LETTER TO SHAREHOLDERS
Dear Shareholder:
During 1994, the bond markets were beaten down by a strengthening
economy, fears of rising inflation, and a weakening U.S. dollar. As a result
of these influences, interest rates rose much faster this year than most
economists anticipated. Prices of municipal bonds reached low points early in
the second quarter, then staged a modest rebound this summer, before sliding
again in recent weeks. Tax exempt yields are now at their highest levels in
nearly two years. While the upward rate move in municipals has been
significant (approximately 1% for long-term bonds), it has not been as
dramatic as the response in the U.S. Treasury market, where yields have risen
twice as much.
For the year ended September 30, 1994, Dreyfus Municipal Income, Inc.
suffered a loss in principal of approximately $.96 per share (9.22% of net
asset value), both figures adjusted for capital gain distributions. Partially
offsetting this loss were tax-free income dividends of $.70 per share. This
equates to a tax-free distribution rate per share of 7.38%, based on the
Fund's closing net asset value of $9.41 on September 30, 1994, and 7.82%
based on the September 30, 1994 closing market price of $8.875. Both figures
are adjusted for capital gain distributions of approximately $0.08 per
share.*
When it became more apparent last summer that the economy was gathering
momentum, we felt confident that this Fund's defensive posture would serve it
well. In light of the market's sell-off and heightened degree of volatility,
we felt that the Fund's comparatively short duration (approximately 6.5
years) and premium coupon structure would be instrumental in reducing the
level of volatility in the portfolio. We believe that our actions were
generally successful. In retrospect, had we anticipated the degree of price
correction that the markets would experience, we might have shortened our
maturity and duration targets even further.
While we continue to be very cautious in our investment strategy, we are
hopeful that the series of Federal Reserve Board moves to tighten interest
rates, begun last February, will start to translate into positive economic
news for the markets. One factor that we believe is currently working to the
municipal market's advantage is its favorable technical position (i.e.,
adequate retail demand for tax exempt securities, combined with a sharp
reduction in the supply of new issuance this year). While we view the
municipal market more favorably today than we have in months, we are wary of
the strong influence exerted by the price of taxable securities. Should a
clearer picture emerge, we are poised to alter our investment strategy
accordingly.
Economic uncertainties recommend that we continue with a cautious
approach. However, as stated above, we are sensing that the tide could change
if the Fed tightens further before year-end. Of particular concern to
management is the amount of tax-free income that the Fund generates for
shareholders. As a portion of the portfolio's higher coupon bonds are retired
over the next several years, maintaining our income objective will be a
priority. Certainly, today's higher interest rate levels have been of benefit
in deploying assets.
After enjoying a number of years of strong market performance, it is
unsettling, to say the least, to be faced with such an uncertain environment.
With the benefit of hindsight, many investors might have opted earlier this
year to switch their investment holdings into more defensive securities as a
hedge against rising rates. While falling prices earlier this year reduced
the value of the portfolio, the level of tax-free dividends remained stable
through the Fund's fiscal year-end. While the financial press focuses
attention on short-term market swings, we maintain a longer perspective.
Focusing too intently on short-term results can be detrimental. For this
reason, we continue to direct our management efforts towards providing a high
degree of tax exempt income each year and to deliver strong long-term
performance results. We trust that our philosophy is in concert with yours.
We have included a current Statement of Investments and recent financial
statements for your review. We greatly appreciate your investment in the
Fund, and look forward to serving your investment needs in the future.
Very truly yours,
(signature logo)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
October 13, 1994
New York, N.Y.
*Income may be subject to state and local taxes. Some income may be
subject to the Federal Alternative Minimum Tax (AMT) for certain
shareholders. Capital gains, if any, are generally subject to Federal,
state and local taxes.
