DREYFUS MUNICIPAL RESERVES
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased that Dreyfus Municipal Reserves achieved a solid
performance in its latest semi-annual fiscal period, the six months ended
April 30, 1996.
The overall economy during these six months showed signs of firming
but no boom.
ECONOMIC ENVIRONMENT
SIGNS OF FIRMING
After many months of slow growth, the U.S. economy picked up its pace
in the closing months of the recent semi-annual reporting period. The first
sign was February's huge increase in payroll jobs, followed by upticks in
consumer income, spending and confidence.
While stepped-up consumer spending had not yet translated into
stronger factory output by the end of April, new factory orders do augur a
faster pace ahead - and not just for consumer goods, but for capital spending
and exports as well.
In fact, the catching up of production to increased demand and sales
growth should be a major force for economic acceleration over the next few
months.
.. . . BUT NO BOOM
Despite these obvious signs of vitality, there are convincing reasons
to believe that the current economic upswing will soon moderate. The bounce
back from the government shutdown, the end of the harsh winter weather and
the resolution of the General Motors strike, we believe, are all exaggerating
the economy's snapback. In addition, the recent rise in market interest rates
places an important limit on growth. It could take a worldwide commodity boom
to inspire the kind of aggressive inventory restocking last seen in 1994.
Finally, while capital spending remains robust, it has been growing
vigorously for three years, making a strong case for consolidation ahead.
INFLATION FEARS AND REALITY
Buffeted by a relentless climb in interest rates since early 1996,
investors are understandably concerned about renewed economic strength and
the potential for higher inflation ahead.
Yet, we believe, there are significant indications that the current
economic pace cannot be sustained. Beyond energy and grains, most industrial
commodity prices appear to be holding steady. Corporate profit growth also
appears to be slowing, encouraging companies to intensify, not lessen, their
quest for cost controls. Moreover, despite demands for higher wages, actual
settlements in recent years have remained fairly modest.
MARKET ENVIRONMENT
In January, the Federal Reserve Board reduced short-term interest
rates slightly, based on perceptions that economic activity was slowing
considerably. This move reduced yields on all short-term investments,
including tax exempt money market instruments. Then, data began to surface
indicating that the reverse might be true: that the economy seemed to be
growing at a relatively rapid rate.
While these mixed economic signals did produce a bit of market
volatility, the semi-annual period closed on a fairly positive note for the
tax exempt money market securities in which the Fund invests. Yields on many
of these securities were quite strong; in fact, market yields on one-year tax
exempt notes rose more than 50 basis points during the first quarter of 1996.
In addition, many analysts and economists now believe short-
term interest rates may continue to rise, given the economy's recent
signs of strength. Such a rise could bring even higher yields for tax exempt
money market securities in the coming months. Nonetheless, the market will be
watching the economy and the Federal Reserve Board closely to assess the
interest rate environment.
PORTFOLIO OVERVIEW
The six months ended April 30, 1996 marked another period of solid
performance for Dreyfus Municipal Reserves. During this semi-annual period,
the Fund once again provided shareholders with a competitive stream of
tax-free income,* while maintaining a high quality portfolio along with a
stable $1.00 share price. For the six months ended April 30, 1996, the Fund's
annualized simple yield was 2.99% for Investor shares and 3.20% for Class R
shares. Reinvesting the Fund's dividends and calculating the effect of
compounding resulted in an annualized effective yield of 3.03% and 3.24% for
Investor shares and Class R shares, respectively.** These yields become even
more attractive when one considers that for taxpayers in the highest Federal
tax bracket of 39.60%, a comparable taxable investment would have had to
yield 4.95% and 5.02%, respectively, for Investor shares and 5.30% and 5.36%,
respectively, for Class R shares, in order to equal the Fund's returns.
In attempting to take advantage of the current investment
environment, your Fund employed a conservative, two-part strategy. First, we
shortened the portfolio's weighted average maturity to approximately 47 days.
This more neutral stance enabled the Fund to remain flexible to achieve
higher yields as they became available. In addition, we continued to hold a
large number of variable-rate securities in the portfolio. Variable-rate
securities provide yields that reset daily and weekly based on traditional
money market indices including the prime lending rate, the Federal Funds rate
and the LIBOR Index.*** In recent months, these holdings have offered better
yields than comparable fixed-rate securities. Variable-rate securities also
give the Fund an additional measure of flexibility to benefit from
potentially higher rates ahead.
