Strategic
Municipals, Inc.
Annual Report
September 30, 1995
DREYFUS STRATEGIC MUNICIPALS, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on Dreyfus Strategic
Municipals, Inc. For its annual reporting period ended September 30, 1995,
your Fund produced a total return (bond price changes and interest income) of
10.18% based on net asset value.* Income dividends, exempt from Federal
personal income taxes, of $.712 per share were paid.** This is equivalent to
a tax-free distribution rate per share of 7.40%+, comfortably in excess of the
inflation rate of 2.54% as measured by the Consumer Price Index for the same
period.++
THE ECONOMY
The Federal Reserve Board relaxed its policy of monetary restraint in
July of 1995 when it lowered the Fed Funds rate on July 6th. This reduction
ended the upward pressure on short-term rates which began in February of
1994. Despite the monetary restraint that existed, long-term rates began to
decline toward the end of that year. The Fed's policy of restraint was based
on concern about inflation, given the strong economic news then prevailing.
But by July of 1995, these same reports indicated a significant weakening
trend in the economy. The July decline in the Fed Funds rate signaled that
economic growth issues outweighed, for a time, Fed fears of a resurgence of
inflation.
Economic reports indicated lagging home and auto sales and a decline in
new home construction from earlier in the year. Furthermore, rising business
inventories (a frequent harbinger of a business slowdown) and weakening
retail sales lent additional credibility to the case for easier credit
conditions. By midyear, jobless claims were also on the rise as the trend of
corporate cost cutting, and layoffs in particular, continued. After the
easing of the Fed Funds rate in the early summer, economic signals were mixed
while inflationary expectations remained subdued. Accordingly, interest rates
stabilized.
Recently, however, economic strength has been reflected in some of the
indicators. Inflation is moderate, but various sectors of the economy such as
consumer spending and housing appear to be picking up. The stronger numbers
may forestall any immediate easing by the Federal Reserve Board,
nevertheless, one should not rule out the possibility of another Fed easing
before year end.
A word about inflation: despite strong economic growth at the beginning
of the reporting period, inflation remained in check. We believe a
continuation of this moderating trend for prices appears likely, particularly
if the economy remains sluggish. This could be good news for bond investors
since easing inflation often results in falling interest rates. Declining
interest rates, often a corollary to slow business conditions, cause bond
prices to rise. Although we strive to maintain a high level of current tax
exempt income for the Fund, we are mindful of the potential erosion in bond
quality if the economy slips back into a recession. We manage portfolios with
a long-term perspective, aware that market conditions can change rapidly.
MARKET ENVIRONMENT
The municipal bond market, buffeted by six interest rate hikes by the
Federal Reserve Board in 1994, recovered strongly in 1995. The interest rate
decline which began in late 1994 persisted throughout the remainder of the
reporting period. This summer's rate cut confirmed what declining long-term
interest rates had indicated all year: that business conditions were weaker
than monetary policy makers thought. If economic conditions remain sluggish,
and Congress is able to arrive at an acceptable budget accord, we believe
further Fed easing is likely. In our view, this would create a favorable
environment for bond markets in general. We are certainly pleased and
encouraged by the good year-to-date performance in the bond market and by the
Fund; however, we are wary that this bond market strength may be counting too
much on continued low inflation. While we remain fully invested in this
improving market, we are alert to the stimulating effects of easing monetary
policy and are watchful for any signs of rekindling inflation.
While the municipal market and the Fund have performed well, results for
municipal securities have been trailing the other fixed income markets. The
prospect of tax reform appears to be limiting the enthusiasm for tax exempt
securities. Since April, when serious tax reform proposals began to surface,
the municipal rally has lagged, resulting in an increase in municipal yields
as a percentage of comparable taxable bond yields. Today, long-term municipal
bonds are yielding nearly 90% of U.S. Treasuries, which is a greater yield
ratio than existed before the onset of talk about tax reform. While it could
be years before an actual change in the tax code is adopted, the market's
reaction so early in the proposal cycle suggests that the ultimate
legislation, if any, may have a less radical effect on the market than
feared.