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
SELECTED INFORMATION SEPTEMBER 30,1994 (UNAUDITED)
<S> <C> <C>
Market Price per share September 30, 1994........................... $ 8 7/8
Shares Outstanding September 30, 1994............................... 20,058,013
American Stock Exchange Ticker Symbol............................... DMF
</TABLE>
<TABLE>
MARKET PRICE (AMERICAN STOCK EXCHANGE)
FISCAL YEAR ENDED SEPTEMBER 30, 1994
----------------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 1993 MARCH 31, 1994 JUNE 30, 1994 SEPTEMBER 30, 1994
---------------------------- -------------------- --------------- -------------------
<S> <C> <C> <C> <C>
High $11 1/4 $10 7/8 $10 $9 3/4
Low 10 3/8 9 3/8 9 1/4 8 3/8
Close 10 5/8 9 3/8 9 1/2 8 7/8
</TABLE>
<TABLE>
PERCENTAGE GAIN (LOSS) based on change in Market Price*
<S> <C> <C>
October 24, 1988 (commencement of operations) through September 30, 1994.............. 37.29%
October 1, 1993 through September 30, 1994............................................ (10.77)
January 1, 1994 through September 30, 1994............................................ (11.92)
April 1, 1994 through September 30, 1994.............................................. ( 1.88)
July 1, 1994 through September 30, 1994............................................... ( 4.84)
</TABLE>
<TABLE>
NET ASSET VALUE PER SHARE
<S> <C> <C>
October 24, 1988 (commencement of operations)........... $9.26
September 30, 1993...................................... 10.45
December 31, 1993....................................... 10.33
March 31, 1994.......................................... 9.67
June 30, 1994........................................... 9.58
September 30, 1994...................................... 9.41
</TABLE>
<TABLE>
PERCENTAGE GAIN (LOSS) based on change in Net Asset Value*
<S> <C> <C>
October 24, 1988 (commencement of operations) through September 30, 1994.............. 57.20%
October 1, 1993 through September 30, 1994............................................ (2.67)
January 1, 1994 through September 30, 1994............................................ (3.95)
April 1, 1994 through September 30, 1994.............................................. .86
July 1, 1994 through September 30, 1994............................................... .05
*With dividends reinvested.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
---------------- --------------
<S> <C> <C>
ARIZONA-3.4%
Salt River Project, Agriculture Improvement and Power District, Electric
System Revenue
7.673%, 1/1/2028 (a,b).................................................. $ 5,000,000 $ 3,487,500
Tucson Airport Authority, Special Facility Revenue (Lockheed Aeromod Center
Inc.)
8.70%, 9/1/2019......................................................... 2,500,000 2,810,475
COLORADO-6.7%
Colorado Health Facilities Authority, Revenue
(Northwest Denver Community Mental Health Center Project) 8.70%, 11/1/2006 1,165,000 1,194,416
City and County of Denver, Airport Revenue:
8.25%, 11/15/2012....................................................... 6,500,000 6,598,605
8%, 11/15/2017.......................................................... 2,000,000 1,978,940
8.50%, 11/15/2023....................................................... 2,475,000 2,549,002
FLORIDA-5.8%
Leon County Educational Facilities Authority, COP (Southgate Residence Hall
Project):
3.75%, 12/1/1995 (c).................................................... 247,560 245,257
9%, 9/1/2014 (c,d)...................................................... 5,000,000 2,500,000
Orange County Health Facilities Authority, Revenue (Mental Health Services)
9.25%, 7/1/2020......................................................... 4,895,000 5,320,522
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership
Project)
6.95%, 1/1/2022......................................................... 2,700,000 2,613,033
GEORGIA-3.9%
Private Colleges and Universities Facilities Authority, Revenue, Refunding
(Clark Atlanta University Project) 8.25%, 1/1/2015...................... 7,000,000 7,158,270
ILLINOIS-14.1%
Chicago O'Hare International Airport, Special Facilities Revenue:
(American Airlines Inc. Project) 7.875%, 11/1/2025...................... 2,000,000 2,014,600
(United Airlines Inc. Project):
8.40%, 5/1/2018....................................................... 8,385,000 8,768,530
8.50%, 5/1/2018....................................................... 2,000,000 2,092,900
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facility Acquisition):
8.75%, 3/1/2010....................................................... 2,225,000 2,340,656
8.50%, 9/1/2010....................................................... 5,000,000 5,170,000
Illinois Health Facilities Authority, Revenue, Refunding (Galesburg Cottage
Hospital)
9.625%, 5/1/2011 (Prerefunded 5/1/1997) (e)............................. 5,000,000 5,664,300
INDIANA-3.3%
Fishers Economic Development, First Mortgage Revenue
(United Student Funds Inc.) 8.375%, 9/1/2014............................ 5,700,000 6,011,961
KENTUCKY-1.8%
