PRESIDENT'S LETTER
Dear Shareholder:
Since our last report to shareholders, the bond markets have been in a
state of flux. Bond prices rallied to a cyclical high last October, and have
moved irregularly lower ever since. Today, long-term municipal bonds are
returning 1% more than they were only six months ago. Reflecting this
move, the Fund's net asset value declined by approximately $.70 per share
(adjusted for capital gain distributions) to $9.67 per share, during the six
months ended March 31, 1994. Partially offsetting, were income dividends
paid per share of $.355; this translates to an annualized tax-exempt
distribution rate per share of 7.28%, based on the March 31 net asset
value, and 7.51% based on the March 31 closing market price, both
adjusted for capital gain distributions.*
After his inauguration last year, President Clinton quickly moved to
outline his domestic economic agenda, which called for higher taxes and a
substantial reduction in the Federal budget deficit. In return, it was
expected that the Federal Reserve Board would continue to maintain a
stimulative monetary policy. In fact, Congress approved a budget package
in early August that tilted fiscal policy toward deficit reduction. In
response, interest rates accelerated their downward move during the
summer before finally reaching their low point during the fourth quarter
of 1993.
MARKET VOLATILITY
The first quarter of 1994 probably will be memorialized as the end of
five years of accommodative Federal Reserve policy. Since February, the
Federal Funds rate has been raised two times. Generally, it is anticipated
that further hikes will be forthcoming should the economy continue to
signal an unacceptable rate of growth. With such a heightened degree of
nervousness influencing both bonds and stocks, the markets could remain
quite volatile.
Higher bond yields have had an effect on the supply of new municipal
bonds. While 1993 was a record year for bond issuance, so far new
issuance has fallen dramatically this year. Should inflation fears subside
and interest rates stabilize, attractive investment opportunities could
surface in municipal securities: new issuance has been reduced, the
highest marginal Federal tax rate has been increased to nearly 40%, and
municipal bonds are yielding substantially more than they were only a few
months ago. However, at this juncture, it is still uncertain whether or
when such a scenario will unfold.
DEFENSIVE PORTFOLIO POSITIONING
As we stated in our Annual Report to shareholders (dated September 30,
1993), it was our intention to maintain the portfolio's defensive posture
in looking to reduce volatility of the Fund. We are seeking to do this by
continuing to hold those bonds with what we believe are high coupons and
dollar prices relative to current market levels, and building cash reserves.
We still believe that this approach is warranted in view of the heightened
degree of uncertainty about the near-term direction of the economy and
inflation. Certainly, recent moves by the Federal Reserve to hike short-
term interest rates provide enough of an impetus to maintain a cautious
stance. The Federal Reserve generally acts in a series of moves rather
than taking a "one shot approach."
As we have witnessed in recent weeks, negative influences on the
markets can be quite powerful. The potential still exists for further
market volatility and higher yields before bond prices begin to rise again.
At difficult times such as these, it is easy to lose sight of the forest for
the trees, as emotion often substitutes for logical investment reasoning.
This Fund is managed with the intention of achieving long-term
performance and income goals. We appreciate your investment in the Fund,
and we want to assure you that we are at all times working in the Fund's
best interest.
Very truly yours,
(Richard J. Moynihan Signature Logo)
Richard J. Moynihan
President
April 8, 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 for certain investors.
Capital gains, if any, are generally subject to Federal, state and local
taxes.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-98.1% AMOUNT VALUE
------------ ------------
<S> <C> <C>
ARIZONA-3.5%
Salt River Project, Agriculture Improvement and Power District, Electric System Revenue
8.004%, 1/1/2028 (a,b)................................................................ $ 5,000,000 $ 3,818,750
Tucson Airport Authority, Special Facility Revenue (Lockheed Aeromod Center Inc.)
