UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5245
DREYFUS STRATEGIC MUNICIPALS, INC.
(Exact name of Registrant as specified in charter)
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Address of principal executive offices) (Zip code)
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 922-6000
Date of fiscal year end: September 30
Date of reporting period: September 30, 2003
-2-
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Dreyfus Strategic
Municipals, Inc.
ANNUAL REPORT September 30, 2003
DREYFUS STRATEGIC MUNICIPALS, INC.
PROTECTING YOUR PRIVACY
OUR PLEDGE TO YOU
THE FUND IS COMMITTED TO YOUR PRIVACY. On this page, you will find the Fund's
policies and practices for collecting, disclosing, and safeguarding "nonpublic
personal information," which may include financial or other customer
information. These policies apply to individuals who purchase Fund shares for
personal, family, or household purposes, or have done so in the past. This
notification replaces all previous statements of the Fund's consumer privacy
policy, and may be amended at any time. We'll keep you informed of changes as
required by law.
YOUR ACCOUNT IS PROVIDED IN A SECURE ENVIRONMENT. The Fund maintains physical,
electronic and procedural safeguards that comply with federal regulations to
guard nonpublic personal information. The Fund's agents and service providers
have limited access to customer information based on their role in servicing
your account.
THE FUND COLLECTS INFORMATION IN ORDER TO SERVICE AND ADMINISTER YOUR ACCOUNT.
The Fund collects a variety of nonpublic personal information, which may
include:
* Information we receive from you, such as your name, address, and social
security number.
* Information about your transactions with us, such as the purchase or sale
of Fund shares.
* Information we receive from agents and service providers, such as proxy
voting information.
THE FUND DOES NOT SHARE NONPUBLIC PERSONAL INFORMATION WITH ANYONE, EXCEPT AS
PERMITTED BY LAW.
THANK YOU FOR THIS OPPORTUNITY TO SERVE YOU.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period covered and do not necessarily represent the views
of Dreyfus or any other person in the Dreyfus organization. Any such views are
subject to change at any time based upon market or other conditions and Dreyfus
disclaims any responsibility to update such views. These views may not be relied
on as investment advice and, because investment decisions for a Dreyfus fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any Dreyfus fund.
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
--------------------------------------------------
2 Letter from the Chairman
3 Discussion of Fund Performance
6 Selected Information
7 Statement of Investments
18 Statement of Assets and Liabilities
19 Statement of Operations
20 Statement of Changes in Net Assets
21 Financial Highlights
23 Notes to Financial Statements
28 Report of Independent Auditors
29 Additional Information
32 Important Tax Information
33 Proxy Results
34 Board Members Information
36 Officers of the Fund
41 Officers and Directors
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus
Strategic Municipals, Inc.
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This annual report for Dreyfus Strategic Municipals, Inc. covers the 12-month
period from October 1, 2002, through September 30, 2003. Inside, you'll find
valuable information about how the fund was managed during the reporting period,
including a discussion with the fund's portfolio manager, W. Michael Petty.
After a prolonged period of sluggish growth, the U.S. economy has shown signs of
sustainable improvement. However, investor uncertainty regarding the strength of
the recovery has produced heightened volatility in the tax-exempt fixed-income
market. After most areas of the municipal bond market experienced sharp declines
during the summer, prices generally bounced back in September.
Despite recent reductions in federal tax rates, we believe that municipal bonds
may become more attractive to certain investors if states and municipalities
continue to raise taxes to balance their budgets. As always, we encourage you to
talk with your financial advisor about ways to enjoy the benefits of tax-exempt
municipal bonds as market conditions evolve.
Thank you for your continued confidence and support.
Sincerely,
Stephen E. Canter
Chairman and Chief Executive Officer
The Dreyfus Corporation
October 15, 2003
DISCUSSION OF FUND PERFORMANCE
W. Michael Petty, Portfolio Manager
How did Dreyfus Strategic Municipals, Inc. perform during the period?
For the 12-month period ended September 30, 2003, the fund achieved a total
return of 5.49%.(1) Over the same period, the fund provided income dividends of
$0.7200 per share, which is equal to a distribution rate of 7.68%.(2)
We attribute the fund's performance primarily to falling interest rates during
the first nine months of the reporting period and the recovery of certain
corporate-backed holdings that bounced back strongly from depressed price
levels. In addition, the fund performed well during the summer of 2003, when our
efforts to improve its overall credit quality proved beneficial during a brief
but intense period of heightened market volatility.
What is the fund's investment approach?
The fund' s investment objective is to maximize current income exempt from
federal income tax to the extent consistent with the preservation of capital.
Under normal market conditions, the fund invests at least 80% of its net assets
in municipal obligations. Generally, the fund invests at least 50% of its net
assets in municipal bonds considered investment-grade or the unrated equivalent
as determined by Dreyfus in the case of bonds, and in the two highest-rating
categories or the unrated equivalent as determined by Dreyfus in the case of
short-term obligations having or deemed to have maturities of less than one
year.
To this end, we have constructed the portfolio by seeking income opportunities
through analysis of each bond's structure, including paying close attention to
each bond's yield, maturity and early redemption features.
Over time, many of the fund's relatively higher-yielding bonds mature or are
redeemed by their issuers, and we generally attempt to replace them with
securities at then-prevailing yields, which may be lower The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
than the rates of the securities which mature or are redeemed. When we believe
an opportunity exists, we also may seek to upgrade the portfolio's investments
with newly issued bonds that, in our opinion, have better structural or income
characteristics than existing holdings.
What other factors influenced the fund's performance?
The fund was influenced by general market trends, including declining interest
rates during the first half of the reporting period and heightened market
volatility as investor sentiment shifted in the second half of the reporting
period.
When the reporting period began, the nation was mired in economic weakness as
2002' s corporate scandals, a persistently declining stock market and rising
geopolitical tensions took their toll on business and consumer spending.
Investors generally remained risk averse in this unsettled climate, which hurt
prices of riskier assets, such as stocks and lower-rated corporate-backed bonds.
Some of the fund's corporate-backed holdings, including tax-exempt bonds issued
by financially troubled airlines, were hit particularly hard, hindering the
fund's returns.
Toward the end of 2002, after the Federal Reserve Board (the "Fed") reduced
short-term interest rates by 50 basis points, investors apparently began to grow
more comfortable with credit risk, and the prices of corporate-backed bonds
bounced back strongly. We took advantage of the rally to reduce the fund's
corporate exposure, and by the end of the reporting period the fund's
airline-related holdings were limited to small positions in two major carriers.
As a result, the fund's overall average credit rating improved from the top of
the single-A range to the bottom of the double-A range.
The fund also benefited from its average duration, which we maintained for much
of the reporting period in a range we considered slightly longer than average.
Despite rising expectations of stronger economic growth, interest rates
continued to decline during the spring of 2003 as investors anticipated another
rate-cut by the Fed, which
occurred in late June. The fund's longer than average duration enabled it to
lock in higher then-prevailing yields for a longer time and capture the benefits
of capital appreciation while interest rates fell.
The fund also received good results from its leveraging strategy. In February
2003, we extended the term of one series of the fund's auction-rate preferred
notes to two years, locking in low borrowing costs on money used to purchase
additional securities.
What is the fund's current strategy?
During the summer of 2003, we adopted a more defensive posture by reducing the
fund's average duration to a range we consider slightly shorter than average. In
addition, we continued our efforts to improve the fund's overall credit quality.
These measures helped the fund during a sharp market reversal in July, when the
municipal bond market suffered the worst one-month decline in its history. The
market's volatility was caused by investors' reactions to stronger than expected
economic data, which raised concerns that inflationary pressures might reemerge.
The bond market bounced back at a more moderate pace in late August and
September, erasing most of July's losses.
