LETTER TO SHAREHOLDERS
Dear Shareholder:
For the 12-month period ended May 31, 1994, Dreyfus Strategic Governments
Income, Inc. paid income dividends per share of $.925, which is equivalent to
a distribution rate per share of 9.25%, based on the closing market price of
$10.00 per share on May 31, 1994. The distribution rate was 8.98% per share
based on the closing net asset value per share of $10.30 on May 31, 1994.
Your Fund's net asset value per share was negatively affected in the wake
of the Federal Reserve Board's moves toward tightening via increases in the
Federal Funds rate. Since February, the Federal Reserve has increased the
Federal Funds rate four times. The unwinding of large leveraged and long
positions of many investors in the European markets resulted in sharper
decreases in the prices of those securities than in those in the U.S. Our
relatively lighter positions in those markets helped the Fund to outperform
many of its competitors during the period. Furthermore, the Fund's credit
quality restrictions prohibited us from holding emerging market debt. While
this acted as an opportunity loss for the portfolio during calendar year
1993, it helped the portfolio during the first five months of 1994, when that
segment suffered large price declines. Finally, the shorter maturity
restriction (the Fund's dollar-weighted average maturity cannot exceed 10
years) for the Fund helped relative performance.
Currently, the U.S. Treasury market appears to be in a bottoming process.
With long bond yields in the range of 7.50% to 7.65%, strong retail buyers
have appeared. However, the 7.00% to 7.25% level on long bonds seems to bring
in profit takers. We believe this could create a solid base building period
for the markets. Clearly, everyone will be closely watching economic reports
to judge whether or not more Federal Reserve tightening moves will be
justified. This should, in turn, set the stage for market performance. We are
carefully watching the market and will make adjustments to the portfolio
holdings when we deem them necessary.
We look forward to serving your investment needs.
Sincerely,
(Garitt A. Kono Signature Logo)
Garitt A. Kono
President
June 16, 1994
New York, N.Y.
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
SELECTED INFORMATION MAY 31,1994 (UNAUDITED)
<S> <C> <C>
Market Price per share May 31,1994.................................. $10
Shares Outstanding May 31,1994...................................... 14,960,617
New York Stock Exchange Ticker Symbol............................... DSI
MARKET PRICE (NEW YORK STOCK EXCHANGE)
</TABLE>
<TABLE>
FISCAL YEAR ENDED MAY 31,1994
-------------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
AUGUST 31,1993 NOVEMBER 30,1993 FEBRUARY 28,1994 MAY 31,1994
----------------- --------------------- ------------------- --------------
<S> <C> <C> <C> <C>
High $11 3/4 $11 7/8 $11 $10 7/8
Low 11 1/8 10 10 9 1/4
Close 11 5/8 10 3/4 10 1/2 10
</TABLE>
<TABLE>
<S> <C> <C>
PERCENTAGE GAIN based on change in Market Price*
June 24,1988 (commencement of operations) through May 31,1994......................... 46.42%
June 1,1993 through May 31,1994....................................................... (5.23)
September 1,1993 through May 31,1994.................................................. (8.25)
December 1,1993 through May 31,1994................................................... (2.82)
March 1,1994 through May 31,1994...................................................... (2.59)
NET ASSET VALUE PER SHARE
June 24,1988 (commencement of operations)............... $11.11
May 31,1993............................................. 11.03
August 31,1993.......................................... 11.13
November 30,1993........................................ 10.87
February 28,1994........................................ 10.78
May 31,1994............................................. 10.30
PERCENTAGE GAIN based on change in Net Asset Value*
June 24,1988 (commencement of operations) through May 31,1994......................... 62.86%
June 1,1993 through May 31,1994....................................................... 1.76
September 1,1993 through May 31,1994.................................................. (1.32)
December 1,1993 through May 31,1994................................................... (1.03)
March 1,1994 through May 31,1994...................................................... (2.29)
*With dividends reinvested.
