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 semi-annual reporting period ended March 31, 1996,
your portfolio produced a total return, including bond price changes and
interest income, of 2.63%, based on net asset value.* Income dividends exempt
from Federal personal income taxes of $.336 per share were paid to
shareholders.** This is equivalent to an annualized tax-free distribution
rate per share of 6.81%.***
THE ECONOMY
Fresh signs of economic growth appeared in the first quarter of this
year. There were encouraging reports of strength in the housing market -
sales of new homes and new home construction surged in February. Factory
orders increased and order backlogs rose in January for the fifth consecutive
month. At present, there are indications that the labor market may be
tightening. Employment is rising and initial claims for unemployment
insurance are lessening. Some increases in real wages may result, a
possibility well worth noting since worker wages are emerging as a political
issue in this year's election. The surprisingly strong employment figures in
February caused a sharp rise in interest rates. As a result, fixed-income
returns for the first quarter of this year were negative.
Several factors that temporarily depressed economic activity have ended.
With the arrival of spring, the severe winter weather which suppressed
construction and discouraged consumer shopping is over. In addition, the
17-day strike at two General Motors brake-parts plants that nearly resulted
in a complete shutdown of GM North American manufacturing has been settled.
Apparently satisfied with the pace of economic growth, the Federal
Reserve Board left the Federal Funds rate unchanged in March. Over the past
12 months, the Fed has reduced the level of short-term interest rates three
times to spur the sluggish economy, the last reduction occurring on January
31, 1996.
Nevertheless, we are reluctant to paint an overly optimistic business
picture since much economic data still remains mixed. Business capital
spending has been an important stimulant to economic growth over the past few
years, particularly in light of the retrenchment in consumer spending. A
recent survey by the Commerce Department revealed that businesses plan only
modest increases in spending on new buildings and equipment this year
compared to 1995. Overall, the survey indicated that capital spending would
rise only 1.5% compared to last year's growth rate of 8.1%. The survey also
points out a significant divergence in the spending plans of manufacturing
companies relative to retailers and wholesalers. Influenced by strong export
growth, capital spending by manufacturers is estimated to rise 7.2%.
Conversely, weak consumer spending has resulted in retailers and wholesalers
cutting their capital spending estimates by 4%. The more cautious approach to
business spending may be an indication that overall economic growth in 1996
will be modest.
THE MARKET
Only a few months ago, the municipal market was viewing benign inflation
data, a soft economy and a very manageable supply of tax-exempt securities as
the necessary ingredients for sustaining last year's strong market gains.
While the technical condition (good demand for and moderate issuance of new
municipal bonds) continues to be a positive factor for the market, stronger
economic and inflation reports have exerted a negative effect on bond prices.
When compared to other bond markets, however, municipals have generally fared
relatively well. If the likelihood of an imminent major tax law change
continues to diminish, we believe that more investors will again realize the
value of tax-exempt funds.
THE PORTFOLIO
The portfolio continues to be structured defensively: bonds bearing high
coupons and premium prices comprise the majority of the portfolio's
structure. The duration (a measure of price risk) approximates that of a fund
which holds primarily intermediate-maturity bonds. In view of the recent
stronger economic and inflation readings, we believe this portfolio's current
structure, along with its focus on income versus capital appreciation, will
help lessen price volatility. In our view, this is evident in the relatively
narrow price band within which the stock price has been quoted.
We believe the portfolio's current posture can serve it well if still
higher interest rates lie ahead. However, we are mindful of both the
inherently limited supply of bonds available for purchase and also of the
market's general tendency to reach an oversold position followed by a
dramatic move the other way. We are focusing our efforts on seeking to
maximize the potential for generating tax-free income while selectively
selling those holdings which are nearing possible redemption.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
April 15, 1996
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.