Our outlook remains one of cautious optimism. In the months ahead,
our challenge will be to strike a favorable management balance between the
positive influence of potentially rising interest rates and seasonal supply
and demand factors that could drive yields on municipal securities lower. We
will be monitoring the economy, flat-tax proposals and interest rates
carefully in order to anticipate any need for change in our investment
strategy.
Sincerely,
[ John Flahive signature logo]
John Flahive
Portfolio
Manager
May 15, 1996
New York, N.Y.
* Some income may be subject to the Federal Alternative Minimum Tax (AMT)
for certain shareholders.
** Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
***The London Interbank Offered Rate ("LIBOR") is "the rate that most
creditworthy international banks dealing in Eurodollars charge each other for
large loans." - John Downes and Elliot Goodman, Dictionary of Finance and
Investment Terms (New York: Barron's, 1985) s.v.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS-100% AMOUNT VALUE
_________________________ _______ _______
<S> <C> <C>
ALASKA-.6%
Anchorage, Higher Education Revenue, Refunding, VRDN
(Alaska Pacific University) 4.20% (LOC; Seattle First National Bank) (a,b) $ 1,200,000 $ 1,200,000
ARIZONA-4%
Cochise County Pollution Control Corporation, SWDR
(Arizona Electric Power Co-Op Inc. Project)
3.40%, 9/1/96 (Corp. Guaranty; National Utility Rural Co-Op)......... 1,000,000 1,000,000
Mesa Municipal Development Corporation, Special Tax, CP
3.40%, 5/6/96 (LOC; Union Bank of Switzerland) (b)................... 2,000,000 2,000,000
Pinal County Industrial Development Authority, HR, VRDN
(Casa Grande Regional Medical Center) 4% (LOC; Chemical Bank) (a,b).. 5,000,000 5,000,000
CALIFORNIA-3.2%
California Health Facilities Financing Authority, Revenue, Refunding, VRDN
(Memorial Health Services) 3.75% (a)................................. 1,300,000 1,300,000
California Statewide Communities Development Corporation, Revenue, VRDN
(Karcher Property Project) 3.75%, Series C
(LOC; Bayerishe Vereinsbank) (a,b)................................... 500,000 500,000
Contra Costa County Housing Authority, MFMR, VRDN (Lakeshore)
3.80%, Series A (LOC; FNMA) (a,b).................................... 325,000 325,000
City of Glendale, Reliance Development Revenue, VRDN (Public Parking)
3.70% (LOC; Barclays Bank) (a,b)..................................... 900,000 900,000
Newport Beach, Revenue, VRDN (Hoag Memorial Hospital Presbyterian)
4.05% (BPA; Credit Suisse) (a)....................................... 900,000 900,000
Orange County, TRAN 4.50%, Series A, 6/30/96............................. 2,000,000 2,000,000
Sacramento County, COP, VRDN (Administration Center and
Court House Project) 3.65% (LOC; Union Bank of Switzerland) (a,b).... 300,000 300,000
Western Riverside County Regional Wastewater Authority, Revenue, VRDN
(Regional Wastewater Treatment)
3.60% (LOC; National Westminster Bank) (a,b)............................. 300,000 300,000
COLORADO-3%
Arapahoe County, IDR, VRDN (CSX Beckett Aviation)
3.59% (LOC; Barclays Bank) (a,b)..................................... 700,000 700,000
Colorado Health Facilities Authority, Revenue:
Health Care Systems (Sisters of Charity-Sunny Acre)
3.75%, 5/1/96 (Insured; MBIA and SBPA; Morgan Guaranty Trust Co.).. 1,000,000 1,000,000
VRDN(North Colorado Medical Center)
4.20% (BPA; Credit Suisse and Insured; MBIA) (a)................... 200,000 200,000
La Plata County, PCR (Amoco Project)
3.25%, 9/1/96 (Corp. Guaranty; Amoco Credit Corp.)................... 1,080,000 1,080,000
Lakewood, IDR, VRDN (Service Merchandise Co., Inc. Project)
3.50% (LOC; Canadian Imperial Bank of Commerce) (a,b)................ 500,000 500,000
South Denver Metropolitan District 3.70%, 6/1/96 (LOC; Barclays Bank) (b) 2,000,000 2,000,000
City of Thornton, IDR, VRDN (Service Merchandise Co., Inc. Project)
3.50% (LOC; Canadian Imperial Bank of Commerce) (a,b)................ 200,000 200,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ _______ _______
COLORADO (CONTINUED)
University of Colorado, University Revenues (Research Building)
4.60%, 6/1/96 (Insured; MBIA)........................................ $ 335,000 $ 335,198
CONNECTICUT-.3%
Fairfield Industrial Development Authority, IDR, VRDN (R. Dakin and Co.