In addition, when making new purchases, we recently have focused on
income-oriented securities with maturities in the 10- to 15-year range. We
believe that these relatively defensive securities should hold more of their
intrinsic value if interest rates begin to rise and bond prices decline.
October 15, 2003
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
BASED UPON NET ASSET VALUE PER SHARE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. MARKET PRICE PER SHARE, NET ASSET VALUE PER SHARE AND INVESTMENT RETURN
FLUCTUATE. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES, AND SOME INCOME MAY
BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS.
CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) DISTRIBUTION RATE PER SHARE IS BASED UPON DIVIDENDS PER SHARE PAID FROM NET
INVESTMENT INCOME DURING THE PERIOD, ANNUALIZED, DIVIDED BY THE MARKET PRICE PER
SHARE AT THE END OF THE PERIOD.
The Fund
SELECTED INFORMATION
September 30, 2003 (Unaudited)
Market Price per share September 30, 2003 $9.38
Shares Outstanding September 30, 2003 60,168,726
New York Stock Exchange Ticker Symbol LEO
MARKET PRICE (NEW YORK STOCK EXCHANGE)
Fiscal Year Ended September 30, 2003
-----------------------------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
DECEMBER 31, 2002 MARCH 31, 2003 JUNE 30, 2003 SEPTEMBER 30, 2003
---------------------------------------------------------------------------------------------------------------
High $10.17 $9.73 $10.27 $10.02
Low 8.92 9.30 9.51 9.02
Close 9.70 9.56 10.03 9.38
PERCENTAGE GAIN (LOSS) based on change in Market Price*
September 23, 1987 (commencement of operations)
through September 30, 2003 200.70%
October 1, 1993 through September 30, 2003 67.07
October 1, 1998 through September 30, 2003 27.69
October 1, 2002 through September 30, 2003 0.33
January 1, 2003 through September 30, 2003 2.56
April 1, 2003 through September 30, 2003 2.03
July 1, 2003 through September 30, 2003 (4.58)
NET ASSET VALUE PER SHARE
September 23, 1987 (commencement of operations) $9.32
September 30, 2002 9.37
December 31, 2002 9.21
March 31, 2003 9.02
June 30, 2003 9.30
September 30, 2003 9.14
PERCENTAGE GAIN based on change in Net Asset Value*
September 23, 1987 (commencement of operations)
through September 30, 2003 214.36%
October 1, 1993 through September 30, 2003 73.66
October 1, 1998 through September 30, 2003 25.55
October 1, 2002 through September 30, 2003 5.49
January 1, 2003 through September 30, 2003 5.25
April 1, 2003 through September 30, 2003 5.37
July 1, 2003 through September 30, 2003 0.27
* WITH DIVIDENDS REINVESTED.
STATEMENT OF INVESTMENTS
September 30, 2003
Principal
LONG-TERM MUNICIPAL INVESTMENTS--146.1% Amount ($) Value ($)
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ALABAMA--5.6%
Houston County Health Care Authority
6.25%, 10/1/2030 (Insured; AMBAC) 8,000,000 9,233,600
Jefferson County, Sewer Revenue:
5.25%, 2/1/2023 (Insured; FGIC)
(Prerefunded 8/1/2012) 5,000,000 (a) 5,718,300
5%, 2/1/2041 (Insured; FGIC)
(Prerefunded 8/1/2012) 14,135,000 (a) 15,878,033
ALASKA--.8%
Alaska Housing Finance Corp.
6%, 6/1/2049 (Insured; MBIA) 4,000,000 4,172,120
ARKANSAS--3.1%
Arkansas Development Finance Authority, SFMR
(Mortgage Backed Securities Program):
6.45%, 7/1/2031 (Guaranteed; GNMA, FNMA) 5,520,000 5,827,740
6.25%, 1/1/2032 (Guaranteed; GNMA) 4,625,000 4,881,965
Little Rock School District
5.25%, 2/1/2030 (Insured; FSA) 6,000,000 6,287,760
ARIZONA--6.6%
Apache County Industrial Development Authority, PCR
(Tucson Electric Power Co. Project) 5.85%, 3/1/2028 1,445,000 1,322,478
Maricopa Pollution Control Corp., PCR
(Public Service Co.) 5.75%, 11/1/2022 6,000,000 5,904,120
Pima County Industrial Development Authority,
Industrial Revenue (Tucson Electric
Power Co. Project) 6%, 9/1/2029 13,605,000 12,676,595
Scottsdale Industrial Development Authority, HR
(Scottsdale Healthcare) 5.80%, 12/1/2031 6,000,000 6,144,660
Tempe Industrial Development Authority,
IDR (California Micro Devices Corp.
Project) 10.50%, 3/1/2018 6,535,000 6,549,638
Tucson, Water System Revenue
5%, 7/1/2021 (Insured; FGIC) 3,500,000 3,649,660
CALIFORNIA--9.6%
California Infrastructure and Economic Development
Bank, Revenue (Bay Area Toll Bridges)
5.25%, 7/1/2017 (Insured; FSA) 12,360,000 13,644,080
California Pollution Control Financing Authority, PCR
(Southern California Edison Co.) 7%, 2/28/2008 5,000,000 5,058,150
State of California 9.569%, 12/1/2018 (Insured; FSA) 10,000,000 (b,c) 10,281,700
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
California Department of Water Resource Power
Supply, Revenue 5.50%, 5/1/2013 (Insured; AMBAC) 11,080,000 12,602,946
Los Angeles Unified School District
5.25%, 7/1/2020 (Insured; FSA) 7,200,000 7,772,472
Oakland 5%, 1/15/2026 (Insured; MBIA) 2,990,000 3,042,056
COLORADO--1.8%
Denver City and County, Special Facilities Airport
Revenue (United Airlines Project) 6.875%, 10/1/2032 6,950,000 (d) 2,814,750
Northwest Parkway Public Highway Authority,
Revenue 7.125%, 6/15/2041 6,750,000 6,883,853
DELAWARE--1.3%
Delaware Transportation Authority,
Transportation System Revenue
5%, 7/1/2019 (Insured; AMBAC) 6,865,000 7,307,312
FLORIDA--2.8%
Florida Housing Finance Corp., Housing Revenue
(Nelson Park Apartments)
6.40%, 3/1/2040 (Insured; FSA) 12,380,000 13,121,686
Orange County Health Facility Authority, HR
(Regional Healthcare Systems) 6%, 10/1/2026 2,000,000 2,084,220
GEORGIA--.9%
Georgia Housing Finance Authority,
SFMR 6.45%, 12/1/2030 595,000 602,491
Private Colleges and Universities
Facilities Authority Revenue (Clark Atlanta
University Project) 8.25%, 1/1/2015 4,127,500 4,364,625
HAWAII--.6%
Hawaii Department of Transportation, Special
Facility Revenue (Caterair International
Corp. Project) 10.125%, 12/1/2010 3,500,000 3,499,160
IDAHO--.6%
Power County Industrial Development Corp, SWDR
(FMC Corp. Project) 6.45%, 8/1/2032 3,250,000 3,052,238
ILLINOIS--7.3%
Chicago:
6.125%, 1/1/2028 (Insured; FGIC) 15,815,000 17,884,393
(Wastewater Transmission Revenue)
6%, 1/1/2030 (Insured; MBIA) (Prerefunded 1/1/2010) 3,000,000 (a) 3,556,080
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
Chicago-O'Hare International Airport, Special
Facility Revenue (United Airlines,
Inc. Project) 6.75%, 11/1/2011 2,000,000 (d) 410,000
Illinois Health Facilities Authority, Revenue:
(Advocate Network Health Care)
6.125%, 11/15/2022 4,020,000 4,438,683
(OSF Healthcare System)
6.25%, 11/15/2029 7,730,000 8,171,615
(Swedish American Hospital) 6.875%, 11/15/2030 4,990,000 5,456,266
INDIANA--2.0%
Franklin Township Independent
School Building Corp., First Mortgage
6.125%, 1/15/2022 (Prerefunded 7/15/2010) 6,500,000 (a) 7,908,030
Indiana Housing Finance Authority, SFMR 5.95%, 1/1/2029 2,775,000 2,868,490
KANSAS--4.9%
Kansas Development Finance Authority, Revenue:
(Board of Regents-Scientific Resource)
5%, 10/1/2021 (Insured; AMBAC) 5,290,000 5,606,448
Health Facility (Sisters of Charity) 6.25%, 12/1/2028 3,000,000 3,344,610
Wyandotte County (Kansas University School
District No. 500) 5.25%, 9/1/2015 (Insured; FSA) 6,455,000 7,383,487
Wichita, HR (Christian Health System Inc.)
