LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to inform you that Dreyfus Strategic Governments Income,
Inc. paid to shareholders of record, distributions of $.4275 per share for
the six months ended November 30, 1994. Based on the Fund's net asset value
of $9.85 per share on November 30, which is the revised date for the end of
the Fund's fiscal year,* this equals an annualized distribution rate per
share of 8.68%. The annualized distribution rate based on the November 30
closing market price of $9.125 was 9.37% per share. The net asset value and
market price for the Fund at the beginning of the six-month period on May 31
were $10.30 and $10.00 respectively.
In reviewing the bond market for the last six months we must really go
back to February 4, 1994. On that date the Federal Reserve Board increased
the Federal Funds rate by 25 basis points. This was the first increase in the
Federal Funds rate in five years. Since then, there have been five more. The
most recent was on November 15, 1994, when the Federal Reserve raised the
Federal Funds rate by 75 basis points, bringing the total increase for 1994
to 250 basis points. As a result of these tightening moves, the 10-year
Treasury note yield has increased from 5.87% on February 4, 1994 to 7.90% on
November 30, 1994 -- a total of 203 basis points.
The past six months have been a period of high volatility in the bond
markets. Based on our perception that global economies are expanding, causing
global interest rates to rise and ultimately halting the dollar's slide, we
employed several strategies in the portfolio. We eliminated our currency
hedges, resulting in a loss of $496,000. These losses were offset by taking
profits of $1,414,000 in New Zealand dollar bonds, German deutschmark bonds
and French franc-denominated Treasury bonds. Furthermore, we also took a
profit of over $40,000 in our Interest Only position. With the proceeds from
these sales we established a GNMA position of just less than $9 million --
representing approximately 6% of the portfolio. With the balance of the
proceeds we took a 9% position in Canadian dollar government bonds. Our
thoughts on both of these purchases are that, as world economies grow and
inflate, the U.S. dollar and the Canadian dollar will be the ultimate
beneficiaries. We therefore currently want to be represented in both
currencies and markets.
As we enter the new calendar year, we continue to anticipate volatility
in the market. The Fund's portfolio is currently structured with an
approximately 10-year average maturity, with 72% of the Fund in U.S.
dollar-denominated securities and 13% in Canadian dollar-denominated
securities. There is still a possibility of at least one more Federal Reserve
Board tightening. We do believe that the stringent Fed policies will be
effective in curbing inflation.
We continue to monitor the markets intensively, and will make adjustments
to the portfolio when we believe it is appropriate. We appreciate the
opportunity to serve your investment needs.
Sincerely,
(signature logo)
Garitt A. Kono
Portfolio Manager
December 23, 1994
New York, N.Y.
* The Fund's prior fiscal year-end was May 31.
<TABLE>
<CAPTION>
<S> <C>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
SELECTED INFORMATION NOVEMBER 30,1994 (UNAUDITED)
Market Price per share November 30, 1994............................ $9 1/8
Shares Outstanding November 30, 1994................................ 14,737,917
New York Stock Exchange Ticker Symbol............................... DSI
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE (NEW YORK STOCK EXCHANGE)
YEAR ENDED NOVEMBER 30, 1994
--------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
FEBRUARY 28, 1994 MAY 31, 1994 AUGUST 31, 1994 NOVEMBER 30, 1994
-------------------- ------------ --------------- -----------------
<S> <C> <C> <C> <C>
High $11 $10 7/8 $10 1/4 $9 3/8
Low 10 9 1/4 9 1/4 8 3/8
Close 10 1/2 10 9 1/4 9 1/8
PERCENTAGE GAIN (LOSS) based on change in Market Price*
June 24, 1988 (commencement of operations) through November 30,1994................... 39.80%
December 1, 1993 through November 30, 1994............................................ (7.21)
March 1, 1994 through November 30, 1994............................................... (6.99)
June 1, 1994 through November 30, 1994................................................ (4.50)
September 1, 1994 through November 30, 1994........................................... .92
NET ASSET VALUE PER SHARE
June 24, 1988 (commencement of operations).............. $11.11
November 30, 1993....................................... 10.87
February 28, 1994....................................... 10.78