Perry County, SWDR (TJ International Project)
7%, 6/1/2024............................................................ 3,500,000 3,372,495
MASSACHUSETTS-1.0%
Massachusetts Housing Finance Agency, SFHR:
8.10%, 8/1/2023......................................................... 505,000 518,514
10.507%, 6/1/2025 (a,b)................................................. 1,300,000 1,327,625
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- --------------
MICHIGAN-8.0%
Detroit Sewage Disposal System, Revenue, Refunding
5.70%, 7/1/2023 (Insured; FGIC) (a)..................................... $ 10,000,000 $ 8,881,300
Greater Detroit Resource Recovery Authority, Revenue
9.25%, Series C, 12/13/2008............................................. 2,800,000 2,974,132
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021......................................................... 3,000,000 2,861,430
MINNESOTA-1.5%
Minnesota Housing Finance Agency, SFMR 8%, 7/1/2029......................... 2,710,000 2,785,636
MISSOURI-.7%
Independence Industrial Development Authority, MFHR (Greenbriar Meadows
Project)
10.25%, 8/1/2019 (f).................................................... 2,000,000 1,200,000
NEW YORK-6.2%
New York City, GO:
7.75%, 8/15/2007........................................................ 4,275,000 4,645,472
8.25%, 11/15/2010....................................................... 3,000,000 3,414,030
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines Inc. Project) 7.75%, 7/1/2019........................ 3,390,000 3,476,818
NEVADA-1.6%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032..................... 3,000,000 3,012,180
NORTH DAKOTA-.7%
North Dakota Housing Finance Agency, SFMR 8.30%, 1/1/2012................... 1,300,000 1,324,947
PENNSYLVANIA-15.0%
Commonwealth of Pennsylvania, GO 8.71%, 7/1/2012 (a,b)...................... 15,650,000 15,200,063
Huntingdon County Industrial Development Authority, First Mortgage Revenue
(Presbyterian Homes-Woodland Retirement Center Project) 8%, 12/1/2020... 3,000,000 3,096,390
Lancaster County Hospital Authority, Health Care Revenue
(United Church Homes Project) 9.125%, 10/1/2014......................... 2,000,000 2,207,020
Montgomery County Higher Education and Health Authority, HR
(United Hospital Inc.- St. Christopher) 8.50%, 11/1/2017................ 4,865,000 5,027,734
Pennsylvania Economic Development Financing Authority, RRR
(Northampton Generating-A) 6.60%, 1/1/2019.............................. 2,500,000 2,243,750
TENNESSEE-4.1%
Tennessee Housing Development Agency (Homeownership Program)
8.125%, 7/1/2021........................................................ 7,150,000 7,548,255
TEXAS-15.4%
Alliance Airport Authority Inc., Special Facilities Revenue (American
Airlines Inc. Project)
7.50%, 12/1/2029........................................................ 2,375,000 2,322,869
Austin, Convention Center Revenue 8.25%, 11/15/2014 (Prerefunded 11/15/1999)(e) 5,500,000 6,292,110
Bell County Health Facilities Development Corp., Revenue
(Southern Healthcare-Southview) 10.50%, 3/1/2020........................ 4,940,000 5,394,974
Montgomery County Health Facilities Development Corp., Hospital Mortgage
Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014..................... 5,330,000 5,869,982
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- --------------
TEXAS (CONTINUED)
Texas Housing Agency, SFMR:
9.375%, 9/1/2016........................................................ $ 4,300,000 $ 4,450,242
8.40%, 7/1/2020......................................................... 1,750,000 1,784,283
8.40%, 1/1/2021......................................................... 2,365,000 2,411,330
UTAH-4.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration)
9.25%, 7/1/2018......................................................... 7,000,000 7,436,520
VIRGINIA-1.2%
Virginia Housing Development Authority, MFHR
10.484%, 5/1/2018 (a,b)................................................. 2,250,000 2,261,250
WYOMING-1.6%
Sweetwater County, SWDR (FMC Corp. Project)
7%, 6/1/2024............................................................ 3,000,000 2,962,650
--------------
TOTAL INVESTMENTS
(cost $183,862,093)..................................................... $184,822,968
==============
</TABLE>
<TABLE>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
COP Certificate of Participation MFHR Multi-Family Housing Revenue
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
GO General Obligation SFHR Single Family Housing Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH(G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ---------------- ------------------
<S> <C> <C> <C>
AAA Aaa AAA 7.9%
AA Aa AA 10.7
A A A 18.2
BBB Baa BBB 25.1
BB Ba BB 2.7
Not Rated (h) Not Rated (h) Not Rated (h) 35.4
------
100.0%
------
------
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Residual interest security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September
30, 1994, these securities amounted to $22,276,438 or 11.8% of net
assets.