6.25%, 11/15/2024 10,000,000 10,728,500
LOUISIANA--1.4%
Parish of Saint James, SWDR (Freeport-McMoRan
Partnership Project) 7.70%, 10/1/2022 8,500,000 7,693,350
MAINE--.6%
Maine Housing Authority, Mortgage 5.30%, 11/15/2023 3,335,000 3,448,390
MARYLAND--1.5%
Baltimore County, PCR
(Bethlehem Steel Corp. Project) 7.50%, 6/1/2015 2,500,000 (d) 12,500
Maryland Economic Development Corp., Student
Housing Revenue (University of Maryland):
6.50%, 6/1/2027 3,000,000 3,225,870
5.75%, 10/1/2033 5,000,000 5,018,850
MASSACHUSETTS--4.2%
Massachusetts Industrial Finance Agency, Revenue
(Ogden Haverhill Project) 5.60%, 12/1/2019 6,000,000 5,658,480
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Health and Educational
Facilities Authority, Revenue:
(Civic Investments) 9%, 12/15/2015 2,000,000 2,264,140
(Beth Israel Hospital Issue)
10.732%, 7/1/2025 (Insured; AMBAC) 3,000,000 (b) 3,082,470
(Partners Healthcare System)
5.75%, 7/1/2032 5,000,000 5,242,900
(Harvard University Issue)
6%, 7/1/2035 (Prerefunded 7/1/2010) 5,825,000 (a) 6,996,699
MICHIGAN--5.0%
Michigan Hospital Finance Authority, HR:
(Ascension Health Credit)
6.125%, 11/15/2026 (Prerefunded 11/15/2009) 5,000,000 (a) 6,057,000
(Crittenton Hospital) 5.625%, 3/1/2027 2,000,000 2,051,340
(Genesys Health System Obligated Group)
8.125%, 10/1/2021 (Prerefunded 10/1/2005) 5,000,000 (a) 5,785,150
Michigan State Building Authority, Revenue
5.25%, 10/15/2013 (Insured; FSA) 3,050,000 3,471,723
Michigan Strategic Fund, Resource Recovery Limited
Obligation Revenue (Detroit Edison Co.)
5.25%, 12/15/2032 3,000,000 3,100,650
Michigan Strategic Fund, SWDR
(Genesee Power Station Project) 7.50%, 1/1/2021 7,140,000 6,891,671
MINNESOTA--2.3%
Duluth Economic Development Authority, Health
Care Facilities Revenue (Saint Luke's
Hospital) 7.25%, 6/15/2032 5,000,000 5,123,400
Minnesota Housing Finance Agency, Residential
Housing Finance 5%, 1/1/2020 4,525,000 4,654,958
Saint Paul Port Authority, Hotel Facility, Revenue
(Radisson Kellogg Project) 7.375%, 8/1/2029 3,000,000 3,058,770
MISSISSIPPI--3.4%
Claiborne County, PCR (Middle South Energy, Inc.)
(System Energy Resources, Inc.) 6.20%, 2/1/2026 4,545,000 4,544,909
Mississippi Business Finance Corp., PCR (System Energy
Resource Inc. Project) 5.875%, 4/1/2022 14,310,000 14,301,986
MISSOURI--3.3%
Missouri Health and Educational Facilities Authority,
Health Facilities Revenue (Saint Anthony's
Medical Center) 6.25%, 12/1/2030 6,750,000 7,131,173
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI (CONTINUED)
Missouri Development Finance Board, Infrastructure
Facilities Revenue (Branson):
5.375%, 12/1/2027 2,000,000 2,015,680
5.50%, 12/1/2032 4,500,000 4,546,440
Saint Louis Industrial Development Authority, Revenue
(Saint Louis Convention Center) 7.25%, 12/15/2035 4,250,000 4,258,075
MONTANA--1.1%
Montana Board of Housing, Single Family Mortgage
6.45%, 6/1/2029 5,790,000 6,109,203
NEVADA--2.6%
Washoe County (Reno-Sparks Convention Center)
6.40%, 7/1/2029 (Insured; FSA)
(Prerefunded 1/1/2010) 12,000,000 (a) 14,419,560
NEW HAMPSHIRE--2.7%
New Hampshire Business Finance Authority, PCR
(Public Service Co. of New Hampshire)
6%, 5/1/2021 (Insured; AMBAC) 7,000,000 7,818,580
New Hampshire Health and Educational Facilities Authority,
Revenue (Exeter Project):
6%, 10/1/2024 1,000,000 1,054,090
5.75%, 10/1/2031 1,000,000 1,031,850
New Hampshire Industrial Development Authority, PCR
(Connecticut Light and Power) 5.90%, 11/1/2016 5,000,000 5,159,950
NEW JERSEY--7.5%
New Jersey Transportation Trust Fund Authority,
Transportation System:
5.50%, 6/15/2015 10,000,000 11,303,800
5.50%, 6/15/2017 9,000,000 10,080,540
New Jersey Health Facilities Financing Authority, Revenue
(Christian Health Care Center) 8.75%, 7/1/2018
(Prerefunded 7/1/2006) 13,740,000 (a) 16,198,086
Tobacco Settlement Financing Corp.
