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, 1996,
your portfolio produced a total return, including bond price changes and
interest income, of 6.20%, based on net asset value.* Income dividends exempt
from Federal personal income taxes of $.672 per share were paid to
shareholders.** This is equivalent to a tax-free distribution rate per share
of 6.72%.***
THE ECONOMY
Low inflation in the face of ongoing strong growth in new jobs and low
unemployment remained the big economic story over the reporting period. On
September 24, the Federal Reserve Board's Open Market Committee ("the Fed")
again decided against raising interest rates. Despite what appeared to be a
sharp split within the Fed, the Central Bank kept the Fed Funds rate at
5.25%. (A news leak reported that eight of the 12 presidents of the regional
Federal Reserve Banks were concerned about inflation and leaning toward an
increase in rates.)
The potential resurgence in inflation has been a primary concern of the
Fed as the economic expansion continues. Yet inflation has remained subdued.
The Consumer Price Index has risen just 2.9% over the past twelve months.
Furthermore, indications of inflation at crude, intermediate and finished
goods levels, as measured by the Producer Price Index, remained well-behaved.
There appear to be few signs of inflation in the production pipeline.
The past inverse relationship between unemployment and inflation has so
far not prevailed during this economic expansion. Most recently, the
unemployment rate fell to 5.1%, its lowest level in seven years. Job growth
has continued to be robust. Yet despite signs of a tightening labor market,
wage gains, considered by many economists to be a harbinger of future
inflation, remained modest, as have virtually all measures of inflation.
Buoyed by such good news, consumers remained confident. The Conference
Board's Consumer Confidence Index has risen since the beginning of the year
and was near a six-year high by the end of the reporting period. Yet, there
were some signs that consumer spending was moderating from its strong pace in
the first half of the year. Retail sales remained subdued all summer.
Consumer borrowing rose over the reporting period, continuing the three-year
trend of steady increases in credit.
Industrial production has risen consistently since February and
businesses showed some signs of inventory accumulation by late summer.
Corporate pricing power still seems to be in check. In a survey of member
corporations released in mid-September, the National Federation of
Independent Business reported that only 20% of its respondents planned to
increase prices in coming months.
Despite all these favorable developments, we are alert for signs of
potential economic excess that could result in a resurgence in inflation.
THE MARKET
The municipal bond market, like its taxable counterparts, has been
buffeted by an unprecedented amount of price volatility during the past year.
The market continues to fixate on the periodic releases of
key economic data, and this has resulted in large and dramatic swings in bond
prices and yields. At this juncture it appears that for now the Fed will
maintain a neutral stance regarding interest rate policy. However, there
continues to be no clear consensus regarding the future direction of the
economy or its strength, or of inflation, as evidenced by a fairly equal
division of opinion among economists. The prevailing uncertain state of
affairs has taken its toll on the psyche (not to mention the profitability)
of many market traders as a sharp decline in prices one day is quickly
followed the next by a reverse move.
In view of the municipal bond market's price activity over the past year,
we restate that our posture is to maintain a long-term perspective that is
not unduly influenced by short-term price swings. The sharp market sell-off
last winter, followed by a strong rally during the summer, followed recently
by yet another climb and then a subsequent fall in yields, underscores this
point!
THE PORTFOLIO
At the time of our last letter to shareholders (dated April 15, 1996) the
fixed-income markets were in the throes of a major bear market move. This
Fund, because of its primary objective of maximizing current tax-exempt
income, is structured to weather such an adverse move. Conversely, when the
market is in a bull phase (e.g., 1995) this Fund will likely experience lower
values in its portfolio holdings than those funds that are geared towards
total return (capital gains plus income). Looking back over the past several
months, the Fund has experienced significantly less price volatility than the
market in general. Both the Fund's net asset value and stock price per share
have deviated only minimally over the past twelve months from the levels at
which they began the year.
Going forward, our strategy will remain as it has been - to emphasize the
maximization of tax-exempt dividend income. In periods such as this,
characterized by unprecedented volatility, we will continue to be guided by
the Fund's investment objective.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 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.