(c) The valuation of this security has been determined in good faith
under the direction of the Board of Directors.
(d) Non-income producing security; interest payment in default.
(e) 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.
(f) Non-accrual status.
(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 Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $183,862,093)-see statement..................................... $184,822,968
Cash.................................................................... 2,736,730
Interest receivable..................................................... 3,718,707
Prepaid expenses........................................................ 351
------------
191,278,756
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 110,200
Payable for investment securities purchased............................. 2,305,908
Accrued expenses........................................................ 132,636 2,548,744
---------------- --------------
NET ASSETS ................................................................ $188,730,012
==============
REPRESENTED BY:
Paid-in capital......................................................... $186,763,565
Accumulated undistributed investment income-net......................... 1,748,774
Accumulated net realized (loss) on investments.......................... (743,202)
Accumulated net unrealized appreciation on investments-Note 3........... 960,875
----------------
NET ASSETS at value applicable to 20,058,013 shares outstanding
(110 million shares of $.001 par value Common Stock authorized)......... $188,730,012
================
NET ASSET VALUE, per share
($188,730,012 / 20,058,013 shares)...................................... $ 9.41
======
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 15,065,207
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,387,108
Shareholder servicing costs........................................... 95,196
Shareholders' reports................................................. 74,499
Professional fees..................................................... 35,075
Directors' fees and expenses-Note 2(b)................................ 23,461
Custodian fees........................................................ 20,656
Registration fees..................................................... 14,500
Miscellaneous......................................................... 16,979
-------
TOTAL EXPENSES.................................................. 1,667,474
------------
INVESTMENT INCOME-NET........................................... 13,397,733
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (733,724)
Net unrealized (depreciation) on investments............................ (17,910,279)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (18,644,003)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (5,246,270)
============
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 13,994,788 $ 13,397,733
Net realized gain (loss) on investments.............................. 1,568,931 (733,724)
Net unrealized appreciation (depreciation) on investments for the year 7,076,796 (17,910,279)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.... 22,640,515 (5,246,270)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ (13,657,140) (13,971,942)
Net realized gain on investments..................................... (1,266,152) (1,517,848)
-------------- --------------
TOTAL DIVIDENDS.................................................... (14,923,292) (15,489,790)
-------------- --------------
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested-Note 1(c)....................................... 3,290,546 2,466,951
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................ 11,007,769 (18,269,109)
NET ASSETS:
Beginning of year.................................................... 195,991,352 206,999,121
-------------- --------------
End of year (including undistributed investment income-net:
$4,172,791 in 1993 and $1,748,774 in 1994)......................... $206,999,121 $188,730,012
============== ==============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED... 323,498 243,882
============== ==============
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL 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 SEPTEMBER 30,
------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.............. $9.52 $9.34 $9.83 $10.06 $10.45
------ ------ ------ ------- -------
INVESTMENT OPERATIONS:
Investment income-net........................... .73 .72 .71 .71 .67
Net realized and unrealized gain (loss) on investments (.19) .49 .30 .44 (.93)
------ ------ ------ ------- -------
TOTAL FROM INVESTMENT OPERATIONS.............. .54 1.21 1.01 1.15 (.26)
------ ------ ------ ------- -------
DISTRIBUTIONS:
Dividends from investment income-net............ (.70) (.68) (.70) (.70) (.70)
Dividends from net realized gain on investments. (.02) (.04) (.08) (.06) (.08)
------ ------ ------ ------- -------
TOTAL DISTRIBUTIONS........................... (.72) (.72) (.78) (.76) (.78)
------ ------ ------ ------- -------
Net asset value, end of year.................... $9.34 $9.83 $10.06 $10.45 $ 9.41
====== ====== ====== ======= =======
Market Value, end of year....................... $9 1/4 $10 $10 1/2 $10 3/4 $8 7/8
====== ====== ====== ======= =======
TOTAL INVESTMENT RETURN* (.21%) 16.61% 13.61% 10.30% (10.77)%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... .85% .88% .86% .83% .84%
Ratio of net investment income to average net assets 7.73% 7.61% 7.20% 7.01% 6.76%
Portfolio Turnover Rate......................... 27.11% 36.40% 22.75% 11.94% 14.41%
Net assets, end of year (000's Omitted)......... $176,356 $188,441 $195,991 $206,999 $188,730
* Calculated based on market value.