7%, 6/1/2041 4,000,000 3,718,880
NEW MEXICO--1.8%
Farmington, PCR:
(El Paso Electric Co. Project)
6.375%, 6/1/2032 5,370,000 5,596,184
(Tucson Electric Power Co., San Juan)
6.95%, 10/1/2020 4,000,000 4,058,600
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK--7.9%
Long Island Power Authority, New York Electric
System Revenue 8.999%, 12/1/2016 10,000,000 (b,c) 11,980,900
New York
5.75%, 8/1/2011 (Insured; MBIA) 8,465,000 9,885,088
New York City Municipal Water Finance Authority, Water
and Sewer System Revenue 5.125%, 6/15/2032 5,000,000 5,088,800
Tobacco Settlement Financing Corp.:
5.50%, 6/1/2019 5,500,000 5,871,415
5.25%, 6/1/2021 (Insured; AMBAC) 5,000,000 5,305,200
Triborough Bridge &Tunnel Authority, Revenue
5.25%, 11/15/2030 5,220,000 5,404,214
NORTH DAKOTA--2.0%
North Dakota Housing Finance Agency, Home
Mortgage Revenue (Housing Finance Program):
6.50%, 1/1/2031 7,165,000 7,559,720
6.15%, 7/1/2031 2,960,000 3,090,062
OHIO--3.9%
Cuyahoga County, Revenue 6%, 1/1/2032 2,000,000 2,124,940
Mahoning County, Hospital Facilities Revenue
(Forum Health Obligation Group) 6%, 11/15/2032 7,000,000 7,287,770
Ohio Air Quality Development Authority, PCR
(Cleveland Electric Illuminating)
6.10%, 8/1/2020 (Insured; ACA) 3,000,000 3,183,090
Ohio Housing Finance Agency,
Residential Mortgage Revenue:
6.25%, 9/1/2020 (Collateralized; GNMA) 2,035,000 2,170,287
6.35%, 9/1/2031 (Collateralized; GNMA) 2,035,000 2,151,972
Ohio Water Development Authority, Pollution Control
Facilities Revenue (Cleveland Electric
Illuminating) 6.10%, 8/1/2020 (Insured; ACA) 4,350,000 4,615,481
OKLAHOMA--2.4%
Oklahoma Industries Authority
(Health System Obligated Group)
5.75%, 8/15/2029 12,230,000 13,120,099
OREGON--3.3%
Port of Portland, International Airport Revenue
(Portland International Airport)
5.50%, 7/1/2024 (Insured; AMBAC) 5,000,000 5,286,250
Tigard--Tualatin School District No. 23
5.375%, 6/15/2019 (Insured; MBIA) 3,000,000 3,301,800
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
OREGON (CONTINUED)
Western Generation Agency, Cogeneration Project
Revenue (Wauna Cogeneration Project):
7.40%, 1/1/2016 5,750,000 5,848,785
7.125%, 1/1/2021 3,400,000 3,435,292
PENNSYLVANIA--1.8%
Pennsylvania Housing Financing Authority
10.980%, 4/1/2025 5,750,000 (b) 6,005,875
York County Hospital Authority, Revenue (Health
Center--Lutheran Social Services) 6.50%, 4/1/2022 4,250,000 4,131,255
SOUTH CAROLINA--2.6%
Greenville Hospital System, Hospital Facilities Revenue
5.50%, 5/1/2026 (Insured; AMBAC) 5,000,000 5,296,000
Greenville County School District , Installment
Purchase Revenue (Building Equity Sooner for
Tomorrow) 5.50%, 12/1/2028 3,500,000 3,669,190
Piedmont Municipal Power Agency, Electric Revenue
6.55%, 1/1/2016 1,690,000 1,692,129
Tobacco Settlement Revenue Management Authority,
Tobacco Settlement Revenue 6.375%, 5/15/2030 4,400,000 3,794,296
TENNESSEE--5.7%
Johnson City Health and Educational
Facilities Board, HR 7.50%, 7/1/2025 5,000,000 5,401,500
Knox County Health Educational and Housing Facilities
Board, Hospital Facilities Revenue (Baptist Health
System of Eastern Tennessee) 6.50%, 4/15/2031 4,910,000 5,023,568
Memphis Center City Revenue Finance Corp.,
Tennessee Sports Facility Revenue
(Memphis Redbirds) 6.50%, 9/1/2028 10,000,000 9,999,900
Tennessee Housing Development Agency
(Homeownership Program) 6.40%, 7/1/2031 10,120,000 10,861,492
TEXAS--13.3%
Austin Convention Enterprises Inc., Convention Center
Hotel Revenue:
5.75%, 1/1/2016 5,200,000 5,660,096
6.70%, 1/1/2028 4,000,000 4,152,960
5.75%, 1/1/2032 6,500,000 6,819,150
6.70%, 1/1/2032 3,500,000 3,594,990
Harris County Health Facilities Development Corp., HR
(Memorial Hermann Hospital System Project)
6.375%, 6/1/2029 8,500,000 9,162,065
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
Houston Airport System, Special Facilities Revenue
(Continental Airlines):
6.75%, 7/1/2029 5,250,000 4,360,702
7%, 7/1/2029 3,800,000 3,256,144
Sabine River Authority, PCR (TXU Electric Co. Project)
6.45%, 6/1/2021 8,300,000 8,439,440
Sam Rayburn Municipal Power Agency, Power Supply
System Revenue 5.75%, 10/1/2021 6,000,000 6,501,660
Texas Department of Housing and
Community Affairs, Collateralized Home
Mortgage Revenue 12.623%, 7/2/2024 3,200,000 (b) 3,554,976
Texas Turnpike Authority, Central Texas Turnpike System
Revenue 5.75%, 8/15/2038 (Insured; AMBAC) 7,100,000 7,697,110
Tomball Hospital Authority, HR
(Tomball Regional Hospital)
6%, 7/1/2025 4,000,000 4,013,080
6%, 7/1/2029 2,800,000 2,800,560
Tyler Health Facilities Development Corp., HR
(East Texas Medical Center Regional Health Care
System Project) 6.75%, 11/1/2025 3,000,000 2,896,470
UTAH--.8%
Carbon County, SWDR (Sunnyside Cogeneration)
7.10%, 8/15/2023 4,331,000 4,118,305
VERMONT--1.0%
Vermont Housing Finance Agency, Single Family Housing
6.40%, 11/1/2030 (Insured; FSA) 5,370,000 5,638,876
VIRGINIA--2.1%
Greater Richmond Convention Center Authority,
Hotel Tax Revenue (Convention Center
Expansion Project) 6.25%, 6/15/2032 10,500,000 11,666,970
WASHINGTON--3.3%
Energy Northwest, Wind Project Revenue
5.875%, 7/1/2020 3,000,000 3,177,810
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (CONTINUED)
Public Utility District No. 1 of Pend Orielle County,
Electric Revenue 6.375%, 1/1/2015 3,755,000 3,969,786
Seattle, Water System Revenue
6%, 7/1/2029 (Insured; FGIC) 10,000,000 11,108,000
WEST VIRGINIA--3.0%
Braxton County, SWDR (Weyerhaeuser Co. Project)
6.125%, 4/1/2026 14,000,000 14,292,460
West Virginia Water Development Authority, Water
Development Revenue 6.375%, 7/1/2039 2,250,000 2,481,322
WISCONSIN--5.3%
Badger Tobacco Asset Securitization Corp., Tobacco
Settlement Revenue 7%, 6/1/2028 24,000,000 22,824,240
Wisconsin Health and Educational Facilities Authority,
Health, Hospital and Nursing Home Revenue
(Aurora Health Care Inc.) :
5.60%, 2/15/2029 2,880,000 2,691,590
6.40%, 4/15/2033 3,000,000 3,027,990
Wisconsin Housing and Economic Development Authority
11.558%, 7/1/2025 500,000 (b,c) 518,560
WYOMING--.9%
Sweetwater County, SWDR (FMC Corp. Project):
7%, 6/1/2024 3,150,000 3,154,127
6.90%, 9/1/2024 2,000,000 1,991,080
U.S. RELATED--1.5%
Guam Housing Corp., SFMR
5.75%, 9/1/2031 (Collateralized; FHLMC) 965,000 1,045,674
Puerto Rico Highway and Transportation
Authority, Transportation Revenue
6%, 7/1/2039 (Prerefunded 7/1/2010) 6,000,000 (a) 7,227,420
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $769,373,168) 802,750,890
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM MUNICIPAL INVESTMENTS--3.4% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ALASKA--2.0%
Valdez, Marine Terminal Revenue, VRDN
(Exxon Mobil Pipeline Co. Project) 1.10% 11,200,000 (e) 11,200,000
RHODE ISLAND--.3%
Rhode Island State Industrial Facilities Corp.,
Marine Terminal Revenue,
VRDN (Exxon Mobil Project) 1.10% 1,700,000 (e) 1,700,000
TEXAS--1.1%
Gulf Coast Waste Disposal Authority, PCR, VRDN
(Amoco Oil Co. Project) 1.10% 600,000 (e) 600,000
Lower Neches Valley Authority Industrial
Development Corp., Exempt Facilities Revenue,
VRDN (Exxon Mobil Project) 1.10% 5,300,000 (e) 5,300,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $18,800,000) 18,800,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $788,173,168) 149.5% 821,550,890
CASH AND RECEIVABLES (NET) 2.4% 13,125,163
PREFERRED STOCK, AT REDEMPTION VALUE (51.9%) (285,000,000)
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS 100.0% 549,676,053
Summary of Abbreviations
ACA American Capital Access
AMBAC American Municipal Bond
Assurance Corporation
FGIC Financial Guaranty
Insurance Company
FHLMC Federal Home Loan Mortgage
Corporation
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
HR Hospital Revenue
IDR Industrial Development Revenue
MBIA Municipal Bond Investors Assurance
Insurance Corporation
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
SWDR Solid Waste Disposal Revenue
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 36.8
AA Aa AA 15.0
A A A 16.7
BBB Baa BBB 13.1
BB Ba BB 6.3
B B B .9
CC Ca CC .4
F1 Mig1 SP1 2.3
Not Rated (f) Not Rated (f) Not Rated (f) 8.5
100.0
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(B) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(C) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT SEPTEMBER 30, 2003,
THESE SECURITIES AMOUNTED TO $22,781,160 OR 4.1% OF NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS.