Project)
3.35% (LOC; Bank of America) (a,b)................................... 600,000 600,000
DELAWARE-2.3%
Delaware Economic Development Authority, Exempt Facility Revenue, VRDN
(Delmarva Power and Light Co. Project)
4.40% (Corp. Guaranty; Delmarva Power and Light Co.) (a)............. 4,400,000 4,400,000
New Castle County, PCR, VRDN (Johnson Controls Inc.)
4.40% (Corp. Guaranty; Johnson Controls Inc.) (a).................... 300,000 300,000
FLORIDA-4.8%
Florida Board of Education
7.50%, Series B, 6/1/96 (Escrowed in; U.S. Treasury Securities)...... 365,000 373,332
Florida Housing Finance Agency, Refunding, VRDN (Fairmont Oaks Project)
4.30%, Series E (LOC; Comerica Bank) (a,b)........................... 1,200,000 1,200,000
Hillsborough County Port District, Special Purpose Revenue, Refunding, VRDN
(IMC Fertilizer) 4.10% (LOC; Rabobank Nederland) (a,b)............... 2,100,000 2,100,000
Pinellas County Educational Facilities Authority,
Independent Higher Education Revenue, CP
3.25%, 5/1/96 (BPA; Credit Suisse and Insured; MBIA)................. 4,000,000 4,000,000
Putnam County Development Authority, PCR:
(Seminole Electric Co-Op)
3.30%, Series D, 6/15/96 (Corp. Guaranty; National Rural Utility Co-Op) 1,000,000 1,000,000
VRDN (Seminole Electric)
4.15%, Series H-1 (Corp. Guaranty; National Rural Utility Co-Op) (a) 1,100,000 1,100,000
GEORGIA-2.8%
Cobb County Development Authority, Revenue, VRDN
(Nuclear Power Inc. Project) 4.15% (LOC; Trust Co. Bank) (a,b)....... 1,730,000 1,730,000
Fulton County Development Authority, Industrial Revenue, VRDN
3.60% (LOC; National Westminster Bank) (a,b)......................... 1,900,000 1,900,000
Hart County Industrial Building Authority, IDR, Refunding, VRDN
(Dundee Mills Inc. Project) 4.25% (LOC; Trust Co. Bank) (a,b)........ 2,000,000 2,000,000
HAWAII-1.8%
State of Hawaii, Airports Systems Revenue, Refunding (Second Series)
5%, 7/1/96 (Insured; MBIA)........................................... 1,000,000 1,001,373
Hawaii Department of Budget and Finance, Special Purpose Mortgage Revenue
(Kaiser Permanente Medical Care) 3.20%, Series B, 9/1/96............. 2,700,000 2,700,000
ILLINOIS-17.3%
Alsip, IDR, VRDN (Ardco Inc. Project)
4.40% (LOC; Harris Trust and Savings Bank) (a,b)..................... 1,565,000 1,565,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ _______ _______
ILLINOIS (CONTINUED)
Burbank, IDR, VRDN (Service Merchandise Co., Inc. Project)
3.50% (LOC; Canadian Imperial Bank of Commerce) (a,b)................ $ 400,000 $ 400,000
City of Chicago:
3.75%, Series A, 10/31/96 (LOC; Morgan Guaranty Trust Co.) (b)....... 1,000,000 1,000,000
VRDN 4.05%, Series B (LOC; Canadian Imperial Bank of Commerce) (a,b). 1,000,000 1,000,000
Chicago O'Hare International Airport, VRDN
3.40%, Series B (LOC; Societe Generale) (a,b)........................ 780,000 780,000
Illinois Development Finance Authority, VRDN:
IDR:
(Columbia Graphics Corp. Project)
4.40% (LOC; Harris Trust and Savings Bank) (a,b)............... 2,800,000 2,800,000
(Overton Gear and Tool Corp.)