</TABLE>
<TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF INVESTMENTS MAY 31, 1994
PRINCIPAL
BONDS AND NOTES-97.5% AMOUNT VALUE
------------ ------------
<S> <C> <C>
BANKING AND FINANCE-2.4% First Interstate Bancorp,
Notes, 10 1/2%, 1996......................... $ 1,000,000 $ 1,067,417
Household Financial,
Retractable Sr. Notes, 11.85%, 1996 1,446,132 (a) 1,505,712
RBSG Capital,
Notes (Gtd. by The Royal Bank of Scotland
Group PLC), 10 1/8%, 2004.................... 1,000,000 1,146,707
------------
3,719,836
------------
FOREIGN/
GOVERNMENTAL-35.3% Australian Government Securities:
Commonwealth Government Bonds:
13%, 1996.................................. 3,690,000 (b) 4,120,992
12%, 2001.................................. 2,214,000 (b) 2,627,797
Treasury Corp. of Victoria,
Bonds (Gtd. by The Government of Victoria),
8 1/4%, 2003............................... 3,690,000 (b) 3,484,467
British Government Securities;
Gilt Edged Securities, 10 1/2%, 1997 3,022,000 (c) 3,233,540
Canadian Government Securities:
Canadian Government Bonds, 10 3/4%, 2009..... 1,446,132 (a) 1,679,537
Hydro-Quebec,
Deb. (Gtd. by The Province of Quebec):
Ser. HX, 10 1/2%, 2021................... 1,446,132 (a) 1,547,361
Ser. IC, 9 5/8%, 2022.................... 1,446,132 (a) 1,427,187
Province of British Columbia:
Bonds, Ser. BCCG-1, 7 3/4%, 2003......... 3,615,329 (a) 3,366,594
Exchangeable Bonds, Ser. BCCD-F,
9 3/4%, 2001........................... 723,066 (a) 765,799
Province of New Brunswick,
Sinking Fund Deb., Ser. EE, 9 1/8%, 2002 1,084,599 (a) 1,079,176
Province of Newfoundland,
Sinking Fund Deb., 11 5/8%, 2007........... 2,000,000 2,508,860
Province of Ontario,
Bonds, 8%, 2003............................ 1,446,132 (a) 1,338,395
Province of Quebec,
Deb., 13 1/4%, 2014........................ 3,200,000 4,104,864
French Government Securities:
Credit Foncier of France,
Bonds (Gtd. by The Republic of France),
9 3/4%, 1995............................... 3,506,400 (d) 3,593,008
French Treasury Bonds,
9%, 1995................................... 4,441,286 (e) 4,534,109
German Government Securities;
Bundesrepublik Deutschland,
9%, 2000................................... 2,430,134 (f) 2,689,915
New Zealand Government Securities;
New Zealand Government Bonds:
10%, 1997.................................. 2,378,000 (g) 2,590,712
10%, 2002.................................. 5,945,000 (g) 6,947,862
Swedish Export Credit,
Notes, 6 1/2%, 2001.......................... 3,211,304 (h) 2,731,535
------------
54,371,710
------------
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1994
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------ ------------
FOREIGN/
SUPRANATIONAL-5.3% European Economic Community,
Notes, 11 5/8%, 1995................. $ 502,197 (i) $ 513,810
International Bank for Reconstruction
and Development:
Bonds, 12 1/2%, 1997............... 2,378,000 (g) 2,741,834
Medium-Term Notes, Ser. B,
9 3/4%, 1998..................... 4,500,000 4,948,200
------------
8,203,844
------------
OTHER-6.8% City of New York,
General Obligation Taxable Bonds,
Ser. D, 9.85%, 2008.................. 3,000,000 3,221,250
Occidental Petroleum,
Sr. Deb., 11 3/4%, 2011.............. 3,000,000 3,305,019
Procter & Gamble,
Bonds, 10 7/8%, 2001.............. 3,615,329 (a) 3,860,087
------------
10,386,356
------------
U.S. GOVERNMENT
AND AGENCIES-47.7% Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit
(Collateralized by FNMA Pass-Through Ctfs.),
Ser. 1993-31, Cl. 31-L,
7 1/2%, 2019 (Interest Only Obligation) (j) 1,417,284
Government National Mortgage Association I,
10%, 1998............................ 132,251 143,203
U.S. Treasury Bonds:
11 1/2%, 11/15/1995.................. 9,000,000 (k) 9,725,625
13 1/8%, 5/15/2001................... 3,400,000 (k) 4,543,780
12%, 8/15/2013....................... 16,800,000 23,375,621
U.S. Treasury Notes:
11 5/8%, 11/15/1994.................. 11,000,000 11,330,000
11 1/4%, 5/15/1995................... 14,100,000 (l) 14,884,313
6 1/4%, 2/15/2003.................... 100,000 94,313
7 1/4%, 5/15/2004.................... 8,000,000 8,052,504
------------
73,566,643
------------
TOTAL BONDS AND NOTES
(cost $155,849,738).................. $150,248,389
============
SHORT-TERM INVESTMENTS-1.7%
TIME DEPOSIT; Chemical Bank (London),
4 1/4%, 6/1/1994
(cost $2,653,000).................... $ 2,653,000 $ 2,653,000
============
TOTAL INVESTMENTS (cost $158,502,738).......................................... 99.2% $152,901,389
====== ============
CASH AND RECEIVABLES (NET)..................................................... .8% $ 1,238,467
====== ============
NET ASSETS..................................................................... 100.0% $154,139,856
====== ============
See notes to financial statements.
</TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
MAY 31, 1994
NOTES TO STATEMENT OF INVESTMENTS:
(a) Denominated in Canadian Dollars.
(b) Denominated in Australian Dollars.
(c) Denominated in British Pounds.
(d) Denominated in European Currency Units.
(e) Denominated in French Francs.
(f) Denominated in German Deutsche Marks.
(g) Denominated in New Zealand Dollars.
(h) Denominated in Swedish Krona.
(i) Denominated in Italian Lire.
(j) Notional face $9,448,563.
(k) Held by the custodian in a segregated account as collateral for open
Financial Futures positions.
(l) Partially held by the custodian in a segregated account as
collateral for open Financial Futures positions.
<TABLE>
STATEMENT OF FINANCIAL FUTURES
MARKET VALUE UNREALIZED
NUMBER OF COVERED (DEPRECIATION)
ISSUER CONTRACTS BY CONTRACTS EXPIRATION AT 5/31/94
- ------ --------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
French Govt. 10 yr. bond (Long)......... 75 $ 7,729,457 June '94 $(122,003)
German Govt. 10 yr. bond (Long)......... 50 7,023,072 September '94 (52,400)
Japanese Govt. 10 yr. bond (Long)...... 10 10,747,824 September '94 (30,534)
----------
$(204,937)
----------
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $158,502,738)-see statement..................................... $152,901,389
Interest receivable..................................................... 2,995,337
Net unrealized appreciation on forward currency exchange contracts-Note 3(a) 53,011
Prepaid expenses........................................................ 1,531
------------
155,951,268
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 91,692
Dividend payable-Note 1(c).............................................. 1,122,048
Payable for futures variation margin-Note 3(a).......................... 271,310
Accrued expenses and other liabilities.................................. 326,362 1,811,412
------------ ------------
NET ASSETS ................................................................ $154,139,856
============
REPRESENTED BY:
Paid-in capital......................................................... $166,237,247
Accumulated undistributed investment income-net......................... 664,913
Accumulated net realized (loss) on investments.......................... (7,009,029)
Accumulated net unrealized (depreciation) on investments [including
($204,937) net unrealized (depreciation) on financial futures]-Note 3(b) (5,753,275)
------------
NET ASSETS at value applicable to 14,960,617 shares outstanding
(100 million shares of $.001 par value Common Stock authorized)......... $154,139,856
============
NET ASSET VALUE, per share
($154,139,856 / 14,960,617 shares)...................................... $10.30
======
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME (net of $69,417 foreign taxes withheld at source)....... $ 14,713,940
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,135,335
Shareholders' reports................................................. 72,385
Shareholder servicing costs........................................... 72,249
Custodian fees........................................................ 60,660
Professional fees..................................................... 48,754
Directors' fees and expenses-Note 2(b)................................ 37,739
Registration fees..................................................... 14,056
Miscellaneous......................................................... 8,548
------------
TOTAL EXPENSES.................................................. 1,449,726
------------
INVESTMENT INCOME-NET........................................... 13,264,214
------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments (including options transactions)-Note 3(a) $(4,512,872)
Net realized gain on financial futures-Note 3(a)........................ 219,158
Net realized (loss) on forward currency exchange contract-Note 3(a)..... (420,599)
------------
NET REALIZED (LOSS)................................................... (4,714,313)
Net unrealized (depreciation) on investments [including ($204,937)
net unrealized depreciation on financial futures]..................... (5,607,686)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (10,321,999)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 2,942,215
============
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
-----------------------------
1993 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 14,098,975 $ 13,264,214
Net realized gain (loss) on investments.............................. 109,023 (4,714,313)
Net unrealized appreciation (depreciation) on investments for the year 110,870 (5,607,686)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 14,318,868 2,942,215
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ (13,434,533) (13,750,031)
Net realized gain on investments..................................... (1,391,883) ----
------------ ------------
TOTAL DIVIDENDS.................................................... (14,826,416) (13,750,031)
------------ ------------
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c)....................................... 1,484,846 773,178
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................ 977,298 (10,034,638)
NET ASSETS:
Beginning of year.................................................... 163,197,196 164,174,494
------------ ------------
End of year (including undistributed investment income-net:
$1,150,730 in 1993 and $664,913 in 1994)........................... $164,174,494 $154,139,856