May 31, 1994............................................ 10.30
August 31, 1994........................................ 10.13
November 30, 1994....................................... 9.85
PERCENTAGE GAIN (LOSS) based on change in Net Asset Value*
June 24,1988 (commencement of operations) through November 30, 1994................... 63.00%
December 1, 1993 through November 30, 1994............................................ ( .94)
March 1, 1994 through November 30, 1994............................................... (2.21)
June 1, 1994 through November 30, 1994............................................... .08
September 1, 1994 through November 30, 1994........................................... ( .53)
- --------------------------------------
*With dividends reinvested.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF INVESTMENTS NOVEMBER 30, 1994
PRINCIPAL
BONDS AND NOTES--91.9% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
BANKING AND FINANCE--5.6% Citicorp,
Sub. Notes, 7 1/8%, 2004............. $ 5,000,000 $ 4,504,905
First Interstate Bancorp,
Notes, 10 1/2%, 1996................. 1,000,000 1,031,041
Household Financial,
Retractable Sr. Notes, 11.85%, 1996.. 1,453,700(a) 1,495,712
RBSG Capital,
Notes (Gtd. by The Royal Bank of
Scotland Group PLC), 10 1/8%, 2004............ 1,000,000 1,071,216
------------
8,102,874
------------
FOREIGN/ GOVERNMENTAL--31.1% Australian Government Securities:
Commonwealth Government Bonds:
13%, 1996........................ 3,843,000(b) 4,053,212
12%, 2001........................ 2,305,800(b) 2,498,911
Treasury Corp. of Victoria,
Bonds (Gtd. by The Government of
Victoria),
8 1/4%, 2003..................... 3,843,000(b) 3,243,876
British Government Securities;
Gilt Edged Securities, 12%, 1998..... 3,131,000(c) 3,503,785
Canadian Government Securities:
Canada Government Bonds, 10 3/4%, 2009 1,453,700(a) 1,626,108
Canada Mortgage and Housing,
Bonds, Ser. DC1, 8 1/2%, 1999.... 7,995,348(a) 7,848,873
Hydro-Quebec,
Deb. (Gtd. by The Province of Quebec):
Ser. HK, 9 3/8%, 2030........... 5,000,000 5,095,200
Ser. HX, 10 1/2%, 2021............ 1,453,700(a) 1,502,689
Ser. IC, 9 5/8%, 2022 ................. 1,453,700(a) 1,385,667
Province of British Columbia,
Exchangeable Bonds, Ser. BCCD-F,
9 3/4%, 2001..................... 726,850(a) 760,140
Province of New Brunswick,
Sinking Fund Deb., Ser. EE, 9 1/8%, 2002 1,090,275(a) 1,073,921
Province of Newfoundland,
Sinking Fund Deb., 11 5/8%, 2007. 2,000,000 2,371,820
Province of Quebec,
Deb., 13 1/4%, 2014.............. 3,200,000 3,896,288
French Government Securities;
Credit Foncier of France,
Bonds (Gtd. by The Republic of
France),
9 3/4%, 1995..................... 3,645,000(d) 3,672,702
Swedish Government Securities;
Swedish Export Credit,
Notes, 6 1/2%, 2001.............. 3,322,259(e) 2,641,528
----------
45,174,720
-----------
FOREIGN/ SUPRANATIONAL--.3% European Economic Community,
Notes, 11 5/8%, 1995................. 494,438(f) 495,921
--------
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1994
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
-------------- --------------
OTHER--7.0% City of New York,
General Obligation Taxable Bonds,
Ser. D, 9.85%, 2008.................. $ 3,000,000 $ 3,041,250
Occidental Petroleum,
Sr. Deb., 11 3/4%, 2011.............. 3,000,000 3,232,443
Procter & Gamble,
Bonds, 10 7/8%, 2001................. 3,634,249(a) 3,843,945
------------
10,117,638
------------
U.S. GOVERNMENT AND AGENCIES--47.9% Government National Mortgage Association I:
10%, 1998............................ 117,748 126,247
8%, 2023............................. 9,084,194 8,661,143
U.S. Treasury Bonds:
13 1/8%, 5/15/2001................... 3,400,000 4,302,595
12%, 8/15/2013....................... 16,800,000 22,139,259
U.S. Treasury Notes:
11 1/4%, 5/15/1995................... 5,100,000 5,212,358
9 1/4%, 1/15/1996.................... 8,000,000 8,185,000
9 3/8%, 4/15/1996.................... 9,000,000 9,247,500
9 1/8%, 5/15/1999.................... 11,000,000 11,537,966
6 1/4%, 2/15/2003.................... 100,000 90,156
------------
69,502,224
------------
TOTAL BONDS AND NOTES
(cost $142,496,125).................. $133,393,377
============
SHORT-TERM INVESTMENTS--9.8%
TIME DEPOSIT;
Chemical Bank (London),
5 3/4%, 12/1/1994
(cost $14,200,000)................... $ 14,200,000 $ 14,200,000
============
TOTAL INVESTMENTS (cost $156,696,125)....................................... 101.7% $147,593,377
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.7%) $(2,429,744)
====== ============
NET ASSETS ........................................................... 100.0% $145,163,633
====== ============
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 Swedish Krona.