*** 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.
SELECTED INFORMATION SEPTEMBER 30, 1996 (UNAUDITED)
<S> <C>
Market Price per share September 30, 1996........................... $10
Shares Outstanding September 30, 1996............................... 56,676,916
New York Stock Exchange Ticker Symbol............................... LEO
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE (NEW YORK STOCK EXCHANGE)
FISCAL YEAR ENDED SEPTEMBER 30, 1996
____________________________________________________________________________________________
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 1995 MARCH 31, 1996 JUNE 30, 1996 SEPTEMBER 30, 1996
___________ ___________ ___________ __________________
<S> <C> <C> <C> <C>
High $9 3\4 $10 1\8 $10 1\8 $10 1\4
Low 9 3\8 9 5\8 9 1\4 9 7\8
Close 9 1\2 9 7\8 10 1\8 10
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE GAIN based on change in Market Price*
<S> <C> <C>
September 23, 1987 (commencement of operations) through September 30, 1996............ 100.30%
October 1, 1991 through September 30, 1996............................................ 36.52
October 1, 1995 through September 30, 1996............................................ 11.23
January 1, 1996 through September 30, 1996............................................ 10.76
April 1, 1996 through September 30, 1996.............................................. 4.79
July 1, 1996 through September 30, 1996............................................... .47
NET ASSET VALUE PER SHARE
September 23, 1987 (commencement of operations)...... $ 9.32
September 30, 1995................................... 9.96
December 31, 1995.................................... 10.15
March 31, 1996....................................... 9.88
June 30, 1996........................................ 9.81
September 30, 1996................................... 9.88
PERCENTAGE GAIN based on change in Net Asset Value*
September 23, 1987 (commencement of operations) through September 30, 1996............ 112.32%
October 1, 1991 through September 30, 1996............................................ 42.19
October 1, 1995 through September 30, 1996............................................ 6.20
January 1, 1996 through September 30, 1996............................................ 2.42
April 1, 1996 through September 30, 1996.............................................. 3.48
July 1, 1996 through September 30, 1996............................................... 2.45
* With dividends reinvested.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.9% AMOUNT VALUE
_______ _______
<S> <C> <C>
ARIZONA-3.4%
Phoenix Industrial Development Authority, Revenue
(Christian Care Retirement Apartments)
10.25%, 1/1/2018 (Prerefunded 1/1/1998) (a)............................. $ 9,520,000 $ 10,419,735
Tempe Industrial Development Authority, IDR
(California Micro Devices Corp. Project) 10.50%, 3/1/2018............... 7,535,000 8,184,517
ARKANSAS-1.7%
Fayetteville Public Facilities Board, Revenue
Refunding (Butterfield Trail Village Project):
8.25%, 9/1/2000....................................................... 1,105,000 1,106,525
9.50%, 9/1/2014....................................................... 7,785,000 8,428,819
CALIFORNIA-2.6%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue:
Zero Coupon, 1/1/2025................................................... 43,860,000 7,003,565
Zero Coupon, 1/1/2027................................................... 48,000,000 6,731,040
COLORADO-5.5%
Bent County, COP (Medium Security Correctional Facility Project) 9.50%, 7/15/2013 13,700,000 14,461,857
Colorado Health Facilities Authority, Revenue,
Refunding (Rocky Mountain Adventist) 6.625%, 2/1/2013................... 3,450,000 3,484,293
Colorado Post-Secondary Educational Facilities Authority, Revenue
(University of Denver Project) 9%, 12/1/2007 (Prerefunded 12/1/1997) (a) 6,100,000 6,570,432
City and County of Denver, Airport Revenue 8%, 11/15/2025................... 5,000,000 5,594,950
FLORIDA-9.9%
Escambia County, PCR (Champion International Corp. Project)