8.70%, 9/1/2019....................................................................... 2,500,000 2,850,850
COLORADO-6.9%
Colorado Health Facilities Authority, Revenue
(Northwest Denver Community Mental Health Center Project) 8.70%, 11/1/2006............ 1,165,000 1,206,427
Colorado Housing Finance Authority, SFMR Zero Coupon, 6/1/2015............................ 21,405,216 2,218,865
City and County of Denver, Airport Revenue:
8.25%, 11/15/2012..................................................................... 6,500,000 6,977,880
8.50%, 11/15/2023..................................................................... 2,475,000 2,685,771
DISTRICT OF COLUMBIA-1.5%
Washington D.C. 5.875%, 6/1/2008.......................................................... 3,070,000 2,931,390
FLORIDA-4.8%
Leon County Educational Facilities Authority, COP (Southgate Residence Hall Project):
3.75%, 12/1/1995...................................................................... 247,560 245,087
9%, 9/1/2014 (c)...................................................................... 5,000,000 3,500,000
Orange County Health Facilities Authority, Revenue (Mental Health Services)
9.25%, 7/1/2020....................................................................... 4,905,000 5,338,945
GEORGIA-3.8%
Private Colleges and Universities Facilities Authority, Revenue, Refunding
(Clark Atlanta University Project) 8.25%, 1/1/2015.................................... 7,000,000 7,143,500
ILLINOIS-14.2%
Chicago O'Hare International Airport, Special Facilities Revenue:
(American Airlines Inc. Project) 7.875%, 11/1/2025.................................... 2,000,000 2,069,460
(United Airlines Inc. Project):
8.40%, 5/1/2018................................................................... 8,490,000 9,092,960
8.50%, 5/1/2018................................................................... 2,000,000 2,150,920
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facility Acquisition):
8.75%, 3/1/2010................................................................... 2,225,000 2,390,674
8.50%, 9/1/2010................................................................... 5,000,000 5,370,450
Illinois Health Facilities Authority, Revenue, Refunding (Galesburg Cottage Hospital)
9.625%, 5/1/2011 (Prerefunded 5/1/1997) (d)........................................... 5,000,000 5,820,050
INDIANA-3.2%
Fishers Economic Development, First Mortgage Revenue
(United Student Funds Inc.) 8.375%, 9/1/2014.......................................... 5,700,000 6,014,469
MASSACHUSETTS-2.4%
Massachusetts Housing Finance Agency, SFHR:
8.10%, 8/1/2023....................................................................... 3,000,000 3,119,460
10.877%, 6/1/2025 (a,b)............................................................... 1,300,000 1,391,000
MICHIGAN-7.2%
Detroit:
GO 6.35%, 4/1/2014.................................................................... 1,500,000 1,395,885
Sewage Disposal System, Revenue, Refunding
8.73%, 7/1/2023 (Insured; FGIC) (a)............................................... 5,000,000 4,200,000
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
MICHIGAN (CONTINUED)
Greater Detroit Resource Recovery Authority, Revenue
9.25%, Series C, 12/13/2008........................................................... $ 4,800,000 $ 5,139,792
Michigan Strategic Fund, SWDR, Refunding (Genesee Power Station Project)
7.50%, 1/1/2021....................................................................... 3,000,000 2,929,710
MINNESOTA-1.5%
Minnesota Housing Finance Agency, SFMR 8%, 7/1/2029....................................... 2,710,000 2,804,823
MISSOURI-.6%
Independence Industrial Development Authority, MFHR (Greenbriar Meadows Project)
10.25%, 8/1/2019 (c).................................................................. 2,000,000 1,200,000
NEW YORK-6.2%
New York City, GO:
7.75%, 8/15/2007...................................................................... 4,275,000 4,756,322
8.25%, 11/15/2010..................................................................... 3,000,000 3,477,870
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines Inc. Project) 7.75%, 7/1/2019...................................... 3,390,000 3,530,956
NEVADA-2.2%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032................................... 4,000,000 4,124,920
NORTH DAKOTA-.8%