(f) Denominated in Italian Lire.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $156,696,125)-see statement..................................... $147,593,377
Cash.................................................................... 112,124
Interest receivable..................................................... 2,464,694
Prepaid expenses........................................................ 22,805
--------------
150,193,000
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 84,035
Payable for investment securities purchased............................. 4,609,798
Payable for Treasury Stock reacquired................................... 186,850
Accrued expenses........................................................ 148,684 5,029,367
------------ -----------
NET ASSETS ................................................................ $145,163,633
============
REPRESENTED BY:
Paid-in capital-Note 4.................................................. $162,065,231
Accumulated distributions in excess of investment income-net-Note 1(c).. (23,673)
Accumulated net realized (loss) on investments.......................... (7,775,177)
Accumulated net unrealized (depreciation) on investments-Note 3(b)...... (9,102,748)
--------------
NET ASSETS at value applicable to 14,737,917 shares outstanding
(100 million shares of $.001 par value Common Stock authorized)......... $145,163,633
============
NET ASSET VALUE, per share
($145,163,633 / 14,737,917 shares)...................................... $ 9.85
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF OPERATIONS
YEAR ENDED SIX MONTHS ENDED
MAY 31, 1994 NOVEMBER 30, 1994
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME (net of $69,417 and $37,433 foreign taxes withheld at
source, respectively)........................................... $ 14,713,940 $ 6,917,806
-------------- --------------
EXPENSES:
Management fee-Note 2(a)........................................ $ 1,135,335 $ 526,157
Shareholders' reports........................................... 72,385 36,029
Shareholder servicing costs..................................... 72,249 18,742
Custodian fees.................................................. 60,660 28,508
Professional fees............................................... 48,754 25,086
Directors' fees and expenses-Note 2(b).......................... 37,739 22,028
Registration fees............................................... 14,056 26,775
Miscellaneous................................................... 8,548 9,265
-------------- --------------
TOTAL EXPENSES............................................ 1,449,726 692,590
-------------- --------------
INVESTMENT INCOME-NET.................................... 13,264,214 6,225,216
-------------- --------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3(a)...................... $ (4,512,872) $ (1,805,446)
Net realized gain (loss) on financial futures-Note 3(a)........... 219,158 (1,180,463)
Net realized (loss) on forward currency exchange contracts-Note 3(a) (420,599) (496,083)
-------------- --------------
NET REALIZED (LOSS)............................................. (4,714,313) (3,481,992)
Net unrealized (depreciation) on investments (including $204,937 net
unrealized depreciation on financial futures on May 31, 1994 and $204,937
net unrealized appreciation on financial futures on November 30, 1994) (5,607,686) (3,349,473)
-------------- --------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS......... (10,321,999) (6,831,465)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........... $ 2,942,215 $ (606,249)
============= ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
--------------------------------
1993 1994 1994
------------ ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Investment income-net............................... $ 14,098,975 $ 13,264,214 $ 6,225,216
Net realized gain (loss) on investments.............. 109,023 (4,714,313) (3,481,992)
Net unrealized appreciation (depreciation) on investments
for the year....................................... 110,870 (5,607,686) (3,349,473)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS..................................... 14,318,868 2,942,215 (606,249)
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income-net............................... (13,434,533) (13,750,031) 4,197,958)
Net realized gain on investments..................... (1,391,883) -- --
From paid-in-capital................................. -- -- (2,197,706)
------------ ------------ ------------
TOTAL DISTRIBUTIONS................................ (14,826,416) (13,750,031) (6,395,664)
------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS:
Dividends reinvested--Note 1(c)...................... 1,484,846 773,178 --
Cost of Treasury Stock acquired-Note 4............... -- -- (1,974,310)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK
TRANSACTIONS................................... 1,484,846 773,178 (1,974,310)
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 977,298 (10,034,638) (8,976,223)
NET ASSETS:
Beginning of year.................................... 163,197,196 164,174,494 154,139,856
------------ ------------ ------------
End of year (including undistributed investment income-net:
$1,150,730 in 1993, $664,913 on May 31, 1994 and
distributions in excess of investment income-net of
($23,673) on November 30, 1994).................... $164,174,494 $154,139,856 $145,163,633
------------ ----------- ------------
SHARES SHARES SHARES
------------ ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Shares issued for dividends reinvested............... 133,323 69,684 --
Shares of Treasury Stock acquired.................... -- -- (222,700)
------------ ----------- ------------
Net Increase (Decrease) in Shares Outstanding...... 133,323 69,684 (222,700)
------------ ----------- ------------
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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.