6.90%, 8/1/2022......................................................... 7,000,000 7,371,840
Florida Board of Education, Capital Outlay 8.80%, 6/1/2019 (b,c)............ 20,000,000 22,475,000
Florida Housing Finance Agency, MFHR
(Palm Aire Retirement Facility Project) 10%, 1/1/2020 (d)............... 4,724,245 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 4,253,350
8.75%, 5/1/2007 (Prerefunded 5/1/1997) (a)............................ 6,000,000 6,279,180
Palm Beach County, Solid Waste IDR:
(Okeelanta Power Limited Partnership Project)
6.70%, 2/15/2015...................................................... 3,000,000 2,650,260
(Osceola Power Limited Partnership Project)
6.95%, 1/1/2022....................................................... 9,150,000 8,191,812
GEORGIA-4.4%
Atlanta Urban Residential Finance Authority, Residential Housing Revenue
(Carter Hall Project) 8.50%, 1/1/2018................................... 10,730,000 11,054,368
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
GEORGIA (CONTINUED)
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 $ 13,053,348
HAWAII-1.0%
Hawaii Department of Transportation, Special Facility Revenue
(Caterair International Corp. Project) 10.125%, 12/1/2010............... 5,200,000 5,380,648
ILLINOIS-8.9%
Chicago-O'Hare International Airport, Special Facility Revenue:
Refunding (Delta Airlines Project) 6.45%, 5/1/2018...................... 3,855,000 3,888,500
(United Airlines Inc. Project) 8.95%, 5/1/2018.......................... 9,440,000 10,763,110
Illinois Health Facilities Authority, Revenue,
Refunding (Ravenswood Hospital Medical Center Project) 8.80%, 6/1/2006.. 8,000,000 8,318,640
Robbins, RRR (Robbins Resource Recovery Partners):
9.25%, 10/15/2014....................................................... 14,050,000 14,260,750
9.25%, 10/15/2016....................................................... 5,700,000 5,785,500
Saint Clair County, East Saint Louis School District No. 189
9%, 11/1/2006........................................................... 5,500,000 5,851,340
INDIANA-5.2%
Indianapolis Airport Authority, Special Facility Revenue
(United Airlines Inc. Project) 6.50%, 11/15/2031........................ 24,000,000 23,931,840
Terre Haute, SWDR (International Minerals and Chemicals Corp.)
8.70%, 3/15/2003........................................................ 4,200,000 4,420,920
KENTUCKY-5.4%
Kenton County Airport Board, Airport Revenue
(Special Facilities-Delta Airlines Project):
7.50%, 2/1/2020....................................................... 10,000,000 10,724,700
6.125%, 2/1/2022...................................................... 8,000,000 7,838,960
Kentucky Development Finance Authority, Hospital Improvement Revenue,
Refunding (Ashland Hospital-Kings Project):
9.75%, 8/1/2005....................................................... 5,000,000 5,370,050
9.75%, 8/1/2011....................................................... 1,135,000 1,223,950
9.75%, 8/1/2011 (Prerefunded 2/1/1998) (a)............................ 1,865,000 2,029,642
9.875%, 2/1/2012 (Prerefunded 2/1/1998) (a)........................... 2,000,000 2,183,720
LOUISIANA-4.1%
East Baton Rouge Sewage Commission, Sewer Revenue
9.25%, 9/1/2012 (Prerefunded 9/1/1997) (a).............................. 11,425,000 12,308,952
Parish of Saint James, SWDR (Freeport-McMoRan Partnership Project)
7.70%, 10/1/2022........................................................ 10,000,000 10,237,400
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MAINE-.6%
Maine Health and Higher Educational Facilities Authority, Revenue
(Waterville Osteopathic Hospital Project)
9.875%, 7/1/2013 (Prerefunded 7/1/1997) (a)............................. $ 2,970,000 $ 3,187,077
MARYLAND-.5%
Baltimore County, PCR,
Refunding (Bethlehem Steel Corp. Project) 7.50%, 6/1/2015............... 2,500,000 2,585,875
MASSACHUSETTS-.5%
Massachusetts Health and Educational Facilities Authority, Revenue,
Refunding (Beth Israel Hospital Issue) 8.522%, 7/1/2025 (Insured; AMBAC) (b) 3,000,000 2,947,500
MICHIGAN-3.3%
Michigan Hospital Finance Authority, HR,