(D) NON-INCOME PRODUCING SECURITY--INTEREST PAYMENT IN DEFAULT.
(E) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
(F) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S,
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2003
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 788,173,168 821,550,890
Interest receivable 13,980,103
Receivable for investment securities sold 7,373,280
Prepaid expenses 514,159
843,418,432
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 507,312
Cash overdraft due to Custodian 482,287
Payable for investment securities purchased 7,185,781
Dividends payable to preferred shareholders 269,783
Commissions payable 15,000
Accrued expenses 282,216
8,742,379
--------------------------------------------------------------------------------
AUCTION PREFERRED STOCK, Series M, T, W, Th and F
par value $.001 per share (11,400 shares
issued and outstanding at $25,000 per share
liquidation preference)--Note 1 285,000,000
--------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ($) 549,676,053
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Common Stock, par value $.001 per share
(60,168,726 shares issued and outstanding) 60,169
Paid-in capital 567,361,060
Accumulated undistributed investment income--net 5,444,760
Accumulated net realized gain (loss) on investments (56,567,658)
Accumulated net unrealized appreciation
(depreciation) on investments 33,377,722
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ($) 549,676,053
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(500 million shares of $.001 par value Common Stock authorized) 60,168,726
NET ASSET VALUE PER SHARE OF COMMON STOCK ($) 9.14
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended September 30, 2003
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 50,254,717
EXPENSES:
Management fee--Note 3(a) 6,208,824
Commission fee--Note 1 744,946
Shareholder servicing costs 143,224
Custodian fees--Note 3(b) 140,593
Shareholders' reports 102,641
Professional fees 79,646
Directors' fees and expenses--Note 3(c) 64,506
Registration fees 54,879
Miscellaneous 60,580
TOTAL EXPENSES 7,599,839
INVESTMENT INCOME--NET 42,654,878
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (27,557,602)
Net unrealized appreciation (depreciation) on investments 18,445,537
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (9,112,065)
DIVIDENDS ON PREFERRED STOCK (4,235,015)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 29,307,798
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended September 30,
-----------------------------------
2003 2002
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 42,654,878 47,823,496
Net realized gain (loss) on investments (27,557,602) (18,783,774)
Net unrealized appreciation
(depreciation) on investments 18,445,537 (2,508,827)
Dividends on Preferred Stock (4,235,015) (4,821,324)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 29,307,798 21,709,571
--------------------------------------------------------------------------------
DIVIDENDS TO COMMON SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (42,956,922) (39,168,624)
--------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
DIVIDENDS REINVESTED 8,567,990 6,491,435
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,081,134) (10,967,618)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 554,757,187 565,724,805
END OF PERIOD 549,676,053 554,757,187
Undistributed investment income--net 5,444,760 10,145,155
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
SHARES ISSUED FOR DIVIDENDS REINVESTED 934,039 685,471
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements and market price data for the fund's common shares.
Year Ended September 30,
-------------------------------------------------------------------
2003 2002(a) 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 9.37 9.66 9.38 9.41 10.22
Investment Operations:
Investment income--net .71(b) .81(b) .82 .71 .56
Net realized and unrealized
gain (loss) on investments (.15) (.35) .18 .02 (.80)
Dividends on Preferred Stock
from net investment income (.07) (.08) (.16) (.13) --
Total from Investment Operations .49 .38 .84 .60 (.24)
Distributions to Common Shareholders:
Dividends from investment income--net (.72) (.67) (.56) (.55) (.57)
Dividends from net realized
gain on investments -- -- -- (.02) --
Total Distributions to
Common Shareholders (.72) (.67) (.56) (.57) (.57)
Capital Stock transactions, net effect of
Preferred Stock offerings -- -- -- (.06) --
Net asset value, end of period 9.14 9.37 9.66 9.38 9.41
Market value, end of period 9.38 10.11 9.69 8 9/16 8
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) .33 11.89 20.22 14.76 (17.55)
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended September 30,
-------------------------------------------------------------------
2003 2002(a) 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets
applicable to Common Stock 1.40(d,e) 1.38(d,e) 1.39(d,e) 1.25(d,e) .84
Ratio of net investment income
to average net assets applicable
to Common Stock 7.86(d,e) 8.61(d,e) 8.49(d,e) 7.91(d,e) 5.63
Portfolio Turnover Rate 54.79 36.81 10.07 19.03 27.05
Asset coverage of Preferred Stock,
end of period 293 294 299 295 --
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, net of Preferred Stock,
end of period ($ x 1,000) 549,676 554,757 565,725 548,939 550,755
Preferred Stock outstanding,
end of period ($ x 1,000) 285,000 285,000 285,000 285,000 --
(A) AS REQUIRED, EFFECTIVE OCTOBER 1, 2001, THE FUND HAS ADOPTED THE PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR
INVESTMENT COMPANIES AND BEGAN AMORTIZING DISCOUNT OR PREMIUM ON A SCIENTIFIC BASIS FOR DEBT SECURITIES ON A DAILY BASIS. THE EFFECT
OF THIS CHANGE FOR THE PERIOD ENDED SEPTEMBER 30, 2002 WAS TO INCREASE NET INVESTMENT INCOME PER SHARE AND DECREASE NET REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS BY LESS THAN $.01 AND
INCREASE THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS FROM 8.58% TO 8.61%. PER SHARE DATA AND RATIOS/SUPPLEMENTAL DATA
PRIOR TO OCTOBER 1, 2001 HAVE NOT BEEN RESTATED TO REFLECT THIS CHANGE IN PRESENTATION.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) CALCULATED BASED ON MARKET VALUE.
(D) DOES NOT REFLECT THE EFFECT OF DIVIDENDS TO PREFERRED STOCKHOLDERS.
(E) THE RATIO OF EXPENSES TO TOTAL AVERAGE NET ASSETS, INCLUSIVE OF THE OUTSTANDING AUCTION PREFERRED STOCK, AND THE RATIO
OF NET INVESTMENT INCOME TO TOTAL AVERAGE NET ASSETS WERE .92% AND 5.15%, RESPECTIVELY, FOR THE YEAR ENDED SEPTEMBER 30, 2003,
..91% AND 5.69%, RESPECTIVELY, FOR THE YEAR ENDED SEPTEMBER 30, 2002, .92% AND 5.65%, RESPECTIVLEY, FOR THE YEAR ENDED
SEPTEMBER 30, 2001 AND .92% AND 5.79%, RESPECTIVELY, FOR THE YEAR ENDED SEPTEMBER 30, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Strategic Municipals, Inc. (the "fund" ) is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified
closed-end management investment company. The fund's investment objective is to
maximize current income exempt from federal income tax to the extent consistent
with the preservation of capital. The Dreyfus Corporation (the "Manager") serves
as the fund' s investment adviser. The Manager is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial
Corporation. The fund's Common Stock trades on the New York Stock Exchange under
the ticker symbol LEO.