SIX MONTHS ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
---------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994 1994
--------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $10.76 $10.70 $10.92 $11.06 $11.03 $10.30
--------- --------- -------- --------- -------- ---------
INVESTMENT OPERATIONS:
Investment income_net................. 1.10 1.06 1.01 .95 .89 .42
Net realized and unrealized gain (loss)
on investments...................... (.08) .24 .19 .02 (.70) (.44)
--------- --------- -------- --------- -------- ---------
TOTAL FROM INVESTMENT OPERATIONS.... 1.02 1.30 1.20 .97 .19 (.02)
--------- --------- -------- --------- -------- ---------
DISTRIBUTIONS:
From investment income_net............ (1.08) (1.08) (1.03) (.91) (.92) (.28)
From net realized gain on investments. -- -- (.03) (.09) -- --
From paid-in capital.................. -- -- -- -- -- (.15)
--------- --------- -------- --------- -------- ---------
TOTAL DISTRIBUTIONS................. (1.08) (1.08) (1.06) (1.00) (.92) ( .43)
--------- --------- -------- --------- -------- ---------
Net asset value, end of year.......... $10.70 $10.92 $11.06 $11.03 $10.30 $ 9.85
======== ======== ====== ====== ======= ========
Market Value, end of year............. $ 9 7/8 $11 1/8 $11 1/2 $11 1/2 $10.00 $ 9 1/8
======== ======== ====== ====== ======= ========
TOTAL INVESTMENT RETURN (1)............... .47% 24.63% 13.83% 9.36% (5.23%) (8.98%)(2)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .89% .87% .88% .88% .89% .92%(2)
Ratio of net investment income to average
net assets.......................... 10.11% 9.67% 9.18% 8.57% 8.18% 8.28%(2)
Portfolio Turnover Rate............... 16.34% 26.38% 56.29% 43.00% 22.76% 65.21%(3)
Net Assets, end of year (000's Omitted) $156,198 $159,751 $163,197 $164,174 $154,140 $145,164
- ---------------------------------------
(1) Calculated based on Market Value.
(2) Annualized.
(3) Not annualized.
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. Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
The Fund has changed its fiscal year end from May 31 to November 30.
(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.
During the fiscal period ended November 30, 1994, the Fund reclassified
$2,715,844 of realized losses on foreign currency from accumulated net
realized loss on investments to accumulated undistributed investment
income-net as a result of varying treatment for Federal income tax versus
financial reporting purposes.
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On November 29, 1994, the Board of Directors declared a cash dividend of
$.0675 per share from investment income-net, payable on December 28, 1994 to
shareholders of record as of the close of business on December 13, 1994.
<TABLE>
<CAPTION>
(D) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
NET INCREASE
NET REALIZED & (DECREASE)
TOTAL NET UNREALIZED IN NET ASSETS
INVESTMENT 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, 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
===== ====== ====== ===== ========= ====== ======= =====
August 31, 1994............... $ 3,558 $ .24 $ 3,210 $ .21 $(2,386) $ (.15) $ 824 $ .06
November 30, 1994............. 3,360 .23 3,015 .21 (4,445) (.29) (1,430) (.08)
------ ----- ------ ------- ------- ------ ------ ------
TOTAL..................... $ 6,918 $ .47 $ 6,225 $ .42 $ (6,831) $ (.44) $ (606) $(.02)
===== ====== ====== ===== ========= ====== ======= =====
</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 and excise taxes.
