30, 1994, adjusted for the capital gain distribution
mentioned above. The distribution rate per share, based on the closing net
asset value per share on September 30, 1994, adjusted for the capital gain
distribution, is 7.35%.
In last year's letter, we praised the municipal market's performance and
summed it up as a good year. This past year, the market's decline and the
resultant decrease in the price of our shares has been disappointing. Last
October we noted that there was reason to be cautious. We underestimated,
however, the Federal Reserve Board's perception of inflation, and the
frequency and severity with which the Federal Reserve would implement
increases in the Federal Funds rate. Five separate actions that moved the
rate from 3.00% to 4.75% within seven months sobered the markets and,
unfortunately, the prices of the bonds held by your Fund suffered. All of the
Fed's actions may be constructive in the long term for the fixed-income
markets, but until its actions are reflected in a diminution of the rate of
economic growth, it hurts!
During the year, we made an effort to add value to the portfolio by
exchanging some holdings for others, but it became apparent that those
possibilities were limited. We believe the Fund's holdings are very good
income producers, and it is all but impossible to improve income by selling
from the current list of assets and then reinvesting.
To date in 1994, the supply of newly issued long-term municipal bonds
lags 1993's amount by a substantial margin. Through September, new issues in
1994 totaled about $126 billion, nearly 44% less than was issued in the first
nine months of 1993. The effect of this year's lesser amount has been to
provide added liquidity in the municipal marketplace, as well as to provide
price support where there might have been weakness. As we move into the last
months of 1994, we expect this condition to continue, making municipals
attractive vis-a-vis other fixed-income investments on an after-tax basis.
We appreciate your investment in Dreyfus Strategic Municipals, and we
look forward to working with you in 1995 and beyond.
Very truly yours,
(logo signature)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 17, 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 (AMT) for certain
shareholders. Capital gains, if any, are generally subject to Federal,
state and local taxes.
Strategic
Municipals, Inc.
Annual
Report
September 30, 1994
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
SELECTED INFORMATION SEPTEMBER 30,1994 (UNAUDITED)
<S> <C>
Market Price per share September 30, 1994........................... $ 9 7/8
Shares Outstanding September 30, 1994............................... 55,629,356
New York Stock Exchange Ticker Symbol............................... LEO
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE (NEW YORK STOCK EXCHANGE)
FISCAL YEAR ENDED SEPTEMBER 30, 1994
-------------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 1993 MARCH 31, 1994 JUNE 30, 1994 SEPTEMBER 30, 1994
-------------------- ---------------- --------------- -------------------
<S> <C> <C> <C> <C>
High $11 3/8 $11 3/8 $10 1/2 $10 5/8
Low 10 3/4 9 7/8 9 7/8 9 3/4
Close 10 7/8 9 7/8 10 1/4 9 7/8
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PERCENTAGE GAIN (LOSS) based on change in Market Price*
September 23, 1987 (commencement of operations) through September 30, 1994............ 71.65%
October 1, 1993 through September 30, 1994............................................ (4.63)
January 1, 1994 through September 30, 1994............................................ (4.11)
April 1, 1994 through September 30, 1994.............................................. 3.77
July 1, 1994 through September 30, 1994............................................... (1.85)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE PER SHARE
September 23,1987 (commencement of operations).......... $9.32
September 30, 1993...................................... 10.43
December 31, 1993....................................... 10.38
March 31, 1994.......................................... 9.91
June 30, 1994........................................... 9.85
September 30, 1994...................................... 9.73
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PERCENTAGE GAIN (LOSS) based on change in Net Asset Value*
September 23, 1987 (commencement of operations) through September 30, 1994............ 81.46%
October 1, 1993 through September 30, 1994............................................ .24
January 1, 1994 through September 30, 1994............................................ (1.01)
April 1, 1994 through September 30, 1994.............................................. 1.89
July 1, 1994 through September 30, 1994............................................... .63
</TABLE>
*With dividends reinvested.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
ARIZONA-3.5%
Phoenix Industrial Development Authority, Revenue (Christian Care Retirement
Apartments)
10.25%, 1/1/2018........................................................ $ 9,765,000 $ 9,838,335
Tempe Industrial Development Authority, IDR (California Micro Devices Corp.