THE PORTFOLIO
We continue to focus our attention on income production when managing
this portfolio. While total return is a concept we understand very well, it
has been clear to us from the inception of this portfolio that our
shareholders are decidedly income conscious. To that end, we continue to
concentrate on retaining high coupon bonds and enjoying the income they
produce, as opposed to realizing capital gains on those bonds and reinvesting
the proceeds at a lower level of interest. In a similar vein, we currently
maintain about 10% of the portfolio's market value in inverse floating-rate
securities because they, too, produce a generous level of income. The obvious
disadvantage to emphasizing income is that in a strong market rally such as
has been seen in 1995, the portfolio will not outperform another portfolio
which is structured more aggressively, that is, one which has a high
percentage of discount coupon bonds. We continue to manage the portfolio with
the bonds' call features very much in mind: to the extent that bonds are lost
to calls, the reinvestment rate on the proceeds will be lower, so, when
possible we try to guard against that event.
The Fund's goal-to maximize current income exempt from Federal income tax
to the extent consistent with the preservation of capital-continues to guide
our portfolio management decisions. The high level of volatility exhibited by
the market in recent years underscores, for us, the need to maintain a
disciplined and long-term focus. Solid market performance thus far in 1995
has rewarded the patient investor.
Included in this report is a series of detailed statements about your
portfolio's holdings and its financial condition. We hope they are
informative. Please know that we appreciate greatly your continued confidence
in The Dreyfus Corporation.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 16, 1995
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
+ Distribution rate per share is based upon dividends per share paid from
net investment income during the period divided by the net asset value
at the end of the period, adjusted for any capital gain distributions.
++ Source: Lipper Analytical Services, Inc. The Consumer Price Index is
published by the Bureau of Labor Statistics and is a
widely accepted measure of inflation in the United States.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
SELECTED INFORMATION SEPTEMBER 30, 1995 (UNAUDITED)
<S> <C> <C>
Market Price per share September 30, 1995........................... $9 5/8
Shares Outstanding September 30, 1995............................... 56,188,316
New York Stock Exchange Ticker Symbol............................... LEO
</TABLE>
MARKET PRICE (NEW YORK STOCK EXCHANGE)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,1995
______________________________________________________
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31,1994 MARCH 31,1995 JUNE 30,1995 SEPTEMBER 30,1995
_______________ _______________ _______________ _______________
<S> <C> <C> <C> <C>
High $9 7\8 $10 1\4 $10 1\4 $10
Low 8 3\8 9 1\4 9 3\8 9 3\8
Close 9 1\8 10 1\8 9 1\2 9 5\8
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE GAIN (LOSS) based on change in Market Price*
<S> <C> <C>
September 23, 1987 (commencement of operations) through September 30, 1995............ 80.07%
October 1, 1990 through September 30, 1995............................................ 40.88
October 1, 1994 through September 30, 1995 ........................................... 4.91
January 1, 1995 through September 30,1995............................................ 11.32
April 1, 1995 through September 30, 1995.............................................. (1.52)
July 1, 1995 through September 30, 1995.............................................. 3.07
NET ASSET VALUE PER SHARE
September 23, 1987 (commencement of operations)........... $9.32
September 30, 1994........................................ 9.73
December 31, 1994......................................... 9.47
March 31, 1995............................................ 9.86
June 30, 1995............................................. 9.94
September 30, 1995........................................ 9.96
PERCENTAGE GAIN based on change in Net Asset Value*
September 23, 1987 (commencement of operations) through September 30, 1995............ 99.93%
October 1, 1990 through September 30, 1995............................................ 48.92