North Dakota Housing Finance Agency, SFMR 8.30%, 1/1/2012................................. 1,545,000 1,597,685
PENNSYLVANIA-14.0%
Commonwealth of Pennsylvania, GO 9.286%, 7/1/2012 (a,b)................................... 15,650,000 16,080,375
Huntingdon County Industrial Development Authority, First Mortgage Revenue
(Presbyterian Homes-Woodland Retirement Center Project) 8%, 12/1/2020................. 3,000,000 3,126,720
Lancaster County Hospital Authority, Health Center Revenue
(United Church Homes Project) 9.125%, 10/1/2014....................................... 2,000,000 2,200,520
Montgomery County Higher Education and Health Authority, HR
(United Hospital Inc.- St. Christopher) 8.50%, 11/1/2017.............................. 4,865,000 5,067,384
TENNESSEE-3.9%
Tennessee Housing Development Agency (Homeownership Program)
8.125%, 7/1/2021...................................................................... 7,150,000 7,334,971
TEXAS-16.1%
Alliance Airport Authority Inc., Special Facilities Revenue (American Airlines Inc. Project)
7.50%, 12/1/2029...................................................................... 2,375,000 2,401,576
Austin, Convention Center Revenue 8.25%, 11/15/2014
(Prerefunded 11/15/1999)(d)........................................................... 5,500,000 6,434,010
Bell County Health Facilities Development Corp., Revenue
(Southern Healthcare - Southview) 10.50%, 3/1/2020.................................... 4,940,000 5,413,203
Montgomery County Health Facilities Development Corp., Hospital Mortgage Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014................................... 5,425,000 5,978,459
Texas Housing Agency, SFMR:
9.375%, 9/1/2016...................................................................... 5,000,000 5,061,250
8.40%, 7/1/2020....................................................................... 2,200,000 2,227,676
8.40%, 1/1/2021....................................................................... 2,965,000 3,025,367
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1994 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
UTAH-4.0%
Carbon County, SWDR, Refunding (Sunnyside Cogeneration)
9.25%, 7/1/2018....................................................................... $ 7,000,000 $ 7,517,860
VIRGINIA-1.3%
Virginia Housing Development Authority, MFHR
10.867%, 5/1/2018 (a,b)............................................................... 2,250,000 2,370,936
------------
TOTAL MUNICIPAL BONDS (cost $180,862,309)................................................. $185,735,178
============
SHORT-TERM MUNICIPAL INVESTMENT-1.9%
MICHIGAN
Michigan Strategic Fund, Limited Obligation Revenue, VRDN (Coil Center Corp. Project)
2.90% (LOC; Tokai Bank)(e)
(cost $3,665,000)..................................................................... $ 3,665,000 $ 3,665,000
============
TOTAL INVESTMENTS - 100.0%
(cost $184,527,309)................................................................... $189,400,178
============
</TABLE>
<TABLE>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
COP Certificate of Participation
FGIC Financial Guaranty Insurance Corporation MFHR Multi-Family Housing 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
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- --------------------
<S> <C> <C> <C>
AAA Aaa AAA 5.3%
AA Aa AA 11.8
A A A 20.9
BBB Baa BBB 26.3
BB Ba BB 2.7
F1 MIG1 SP1 1.9
Not Rated (g) Not Rated (g) Not Rated (g) 31.1
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater 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 March 31,
1994, these securities amounted to $23,661,063 or 12.2% of net assets.
(c) Non-income producing security; interest payment in default.
(d) Bonds which are prerefunded are collateralized by the issuer with
U.S. Government securities which are held in escrow and are used to pay
principal and interest on the tax-exempt issue and to retire the bonds in
full at the earliest refunding date.
(e) Securities payable on demand, secured by bank letters of credit. The
interest rate, which is subject to change, is based upon bank prime rates
or an index of market interest rates.
(f) Fitch currently provides creditworthiness information for a limited
amount of investments.
(g) 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 independent accountants' review report and notes to financial
statements.