Project)
10.50%, 3/1/2018........................................................ 7,720,000 8,412,561
ARKANSAS-1.9%
Fayetteville Public Facilities Board, Revenue, Refunding (Butterfield Trail
Village Project):
8.25%, 9/1/2000......................................................... 1,475,000 1,481,033
9.50%, 9/1/2014......................................................... 7,785,000 8,397,835
COLORADO-7.3%
Bent County, COP (Medium Security Correctional Facility Project) 9.50%, 7/15/2013 14,330,000 14,795,725
Colorado Post-Secondary Educational Facilities Authority, Revenue
(University of Denver Project) 9%, 12/1/2007 (Prerefunded 12/1/1997) (a) 6,100,000 6,953,085
City and County of Denver, Airport Revenue:
8.50%, 11/15/2023....................................................... 11,500,000 11,843,850
8%, 11/15/2025.......................................................... 5,000,000 4,976,500
FLORIDA-11.0%
Escambia County, PCR (Champion International Corp. Project)
6.90%, 8/1/2022......................................................... 7,500,000 7,389,525
Florida Board of Education, Capital Outlay 9.02%, 6/1/2019 (b,c)............ 20,000,000 20,025,000
Florida Housing Finance Agency, MFHR (Palm Aire) 10%, 1/1/2020 (d).......... 4,960,794 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 4,569,574
8.75%, 5/1/2007 (Prerefunded 5/1/1997) (a).............................. 6,000,000 6,697,440
Leon County Educational Facilities Authority, COP (Southgate Residence Hall
Project):
3.75%, 12/1/1995 (e).................................................... 247,560 245,258
9%, 9/1/2014 (d,e)...................................................... 5,000,000 2,500,000
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015...................................................... 5,000,000 4,720,200
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022....................................................... 9,150,000 8,855,278
GEORGIA-5.0%
Atlanta Urban Residential Finance Authority, Residential Housing Revenue
(Carter Hall Project) 8.50%, 1/1/2018................................... 11,055,000 11,010,890
Burke County Development Authority, PCR (Georgia Power Co. Plant Vogtle
Project):
12%, 10/1/2014.......................................................... 2,390,000 2,438,326
10.50%, 11/1/2015....................................................... 1,700,000 1,839,961
Private Colleges and Universities Facilities Authority, Revenue,
Refunding (Clark Atlanta University Project) 8.25%, 1/1/2015............ 11,000,000 11,248,710
HAWAII-1.2%
Hawaii Department of Transportation, Special Facility Revenue
(Caterair International Corp. Project) 10.125%, 12/1/2010............... 6,000,000 6,113,520
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
IDAHO-.5%
Idaho Health Facilities Authority, Revenue (Bannock County Nursing Lease
Agreement)
9.23%, 4/1/2003 (Prerefunded 5/1/1995) (a)............................. $ 2,412,451 $ 2,487,093
ILLINOIS-4.8%
Chicago O'Hare International Airport, Special Facilities Revenue
(United Airlines Inc. Project) 8.95%, 5/1/2018.......................... 9,736,000 10,486,938
Illinois Health Facilities Authority, Revenue, Refunding
(Ravenswood Hospital Medical Center Project) 8.80%, 6/1/2006............ 8,000,000 8,778,240
Saint Clair County, East Saint Louis School District No. 189 9%, 11/1/2006. 5,500,000 6,065,620
INDIANA-.9%
Terre Haute, SWDR (International Minerals and Chemicals Corp.)