4.40% (LOC; Harris Trust and Savings Bank) (a,b)............... 2,100,000 2,100,000
Revenue:
(Aurora Central Catholic High School)
4.10% (LOC; Northern Trust Co.) (a,b)................................ 1,000,000 1,000,000
(Council Jewish Ederly) 4.20% (LOC; Lasalle National Bank) (a,b)... 3,500,000 3,500,000
(Lyric Opera Chicago Project)
4.10% (LOC: Bank Caisse Nationale de Credit, Harris Trust and
Savings Bank, National Bank of Detroit and Northern Trust Co.) (a,b) 1,100,000 1,100,000
(Saint Paul's House Project) 4.10% (LOC; Lasalle National Bank) (a,b) 1,625,000 1,625,000
(WBEZ Alliance Inc. Project) 4.20% (LOC; Lasalle National Bank) (a,b) 1,000,000 1,000,000
Illinois Educational Facilities Authority, Revenues, VRDN:
(Aurora University) 4.20% (LOC; Harris Trust and Savings Bank) (a,b). 500,000 500,000
(Cultural Pool) 4.15% (LOC; First Chicago Corp.) (a,b)............... 300,000 300,000
Illinois Health Facilities Authority, Revenue:
CP (Alexian Brothers Medical Center) 3.40%, Series D, 5/6/96
(Insured; MBIA and SBPA; Morgan Guaranty Trust Co.)................ 1,570,000 1,570,000
VRDN:
(Ingalls Memorial Hospital) 4.20% (LOC; Lasalle National Bank) (a,b) 40,000 40,000
(Memorial Medical Center) 4.20%, Series C (LOC; Kredietbank) (a,b). 5,100,000 5,100,000
City of Lockport, IDR, VRDN (Panduit Corp. Project)
4.05% (LOC; Commerzbank) (a,b)....................................... 3,200,000 3,200,000
City of Naperville, IDR, VRDN (Service Merchandise Co., Inc. Project) 3.50% (a) 2,000,000 2,000,000
City of New Lenox, IDR, VRDN (Panduit Corporation Project)
4.05% (LOC; Commerzbank) (a,b)....................................... 1,300,000 1,300,000
City of Northbrook, IDR, Refunding, VRDN (Euromarket Designs Inc.)
4.25% (LOC; Harris Trust and Savings Bank) (a,b)..................... 100,000 100,000
City of Zion, Revenue, VRDN (H & M Enterprises LLC Project)
4.25% (LOC; Federal Home Loan Banks) (a,b)........................... 3,050,000 3,050,000
INDIANA-.9%
City of Auburn, EDR, VRDN (RJ Tower Corp. Project)
4.45% (LOC; Comerica Bank) (a,b)..................................... 425,000 425,000
Indiana Healh Facilities, VRDN 4.20% (LOC; Banc One Corp.) (a,b)......... 1,500,000 1,500,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ ________ ________
IOWA-1%
Iowa Municipalities Workers Compensation Association, Self Insurance Funding
Revenue 4.10%, 7/1/96 (LOC; Dai-Ichi Kangyo Bank) (b)................ $ 2,000,000 $ 2,000,000
KANSAS-.4%
Overland Park, International Improvement Revenue 4.70%, Series B, 9/1/96. 400,000 401,846
City of Topeka 7.40%, Series A, 10/1/96 (Escrowed in; U.S. Treasury Securities) 400,000 406,737
KENTUCKY-.7%
Pendelton County, Self Insurance Funding Revenue
(Kentucky Association Community) 5%, 7/1/96 (LOC; PNC Bank) (b)...... 1,500,000 1,500,000
LOUISIANA-.8%
State of Louisiana, Refunding, GO Notes 6.40%, 8/1/96 (Insured; MBIA).... 425,000 428,013
West Baton Rouge Parish Industrial District No. 3, VRDN
(Dow Chemical Co. Project) 4.30% (Corp. Guaranty; Dow Chemical Co.) (a) 1,100,000 1,100,000
MAINE-2.2%
State of Maine, BAN:
3.55%, 5/15/96....................................................... 3,000,000 3,000,398
3.70%, 5/15/96....................................................... 1,500,000 1,500,143
MASSACHUSETTS-10.6%
Town of Adams, BAN 4.04%, 6/14/96........................................ 500,000 500,000
Town of Andover, Revenue 6.50%, 11/1/96.................................. 600,000 608,498
Town of Mansfield, BAN 3.72%, 8/21/96.................................... 1,375,000 1,375,000
Commonwealth of Massachusetts, VRDN:
4.05%, Series B (LOC; National Westminster Bank) (a,b)............... 2,300,000 2,300,000