</TABLE>
See notes to financial statements.
DREYFUS MUNICIPAL 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.
(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 declared and paid at least
annually. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
As a result of the treatment of premium amortization for financial
reporting purposes, versus Federal income tax purposes the Fund reclassified
$1,849,807 from undistributed net investment income to undistributed net
realized and unrealized gains (losses). This amount represented the
cumulative effect of such difference. Results of operations and net assets
were not effected by this reclassification.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less than
95% of the market price) as defined in the dividend reinvestment plan.
On September 29, 1994, the Board of Directors declared a cash dividend of
$.0575 per share from investment income-net, payable on October 27, 1994 to
shareholders of record as of the close of business on October 13, 1994.
DREYFUS MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
NET INCREASE
NET REALIZED & (DECREASE)
UNREALIZED GAIN IN NET ASSETS
TOTAL INVESTMENT NET INVESTMENT (LOSS) ON RESULTING FROM
INCOME INCOME INVESTMENTS OPERATIONS
------------------- ------------------ ---------------- -------------------
(000'S) PER (000'S) PER (000'S) PER (000'S) PER
QUARTER ENDED OMITTED SHARE OMITTED SHARE OMITTED SHARE OMITTED SHARE
------- ------ -------- ------ ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1992........... $ 3,902 $ 0.20 $ 3,496 $ 0.18 $ (853) $ (0.05) $ 2,643 $ 0.13
March 31, 1993.............. 3,874 0.20 3,473 0.18 3,023 0.15 6,496 0.33
June 30, 1993............... 3,933 0.20 3,697 0.19 4,478 0.22 8,175 0.41
September 30, 1993.......... 3,940 0.19 3,329 0.16 1,998 0.12 5,327 0.28
------- ------ -------- ------ ------- ------- -------- -------
TOTAL................... $15,649 $ 0.79 $13,995 $ 0.71 $ 8,646 $ 0.44 $22,641 $ 1.15
======= ====== ======== ====== ======= ======= ======== =======
December 31, 1993........... $ 3,857 0.19 $ 3,415 $ 0.17 $ (691) $(0.03) $ 2,724 $ 0.14
March 31, 1994.............. 3,810 0.19 3,398 0.17 (13,072) (0.65) (9,674) (0.48)
June 30, 1994............... 3,725 0.19 3,316 0.17 (1,564) (0.08) 1,752 0.09
September 30, 1994.......... 3,673 0.18 3,269 0.16 (3,317) (0.17) (48) (.01)
------- ------ -------- ------ ------- ------- -------- -------
TOTAL................... $15,065 $ 0.75 $13,398 $ 0.67 $(18,644) $(0.93) $ (5,246) $(0.26)
======= ====== ======== ====== ======= ======= ======== =======
</TABLE>
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
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. 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, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. There was no expense
reimbursement for the year ended September 30, 1994.
(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 $2,500 and an attendance fee of
$250 per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $52,620,179 and $52,304,326, respectively, for the year ended
September 30, 1994, and consisted entirely of long-term and short-term
municipal investments.
At September 30, 1994, accumulated net unrealized appreciation on
investments was $960,875, consisting of $7,808,593 gross unrealized
appreciation and $6,847,718 gross unrealized depreciation.
At September 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).
DREYFUS MUNICIPAL INCOME, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS MUNICIPAL INCOME, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Municipal Income, Inc., including the statement of investments, as of
September 30, 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 September 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 Municipal Income, Inc. at September 30, 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 LLP Signature Logo)
New York, New York
November 4, 1994
DREYFUS MUNICIPAL INCOME, INC.
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
The Fund generally distributes net investment income monthly. From and
after any issuance of Preferred Stock, monthly distributions to the holders
of the Common Stock (the "Common Shareholders") will consist of all net
investment income of the Fund remaining after payment of dividends on such
Preferred Stock. Any net realized short-term capital gains and any net
realized long-term capital gains will be distributed at least annually.