8.70%, 3/15/2003........................................................ 4,200,000 4,616,514
KENTUCKY-2.2%
Kentucky Development Finance Authority, Hospital Improvement Revenue,
Refunding
(Ashland Hospital-Kings Project):
9.75%, 8/1/2005....................................................... 5,000,000 5,701,150
9.75%, 8/1/2011....................................................... 3,000,000 3,488,460
9.875%, 2/1/2012 (Prerefunded 2/1/1998) (a)........................... 2,000,000 2,333,220
LOUISIANA-4.4%
East Baton Rouge Sewage Commission, Sewer Revenue
9.25%, 9/1/2012 (Prerefunded 9/1/1997) (a).............................. 11,425,000 13,098,991
Saint James Parish, SWDR (Freeport-McMoran Partnership Project)
7.70%, 10/1/2022........................................................ 10,000,000 9,920,400
MAINE-.7%
Maine Health and Higher Educational Facilities Authority, Revenue
(Waterville Osteopathic Hospital Project)
9.875%, 7/1/2013 (Prerefunded 7/1/1997) (a)............................. 3,100,000 3,567,852
MASSACHUSETTS-1.5%
Massachusetts Health and Educational Facilities Authority, Revenue
(Beth Israel Hospital Issue) 8.472%, 7/1/2025 (Insured; AMBAC) (b)...... 3,000,000 2,670,000
Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue,
Refunding
13%, 7/1/2018 (Prerefunded 1/1/1995) (a)................................ 4,915,000 5,127,869
MICHIGAN-6.6%
Greater Detroit Resource Recovery Authority, Revenue:
9.25%, Series A, 12/13/2008............................................. 5,200,000 5,523,388
9.25%, Series C, 12/13/2008............................................. 4,100,000 4,354,979
9.25%, Series D, 12/13/2008............................................. 2,000,000 2,124,380
9.25%, Series G, 12/13/2008............................................. 9,585,000 10,181,091
9.25%, Series H, 12/13/2008............................................. 8,920,000 9,474,735
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021......................................................... 2,000,000 1,907,620
Monroe County, PCR (Detroit Edison Co.) 10.50%, 12/1/2016................... 1,200,000 1,316,028
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MISSISSIPPI-2.6%
Claiborne County, PCR (Middle South Energy Inc.):
9.50%, 12/1/2013........................................................ $ 2,000,000 $ 2,255,320
9.875%, 12/1/2014....................................................... 10,180,000 11,616,703
MISSOURI-.8%
Independence Industrial Development Authority, MFHR (Greenbriar Meadows
Project)
10.25%, 8/1/2019 (f).................................................... 6,885,000 4,131,000
NEVADA-.7%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032..................... 4,000,000 4,016,240
NEW HAMPSHIRE-1.0%
New Hampshire Industrial Development Authority, PCR (United Illumination Co.
Project)
9.375%, 7/1/2012........................................................ 4,950,000 5,529,793
NEW JERSEY-3.1%
New Jersey Health Care Facilities Financing Authority, Revenue
(Christian Health Care Center) 8.75%, 7/1/2018 (Insured; MBIA).......... 16,810,000 16,641,900
NEW YORK-4.8%
Housing Corp. of New York, Revenue 9%, 11/1/2017 (Prerefunded 11/1/1997) (a) 12,400,000 14,094,584
New York City Municipal Water Finance Authority, Water and Sewer System
Revenue
9%, 6/15/2017 (Prerefunded 6/15/1997) (a)............................... 10,000,000 11,281,300
OHIO-3.2%
Ohio Air Quality Development Authority, Revenue (Dayton Power and Light Co.