The fund has outstanding 2,280 shares of Series M, Series T, Series W, Series TH
and Series F for a total of 11,400 shares of Auction Preferred Stock ("APS"),
with a liquidation preference of $25,000 per share (plus an amount equal to
accumulated but unpaid dividends upon liquidation) . APS dividend rates are
determined pursuant to periodic auctions. Deutsche Bank Trust Company America,
as Auction Agent, receives a fee from the fund for its services in connection
with such auctions. The fund also compensates broker-dealers generally at an
annual rate of .25% of the purchase price of the shares of APS placed by the
broker-dealer in an auction.
The fund is subject to certain restrictions relating to the APS. Failure to
comply with these restrictions could preclude the fund from declaring any
distributions to common shareholders or repurchasing common shares and/or could
trigger the mandatory redemption of APS at liquidation value.
The holders of the APS, voting as a separate class, have the right to elect at
least two directors. The holders of the APS will vote as a separate class on
certain other matters, as required by law. The fund has designated Robin R.
Pringle and John E. Zuccotti to represent holders of APS on the fund's Board of
Directors.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
may require the use of management estimates and assumptions. Actual results
could differ from those estimates.
(a) Portfolio valuation: Investments in municipal debt securities (excluding
options and financial futures on municipal and U.S. Treasury securities) are
valued on the last business day of each week and month by an independent pricing
service (the "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.
(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 discount and premium 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 of Common Stock (" Common Shareholders(s):
Dividends are recorded on the ex-dividend date. Dividends from investment
income-net are declared and paid monthly. Dividends from net realized capital
gain, if any, are normally declared and paid annually, but the fund may make
distributions on a more frequent basis to comply with distribution requirements
of the Internal
Revenue Code of 1986, as amended (the "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. Income and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
accounting principles generally accepted in the United States.
For Common Shareholders who elect to receive their distributions in additional
shares of the fund, in lieu of cash, such distributions will be reinvested at
the lower of the market price or net asset value per share (but not less than
95% of the market price) as defined in the dividend reinvestment and cash
purchase plan.
On September 30, 2003, the Board of Directors declared a cash dividend of $.06
per share from investment income-net, payable on October 29, 2003 to Common
Shareholders of record as of the close of business on October 15, 2003.
(d) Dividends to shareholders of APS: For APS, dividends are currently reset
every 7 days for Series Th. The dividend rate for Series M will be in effect
until November 8, 2004. The dividend rate for Series T will be in effect until
July 20, 2004. The dividend rate for Series W will be in effect until December
3, 2003. The dividend rate for Series F will be in effect until February 13,
2005. The dividend rates in effect at September 30, 2003 were as follows: Series
M-1.40%, Series T-1.07%, Series W-1.65%, Series TH-.90% and Series F-1.64%.
(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 Code and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all federal income and excise taxes.
At September 30, 2003, the components of accumulated earnings on a tax basis
were as follows: undistributed tax exempt income $6,055,850, accumulated capital
losses $30,487,747 and unrealized appreciation $33,346,093. In addition, the
fund had $25,972,240 of capital losses real The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ized after October 31, 2002, which were deferred for tax purposes to the first
day of the following fiscal year.
The accumulated capital loss carryover is available to be applied against future
net securities profits, if any, realized subsequent to September 30, 2003. If
not applied, $9,836,505 of the carryover expires in fiscal 2009, $76,128 expires
in fiscal 2010 and $20,575,114 expires in fiscal 2011.
The tax character of distributions paid to shareholders during the fiscal
periods ended September 30, 2003 and September 30, 2002, respectively, were as
follows: tax exempt income of $47,191,937 and $43,989,948.
During the period ended September 30, 2003, as a result of permanent book to tax
differences, the fund decreased accumulated undistributed investment income-net
by $163,336, increased accumulated net realized gain (loss) on investments by
$106,706 and increased paid-in capital by $56,630. Net assets were not affected
by this reclassification.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes. Interest is charged to the fund based on prevailing market rates in
effect at the time of borrowings. During the period ended September 30, 2003,
the fund did not borrow under the line of credit.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .75 of 1% of the value of the
fund's average weekly net assets, inclusive of the outstanding auction preferred
stock, and is payable monthly. The Agreement provides for an expense
reimbursement from the Manager should the fund's aggregate expenses, exclusive
of taxes, interest on borrowings, brokerage and extraordinary expenses, in any
full fiscal year exceed the lesser of (1) the expense limitation of any state
having jurisdiction over the fund or (2) 2% of the first $10 million, 1 1_2% of
the next $20 million and 1% of the excess over $30 million of the averag
value of the fund' s net assets. During the period ended September 30, 2003,
there was no expense reimbursement pursuant to the Agreement.
(b) The fund compensates Boston Safe Deposit and Trust Company, an affiliate of
the Manager, under a custody agreement for providing custodial services to the
fund. During the period ended September 30, 2003, $140,593 was charged by Boston
Safe Deposit and Trust Company pursuant to the custody agreement.
(c) Through January 27, 2003, each Board member who is not an "affiliated
person" as defined in the Act received from the fund an annual fee at the rate
of $4,500 and an attendance fee of $500 per meeting. Each such Board member also
serves as a Board member of other Funds within the Dreyfus complex
(collectively, the "Fund Group"). After January 27, 2003, Board compensation was
changed from a "Fund by Fund" basis to a "Fund Group" basis; this compensation
arrangement effectively allocates the fees among the funds in the group in
proportion to each fund's relative net assets. Aggregate fees paid to each Board
member with respect to the period ended September 30, 2003 were $4,373, with an
average attendance fee per meeting of $534. The Chairman of the Board receives
an additional 25% of such compensation. Subject to the fund's Emeritus Program
Guidelines, Emeritus Board members, if any, receive 50% of the annual retainer
fee and per meeting fee paid at the time the Board member achieves emeritus
status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended September 30, 2003, amounted to
$443,627,807 and $438,353,567, respectively.
At September 30, 2003, the cost of investments for federal income tax purposes
was $788,204,797; accordingly, accumulated net unrealized appreciation on
investments was $33,346,093, consisting of $43,329,682 gross unrealized
appreciation and $9,983,589 gross unrealized depreciation.
The Fund
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors Dreyfus Strategic Municipals, Inc.
We have audited the accompanying statement of assets and liabilities of Dreyfus
Strategic Municipals, Inc., including the statement of investments, as of
September 30, 2003, 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 auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of September
30, 2003 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Strategic Municipals, Inc. at September 30, 2003, 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 accounting principles generally accepted
in the United States.
New York, New York
November 5, 2003
ADDITIONAL INFORMATION (Unaudited)
Dividend Reinvestment and Cash Purchase Plan
Under the fund' s Dividend Reinvestment and Cash Purchase Plan (the "Plan"), a
holder of Common Stock who has fund shares registered in his name will have all
dividends and distributions reinvested automatically by The Bank of New York, as
Plan agent (the "Agent" ), in additional shares of the fund at the lower of
prevailing market price or net asset value (but not less than 95% of market
value at the time of valuation) unless such shareholder elects to receive cash
as provided below. If market price is equal to or exceeds net asset value,
shares will be issued at net asset value. If net asset value exceeds market
price or if a cash dividend only is declared, the Agent, as agent for the Plan
participants, will buy fund shares in the open market. A Plan participant is not
relieved of any income tax that may be payable on such dividends or
distributions.
A 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.
A Common Shareholder who has fund shares registered in his name may elect to
withdraw from the Plan at any time for a $2.50 fee and thereby elect to receive
cash in lieu of shares of the fund. Changes in elections must be in writing,
sent to The Bank of New York, Dividend Reinvestment Department, P.O. Box 1958,
Newark, New Jersey 07101-9774, should include the shareholder's name and address
as they appear on the Agent's records and will be effective only if received
more than fifteen days prior to the record date for any distribution.