Refunding (Genesys Health System Obligated Group) 8.125%, 10/1/2021..... 5,000,000 5,572,550
Michigan Strategic Fund, SWDR,
Refunding (Genesee Power Station Project) 7.50%, 1/1/2021............... 7,000,000 6,950,860
Wayne Charter County, Special Airport Facilities Revenue,
Refunding (Northwest Airlines, Inc.) 6.75%, 12/1/2015................... 5,700,000 5,798,553
MISSISSIPPI-3.7%
Claiborne County, PCR
(Middle South Energy Inc.):
9.50%, 12/1/2013...................................................... 2,000,000 2,223,100
9.875%, 12/1/2014..................................................... 10,180,000 11,392,743
Refunding (System Energy Resources, Inc.) 6.20%, 2/1/2026 .............. 7,000,000 6,754,020
NEVADA-.8%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032..................... 4,000,000 4,283,920
NEW HAMPSHIRE-4.5%
New Hampshire Industrial Development Authority, PCR:
(Public Service Co. Project):
7.65%, Series A, 5/1/2021 ............................................ 15,645,000 16,024,235
7.65%, Series C, 5/1/2021............................................. 3,500,000 3,584,840
(United Illumination Co. Project)
9.375%, 7/1/2012 ..................................................... 4,950,000 5,218,241
NEW JERSEY-3.5%
New Jersey Health Care Facilities Financing Authority, Revenue
(Christian Health Care Center) 8.75%, 7/1/2018 (Insured; MBIA).......... 16,810,000 18,934,616
NEW YORK-4.9
Housing Corp. of New York, Revenue 9%, 11/1/2017 (Prerefunded 11/1/1997) (a) 12,400,000 13,319,336
New York City Municipal Water Finance Authority, Water and Sewer System Revenue
9%, 6/15/2017 (Prerefunded 6/15/1997) (a)............................... 7,000,000 7,392,630
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York State Energy Research and Development Authority, Electric Facilities Revenue
(Long Island Lighting Co.):
7.15%, 2/1/2022....................................................... $ 3,000,000 $ 3,042,390
6.90%, 8/1/2022....................................................... 3,275,000 3,285,808
OHIO-.2%
Springdale Hospital Facilities, First Mortgage Revenue
(Southwestern Ohio Seniors' Services, Inc.) 6%, 11/1/2023............... 1,000,000 975,770
PENNSYLVANIA-8.6%
Butler County Industrial Development Authority, First Mortgage Revenue
(Saint John Lutheran Care Center):
9.75%, Series A, 10/1/1998............................................ 470,000 493,749
Refunding 10%, Series A1, 10/1/2017................................... 8,450,000 9,656,913
Refunding 10%, Series A2, 10/1/2017................................... 940,000 1,074,260
Cambria County Hospital Development Authority, HR,
Refunding (Conemaugh Valley Memorial Hospital) 8.875%, 7/1/2018......... 7,000,000 7,470,820
Lehigh County General Purpose Authority, Revenue (Wiley House)
9.50% 11/1/2016......................................................... 3,000,000 3,214,920
Montgomery County Industrial Development Authority, First Mortgage Revenue
(Meadowood Corp. Project):
8.25%, 12/1/2018...................................................... 3,750,000 3,855,225
Refunding 10.25%, 12/1/2020........................................... 5,000,000 5,521,800
Zero Coupon, 12/1/2020................................................ 4,276,125 351,455
Pennsylvania Housing Finance Agency, SFMR 8.414%, 4/1/2025 (b).............. 6,000,000 5,917,500
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corp.) 8.50%, 6/1/2016.................................... 5,200,000 5,603,832
York County Hospital Authority, Revenue,
Refunding (Health Center - Lutheran Social Services) 6.50%, 4/1/2022.... 4,250,000 4,181,405
SOUTH CAROLINA-2.4%
Piedmont Municipal Power Agency, Electric Revenue,
Refunding 6.55%, 1/1/2016............................................... 4,000,000 4,022,520
South Carolina Housing Authority, Homeownership Mortgage Revenue 9%, 7/1/2018 690,000 695,803
Spartanburg County, Hospital Facilities Revenue
(Spartanburg General Hospital System) 8.867%, 4/13/2022 (b)............. 7,700,000 8,210,125
TENNESSEE-1.3%
Gatlinburg, COP (Gatlinburg Convention Center Inc.)