Project)
9.50%, 12/1/2015........................................................ 12,000,000 12,914,880
Springdale Hospital Facilities, First Mortgage Revenue
(Southwestern Ohio Seniors', Services, Inc.) 6%, 11/1/2023.............. 5,000,000 4,118,200
OKLAHOMA-3.4%
Tulsa Municipal Airport Trust, Revenue (American Airlines) 9.50%, 6/1/2020.. 17,045,000 18,034,462
PENNSYLVANIA-9.1%
Beaver County Industrial Development Authority, PCR
(Cleveland Electric Illumination Co. Project):
11.125%, 11/15/2014................................................... 7,400,000 7,682,310
10.50%, 9/1/2015...................................................... 2,500,000 2,669,625
Butler County Industrial Development Authority, First Mortgage Revenue
(Saint John Lutheran Care Center):
9.75%, Series A, 10/1/1998............................................ 715,000 801,322
10%, Series A1, 10/1/2017............................................. 8,450,000 8,992,828
10%, Series A2, 10/1/2017............................................. 940,000 1,000,386
Cambria County Hospital Development Authority, HR, Refunding
(Conemaugh Valley Memorial Hospital) 8.875%, 7/1/2018................... 7,000,000 7,662,060
Montgomery County Industrial Development Authority, First Mortgage Revenue
(Meadowood Corp. Project):
8.25%, 12/1/2018...................................................... 3,750,000 3,548,963
Zero Coupon, 12/1/2020................................................ 225,187 17,157
10.25%, 12/1/2020..................................................... 5,000,000 5,396,000
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
PENNSYLVANIA (CONTINUED)
Pennsylvania Housing Finance Agency, SFMR 8.769%, 4/1/2025 (b).............. $ 6,000,000 $ 4,905,000
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016.................................... 5,200,000 5,488,340
SOUTH CAROLINA-2.5%
South Carolina Housing Authority, Homeownership Mortgage Revenue 9%, 7/1/2018 5,555,000 5,896,966
Spartanburg County, Hospital Facilities Revenue (Spartanburg General Hospital
System)
9.202%, 4/13/2022 (b)................................................... 7,700,000 7,334,250
TENNESSEE-1.5%
Gatlinburg, COP (Gatlinburg Convention Center Inc.)
9.25%, 12/1/2012 (Prerefunded 12/1/1997) (a)............................ 6,715,000 7,772,142
TEXAS-8.6%
Harris County Health Facilities Development Corp., HR (Hermann Trust)
9%, 10/1/2017 (Prerefunded 10/1/1997) (a)............................... 15,000,000 16,988,850
Port of Corpus Christi Industrial Development Corp., Revenue
(Valero Refinancing and Marketing Co.) 10.25%, 6/1/2017................. 6,450,000 7,279,406
Texas Department of Housing and Community Affairs, Home Mortgage Revenue,
Refunding:
6.90%, 7/2/2024....................................................... 12,000,000 11,968,200
10.129%, 7/2/2024 (b)................................................. 2,500,000 2,484,375
Texas Housing Agency, SFMR 9.375%, 9/1/2016................................. 4,015,000 4,155,284
Tyler Health Facilities Development Corp., HR, Refunding (East Texas Medical
Center
Regional Healthcare System Project) 6.75%, 11/1/2025.................... 3,000,000 2,720,190
UTAH-2.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018..... 10,000,000 10,623,600
VIRGINIA-.7%
Fairfax County Water Authority, Revenue 8.18%, 4/1/2029 (b,c)............... 5,000,000 3,843,750
WEST VIRGINIA-2.1%
West Virginia Water Development Authority, Water Development Revenue (Loan
Program)
9.50%, 11/1/2025 (Prerefunded 11/1/1994) (a)............................ 10,905,000 11,200,962
WISCONSIN-1.7%
Wisconsin Housing and Economic Development Authority, Home Ownership Revenue
9.17%, 7/1/2025 (b,c)................................................... 10,000,000 9,050,000
U.S. RELATED-.7%
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway
Revenue
7.061%, 7/1/2008 (b).................................................... 4,700,000 3,965,625
--------------
TOTAL INVESTMENTS
(cost $517,077,598)..................................................... $ 528,635,624
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <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 Investors Association
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH(G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ------- ------- ----------------- -------------------
<S> <C> <S> <C>
AAA Aaa AAA 17.4%
AA Aa AA 9.1
A A A 5.4
BBB Baa BBB 32.6
BB Ba BB .5
Not Rated (h) Not Rated (h) Not Rated (h) 35.0
------
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 are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Residual interest 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 September
30, 1994, these securities amounted to $32,918,750 or 6.1% of net assets.