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF
DIVIDENDS REINVESTED................................................. 133,323 69,684
============ ============
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, 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 MAY 31,
------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.............. $10.76 $10.70 $10.92 $11.06 $11.03
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net........................... 1.10 1.06 1.01 .95 .89
Net realized and unrealized gain (loss) on investments (.08) .24 .19 .02 (.70)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.............. 1.02 1.30 1.20 .97 .19
------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net............ (1.08) (1.08) (1.03) (.91) (.92)
Dividends from net realized gain on investments. -- -- (.03) (.09) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS........................... (1.08) (1.08) (1.06) (1.00) (.92)
------ ------ ------ ------ ------
Net asset value, end of year.................... $10.70 $10.92 $11.06 $11.03 $10.30
====== ====== ====== ====== ======
Market Value, end of year....................... $ 9 7/8 $11 1/8 $11 1/2 $11 1/2 $10.00
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN* .47% 24.63% 13.83% 9.36% (5.23%)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... .89% .87% .88% .88% .89%
Ratio of net investment income to average net assets 10.11% 9.67% 9.18% 8.57% 8.18%
Portfolio Turnover Rate......................... 16.34% 26.38% 56.29% 43.00% 22.76%
Net Assets, end of year (000's Omitted)......... $156,198 $159,751 $163,197 $164,174 $154,140
- -----------
*Calculated based on Market Value
See notes to financial statements.
</TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified closed-end management investment company. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures, but excluding domestic-debt 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. Securities 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. Investments
denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
Most domestic-debt securities (excluding short-term investments) are
valued on the last business day of each week and month by an independent
pricing service ("Service") approved by the Board of Directors. Domestic-debt
securities 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 domestic-debt securities are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as
to values from dealers; and general market conditions. Short-term investments
are carried at amortized cost, which approximates value.
(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 including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and net short-term realized
capital gain are normally declared and paid monthly. Dividends from net
long-term realized capital gain are normally declared and paid annually, but
the Fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code. 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 May 31, 1994, the Board of Directors declared a cash dividend of $.075
per share from investment income-net, payable on June 28, 1994 to
shareholders of record as of the close of business on June 14, 1994.
<TABLE>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
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>
August 31, 1992................... $ 4,150 $0.28 $ 3,767 $0.25 $ 5,220 $0.36 $ 8,987 $0.61
November 30, 1992................. 3,776 0.25 3,408 0.23 (8,375) (0.57) (4,967) (0.34)
February 28, 1993................. 3,852 0.26 3,463 0.24 3,748 0.25 7,211 0.49
May 31, 1993...................... 3,767 0.26 3,461 0.23 (373) (0.02) 3,088 0.21
------- ----- ------- ----- ------- ----- ------- -----
TOTAL....................... $15,545 $1.05 $14,099 $0.95 $ 220 $0.02 $14,319 $0.97
======= ===== ======= ===== ======= ===== ======= =====
August 31, 1993................... $ 3,716 $0.25 $ 3,323 $0.22 $ 1,842 $0.12 $ 5,165 $0.34
November 30, 1993................. 3,627 0.24 3,286 0.22 (3,727) (0.25) (441) (0.03)
February 28, 1994................. 3,668 0.25 3,301 0.22 (1,395) (0.09) 1,906 0.13
May 31, 1994...................... 3,703 0.25 3,354 0.23 (7,042) (0.48) (3,688) (0.25)
------- ----- ------- ----- ------- ----- ------- -----
TOTAL....................... $14,714 $0.99 $13,264 $0.89 $(10,322)$(0.70) $ 2,942 $0.19
======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the applicable provisions of the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve it from substantially
all Federal income taxes.
The Fund has an unused capital loss carryover of approximately $1,859,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to May 31, 1994. The
carryover does not include net realized securities losses from November 1,
1993 through May 31, 1994 which are treated, for Federal income tax purposes,
as arising in fiscal 1995. If not applied, the carryover expires in fiscal
2002.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .70 of 1% of the average
weekly value of the Fund's net assets and is payable monthly.
(B) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager. Each director who is not an
"affiliated person" receives an annual fee of $4,500 and an attendance fee of
$500 per meeting.
(C) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Manager
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in August 1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's
shareholders before completion of the merger. Proxy materials, approved by
the Fund's Board, recently have been mailed to Fund shareholders.