9.25%, 12/1/2012 (Prerefunded 12/1/1997) (a)............................ 6,715,000 7,302,630
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
TEXAS-7.0%
Harris County Health Facilities Development Corp., HR (Hermann Trust)
9%, 10/1/2017 (Prerefunded 10/1/1997) (a)............................... $ 13,000,000 $ 13,899,080
Port of Corpus Christi Industrial Development Corp., Revenue
(Valero Refinancing and Marketing Co.) 10.25%, 6/1/2017................. 6,450,000 6,862,091
Texas Department of Housing and Community Affairs,
Collateralized Home Mortgage Revenue, Refunding 6.90%, 7/2/2024......... 11,000,000 11,663,630
Tyler Health Facilities Development Corp., HR,
Refunding (East Texas Medical Center Regional Health Care System Project)
6.75%, 11/1/2025........................................................ 3,000,000 3,022,620
West Side Calhoun County Navigation District, SWDR
(Union Carbide Chemicals Project) 6.40%, 5/1/2023....................... 2,755,000 2,754,972
UTAH-1.3%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration) 9.25%, 7/1/2018..... 10,000,000 7,139,300
VIRGINIA-.9%
Fairfax County Water Authority, Revenue 7.643%, 4/1/2029 (b,c).............. 5,000,000 4,850,000
WASHINGTON-1.1%
Public Utility District No. 1 of Pend Orielle County, Electric Revenue
6.375%, 1/1/2015........................................................ 6,000,000 6,091,680
WISCONSIN-1.9%
Wisconsin Housing and Economic Development Authority, Homeownership Revenue
8.949%, 7/1/2025 (b,c).................................................. 10,000,000 10,225,000
WYOMING-.8%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024............................................................ 2,200,000 2,324,674
6.90%, 9/1/2024......................................................... 2,000,000 2,095,640
___________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $523,516,648)..................................................... $547,068,951
==============
SHORT-TERM MUNICIPAL INVESTMENTS-.1%
CALIFORNIA;
Irvine Ranch Water District, VRDN (District Nos. 140-240-105-250),
3.80% (LOC; Bank of America National Trust & Savings Association) (e,f). $ 100,000 $ 100,000
FLORIDA;
University Athletic Association Inc., Capital Improvement Revenue, VRDN
(University of Florida Stadium Project) 3.95%, (LOC; Suntrust Bank) (e,f) 100,000 100,000
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1996
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MASSACHUSETTS;
Massachusetts, VRDN 3.95%, (LOC; National Westminster Bank PLC) (e,f)... $ 400,000 $ 400,000
NEW YORK;
New York City, VRDN 3.90%, (LOC; Morgan Guaranty Trust Co.) (e,f)....... 200,000 200,000
___________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $800,000)......................................................... $ 800,000
==============
TOTAL INVESTMENTS-100.0%
(cost $524,316,648)..................................................... $547,868,951
==============
</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 RRR Resources Recovery Revenue
IDR Industrial Development Revenue SFMR Single Family Mortgage Revenue
LOC Letter of Credit SWDR Solid Waste Disposal Revenue
MBIA Municipal Bond Investors Assurance VRDN Variable Rate Demand Notes
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 13.9%
AA Aa AA 8.1
A A A 5.3
BBB Baa BBB 27.9
BB Ba BB 7.9
F1 MIG1, VMG1, P1 SP1, A1 .1
Not Rated (h) Not Rated (h) Not Rated (h) 36.8
_________
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) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
September 30, 1996, these securities amounted to $37,550,000 or 6.7% of
net assets.