October 1, 1994 through September 30, 1995............................................ 10.18
January 1, 1995 through September 30, 1995........................................... 11.00
April 1, 1995 through September 30, 1995............................................. 4.65
July 1, 1995 through September 30, 1995.............................................. 1.94
*With dividends reinvested.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
ALABAMA-.3%
Courtland Industrial Development Board, SWDR
(Champion International Corp. Project) 6.50%, 9/1/2025.................. $2,000,000 $1,989,400
ARIZONA-3.4%
Phoenix Industrial Development Authority, Revenue
(Christian Care Retirement Apartments) 10.25%, 1/1/2018................. 9,650,000 10,054,817
Tempe Industrial Development Authority, IDR
(California Micro Devices Corp. Project) 10.50%, 3/1/2018............... 7,630,000 8,602,443
ARKANSAS-1.8%
Fayetteville Public Facilities Board, Revenue,
Refunding (Butterfield Trail Village Project):
8.25%, 9/1/2000....................................................... 1,415,000 1,418,453
9.50%, 9/1/2014....................................................... 7,785,000 8,512,975
CALIFORNIA-2.2%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
6.50%, 1/1/2032......................................................... 12,000,000 11,948,640
COLORADO-7.9%
Bent County, COP (Medium Security Correctional Facility Project) 9.50%, 7/15/2013 14,030,000 14,822,274
Colorado Health Facilities Authority, Revenue,
Refunding (Rocky Mountain Adventist) 6.625%, 2/1/2013................... 3,450,000 3,449,586
Colorado Post-Secondary Educational Facilities Authority, Revenue
(University of Denver Project) 9%, 12/1/2007 (Prerefunded 12/1/1997) (a) 6,100,000 6,831,695
City and County of Denver, Airport Revenue:
8.50%, 11/15/2023....................................................... 11,500,000 13,052,500
8%, 11/15/2025.......................................................... 5,000,000 5,551,850
FLORIDA-10.0%
Escambia County, PCR (Champion International Corp. Project)
6.90%, 8/1/2022......................................................... 7,000,000 7,275,310
Florida Board of Education, Capital Outlay 8.371%, 6/1/2019 (b,c)........... 20,000,000 21,325,000
Florida Housing Finance Agency, MFHR
(Palm Aire Retirement Facility Project) 10%, 1/1/2020 (d)............... 4,724,246 3,259,730
Indian Trace Community Development District
(Basin 1 Water Management Special Benefit):
9.25%, 5/1/2002 (Prerefunded 5/1/1997) (a)............................ 4,050,000 4,437,383
8.75%, 5/1/2007 (Prerefunded 5/1/1997) (a)............................ 6,000,000 6,519,540
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015...................................................... 3,000,000 2,964,450
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
FLORIDA (CONTINUED)
Palm Beach County, Solid Waste IDR (continued):
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022....................................................... $9,150,000 $9,137,647
GEORGIA-4.3%
Atlanta Urban Residential Finance Authority, Residential Housing Revenue
(Carter Hall Project) 8.50%, 1/1/2018................................... 10,900,000 11,229,071
Private Colleges and Universities Facilities Authority, Revenue,
Refunding (Clark Atlanta University Project) 8.25%, 1/1/2015............ 11,000,000 12,177,550
HAWAII-1.1%
Hawaii Department of Transportation, Special Facility Revenue
(Caterair International Corp. Project) 10.125%, 12/1/2010............... 5,600,000 5,868,744
ILLINOIS-8.5%
Chicago O'Hare International Airport, Special Facilities Revenue
(United Airlines Inc. Project) 8.95%, 5/1/2018.......................... 9,595,000 10,873,918
Illinois Health Facilities Authority, Revenue,
Refunding (Ravenswood Hospital Medical Center Project) 8.80%, 6/1/2006.. 8,000,000 8,624,160
Robbins, RRR (Robbins Resource Recovery Partners):
9.25%, 10/15/2014....................................................... 13,300,000 14,639,576
9.25%, 10/15/2016....................................................... 5,700,000 6,274,104
Saint Clair County, East Saint Louis School District No. 189
9%, 11/1/2006........................................................... 5,500,000 6,061,055
INDIANA-1.5%
Indianapolis Airport, Special Facilities Revenue
(United Airlines Inc. Project) 6.50%, 11/15/2031........................ 3,500,000 3,437,490
Terre Haute, SWDR (International Minerals and Chemicals Corp.)