(d) Non-income producing security; interest payment in default.
(e) The valuation of this security has been determined in good faith
under the direction of the Board of Directors.
(f) Non-accrual status.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) 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 notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $517,077,598)_see statement..................................... $528,635,624
Interest receivable..................................................... 13,191,776
Prepaid expenses........................................................ 17,200
------------
541,844,600
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $335,767
Due to Custodian........................................................ 137,270
Accrued expenses........................................................ 247,909 720,946
--------- ------------
NET ASSETS ................................................................ $541,123,654
============
REPRESENTED BY:
Paid-in capital......................................................... $526,341,787
Accumulated undistributed investment income_net......................... 3,294,893
Accumulated net realized (loss) on investments.......................... (71,052)
Accumulated net unrealized appreciation on investments_Note 3........... 11,558,026
------------
NET ASSETS at value, applicable to 55,629,356 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $541,123,654
============
NET ASSET VALUE, per share
($541,123,654 / 55,629,356 shares)...................................... $9.73
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1994
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $44,805,814
EXPENSES:
Management fee_Note 2(a)............................................. $ 4,148,772
Shareholder servicing costs........................................... 197,311
Shareholders' reports................................................. 144,367
Custodian fees........................................................ 89,331
Registration fees..................................................... 53,052
Professional fees..................................................... 42,238
Directors' fees and expenses_Note 2(b)................................ 35,416
Miscellaneous......................................................... 32,484
------------
TOTAL EXPENSES.................................................... 4,742,971
------------
INVESTMENT INCOME_NET............................................ 40,062,843
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments_Note 3.............................. $ (71,003)
Net unrealized (depreciation) on investments............................ (38,368,269)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (38,439,272)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 1,623,571
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
-----------------------------------
1993 1994
-------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income_net.................................................. $ 40,412,167 $ 40,062,843
Net realized gain (loss) on investments................................. 3,218,304 (71,003)
Net unrealized appreciation (depreciation) on investments for the year.. 13,172,468 (38,368,269)
-------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 56,802,939 1,623,571
-------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net.................................................. (39,149,106) (39,310,582)
Net realized gain on investments........................................ -- (853,824)
-------------- ---------------
TOTAL DIVIDENDS....................................................... (39,149,106) (40,164,406)
-------------- ---------------
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested_Note 1(c)......................................... 14,784,837 14,075,111
-------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... 32,438,670 (24,465,724)
NET ASSETS:
Beginning of year....................................................... 533,150,708 565,589,378
-------------- ---------------
End of year (including undistributed investment income_net:
$6,915,827 in 1993 and $3,294,893 in 1994)............................ $565,589,378 $541,123,654
============ ============
SHARES SHARES
-------------- ---------------
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED...... 1,436,357 1,384,461
============ ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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 year indicated. This information
has been derived from the financial statements and market price data for the
Fund's shares.
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.............. $ 9.97 $ 9.79 $ 9.96 $10.10 $10.43
------- ------- ------- ------ -------
INVESTMENT OPERATIONS:
Investment income_net.......................... .78 .78 .75 .75 .73
Net realized and unrealized gain (loss) on investments (.15) .27 .17 .31 (.69)
------- ------- ------- ------ -------
TOTAL FROM INVESTMENT OPERATIONS.............. .63 1.05 .92 1.06 .04
------- ------- ------- ------ -------
DISTRIBUTIONS:
Dividends from investment income_net........... (.76) (.76) (.75) (.73) (.72)
Dividends from net realized gain on investments. (.05) (.12) (.03) -- (.02)
------- ------- ------- ------ -------
TOTAL DISTRIBUTIONS........................... (.81) (.88) (.78) (.73) (.74)
------- ------- ------- ------ -------
Net asset value, end of year.................... $ 9.79 $ 9.96 $10.10 $10.43 $ 9.73
======= ======= ======== ====== ========
Market Value, end of year....................... $ 10 $10 1/2 $10 5/8 $11 1/8 $ 9 7/8
======= ======= ======== ====== ========
TOTAL INVESTMENT RETURN* 1.98% 14.80% 9.14% 12.40% (4.63%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... .89% .88% .88% .87% .86%
Ratio of net investment income to average net assets 7.94% 7.99% 7.56% 7.40% 7.24%
Portfolio Turnover Rate......................... 10.51% 6.43% 21.80% 11.59% 4.85%
Net assets, end of year (000's Omitted)......... $482,515 $510,120 $533,151 $565,589 $541,124
*Calculated based on market value.