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $184,527,309)-see statement.............................................. $189,400,178
Cash............................................................................... 578,240
Interest receivable................................................................ 3,689,390
Prepaid expenses................................................................... 10,386
------------
193,678,194
LIABILITIES:
Due to The Dreyfus Corporation..................................................... $ 117,603
Accrued expenses................................................................... 117,145 234,748
------------ ------------
NET ASSETS............................................................................. $193,443,446
============
REPRESENTED BY:
Paid-in capital.................................................................... $186,270,967
Accumulated undistributed investment income-net.................................... 3,923,896
Accumulated distributions in excess of net realized gain on investments-Note 1(c).. (1,624,286)
Accumulated net unrealized appreciation on investments-Note 3...................... 4,872,869
------------
NET ASSETS at value applicable to 20,007,094 outstanding shares of
Common Stock, equivalent to $9.67 per share
(110 million shares of $.001 par value authorized)................................. $193,443,446
============
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.................................................................... $ 7,666,561
EXPENSES:
Management fee-Note 2(a)....................................................... $ 710,929
Shareholder servicing costs.................................................... 49,451
Shareholders' reports.......................................................... 36,627
Professional fees.............................................................. 19,840
Directors' fees and expenses-Note 2(b)......................................... 11,132
Custodian fees................................................................. 10,557
Registration fees.............................................................. 7,250
Miscellaneous.................................................................. 7,483
------------
TOTAL EXPENSES............................................................. 853,269
------------
INVESTMENT INCOME-NET...................................................... 6,813,292
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3.......................................... $ (89,445)
Net unrealized (depreciation) on investments....................................... (13,673,840)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS.......................... (13,763,285)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ (6,949,993)
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1994
1993 (UNAUDITED)
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net.............................................................. $ 13,994,788 $ 6,813,292
Net realized gain (loss) on investments............................................ 1,568,931 (89,445)
Net unrealized appreciation (depreciation) on investments for the period........... 7,076,796 (13,673,840)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ 22,640,515 (6,949,993)
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.............................................................. (13,657,140) (7,062,187)
Net realized gain on investments................................................... (1,266,152) --
Excess net realized gain on investments............................................ -- (1,517,848)
------------ ------------
TOTAL DIVIDENDS................................................................ (14,923,292) (8,580,035)
------------ ------------
CAPITAL STOCK TRANSACTIONS;
Dividends reinvested_Note 1(c)..................................................... 3,290,546 1,974,353
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................................ 11,007,769 (13,555,675)
NET ASSETS:
Beginning of period................................................................ 195,991,352 206,999,121
------------ ------------
End of period (including undistributed investment income-net:
$4,172,791 in 1993 and $3,923,896 in 1994)..................................... $206,999,121 $193,443,446
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS;
INCREASE IN SHARES OUTSTANDING AS A RESULT OF DIVIDENDS REINVESTED................. 323,498 192,963
============ ============
See independent accountants' review report and 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 period indicated. This information
has been derived from information provided in the financial statements and
market price data for the Fund's shares.
YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED
-------------------------------------------------------- MARCH 31, 1994
PER SHARE DATA: 1989(1) 1990 1991 1992 1993 (UNAUDITED)
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 9.26(2) $ 9.52 $ 9.34 $ 9.83 $ 10.06 $ 10.45
------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net....................... .64 .73 .72 .71 .71 .34
Net realized and unrealized gain (loss)
on investments.......................... .14 (.19) .49 .30 .44 (.68)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS........ .78 .54 1.21 1.01 1.15 (.34)
------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net........ (.52) (.70) (.68) (.70) (.70) (.36)
Dividends from net realized gain
on investments.......................... -- (.02) (.04) (.08) (.06) --
Dividends from excess net realized
gain on investments..................... -- -- -- -- -- (.08)
------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS..................... (.52) (.72) (.72) (.78) (.76) (.44)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $ 9.52 $ 9.34 $ 9.83 $ 10.06 $ 10.45 $ 9.67
======= ======= ======= ======= ======= =======
Market Value, end of period................. $ 10 $ 9 1/4 $ 10 $10 1/2 $10 3/4 $ 9 3/8
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 5.88%(4) (.21%) 16.61% 13.61% 10.30% (18.17%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets..... .88%(4) .85% .88% .86% .83% .84%(4)
Ratio of net investment income to
average net assets...................... 7.37%(4) 7.73% 7.61% 7.20% 7.01% 6.71%(4)
Portfolio Turnover Rate..................... 95.24%(5) 27.11% 36.40% 22.75% 11.94% 2.39%(5)
Net assets, end of period (000's Omitted)... $176,757 $176,356 $188,441 $195,991 $206,999 $193,443
(1) From October 24, 1988 (commencement of operations) to September 30, 1989.