8.70%, 3/15/2003........................................................ 4,200,000 4,632,222
KENTUCKY-4.0%
Kenton County Airport Board, Airport Revenue
(Special Facilities-Delta Airlines Project) 7.50%, 2/1/2020............. 10,000,000 10,614,800
Kentucky Development Finance Authority, Hospital Improvement Revenue,
Refunding (Ashland Hospital-Kings Project):
9.75%, 8/1/2005....................................................... 5,000,000 5,617,250
9.75%, 8/1/2011....................................................... 1,135,000 1,280,507
9.75%, 8/1/2011 (Prerefunded 2/1/1998) (a)............................ 1,865,000 2,116,607
9.875%, 2/1/2012 (Prerefunded 2/1/1998) (a)........................... 2,000,000 2,279,640
LOUISIANA-4.2%
East Baton Rouge Sewage Commission, Sewer Revenue
9.25%, 9/1/2012 (Prerefunded 9/1/1997) (a).............................. 11,425,000 12,827,419
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
LOUISIANA (CONTINUED)
Saint James Parish, SWDR (Freeport-McMoRan Partnership Project)
7.70%, 10/1/2022........................................................ $10,000,000 $10,234,100
MAINE-.6%
Maine Health and Higher Educational Facilities Authority, Revenue
(Waterville Osteopathic Hospital Project)
9.875%, 7/1/2013 (Prerefunded 7/1/1997) (a)............................. 3,035,000 3,435,741
MARYLAND-.5%
Baltimore County, PCR,
Refunding (Bethlehem Steel Corp. Project) 7.50%, 6/1/2015............... 2,500,000 2,584,900
MASSACHUSETTS-.5%
Massachusetts Health and Educational Facilities Authority, Revenue,
Refunding (Beth Israel Hospital Issue) 8.168%, 7/1/2025 (Insured; AMBAC) (b) 3,000,000 2,842,500
MICHIGAN-6.2%
Greater Detroit Resource Recovery Authority, Revenue:
9.25%, Series A, 12/13/2008............................................. 5,200,000 5,399,472
9.25%, Series C, 12/13/2008............................................. 4,100,000 4,257,276
9.25%, Series G, 12/13/2008............................................. 9,585,000 9,952,681
9.25%, Series H, 12/13/2008............................................. 8,920,000 9,262,171
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021..... 5,000,000 5,396,800
MISSISSIPPI-2.6%
Claiborne County, PCR (Middle South Energy Inc.):
9.50%, 12/1/2013........................................................ 2,000,000 2,330,760
9.875%, 12/1/2014....................................................... 10,180,000 11,875,581
NEVADA-.8%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032..................... 4,000,000 4,250,600
NEW HAMPSHIRE-1.8%
New Hampshire Industrial Development Authority, PCR:
(Public Service Co. Project)
7.65%, 5/1/2021 ...................................................... 4,000,000 4,244,120
(United Illumination Co. Project)
9.375%, 7/1/2012 ..................................................... 4,950,000 5,507,618
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 17,651,677
NEW YORK-4.5%
Housing Corp. of New York, Revenue 9%, 11/1/2017 (Prerefunded 11/1/1997) (a) 12,400,000 13,863,448
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York City Municipal Water Finance Authority, Water and Sewer System Revenue
9%, 6/15/2017 (Prerefunded 6/15/1997) (a)............................... $10,000,000 $11,008,300
OHIO-3.1%
Ohio Air Quality Development Authority, Revenue (Dayton Power and Light Co.