*** Annualized distribution rate per share is based upon dividends per
share paid from net investment income during the period, divided by the
market price per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
ARIZONA-3.6%
Phoenix Industrial Development Authority, Revenue
(Christian Care Retirement Apartments)
10.25%, 1/1/2018 (Prerefunded 1/1/1998) (a)............................. $ 9,520,000 $ 10,691,531
Tempe Industrial Development Authority, IDR
(California Micro Devices Corp. Project) 10.50%, 3/1/2018............... 7,535,000 8,346,293
ARKANSAS-1.8%
Fayetteville Public Facilities Board, Revenue
Refunding (Butterfield Trail Village Project):
8.25%, 9/1/2000....................................................... 1,415,000 1,416,882
9.50%, 9/1/2014....................................................... 7,785,000 8,490,477
CALIFORNIA-2.2%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
6.50%, 1/1/2032......................................................... 12,000,000 12,003,000
COLORADO-5.7%
Bent County, COP (Medium Security Correctional Facility Project) 9.50%, 7/15/2013 14,030,000 14,794,495
Colorado Health Facilities Authority, Revenue,
Refunding (Rocky Mountain Adventist) 6.625%, 2/1/2013................... 3,450,000 3,464,456
Colorado Post-Secondary Educational Facilities Authority, Revenue
(University of Denver Project) 9%, 12/1/2007 (Prerefunded 12/1/1997) (a) 6,100,000 6,725,311
City and County of Denver, Airport Revenue 8%, 11/15/2025................... 5,000,000 5,614,200
FLORIDA-11.3%
Escambia County, PCR (Champion International Corp. Project):
5.875%, 6/1/2022........................................................ 5,000,000 4,812,300
6.90%, 8/1/2022......................................................... 7,000,000 7,393,750
Florida Board of Education, Capital Outlay 8.373%, 6/1/2019 (b,c)........... 20,000,000 21,850,000
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 4,364,645
8.75%, 5/1/2007 (Prerefunded 5/1/1997) (a)............................ 6,000,000 6,425,160
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015...................................................... 3,000,000 3,022,530
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022....................................................... 9,150,000 9,227,226
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
GEORGIA-4.5%
Atlanta Urban Residential Finance Authority, Residential Housing Revenue
(Carter Hall Project) 8.50%, 1/1/2018................................... $ 10,730,000 $ 11,027,221
Private Colleges and Universities Facilities Authority, Revenue,
Refunding (Clark Atlanta University Project)
8.25%, 1/1/2015 (Prerefunded 1/1/2003) (a).............................. 10,770,000 13,225,022
HAWAII-1.0%
Hawaii Department of Transportation, Special Facility Revenue
(Caterair International Corp. Project) 10.125%, 12/1/2010............... 5,400,000 5,584,248
ILLINOIS-8.4%
Chicago-O'Hare International Airport, Special Facility Revenue:
Refunding (Delta Airlines Project) 6.45%, 5/1/2018...................... 3,855,000 3,861,669
(United Airlines Inc. Project) 8.95%, 5/1/2018.......................... 9,595,000 10,913,641
Illinois Health Facilities Authority, Revenue,
Refunding (Ravenswood Hospital Medical Center Project) 8.80%, 6/1/2006.. 8,000,000 8,440,160
Robbins, RRR (Robbins Resource Recovery Partners):
9.25%, 10/15/2014....................................................... 14,050,000 11,240,000
9.25%, 10/15/2016....................................................... 5,700,000 4,560,000
Saint Clair County, East Saint Louis School District No. 189
9%, 11/1/2006........................................................... 5,500,000 5,939,945
INDIANA-5.3%
Indianapolis Airport Authority, Special Facility Revenue
(United Airlines Inc. Project) 6.50%, 11/15/2031........................ 24,000,000 23,741,280
Terre Haute, SWDR (International Minerals and Chemicals Corp.)
8.70%, 3/15/2003........................................................ 4,200,000 4,476,612
KENTUCKY-5.5%
Kenton County Airport Board, Airport Revenue
(Special Facilities-Delta Airlines Project):
7.50%, 2/1/2020....................................................... 10,000,000 10,716,700
6.125%, 2/1/2022...................................................... 8,000,000 7,669,360
Kentucky Development Finance Authority, Hospital Improvement Revenue,
Refunding (Ashland Hospital-Kings Project):
9.75%, 8/1/2005....................................................... 5,000,000 5,481,650
9.75%, 8/1/2011....................................................... 1,135,000 1,240,237