(2) Net of offering costs charged to paid-in capital.
(3) Calculated based on market value.
(4) Annualized.
(5) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
DREYFUS MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 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 in the judgment of the
Service are readily available and are representative of the bid side of the
market 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 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.
Dividends in excess of net realized gains on investment for financial
statement purposes result primarily from losses from securities
transactions during the six months ended March 31, 1994 which are
treated for Federal income tax purposes as arising in Fiscal 1995.
For shareholders who elect to receive their distributions in additional
shares of the Fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less
than 95% of the market price) based on the record date's respective price.
If the net asset value per share on the record date is lower than the
market price per share, shares will be issued by the Fund at the record
date's net asset value on the payable date of the distribution. If the net
asset value per share is less than 95% of market value, shares will be
issued by the Fund at 95% of market value. If the market price is lower
than the net asset value per share on the record date, Mellon Bank, N.A.
will purchase Fund shares in the open market commencing on the payable
date, and reinvest those shares accordingly. As a result of purchasing Fund
shares in the open market, Fund shares outstanding will not be affected by
this form of reinvestment.
On March 29, 1994, the Board of Directors declared a cash dividend of
$.0575 per share from investment income-net, payable on April 27, 1994
to shareholders of record as of the close of business on April 13, 1994.
<TABLE>
DREYFUS MUNICIPAL INCOME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) QUARTERLY RESULTS OF OPERATIONS:
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)
------- ------ ------- ------ -------- ------ ------- ------
TOTAL....................... $ 7,667 $ 0.38 $ 6,813 $ 0.34 $(13,763) $(0.68) $(6,950) $(0.34)
======= ====== ======= ====== ======== ====== ======= ======
</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 provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from all, or substantially all, Federal income
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 six months ended
March 31, 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.
(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 shareholders of the Manager and of Mellon. The merger
is expected to occur in mid-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 board
and shareholders before completion of the merger. Shareholder approval
will be solicited by a proxy statement.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $15,912,560 and
$16,141,729, respectively, for the six months ended March 31, 1994, and
consisted entirely of municipal bonds and short-term municipal
investments.
At March 31, 1994, for Federal income tax purposes, the cost of
investments was $184,159,173 and accumulated net unrealized
appreciation on investments was $5,241,005, consisting of $10,272,767
gross unrealized appreciation and $5,031,762 gross unrealized
depreciation.
At March 31, 1994, for financial reporting purposes, the cost of
investments was $184,527,309 and accumulated net unrealized
appreciation on investments was $4,872,869, consisting of $10,059,498
gross unrealized appreciation and $5,186,629 gross unrealized
depreciation.
DREYFUS MUNICIPAL INCOME, INC.
REVIEW REPORT OF ERNST & YOUNG, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS MUNICIPAL INCOME, INC.
We have reviewed the accompanying statement of assets and liabilities
of Dreyfus Municipal Income, Inc., including the statement of investments,
as of March 31, 1994, and the related statements of operations and
changes in net assets and financial highlights for the six month period
ended March 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than
an audit conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the objective of
expressing an opinion regarding the financial statements and financial
highlights taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements and financial
highlights referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year
ended September 30, 1993 and financial highlights for each of the five
years in the period ended September 30, 1993 and in our report dated
November 3, 1993, we expressed an unqualified opinion on such statement
of changes in net assets and financial highlights.
(Ernst & Young Signature Logo)
New York, New York
May 6, 1994
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
Richard J. Moynihan
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:
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 sec-
tion 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 856SA943
DREYFUS
MUNICIPAL
INCOME,
INC.
SEMI_ANNUAL REPORT
MARCH 31, 1994
(Dreyfus Lion Logo)