Project)
9.50%, 12/1/2015 (Prerefunded 12/1/1995) (a)............................ 12,000,000 12,411,000
Springdale Hospital Facilities, First Mortgage Revenue
(Southwestern Ohio Seniors' Services, Inc.) 6%, 11/1/2023............... 5,000,000 4,405,300
OKLAHOMA-3.2%
Tulsa Municipal Airport Trust, Revenue (American Airlines) 9.50%, 6/1/2020.. 17,045,000 17,552,941
PENNSYLVANIA-7.8%
Butler County Industrial Development Authority, First Mortgage Revenue
(Saint John Lutheran Care Center):
9.75%, Series A, 10/1/1998............................................ 600,000 651,510
Refunding, 10%, Series A1, 10/1/2017.................................. 8,450,000 9,437,889
Refunding, 10%, Series A2, 10/1/2017.................................. 940,000 1,049,895
Cambria County Hospital Development Authority, HR,
Refunding (Conemaugh Valley Memorial Hospital) 8.875%, 7/1/2018......... 7,000,000 7,805,630
Lehigh County General Purpose Authority, Revenue (Wiley House)
9.50%, 11/1/2016........................................................ 3,000,000 3,183,270
Montgomery County Industrial Development Authority, First Mortgage Revenue
(Meadowood Corp. Project):
8.25%, 12/1/2018...................................................... 3,750,000 3,807,863
Zero Coupon, 12/1/2020................................................ 4,276,125 356,330
10.25%, 12/1/2020..................................................... 5,000,000 5,552,400
Pennsylvania Housing Finance Agency, SFMR 7.604%, 4/1/2025 (b).............. 6,000,000 5,632,500
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016.................................... 5,200,000 5,563,688
SOUTH CAROLINA-1.6%
South Carolina Housing Authority, Homeownership Mortgage Revenue 9%, 7/1/2018 690,000 713,929
Spartanburg County, Hospital Facilities Revenue
(Spartanburg General Hospital System) 8.655%, 4/13/2022 (b)............. 7,700,000 7,950,250
TENNESSEE-1.4%
Gatlinburg, COP (Gatlinburg Convention Center Inc.)
9.25%, 12/1/2012 (Prerefunded 12/1/1997) (a)............................ 6,715,000 7,596,881
TEXAS-7.6%
Harris County Health Facilities Development Corp., HR (Hermann Trust)
9%, 10/1/2017 (Prerefunded 10/1/1997) (a)............................... 15,000,000 16,690,050
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
TEXAS (CONTINUED)
Port of Corpus Christi Industrial Development Corp., Revenue
(Valero Refinancing and Marketing Co.) 10.25%, 6/1/2017................. $ 6,450,000 $ 7,252,444
Texas Department of Housing and Community Affairs, Home Mortgage Revenue,
Refunding 6.90%, 7/2/2024 (b)........................................... 11,000,000 11,464,860
Texas Housing Agency, SFMR 9.375%, 9/1/2016................................. 3,545,000 3,637,560
Tyler Health Facilities Development Corp., HR, Refunding (East Texas Medical
Center
Regional Healthcare System Project) 6.75%, 11/1/2025.................... 3,000,000 2,869,950
UTAH-2.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018..... 10,000,000 10,931,200
VIRGINIA-.8%
Fairfax County Water Authority, Revenue 7.097%, 4/1/2029 (b,c).............. 5,000,000 4,443,750
WISCONSIN-1.8%
Wisconsin Housing and Economic Development Authority, Homeownership Revenue
8.56%, 7/1/2025 (b,c)................................................... 10,000,000 9,887,500
WYOMING-.8%
Sweetwater County, SWDR (FMC Corp. Project):
7.00%, 6/1/2024......................................................... 2,200,000 2,266,352
6.90%, 9/1/2024......................................................... 2,000,000 2,049,160
___________
TOTAL INVESTMENTS
(cost $516,776,714)..................................................... $548,969,653
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
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 RRR Resource Recovery Revenue
IDR Industrial Development Revenue SFMR Single Family Mortgage Revenue
MBIA Municipal Bond Investors Assurance SWDR Solid Waste Disposal Revenue
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ ____- _____________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 15.2%
AA Aa AA 10.6
A A A 2.0
BBB Baa BBB 32.0
BB Ba BB 1.9
Not Rated (f) Not Rated (f) Not Rated (f) 38.3
----
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 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, 1995, these securities amounted to
$35,656,250 or 6.4% of net assets.