9.75%, 8/1/2011 (Prerefunded 2/1/1998) (a)............................ 1,865,000 2,077,237
9.875%, 2/1/2012 (Prerefunded 2/1/1998) (a)........................... 2,000,000 2,237,440
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
LOUISIANA-4.3%
East Baton Rouge Sewage Commission, Sewer Revenue
9.25%, 9/1/2012 (Prerefunded 9/1/1997) (a).............................. $ 11,425,000 $ 12,633,422
Parish of Saint James, SWDR (Freeport-McMoRan Partnership Project)
7.70%, 10/1/2022........................................................ 10,000,000 10,221,600
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 3,327,088
MARYLAND-.5%
Baltimore County, PCR,
Refunding (Bethlehem Steel Corp. Project) 7.50%, 6/1/2015............... 2,500,000 2,581,250
MASSACHUSETTS-.5%
Massachusetts Health and Educational Facilities Authority, Revenue,
Refunding (Beth Israel Hospital Issue) 8.624%, 7/1/2025 (Insured; AMBAC) (b) 3,000,000 2,947,500
MICHIGAN-1.0%
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021..... 5,000,000 5,481,650
MISSISSIPPI-3.8%
Claiborne County, PCR
(Middle South Energy Inc.):
9.50%, 12/1/2013...................................................... 2,000,000 2,255,420
9.875%, 12/1/2014..................................................... 10,180,000 11,567,330
Refunding (System Energy Resources, Inc.) 6.20%, 2/1/2026 .............. 7,000,000 6,794,900
NEVADA-.8%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032..................... 4,000,000 4,269,360
NEW HAMPSHIRE-4.7%
New Hampshire Industrial Development Authority, PCR
(Public Service Co. Project):
7.65%, Series A, 5/1/2021............................................. 15,645,000 16,387,512
7.65%, Series C, 5/1/2021............................................. 3,500,000 3,666,110
(United Illumination Co. Project)
9.375%, 7/1/2012 ..................................................... 4,950,000 5,373,176
NEW JERSEY-3.3%
New Jersey Health Care Facilities Financing Authority, Revenue
(Christian Health Care Center) 8.75%, 7/1/2018 (Insured; MBIA).......... 16,810,000 17,806,665
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK-5.8%
Housing Corp. of New York, Revenue 9%, 11/1/2017 (Prerefunded 11/1/1997) (a) $ 12,400,000 $ 13,632,188
New York City Municipal Water Finance Authority, Water and Sewer System Revenue
9%, 6/15/2017 (Prerefunded 6/15/1997) (a)............................... 10,000,000 10,831,500
New York State Energy Research and Development Authority, Electric Facilities Revenue
(Long Island Lighting Co.):
7.15%, 2/1/2022....................................................... 3,000,000 3,068,400
6.90%, 8/1/2022....................................................... 3,275,000 3,302,477
OHIO-.8%
Springdale Hospital Facilities, First Mortgage Revenue
(Southwestern Ohio Seniors' Services, Inc.) 6%, 11/1/2023............... 4,500,000 4,193,775
PENNSYLVANIA-8.8%
Butler County Industrial Development Authority, First Mortgage Revenue
(Saint John Lutheran Care Center):
9.75%, Series A, 10/1/1998............................................ 470,000 503,398
Refunding, 10%, Series A1, 10/1/2017.................................. 8,450,000 9,627,930
Refunding, 10%, Series A2, 10/1/2017.................................. 940,000 1,071,036
Cambria County Hospital Development Authority, HR,
Refunding (Conemaugh Valley Memorial Hospital) 8.875%, 7/1/2018......... 7,000,000 7,519,960
Lehigh County General Purpose Authority, Revenue (Wiley House)
9.50% 11/1/2016......................................................... 3,000,000 3,219,720
Montgomery County Industrial Development Authority, First Mortgage Revenue
(Meadowood Corp. Project):
8.25%, 12/1/2018...................................................... 3,750,000 3,828,038
Refunding, 10.25%, 12/1/2020.......................................... 5,000,000 5,540,900
Zero Coupon, 12/1/2020................................................ 4,276,125 346,409
Pennsylvania Housing Finance Agency, SFMR 8.111%, 4/1/2025 (b).............. 6,000,000 5,850,000
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016.................................... 5,200,000 5,564,988
York County Hospital Authority, Revenue,
Refunding (Health Center - Lutheran Social Services) 6.50%, 4/1/2022.... 4,250,000 4,105,457
SOUTH CAROLINA-1.7%
South Carolina Housing Authority, Homeownership Mortgage Revenue 9%, 7/1/2018 690,000 692,339
Spartanburg County, Hospital Facilities Revenue
(Spartanburg General Hospital System) 8.868%, 4/13/2022 (b)............. 7,700,000 8,239,000
TENNESSEE-1.4%
Gatlinburg, COP (Gatlinburg Convention Center Inc.)