(d) Non-income producing security; interest payment in default.
(e) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Secured by letters of credit.
(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 Manager to be of comparable quality to
those rated securities in which the Fund may invest.
(I) At September 30, 1996 the Fund had $140,739,092 (25.1% 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, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $524,316,648)-see statement..................................... $547,868,951
Cash.................................................................... 64,027
Interest receivable..................................................... 12,631,301
Prepaid expenses........................................................ 15,917
______________
560,580,196
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $367,442
Accrued expenses........................................................ 140,615 508,057
_____________ ______________
NET ASSETS ................................................................ $560,072,139
==============
REPRESENTED BY:
Paid-in capital......................................................... $536,590,865
Accumulated undistributed investment income-net......................... 4,077,614
Accumulated net realized (loss) on investments.......................... (4,148,643)
Accumulated net unrealized appreciation on investments-Note 4........... 23,552,303
______________
NET ASSETS at value applicable to 56,676,916 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $560,072,139
==============
NET ASSET VALUE, per share
($560,072,139 / 56,676,916 shares)...................................... $9.88
======
See notes to financial statements.
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $43,374,382
EXPENSES:
Management fee-Note 3(a).............................................. $ 4,183,713
Shareholder servicing costs........................................... 191,306
Custodian fees-Note 3(b).............................................. 99,822
Professional fees..................................................... 84,409
Shareholders' reports................................................. 73,363
Registration fees..................................................... 60,133
Directors' fees and expenses-Note 3(c)................................ 59,636
Miscellaneous......................................................... 33,374
_____________
TOTAL EXPENSES.................................................... 4,785,756
______________
INVESTMENT INCOME-NET............................................. 38,588,626
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 4:
Net realized gain on investments........................................ $ 3,320,905
Net unrealized (depreciation) on investments............................ (8,640,636)
_____________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (5,319,731)
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $33,268,895
===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC MUNICIPALS, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
_______________________________________
1995 1996
_______________ _______________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 39,777,735 $ 38,588,626
Net realized gain (loss) on investments................................. (7,398,496) 3,320,905
Net unrealized appreciation (depreciation) on investments for the year.. 20,634,913 (8,640,636)
_______________ _______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 53,014,152 33,268,895
_______________ _______________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (39,758,554) (37,825,086)
_______________ _______________
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c).......................................... 5,482,758 4,766,320
_______________ _______________
TOTAL INCREASE IN NET ASSETS.......................................... 18,738,356 210,129
NET ASSETS:
Beginning of year....................................................... 541,123,654 559,862,010
_______________ _______________
End of year (including undistributed investment income-net:
$3,314,074 in 1995 and $4,077,614 in 1996)............................ $559,862,010 $560,072,139
============== ================
SHARES SHARES
_______________ _______________
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED 558,960 488,600
============== ================
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: 1992 1993 1994 1995 1996
_______ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $ 9.96 $10.10 $10.43 $ 9.73 $ 9.96
_______ ________ ________ ________ ________
INVESTMENT OPERATIONS:
Investment income-net........................ .75 .75 .73 .71 .68
Net realized and unrealized gain (loss) on investments .17 .31 (.69) .23 (.09)
_______ ________ ________ ________ ________
TOTAL FROM INVESTMENT OPERATIONS........... .92 1.06 .04 .94 .59
_______ ________ ________ ________ ________
DISTRIBUTIONS:
Dividends from investment income-net......... (.75) (.73) (.72) (.71) (.67)
Dividends from net realized gain on investments (.03) - (.02) - -
_______ ________ ________ ________ ________
TOTAL DISTRIBUTIONS........................ (.78) (.73) (.74) (.71) (.67)
_______ ________ ________ ________ ________
Net asset value, end of year................. $10.10 $10.43 $ 9.73 $ 9.96 $ 9.88
======= ======= ======== ======== =========
Market Value, end of year.................... $ 10 5\8 $ 11 1\8 $ 9 7\8 $ 9 5\8 $10.00
======= ======= ======== ======== =========
TOTAL INVESTMENT RETURN*......................... 9.14% 12.40% (4.63%) 4.91% 11.23%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .88% .87% .86% .87% .86%
Ratio of net investment income to average net assets 7.56% 7.40% 7.24% 7.30% 6.92%
Portfolio Turnover Rate...................... 21.80% 11.59% 4.85% 13.68% 19.27%
Net Assets, end of year (000's Omitted)...... $533,151 $565,589 $541,124 $559,862 $560,072
*Calculated based on market value.