(d) Non-income producing security; interest payment in default.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
(g) At September 30, 1995 the Fund had $141,667,173 (25.3% of net
assets) invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $516,776,714)-see statement..................................... $548,969,653
Interest receivable..................................................... 13,476,979
Prepaid expenses........................................................ 27,079
___________
562,473,711
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 345,661
Payable for investment securities purchased............................. 1,971,194
Accrued expenses and other liabilities.................................. 294,846 2,611,701
__________ __________
NET ASSETS ................................................................ $559,862,010
============
REPRESENTED BY:
Paid-in capital......................................................... $531,824,545
Accumulated undistributed investment income-net......................... 3,314,074
Accumulated net realized (loss) on investments.......................... (7,469,548)
Accumulated net unrealized appreciation on investments-Note 3........... 32,192,939
___________
NET ASSETS at value applicable to 56,188,316 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $559,862,010
============
NET ASSET VALUE, per share
($559,862,010 / 56,188,316 shares)...................................... $9.96
=========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $44,521,512
EXPENSES:
Management fee-Note 2(a).............................................. $4,084,436
Shareholder servicing costs........................................... 224,940
Shareholders' reports................................................. 134,863
Custodian fees-Note 2(b).............................................. 89,293
Professional fees..................................................... 83,237
Directors' fees and expenses-Note 2(c)................................ 55,788
Registration fees..................................................... 43,123
Miscellaneous......................................................... 28,097
______
TOTAL EXPENSES.................................................... 4,743,777
_________
INVESTMENT INCOME-NET............................................. 39,777,735
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (7,398,496)
Net unrealized appreciation on investments.............................. 20,634,913
___________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 13,236,417
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $53,014,152
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
________________
1994 1995
_______ _______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $40,062,843 $ 39,777,735
Net realized (loss) on investments...................................... (71,003) (7,398,496)
Net unrealized appreciation (depreciation) on investments for the year.. (38,368,269) 20,634,913
__________ __________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 1,623,571 53,014,152
__________ __________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (39,310,582) (39,758,554)
Net realized gain on investments........................................ (853,824) _ _
__________ __________
TOTAL DIVIDENDS....................................................... (40,164,406) (39,758,554)
__________ __________
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c).......................................... 14,075,111 5,482,758
__________ __________
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... (24,465,724) 18,738,356
NET ASSETS:
Beginning of year....................................................... 565,589,378 541,123,654
__________ __________
End of year (including undistributed investment income-net:
$3,294,893 in 1994 and $3,314,074 in 1995) ........................... $541,123,654 $559,862,010
============ ============
SHARES SHARES
_______ _______
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED 1,384,461 558,960
============ ============
</TABLE>
See notes to financial statements.
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.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
______________________________
PER SHARE DATA: 1991 1992 1993 1994 1995
___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $ 9.79 $ 9.96 $10.10 $10.43 $ 9.73
___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net........................ .78 .75 .75 .73 .71
Net realized and unrealized gain (loss) on investments .27 .17 .31 (.69) .23
___ ___ ___ ___ ___
TOTAL FROM INVESTMENT OPERATIONS........... 1.05 .92 1.06 .04 .94
___ ___ ___ ___ ___
DISTRIBUTIONS:
Dividends from investment income-net......... (.76) (.75) (.73) (.72) (.71)
Dividends from net realized gain on investments (.12) (.03) - (.02) -
___ ___ ___ ___ ___
TOTAL DISTRIBUTIONS........................ (.88) (.78) (.73) (.74) (.71)
___ ___ ___ ___ ___
Net asset value, end of year................... $ 9.96 $10.10 $10.43 $ 9.73 $9.96
====== ====== ====== ====== ======
Market Value, end of year..................... $ 10 1\2 $ 10 5\8 $ 11 1\8 $9 7\8 $ 9 5\8
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN*......................... 14.80% 9.14% 12.40% (4.63%) 4.91%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .88% .88% .87% .86% .87%
Ratio of net investment income to average net assets 7.99% 7.56% 7.40% 7.24% 7.30%
Portfolio Turnover Rate...................... 6.43% 21.80% 11.59% 4.85% 13.68%
Net Assets, end of year (000's Omitted)...... $510,120 $533,151 $565,589 $541,124 $559,862
*Calculated based on market value.