See notes to financial statements.
</TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS
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. Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
(A) PORTFOLIO VALUATION: Investments in municipal debt securities
(excluding options and financial futures on municipal and U.S. treasury
securities) are valued on the last business day of each week and month by an
independent pricing service ("Service") approved by the Board of Directors.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Options and financial futures on
municipal and U.S. treasury securities are valued at the last sales price on
the securities exchange on which such securities are primarily traded or at
the last sales price on the national securities market on the last business
day of each week and month. Investments not listed on an exchange or the
national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: 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.
As a result of the treatment of premium amortization for financial
reporting purposes, versus Federal income tax purposes, the Fund reclassified
$4,373,195 from undistributed net investment income to undistributed net
realized and unrealized gains (losses). This amount represented the
cumulative effect of such difference. Results of operations and net assets
were not effected by this reclassification.
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) as defined in the dividend reinvestment and cash
purchase plan.
On September 29, 1994, the Board of Directors declared a cash dividend of
$.061 per share from investment income-net, payable on October 27, 1994 to
shareholders of record as of the close of business on October 13, 1994.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
NET INCREASE
NET REALIZED & (DECREASE)
UNREALIZED GAIN IN NET ASSETS
TOTAL INVESTMENT NET 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) $ 7,244 $ 0.13
March 31, 1994.............. 11,508 0.21 10,348 0.19 (26,084) (0.47) (15,736) (0.28)
June 30, 1994............... 10,871 0.20 9,691 0.18 (2,721) (0.05) 6,970 0.13
September 30, 1994.......... 11,002 0.20 9,836 0.18 (6,690) (0.12) 3,146 0.06
------ ----- --------- ----- -------- ----- ------- -----
TOTAL................... $44,806 $ 0.82 $40,063 $ 0.73 $(38,439) $(0.69) $ 1,624 $ 0.04
====== ===== ====== ====== ======= ====== ======= =====
</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 applicable provisions
of the Internal Revenue Code, and to make distributions of income and net
realized capital gain sufficient to relieve it from substantially all Federal
income and excise taxes.
The Fund has an unused capital loss carryover of approximately $12,700
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1994. The
carryover does not include net realized securities losses from November 1,
1993 through September 30, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, the carryover expires in
fiscal 2002.
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 year ended September 30, 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.
NOTE 3_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $96,093,187 and $81,011,506, respectively, for the year ended
September 30, 1994, and consisted entirely of long-term and short-term
municipal investments.
At September 30, 1994, accumulated net unrealized appreciation on
investments was $11,558,026, consisting of $26,651,777 gross unrealized
appreciation and $15,093,751 gross unrealized depreciation.
At September 30, 1994, 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).
DREYFUS STRATEGIC MUNICIPALS, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS STRATEGIC MUNICIPALS, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Strategic Municipals, Inc., including the statement of investments,
as of September 30, 1994, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1994 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Strategic Municipals, Inc. at September 30, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
(Ernst & Young LLP signature logo)
New York, New York
November 9, 1994
DREYFUS STRATEGIC MUNICIPALS, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (UNAUDITED)
The Fund generally distributes net investment income monthly. Any net
realized short-term capital gains and any net realized long-term capital
gains will be distributed at least annually.