A Plan participant who has fund shares in his name has the option of making
additional cash payments to the Agent, semi-annually, in any amount from $1,000
to $10,000, for investment in the fund's shares in the open market on or about
January 15 and July 15. Any voluntary cash payments received more than 30 days
prior to these dates will be The Fund
ADDITIONAL INFORMATION (Unaudited) (CONTINUED)
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 Common 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 Common Shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the accounts. Shares in the account
of each Plan participant will be held by the Agent in non-certificated form in
the name of the participant, and each such participant's proxy will include
those shares purchased pursuant to the Plan.
The fund pays the Agent's fee for reinvestment of dividends and distributions.
Plan participants pay a pro rata share of brokerage commissions incurred with
respect to the Agent's open market purchases and purchases from voluntary cash
payments, and a $1.25 fee for each purchase made from a voluntary cash payment.
The fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
notice of the change sent to Plan participants at least 90 days before the
record date for such dividend or distribution. The Plan also may be amended or
terminated by the Agent on at least 90 days' written notice to Plan
participants.
Managed Dividend Policy
The fund' s dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more consistent yield to the current trading price of shares
of Common Stock of the fund, the fund may at times pay out less than the entire
amount of net investment income earned in any particular month and may at times
in any month pay out such accumulated but undistributed income in addition to
net investment income earned in that month. As a result, the dividends paid b
the fund for any particular month may be more or less than the amount of net
investment income earned by the fund during such month. The fund's current
accumulated but undistributed net investment income, if any, is disclosed in the
Statement of Assets and Liabilities, which comprises part of the Financial
Information included in this report.
Benefits and Risks of Leveraging
The fund utilizes leverage to seek to enhance the yield and net asset value of
its Common Stock. These objectives cannot be achieved in all interest rate
environments. To leverage, the fund issues Preferred Stock, which pays dividends
at prevailing short-term interest rates, and invests the proceeds in long-term
municipal bonds. The interest earned on these investments is paid to Common
Shareholders in the form of dividends, and the value of these portfolio holdings
is reflected in the per share net asset value of the fund's Common Stock. In
order to benefit Common Shareholders, the yield curve must be positively sloped:
that is, short-term interest rates must be lower than long-term interest rates.
At the same time, a period of generally declining interest rates will benefit
Common Shareholders. If either of these conditions change, then the risk of
leveraging will begin to outweigh the benefits.
Supplemental Information
During the period ended September 30, 2003, shareholders approved changes in the
fund' s fundamental investment policies to permit the fund to engage in swap
transactions and to invest in other investment companies. Otherwise, during the
period ended, there were: (i) no material changes in the fund's investment
objective or policies, (ii) no changes in the fund's charter or by-laws that
would delay or prevent a change of control of the fund, and (iii) no material
changes in the principal risk factors associated with investment in the fund. In
addition, on November 1, 2002, W. Michael Petty was assigned as the person
primarily responsible for the day-to-day management of the fund's portfolio.
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund hereby designates all the dividends
paid from investment income-net during the fiscal year ended September 30, 2003
as "exempt-interest dividends" (not generally subject to regular federal income
tax) .
As required by federal tax law rules, shareholders will receive notification of
their portion of the fund's taxable ordinary dividends (if any) and capital gain
distributions (if any) paid for the 2003 calendar year on Form 1099-DIV which
will be mailed by January 31, 2004.
PROXY RESULTS (Unaudited)
Holders of Common Stock and holders of Auction Preferred Stock ("APS") voted
together as a single class (except as noted below) on the following proposals
presented at the annual shareholders' meeting held on May 16, 2003.
Shares
----------------------------------------------------
For Authority Withheld
----------------------------------------------------
To elect three Class I Directors:((+))
David W. Burke 29,261,714 893,893
Hans C. Mautner 29,261,714 893,893
John E. Zuccotti((+)(+)) 10,410 19
((+)) THE TERMS OF THESE CLASS I DIRECTORS EXPIRE IN 2006.
((+)(+)) ELECTED SOLELY BY APS HOLDERS; COMMON SHAREHOLDERS NOT ENTITLED TO VOTE.
Shares
-----------------------------------------------------------
For Authority Withheld
-----------------------------------------------------------
To approve a change to the fundamental
investment policies and investment restrictions
of the fund to permit the fund to:
* Engage in swap transactions 22,276,026 2,768,009
* Invest in other investment companies,
and to make that policy non-fundamental 22,098,043 2,945,965
The Fund
BOARD MEMBERS INFORMATION (Unaudited)
JOSEPH S. DIMARTINO (60)
CHAIRMAN OF THE BOARD (1995) Current term expires in 2004
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Corporate Director and Trustee
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* The Muscular Dystrophy Association, Director
* Levcor International, Inc., an apparel fabric processor, Director
* Century Business Services, Inc., a provider of outsourcing functions for small
and medium size companies, Director
* The Newark Group, a provider of a national market of paper recovery
facilities, paperboard mills and paperboard converting plants, Director
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 191
--------------
DAVID W. BURKE (67)
BOARD MEMBER (1994) Current term expires in 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Corporate Director and Trustee
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* John F. Kennedy Library Foundation, Director
* U.S.S. Constitution Museum, Director
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 87
--------------
WILLIAM HODDING CARTER III (68)
BOARD MEMBER (1988) Current term expires in 2004
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* President and Chief Executive Officer of the John S. and James L. Knight
Foundation (1998-present)
* President and Chairman of MainStreet TV (1985-1998)
* Knight Professor in Journalism at the University of Maryland (1995-1998)
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* Independent Sector, Director
* The Century Foundation, Director
* The Enterprise Corporation of the Delta, Director
* Foundation of the Mid-South, Director
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
EHUD HOUMINER (63)
BOARD MEMBER (1994) Current term expires in 2005
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Executive-in-Residence at the Columbia Business School, Columbia University
* Principal of Lear, Yavitz and Associates, a management consulting firm, from
1996 through 2001
OTHER BOARD MEMBERSHIPS AND AFFILIATIONS:
* Avnet Inc., an electronics distributor, Director
* International Advisory Board to the MBA Program School of
Management, Ben Gurion University, Chairman
* Explore Charter School, Brooklyn, NY, Chairman
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 25
RICHARD C. LEONE (63)
BOARD MEMBER (1989) Current term expires in 2004
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* President of The Century Foundation (formerly, The Twentieth Century Fund,
Inc.) , a tax exempt research foundation engaged in the study of economic,
foreign policy and domestic issues
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
HANS C. MAUTNER (65)
BOARD MEMBER (1989) Current term expires in 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* President--International Division and an Advisory Director of Simon Property
Group, a real estate investment company (1998-present)
* Director and Vice Chairman of Simon Property Group (1998-2003)
* Chairman and Chief Executive Officer of Simon Global Limited (1999-present)
* Chairman, Chief Executive Officer and a Trustee of Corporate Property
Investors, which merged into Simon Property Group in 1998 (1972-1998)
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
ROBIN A. PRINGLE (40)
BOARD MEMBER (1995) Current term expires in 2005
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Senior Vice President of Mentor/National Mentoring Partnership, a national
non-profit organization that is leading the movement to connect America's young
people with caring adult mentors
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
JOHN E. ZUCCOTTI (66)
BOARD MEMBER (1989) Current term expires in 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
* Chairman of Brookfield Financial Properties, Inc.
NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 7
--------------
THE ADDRESS OF EACH BOARD MEMBER IS C/O THE DREYFUS CORPORATION, 200 PARK
AVENUE, NEW YORK, NY 10166.
The Fund
OFFICERS OF THE FUND (Unaudited)
STEPHEN E. CANTER, PRESIDENT SINCE MARCH 2000.