9.25%, 12/1/2012 (Prerefunded 12/1/1997) (a)............................ 6,715,000 7,474,399
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
TEXAS-7.1%
Harris County Health Facilities Development Corp., HR (Hermann Trust)
9%, 10/1/2017 (Prerefunded 10/1/1997) (a)............................... $ 15,000,000 $ 16,419,000
Port of Corpus Christi Industrial Development Corp., Revenue
(Valero Refinancing and Marketing Co.) 10.25%, 6/1/2017................. 6,450,000 7,010,698
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue, Refunding 6.90%, 7/2/2024......... 11,000,000 11,697,840
Tyler Health Facilities Development Corp., HR, Refunding (East Texas Medical Center
Regional Healthcare System Project) 6.75%, 11/1/2025.................... 3,000,000 2,921,190
UTAH-2.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018..... 10,000,000 10,648,700
VIRGINIA-.9%
Fairfax County Water Authority, Revenue 7.77%, 4/1/2029 (b,c)............... 5,000,000 4,531,250
WISCONSIN-1.9%
Wisconsin Housing and Economic Development Authority, Homeownership Revenue
8.949%, 7/1/2025 (b,c).................................................. 10,000,000 10,137,500
WYOMING-.8%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024............................................................ 2,200,000 2,304,016
6.90%, 9/1/2024......................................................... 2,000,000 2,075,840
_________
TOTAL INVESTMENTS
(cost $511,796,869)..................................................... $536,005,339
=============
</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 Resources 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 15.5%
AA Aa AA 8.0
A A A 4.3
BBB Baa BBB 25.0
BB Ba BB 11.7
Not Rated (f) Not Rated (f) Not Rated (f) 35.5
_______
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) 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,
1996, these securities amounted to $36,518,750 or 6.6% 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 March 31, 1996, the Fund had $146,203,774 (26.3% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $511,796,869)-see statement..................................... $536,005,339
Cash.................................................................... 7,157,122
Interest receivable..................................................... 12,573,241
Prepaid expenses........................................................ 41,249
___________
555,776,951
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $353,908
Accrued expenses........................................................ 227,456 581,364
________ ___________
NET ASSETS.................................................................. $555,195,587
=============
REPRESENTED BY:
Paid-in capital......................................................... $531,824,545
Accumulated undistributed investment income-net......................... 3,823,682
Accumulated net realized (loss) on investments.......................... (4,661,110)
Accumulated net unrealized appreciation on investments-Note 3........... 24,208,470
___________
NET ASSETS at value, applicable to 56,188,316 outstanding shares of
Common Stock, equivalent to $9.88 per share (500 million shares
of $.001 par value authorized).......................................... $555,195,587
=============
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $21,841,776
EXPENSES:
Management fee-Note 2(a).............................................. $ 2,116,683
Shareholder servicing costs........................................... 99,848
Shareholders' reports................................................. 58,720
Professional fees..................................................... 50,377
Custodian fees-Note 2(b).............................................. 49,060
Registration fees..................................................... 35,028
Directors' fees and expenses-Note 2(c)................................ 31,925
Miscellaneous......................................................... 11,238
_________
TOTAL EXPENSES.................................................. 2,452,879
___________
INVESTMENT INCOME-NET........................................... 19,388,897
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $ 2,808,438
Net unrealized (depreciation) on investments............................ (7,984,469)
_________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (5,176,031)
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $14,212,866
=============
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1996
1995 (UNAUDITED)
________ ___________
OPERATIONS:
<S> <C> <C>
Investment income-net.................................................. $ 39,777,735 $ 19,388,897
Net realized gain (loss) on investments................................ (7,398,496) 2,808,438
Net unrealized appreciation (depreciation) on investments for the period 20,634,913 (7,984,469)
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. 53,014,152 14,212,866
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................. (39,758,554) (18,879,289)
_____________ _____________
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c)......................................... 5,482,758 __
_____________ _____________
TOTAL INCREASE (DECREASE) IN NET ASSETS.............................. 18,738,356 (4,666,423)
NET ASSETS:
Beginning of period.................................................... 541,123,654 559,862,010
_____________ _____________
End of period (including undistributed investment income-net:
$3,314,074 in 1995 and $3,823,682 in 1996)........................... $559,862,010 $555,195,587
============= =============
SHARES SHARES
_____________ _____________
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED 558,960 __
============= =============
</TABLE>
See independent accountants' review report and 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 period indicated. This