Under the Fund's Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), a shareholder who has Fund shares registered in his name will have
all distributions reinvested automatically by The Bank of New York, as Plan
agent (the "Agent"), in additional shares of the Fund at the lower of
prevailing market price or net asset value (but not less than 95% of market
value at the time of valuation) unless such shareholder elects to receive
cash as provided below. If market price is equal to or exceeds net asset
value, shares will be issued at net asset value. If net asset value exceeds
market price or if a cash dividend only is declared, the Agent, as agent for
the Plan participants, will buy Fund shares in the open market. A Plan
participant is not relieved of any income tax that may be payable on such
dividends or distributions.
A shareholder who owns Fund shares registered in nominee name through his
broker/dealer (i.e., in "street name") may not participate in the Plan, but
may elect to have cash dividend distributions reinvested by his broker/dealer
in additional shares of the Fund if such service is provided by the
broker/dealer; otherwise such distributions will be treated like any other
cash dividend.
A shareholder who has Fund shares registered in his name may elect to
withdraw from the Plan at any time for a $2.50 fee and thereby elect to
receive cash in lieu of shares of the Fund. Changes in elections must be in
writing, sent to The Bank of New York, Dividend Reinvestment Department, P.O.
Box 11260, Church Street Station, New York, New York 10277-0760, should
include the shareholder's name and address as they appear on the Agent's
records and will be effective only if received more than fifteen days prior
to the record date for any distribution.
A Plan participant who has Fund shares registered in his name has the
option of making additional cash payments to the Agent, semi-annually, in any
amount from $1,000 to $10,000, for investment in the Fund's shares in the
open market on or about January 15 and July 15. Any voluntary cash payments
received more than 30 days prior to these dates will be returned by the
Agent, and interest will not be paid on any uninvested cash payments. A
participant may withdraw a voluntary cash payment by written notice, if the
notice is received by the Agent not less than 48 hours before the payment is
to be invested. A shareholder who owns Fund shares registered in street name
should consult his broker/dealer to determine whether an additional cash
purchase option is available through his broker/dealer.
The Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account. Shares in the
account of each Plan participant will be held by the Agent in
non-certificated form in the name of the participant, and each such
participant's proxy will include those shares purchased pursuant to the Plan.
The Fund pays the Agent's fee for reinvestment of dividends and
distributions, Plan participants pay a pro rata share of brokerage
commissions incurred with respect to the Agent's open market purchases and
purchases from voluntary cash payments, and a $1.25 fee for each purchase
made from a voluntary cash payment.
The Fund reserves the right to amend or terminate the Plan as applied to
any voluntary cash payments made and any dividend or distribution paid
subsequent to notice of the change sent to Plan participants at least 90 days
before the record date for such dividend or distribution. The Plan also may
be amended or terminated by the Agent on at least 90 days' written notice to
Plan participants.
DREYFUS STRATEGIC MUNICIPALS, INC.
CERTAIN MANAGEMENT POLICY INFORMATION (UNAUDITED)
On August 4, 1994, the Fund's shareholders voted to change certain of the
Fund's fundamental policies and investment restrictions to permit the Fund to
borrow money to the extent permitted under the Investment Company Act of
1940, as amended. However, the Fund currently anticipates to borrow money
only for temporary or emergency (not leveraging) purposes, in an amount up to
15% of the value of the Fund's total assets (including the amount borrowed)
valued at the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While such borrowings
exceed 5% of the Fund's assets, the Fund would not make any additional
investments.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended
September 30, 1994 as "exempt-interest dividends" (not generally subject to
regular Federal income tax).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1994 calendar year
on Form 1099-DIV which will be mailed by January 31, 1995.
OFFICERS AND DIRECTORS
DREYFUS STRATEGIC MUNICIPALS, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
DIRECTORS
David W. Burke
Hodding Carter III
Ehud Houminer
Richard C. Leone
Hans C. Mautner
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:
Joseph P. Darcy
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.