Chairman of the Board, Chief Executive Officer and Chief Operating Officer
of the Manager, and an officer of 95 investment companies (comprised of 188
portfolios) managed by the Manager. Mr. Canter also is a Board member and, where
applicable, an Executive Committee Member of the other investment management
subsidiaries of Mellon Financial Corporation, each of which is an affiliate of
the Manager. He is 58 years old and has been an employee of the Manager since
May 1995.
STEPHEN R. BYERS, EXECUTIVE VICE PRESIDENT SINCE NOVEMBER 2002.
Chief Investment Officer, Vice Chairman and a Director of the Manager, and
an officer of 95 investment companies (comprised of 188 portfolios) managed by
the Manager. Mr. Byers also is an Officer, Director or an Executive Committee
Member of certain other investment management subsidiaries of Mellon Financial
Corporation, each of which is an affiliate of the Manager. He is 50 years old
and has been an employee of the Manager since January 2000. Prior to joining the
Manager, he served as an Executive Vice President-Capital Markets, Chief
Financial Officer and Treasurer at Gruntal & Co., L.L.C.
A. PAUL DISDIER, EXECUTIVE VICE PRESIDENT SINCE MARCH 2000.
Executive Vice President of the Fund, Director of Dreyfus Municipal
Securities, and an officer of 3 other investment companies (comprised of 3
portfolios) managed by the Manager. He is 48 years old and has been an employee
of the Manager since February 1988.
MARK N. JACOBS, VICE PRESIDENT SINCE MARCH 2000.
Executive Vice President, Secretary and General Counsel of the Manager, and
an officer of 96 investment companies (comprised of 204 portfolios) managed by
the Manager. He is 57 years old and has been an employee of the Manager since
June 1977.
JOHN B. HAMMALIAN, SECRETARY SINCE MARCH 2000.
Associate General Counsel of the Manager, and an officer of 37 investment
companies (comprised of 46 portfolios) managed by the Manager. He is 40 years
old and has been an employee of the Manager since February 1991
MICHAEL A. ROSENBERG, ASSISTANT SECRETARY SINCE MARCH 2000.
Associate General Counsel of the Manager, and an officer of 93 investment
companies (comprised of 197 portfolios) managed by the Manager. He is 43 years
old and has been an employee of the Manager since October 1991.
STEVEN F. NEWMAN, ASSISTANT SECRETARY SINCE MARCH 2000.
Associate General Counsel and Assistant Secretary of the Manager, and an
officer of 96 investment companies (comprised of 204 portfolios) managed by the
Manager. He is 54 years old and has been an employee of the Manager since July
1980.
JAMES WINDELS, TREASURER SINCE NOVEMBER 2001.
Director - Mutual Fund Accounting of the Manager, and an officer of 96
investment companies (comprised of 204 portfolios) managed by the Manager. He is
45 years old and has been an employee of the Manager since April 1985.
GREGORY S. GRUBER, ASSISTANT TREASURER SINCE MARCH 2000.
Senior Accounting Manager - Municipal Bond Funds of the Manager, and an
officer of 29 investment companies (comprised of 58 portfolios) managed by the
Manager. He is 44 years old and has been an employee of the Manager since August
1981.
KENNETH J. SANDGREN, ASSISTANT TREASURER SINCE NOVEMBER 2001.
Mutual Funds Tax Director of the Manager, and an officer of 96 investment
companies (comprised of 204 portfolios) managed by the Manager. He is 49 years
old and has been an employee of the Manager since June 1993.
The Fund
NOTES
NOTES
OFFICERS AND DIRECTORS
Dreyfus Strategic Municipals, Inc.
200 Park Avenue
New York, NY 10166
DIRECTORS
Joseph S. DiMartino
David W. Burke
William Hodding Carter, III
Ehud Houminer
Richard C. Leone
Hans C. Mautner
Robin A. Pringle(*)
John E. Zuccotti(*)
* AUCTION PREFERRED STOCK DIRECTORS
OFFICERS
President
Stephen E. Canter
Vice President
Mark N. Jacobs
Executive Vice Presidents
Stephen Byers
A. Paul Disdier
Secretary
John B. Hammalian
Assistant Secretaries
Steven F. Newman
Michael A. Rosenberg
Treasurer
James Windels
Assistant Treasurers
Gregory S. Gruber
Kenneth J. Sandgren
Anti-Money Laundering Compliance Officer
William Germenis
PORTFOLIO MANAGERS:
Joseph P. Darcy
A. Paul Disdier
Douglas J. Gaylor
PORTFOLIO MANAGERS (CONTINUED)
Joseph A. Irace
Colleen A. Meehan
W. Michael Petty
Scott Sprauer
James Welch
Monica S. Wieboldt
INVESTMENT ADVISER
The Dreyfus Corporation
CUSTODIAN
Boston Safe Deposit
and Trust Company
COUNSEL
Stroock & Stroock & Lavan LLP
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR
The Bank of New York (Common Stock)
Deutsche Bank Trust Company America (Auction Preferred Stock)
AUCTION AGENT
Deutsche Bank Trust Company America (Auction Preferred Stock)
STOCK EXCHANGE LISTING
NYSE Symbol: LEO
INITIAL SEC EFFECTIVE DATE
9/23/87
THE NET ASSET VALUE APPEARS IN THE FOLLOWING PUBLICATIONS: BARRON'S, CLOSED-END
BOND FUNDS SECTION UNDER THE HEADING "MUNICIPAL BOND FUNDS" EVERY MONDAY; WALL
STREET JOURNAL, MUTUAL FUNDS SECTION UNDER THE HEADING "CLOSED-END BOND FUNDS"
EVERY MONDAY; NEW YORK TIMES, BUSINESS SECTION UNDER THE HEADING "CLOSED-END
BOND FUNDS--NATIONAL MUNICIPAL BOND FUNDS" EVERY SUNDAY.
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(C) OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, THAT THE FUND MAY PURCHASE SHARES OF ITS COMMON
STOCK IN THE OPEN MARKET WHEN IT CAN DO SO AT PRICES BELOW THE THEN CURRENT NET
ASSET VALUE PER SHARE.
The Fund
For More Information
Dreyfus Strategic Municipals, Inc.
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
Transfer Agent & Dividend Disbursing Agent and Registrar
(Common Stock)
The Bank of New York
101 Barclay Street
New York, NY 10286
(c) 2003 Dreyfus Service Corporation 853AR0903
ITEM 2. CODE OF ETHICS.
The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board has determined that Richard C. Leone, a member of
the Audit Committee of the Board, is an audit committee financial expert as
defined by the Securities and Exchange Commission (the "SEC"). Mr. Leone is
"independent" as defined by the SEC for purposes of audit committee financial
expert determinations.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive and principal financial officers have
concluded, based on their evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report, that
the Registrant's disclosure controls and procedures are reasonably designed to
ensure that information required to be disclosed by the Registrant on Form N-CSR
is recorded, processed, summarized and reported within the required time periods
and that information required to be disclosed by the Registrant in the reports
that it files or submits on Form N-CSR is accumulated and communicated to the
Registrant's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.
(b) There were no changes to the Registrant's internal control over financial
reporting that occurred during the Registrant's most recently ended fiscal
half-year that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial
officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certification of principal executive and principal financial officers
as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DREYFUS STRATEGIC MUNICIPALS, INC.
By: /s/Stephen E. Canter
____________________
Stephen E. Canter
President
Date: November 21, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/Stephen E. Canter
______________________
Stephen E. Canter
Chief Executive Officer
Date: November 21, 2003
By: /s/James Windels
_______________________
James Windels
Chief Financial Officer
Date: November 21, 2003
EXHIBIT INDEX
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial
officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(EX-99.CERT)
(b) Certification of principal executive and principal financial
officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
(EX-99.906CERT)