information has been derived from the financial statements and market price
data for the Fund's shares.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31, 1996
-------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED)
_______ _______ _______ _______ _______ ___________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 9.79 $ 9.96 $10.10 $10.43 $ 9.73 $ 9.96
_______ _______ _______ _______ _______ ________
INVESTMENT OPERATIONS:
Investment income-net................. .78 .75 .75 .73 .71 .35
Net realized and unrealized gain (loss)
on investments...................... .27 .17 .31 (.69) .23 (.09)
_______ _______ _______ _______ _______ ________
TOTAL FROM INVESTMENT OPERATIONS. 1.05 .92 1.06 .04 .94 .26
_______ _______ _______ _______ _______ ________
DISTRIBUTIONS:
Dividends from investment income-net.. (.76) (.75) (.73) (.72) (.71) (.34)
Dividends from net realized gain
on investments...................... (.12) (.03) - (.02) - -
_______ _______ _______ _______ _______ ________
TOTAL DISTRIBUTIONS................. (.88) (.78) (.73) (.74) (.71) (.34)
_______ _______ _______ _______ _______ ________
Net asset value, end of period........ $ 9.96 $10.10 $10.43 $ 9.73 $ 9.96 $ 9.88
======= ====== ====== ====== ====== ======
Market Value, end of period......... $ 10 1\2 $10 5\8 $ 11 1\8 $ 9 7\8 $ 9 5\8 $ 9 7\8
======= ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(1)................ 14.80% 9.14% 12.40% (4.63%) 4.91% 12.27%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .88% .88% .87% .86% .87% .87%(2)
Ratio of net investment income to
average net assets.................. 7.99% 7.56% 7.40% 7.24% 7.30% 6.85%(2)
Portfolio Turnover Rate............... 6.43% 21.80% 11.59% 4.85% 13.68% 12.91%(3)
Net Assets, end of period (000's Omitted) $510,120 $533,151 $565,589 $541,124 $559,862 $555,196
(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:
Dreyfus Strategic Municipals, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a diversified closed-end management
investment company. The Fund's investment objective is to maximize current
income exempt from Federal income tax to the extent consistent with the
preservation of capital. 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 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) 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.
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
On March 27, 1996, the Board of Directors declared a cash dividend of
$.056 per share from investment income-net, payable on
April 25, 1996 to shareholders of record as of the close of business on April
11, 1996.
(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 value
of the Fund's average weekly 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, 11\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, 1996.
(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 six months ended March 31,
1996 amounted to $49,060.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund 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
(provided the Fund's assets exceed $100 million).
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the six months ended March 31, 1996,
amounted to $71,441,443 and $79,114,714, respectively.
At March 31, 1996, accumulated net unrealized appreciation on investments
was $24,208,470, consisting of $31,876,811 gross unrealized appreciation and
$7,668,341 gross unrealized depreciation.
At March 31, 1996, 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.
REVIEW REPORT OF ERNST & YOUNG LLP, 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, 1996, and the related statements of operations and changes in
net assets and financial highlights for the six month period ended March 31,
1996. 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, 1995 and financial highlights for each of the five years in the
period ended September 30, 1995 and in our report dated November 7, 1995, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
[Ernst & Young LLP signature logo]
New York, New York
May 7, 1996
DREYFUS STRATEGIC MUNICIPALS, INC.
PROXY RESULTS (UNAUDITED)
During the fiscal year ended September 30, 1995, stockholders voted on
the following proposals presented at the annual stockholders' meeting held on
March 31, 1995. The description of each proposal and the number of shares
voted are as follows:
<TABLE>
<CAPTION>
FOR AUTHORITY WITHHELD
_______ __________________
1.TO ELECT THREE CLASS I AND ONE CLASS II DIRECTORS:*
<S> <C> <C>
CLASS I
Hodding Carter, III................................. 41,109,501 863,874
Joseph S. DiMartino................................. 41,218,648 754,727
Richard C. Leone.................................... 41,222,705 750,670
CLASS II
Robin A. Smith...................................... 41,152,628 820,747
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
_______ ________ ________
2.TO RATIFY THE SELECTION OF ERNST & YOUNG LLP
<S> <C> <C> <C>
AS INDEPENDENT AUDITORS OF THE FUND....................... 40,840,491 343,845 820,747
</TABLE>
* The terms of these Class I and Class II Directors expire in 1998 and 1996,
respectively. Ehud Houminer is also a Class II Director whose term expires in
1998, and David W. Burke, Hans C. Mautner and John E. Zuccotti are Class III
Directors whose terms expire in 1997.
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
Robert B. Rivel, DIRECTOR EMERITUS
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
Vice President and Assistant Secretary
Elizabeth Bachman
Assistant Treasurer
John J. Pyburn
Assistant Treasurer
Joseph F. Tower, III
Assistant Secretary
Margaret M. Pardo
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
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, Money and Business
Section under the heading "Closed-End Bond Funds-National Municipal Bond
Funds" every Sunday.
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. 970SA963
[Dreyfus logo]
Strategic
Municipals, Inc.
Semi-Annual
Report
March 31, 1996