Net realized short- or long-term capital gains, if any, will be
distributed to Common Shareholders at least once a year to the extent not
necessary to pay dividends on or meet the liquidation preference of shares of
any Preferred Stock. While there are any shares of Preferred Stock
outstanding, the Fund may not declare any cash dividend or other distribution
on its Common Stock, unless at the time of such declaration, (i) all accrued
Preferred Stock dividends have been paid and (ii) the net asset value of the
Fund's portfolio (determined after deducting the amount of such dividend or
other distribution) is at least 200% of the liquidation value of the
outstanding Preferred Stock (expected to equal the original purchase price
per share plus any accrued and unpaid dividends thereon). This limitation on
the Fund's ability to make distributions on its Common Stock could under
certain circumstances impair the ability of the Fund to maintain its
qualification for taxation as a regulated investment company.
Under the Fund's Dividend Reinvestment Plan (the "Plan"), a Common
Shareholder who has Fund shares registered in his name will have all
dividends and 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 Common 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 dividends and distributions reinvested by
his broker/dealer in additional shares of the Fund if such service is
provided by the broker/dealer; otherwise such dividends and distributions
will be treated like any other cash dividend or distribution.
A Common 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 ten business days prior to the record date for any
distribution.
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 in
connection with the reinvestment of dividends or distributions.
The Fund reserves the right to amend or terminate the Plan as applied to
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 MUNICIPAL INCOME, INC.
CERTAIN MANAGEMENT POLICY INFORMATION (UNAUDITED)
On August 4, 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. However, the Fund currently anticipates to borrow money only for
temporary or emergency (not leveraging) purposes, in an amount up to 15% of
the value of the Fund's total assets (including the amount borrowed) valued
at the lesser of cost or market, less liabilities (not including the amount
borrowed) at the time the borrowing is made. While such borrowings exceed 5%
of the Fund's assets, the Fund would not make any additional investments.
DREYFUS MUNICIPAL INCOME, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended September 30, 1994:
- all the dividends paid from investment income-net are
"exempt-interest dividends" (not generally subject to regular Federal
income tax), and
- the portion of the $.136404 per share paid by the Fund on
December 29, 1993 representing a long-term capital gain distribution
is $.060506 per share.
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 1994 calendar year
on Form 1099-DIV which will be mailed by January 31, 1995.
OFFICERS AND DIRECTORS
DREYFUS MUNICIPAL INCOME, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
DIRECTORS
Lucy Wilson Benson
David W. Burke
Martin D. Fife
Whitney I. Gerard
Robert R. Glauber
Arthur A. Hartman
George L. Perry
Paul Wolfowitz
OFFICERS
President and
Chief Investment Officer
Richard J. Moynihan
Vice President-Financial
Jeffrey N. Nachman
Treasurer
John J. Pyburn
Secretary
Daniel C. Maclean III
Assistant Secretary
Christine Pavalos
Controller
Jean Farley
Vice Presidents and
Investment Officers:
Joseph P. Darcy
A. Paul Disdier
Karen M. Hand
Stephen C. Kris
Jill C. Shaffro
L. Lawrence Troutman
Samuel J. Weinstock
Monica S. Wieboldt
INVESTMENT ADVISER
The Dreyfus Corporation
CUSTODIAN
The Bank of New York
COUNSEL
Stroock & Stroock & Lavan
TRANSFER AGENT,
DIVIDEND DISTRIBUTION AGENT
AND REGISTRAR
Mellon Bank, N.A.
STOCK EXCHANGE LISTING
AMEX Symbol: DMF
INITIAL SEC EFFECTIVE DATE
10/21/88
The Net Asset Value appears in the
following publications: Barron's,
Closed-End Bond Funds section under
the heading "Municipal Bond Funds"
every Monday; Wall Street Journal,
Mutual Funds section under the
heading "Closed-End Bond Funds" every
Monday; New York Times, Business
section under the heading "Closed-End
Bond Funds" every Monday.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase shares of its
common stock in the open market when it can do so at prices below the then
current net asset value per share.
Printed in U.S.A 856AR949
DREYFUS
MUNICIPAL
INCOME,
INC.
ANNUAL REPORT
SEPTEMBER 30, 1994