The Fund has an unused capital loss carryover of approximately $7,419,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to November 30, 1994. The
carryover does not include net realized securities losses from November 1,
1994 through November 30, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, $768,000 of the
carryover expires in fiscal 2001 and $6,651,000 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) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager. Each
director who is not an "affiliated person" receives an annual fee of $4,500
and an attendance fee of $500 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts,
during the six months ended November 30, 1994, amounted to $86,133,919 and
$86,589,626, respectively.
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. At November 30, 1994, there were no forward
currency exchange contracts outstanding.
The Fund is engaged in trading financial futures contracts. 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 these deposits is determined by the
exchange or Board of Trade on which the contract is traded and is subject to
change. At November 30, 1994, there were no financial futures contracts
outstanding.
(B) At November 30, 1994, accumulated net unrealized depreciation on
investments was $9,102,748, consisting of $136,815 gross unrealized
appreciation and $9,239,563 gross unrealized depreciation.
At November 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 4--CAPITAL STOCK
The Fund repurchased 222,700 shares of Treasury Stock during the six
months ended November 30, 1994 at an average market price per share of $8.87
and a weighted average discount from net asset value of 9.72% per share. At
November 30, 1994 paid-in-capital is net the cost of $1,974,310 of Treasury
Stock reacquired.
Fund shares traded at an average discount of more than 10% from their net
asset value for the 12- week period ended December 30, 1994. According to the
Fund's Prospectus for its initial public offering, under such circumstances
the Fund will submit a proposal to shareholders to convert the Fund from a
closed-end to an open-end fund at its next annual shareholder meeting.
Therefore, it is anticipated that the Board of Directors at a Board meeting
during the first half of 1995 will consider presenting such a proposal to
shareholders. It is expected that the Fund's annual shareholders meeting will
take place during the second half of 1995.
DREYFUS STRATEGIC GOVERNMENTS INCOME, INC.
REPORT OF ERNST & YOUNG LLP, 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 statement of
investments, as of November 30, 1994, and the related statements of
operations for the year ended May 31, 1994 and for the six months ended
November 30, 1994, the statements of changes in net assets for each of the
two years in the period ended May 31, 1994 and for the six months ended
November 30, 1994, and financial highlights for each of the years indicated th
erein. 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 November 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Strategic Governments Income, Inc. at November 30, 1994,
the results of its operations for the year ended May 31, 1994 and for the six
months ended November 30, 1994, the changes in its net assets for each of the
two years in the period ended May 31, 1994 and for the six months ended
November 30, 1994, 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
January 13, 1995
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 own name will
have all distributions reinvested automatically by Mellon Bank, N.A., as Plan
agent (the "Agent"), in additional shares of the Fund's Common Stock 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 dividend or other distribution payable only in
cash is declared, the Agent, as agent for the Plan participants, will buy
shares of the Fund's Common Stock 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 the name of his
broker/dealer or other nominee (i.e., in "street name") may not participate
in the Plan, but may elect to have cash dividend distributions reinvested by
his broker/dealer or other nominee in additional shares of the Fund if such
service is provided by the broker/dealer or other nominee; 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 written 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 GOVERNMENTS INCOME, INC.
CERTAIN MANAGEMENT POLICY INFORMATION
On August 3, 1994, the Fund's shareholders voted to change certain of the
Fund's fundamental policies and investment restrictions to permit the Fund to
borrow money to the extent permitted under the Investment Company Act of
1940, as amended. The Fund intends to borrow money: (a) for temporary or
emergency purposes or for clearance of transactions in amounts not exceeding
15% of its total assets (not including the amount borrowed). While such
borrowings exceed 5% of the Fund's assets, the Fund will not make any
additional investments; (b) in connection with repurchases of, or tenders
for, the Fund's shares, but only if after each such borrowing the ratio which
the value of the total assets of the Fund less all liabilities and
indebtedness not represented by senior securities bears to the aggregate
amount of senior securities representing indebtedness of the Fund is at least
300%; and (c) as otherwise described in its Prospectus.
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 STRATEGIC GOVERNMENTS
INCOME, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND PAYING AGENT AND REGISTRAR
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Printed in U.S.A. 853AR9411
Strategic
Governments
Income, Inc.
Annual Report
November 30, 1994