</TABLE>
See notes to financial statements.
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. The Manager
is 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, if any, are normally declared and
paid at least annually. To the extent that net realized capital gain can be
offset by capital loss carryovers, it is the policy of the Fund not to
distribute such gain.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less than
95% of the market price) as defined in the dividend reinvestment plan and
cash purchase plan.
On September 28, 1995, the Board of Directors declared a cash dividend of
$.056 per share from investment income-net, payable on October 26, 1995 to
shareholders of record as of the close of business on October 12, 1995.
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
NET INCREASE
NET REALIZED & (DECREASE)
UNREALIZED IN NET ASSETS
TOTAL INVESTMENT NET INVESTMENT GAIN (LOSS) RESULTING FROM
INCOME INCOME ON 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, 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
========= ========= ======= ======== ========= ========= ========= ========
December 31, 1994. $11,035 $ 0.20 $ 9,873 $ 0.18 $(13,953) $(0.25) $ (4,080) $(0.07)
March 31, 1995...... 11,062 0.19 9,853 0.17 21,830 0.40 31,683 0.57
June 30, 1995.. 11,106 0.20 9,974 0.18 4,435 0.07 14,409 0.25
September 30, 1995 11,319 0.20 10,078 0.18 924 0.01 11,002 0.19
________ ________ ________ ________ __________ ________ ________ ________
TOTAL....... $44,522 $ 0.79 $39,778 $ 0.71 $ 13,236 $ 0.23 $ 53,014 $ 0.94
========= ========= ======= ======== ========= ========= ========= ========
</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 $70,900
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through September 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $12,700 of the carryover
expires in fiscal 2002 and $58,200 expires in fiscal 2003.
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, 1995.
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) The Fund compensates Boston Safe Deposit and Trust Company, an
affiliate of the Manager, under a Custody Agreement for
providing custodial services to the Fund. Such compensation for the year
ended September 30, 1995 amounted to $89,293.
(C) Prior to February 1, 1995, certain officers, of the Fund were
"affiliated persons," as defined in the Act, of the Manager and/or Dreyfus
Service Corporation, a wholly-owned subsidiary 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. The Chairman of the Board receives an
additional 25% of such compensation and the Director Emeritus receives 50% of
such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $152,540,438 and $145,262,162, respectively, for the year ended
September 30, 1995, and consisted entirely of long-term and short-term
municipal investments.
At September 30, 1995, accumulated net unrealized appreciation on
investments was $32,192,939, consisting of $35,738,374 gross unrealized
appreciation and $3,545,435 gross unrealized depreciation.
At September 30, 1995, 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, 1995, 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, 1995 by correspondence with the custodian
and brokers. 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, 1995, 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 and Young LLP signature logo]
New York, New York
November 7, 1995
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 1958, Newark, New Jersey 07101-9774, 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.
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, 1995 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 1995 calendar year
on Form 1099-DIV which will be mailed by January 31, 1996.
OFFICERS AND DIRECTORS
DREYFUS STRATEGIC MUNICIPALS, INC.
200 Park Avenue
New York, NY 10166
DIRECTORS
Joseph S. DiMartino, Chairman
David W. Burke
Hodding Carter, III
Ehud Houminer
Richard C. Leone
Hans C. Mautner
Robin A. Smith
John E. Zuccotti
OFFICERS
President and Treasurer
Marie E. Connolly
Vice President and Secretary
John E. Pelletier
Vice President and Assistant Treasurer
Frederick C. Dey
Vice President and Assistant Secretary
Eric B. Fischman
Assistant Treasurer
John J. Pyburn
Assistant Treasurer
Joseph F. Tower, III
Assistant Secretary
Ruth Leibert
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
L. Lawrence Troutman
Samuel J. Weinstock
Monica S. Wieboldt
MANAGER
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 lion "d" logo]
DREYFUS STRATEGIC MUNICIPALS, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
The Bank of New York
101 Barclay Street
New York, NY 10286
Printed in U.S.A. 970AR959
[Dreyfus logo]