See notes to financial statements.
</TABLE>
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS
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. ("Mellon").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(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) as defined in the dividend reinvestment and cash
purchase plan.
On September 30, 1996, the Board of Directors declared a cash dividend of
$.056 per share from investment income-net, payable on October 28, 1996 to
shareholders of record as of the close of business on October 14, 1996.
DREYFUS STRATEGIC MUNICIPALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) 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 $4,148,600
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1996. If not
applied, $12,700 of the carryover expires in fiscal 2002, $58,200 expires in
fiscal 2003 and $4,077,700 expires in fiscal 2004.
NOTE 2-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed Funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. For the period ended September 30, 1996, the Fund did not
borrow under the line of credit.
NOTE 3-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, 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, 1996.
(B) The Fund compensates Mellon under a custody agreement for providing
custodial services to the Fund. During the year ended September 30, 1996,
$99,822 was paid to Mellon pursuant to the custody agreement.
(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.
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended September 30, 1996,
amounted to $109,010,904 and $105,550,345, respectively.
At September 30, 1996, accumulated net unrealized appreciation on
investments was $23,552,303, consisting of $30,675,387 gross unrealized
appreciation and $7,123,084 gross unrealized depreciation.
At September 30, 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.
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, 1996, 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 verification by
examination of securities held by the custodian as of September 30, 1996 and
confirmation of securities not held by the custodian by correspondence with
others. 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, 1996, 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 4, 1996
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, 1996 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 1996 calendar year
on Form 1099-DIV which will be mailed by January 31, 1997.
DREYFUS STRATEGIC MUNICIPALS, INC.
PROXY RESULTS (UNAUDITED)
During the fiscal year ended September 30, 1996, stockholders voted on
the following proposals presented at the annual stockholders' meeting held on
May 3, 1996. The description of each proposal and the number of shares voted
are as follows:
<TABLE>
<CAPTION>
FOR AUTHORITY WITHHELD
________ ___________________
<S> <C> <C>
1.TO ELECT TWO CLASS II DIRECTORS:*
CLASS II
Ehud Houminer......................................... 42,490,934 765,894
Robin A. Smith........................................ 42,490,932 765,896
FOR AGAINST ABSTAINED
______________ __________ ________________
2.TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS FOR THE FUND..................... 42,181,532 282,420 792,896
*The terms of these Class II Directors expire in 1999.
</TABLE>
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
Richard W. Ingram
Vice President and Assistant Treasurer
Mary A. Nelson
Vice President and Assistant Treasurer
Joseph F. Tower, III
Vice President and Assistant Secretary
Elizabeth Bachman
Vice President and Assistant Secretary
Douglas C. Conroy
PORTFOLIO MANAGERS
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Richard J. Moynihan
Jill C. Shaffro
Samuel J. Weinstock
Monica S. Wieboldt
INVESTMENT ADVISER
The Dreyfus Corporation
CUSTODIAN
Mellon Bank, N.A.
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-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
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
The Bank of New York
101 Barclay Street
New York, NY 10286
Printed in U.S.A. 970AR969
[Dreyfus logo]
Strategic
Municipals, Inc.
Annual Report
September 30, 1996