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, forward currency exchange contracts and
options transactions, during the year ended May 31, 1994, amounted to
$34,850,646 and $38,164,161, respectively.
In addition, the following summarizes open forward currency exchange
contracts at May 31, 1994:
<TABLE>
U.S. DOLLAR UNREALIZED
FORWARD CURRENCY SALE CONTRACTS PROCEEDS VALUE APPRECIATION
----------------------------------- -------------- ------------- ----------------
<S> <C> <C> <C>
German Deutsche Marks, expiring 6/30/94.... $2,798,905 $2,792,109 $ 6,796
French Francs, expiring 6/30/94............ 4,448,398 4,402,183 46,215
--------
$53,011
========
</TABLE>
When executing forward currency exchange contracts, the Fund is obligated
to buy or sell a foreign currency at a specified
rate on a certain date in the future. With respect to sales of forward
currency exchange contracts, the Fund would incur a loss if the value of the
contract increases between the date the forward contract is opened and the
date the forward contract is closed. The Fund realizes a gain if the value of
the contract decreases between those dates. With respect to purchases of
forward currency exchange contracts, the Fund would incur a loss if the value
of the contract decreases between the date the forward contract is opened and
the date the forward contract is closed. The Fund realizes a gain if the
value of the contract increases between those dates.
In addition, the following table summarizes the Fund's put options
written transactions for the year ended May 31, 1994:
<TABLE>
OPTIONS TERMINATED
--------------------
NET
NUMBER OF PREMIUMS REALIZED
OPTIONS WRITTEN: CONTRACTS RECEIVED COST GAIN
---------------------- ------------ -------- -------- --------
<S> <C> <C> <C> <C>
Contracts outstanding May 31, 1993............ - -
Contracts written............................. 1,000 $ 68,750
----- -------- --------
Contracts terminated.......................... 1,000 68,750 $ 15,625 $ 53,125
----- -------- ======== ========
Contracts outstanding May 31, 1994............ - $ -
===== ========
</TABLE>
As a writer of put options, the Fund receives a premium at the outset
and then bears the market risk of unfavorable changes
in the price of the financial instrument underlying the option. Generally,
the Fund would incur a gain, to the extent of the premium, if the price of
the underlying financial instrument increases between the date the option is
written and the date on which the option is terminated. Generally, the Fund
would realize a loss if the price of the financial instrument declines
between those dates. At May 31, 1994, there were no written put options
outstanding.
The Fund is engaged in trading financial futures contracts (see the
Statement of Financial Futures). The Fund is exposed to market risk as a
result of changes in the value of the underlying financial instruments.
Investments in financial futures require the Fund to "mark to market" on a
daily basis, which reflects the change in the market value of the contract at
the close of each day's trading. Accordingly, variation margin payments are
made or received to reflect daily unrealized gains or losses. When the
contracts are closed, the Fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist
of cash or cash equivalents, up to approximately 10% of the contract amount.
The amount of
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
these deposits is determined by the exchange or Board of Trade on which the
contract is traded and is subject to change. Contracts open at May 31, 1994
and their related unrealized market (depreciation) are set forth in the
Statement of Financial Futures.
(B) At May 31, 1994, accumulated net unrealized depreciation on
investments was $5,753,275, consisting of $2,466,767 gross unrealized
appreciation and $8,220,042 gross unrealized depreciation.
At May 31, 1994, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Strategic Governments Income, Inc., including the statements of
investments and financial futures, as of May 31, 1994, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1994 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Strategic Governments Income, Inc. at May 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
Ernst & Young Signature Logo
New York, New York
July 11, 1994
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (UNAUDITED)
The Fund generally distributes net investment income and any net realized
short-term capital gains monthly, and net realized long-term capital gains 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 Mellon Bank, N.A., 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 $5.00 fee and thereby elect to
receive cash in lieu of shares of the Fund. Changes in elections must be in
writing, sent to Mellon Bank, N.A., P.O. Box 750, Pittsburgh, Pennsylvania
15230, Attention: Dividend Reinvestment, 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 $100 to $500, 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.
Plan participants pay an Agent's fee of $.50 per reinvestment of
dividends and distributions, 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 $3.00 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 Logo)
Strategic
Governments
Income, Inc.
Annual Report
May 31, 1994
(Dreyfus Lion "D" Logo)
DREYFUS STRATEGIC GOVERNMENTS
INCOME, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND PAYING AGENT AND REGISTRAR
Mellon Bonk, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Printed in U.S.A. 854AR945
Registration Mark