4.05%, Series E (LOC; ABN-Amro Bank) (a,b)........................... 3,000,000 3,000,000
Massachusetts Bay Transportation Authority, Revenue
(Massachusetts General Transportation System)
3.05%, Series A, 9/1/96 (LOC; State Street Bank and Trust Co.) (b)... 4,000,000 3,997,354
Massachusetts Health and Educational Facilities Authority, Revenue, CP
(Boston University) 3.20%, Series H, 5/16/96 (LOC; Landesbank Hessin) (b) 2,000,000 2,000,000
Massachusetts Industrial Finance Agency, Revenue, VRDN:
(Berkshire Project) 3.90% (LOC; National Westminster Bank) (a,b)..... 200,000 200,000
(Groton School Project) 3.90% (LOC; National Westminster Bank) (a,b). 2,000,000 2,000,000
(Hampshire College Project) 3.90% (LOC; National Westminster Bank) (a,b) 2,030,000 2,030,000
Middlesex County, RAN 3.69%, 12/13/96.................................... 1,500,000 1,500,000
Norfolk County, RAN 3.81%, 12/13/96...................................... 1,700,000 1,700,000
Town of North Andover, SAAN 3.78%, 7/17/96............................... 228,252 228,252
MICHIGAN-2.4%
Farmington Hills Housing Finance Authority, HR, VRDN
(Boston General Hospital)
4.20%, Series B (BPA; Comerica Bank and Insured; MBIA) (a)........... 2,400,000 2,400,000
Michigan Building Authority, Revenue, CP
3.50%, 5/7/96 (LOC; Canadian Imperial Bank of Commerce) (b).......... 2,505,000 2,505,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ ________ _______
MISSISSIPPI-.5%
Jackson County, Water Systems Revenue, Refunding
3.30%, 8/1/96 (Corporate Guaranty; Chevron USA Inc.)................. $ 1,000,000 $ 1,000,000
MISSOURI-1.9%
Kansas City Industrial Development Authority, MFHR, VRDN
(Timberline Village Apartments Project) 4% (LOC; Bank of America) (a,b) 1,300,000 1,300,000
Saint Charles County Industrial Development Authority, Industrial Revenue,
Refunding, VRDN (Cedar Ridge Apartments) 4.20%, Series A (LOC; Bank One) (a,b)..... 2,540,000 2,540,000
MONTANA-.1%
Butte-Silver Bow, PCR, Refunding, VRDN (Rhone-Poulenc Inc. Project):
4.05% (LOC; Banque Nationale de Paris) (a,b)......................... 105,000 105,000
4.05% (LOC; Banque Nationale de Paris) (a,b)......................... 100,000 100,000
NEVADA-.5%
Clark County, IDR, VRDN (Nevada Power Co. Project)
4.30%, Series A (LOC; Barclays Bank) (a,b)........................... 1,000,000 1,000,000
NEW HAMPSHIRE-.8%
New Hampshire Higher Educational and Health Facilities Authority, Revenue
(Dartmouth Educational Loan Corp.) 4.50%, 6/1/96..................... 1,630,000 1,630,000
NEW YORK-.8%
Broome County Industrial Development Agency, IDR, Refunding, VRDN
(Bing Realty Project) 3.70% (LOC; Meridian Bancorp Inc.) (a,b)....... 250,000 250,000
Suffolk County, Refunding (Southwest Sewer District)
4%, 2/1/97 (Insured; MBIA)........................................... 1,400,000 1,405,103
OREGON-.5%
Multnomah County School District Number 15, Notes 5%, 5/30/96............ 1,000,000 1,000,806
PENNSYLVANIA-6.6%
Allegheny County Industrial Development Authority, Revenue, CP (Duquesne)
3.75%, Series A, 11/7/96 (LOC; Canadian Imperial Bank of Commerce) (b) 3,500,000 3,500,000
Bucks County Industrial Development Authority, Revenue, VRDN
(SHV Real Estate Inc.) 3.75% (LOC; ABN-Amro Bank) (a,b).............. 200,000 200,000
Chartiers Valley Industrial and Commercial Development Authority, Revenue,
VRDN (William Penn Place Project) 3.60% (LOC; PNC Bank) (a,b)........ 1,000,000 1,000,000
Chester County Industrial Development Authority, IDR, VRDN
(Keystone Foods Corp.) 3.95% (LOC; Bank of Scotland) (a,b)........... 1,700,000 1,700,000
Delaware County Industrial Development Authority, PCR, Refunding, CP
(Philadelphia Electric Co.) 3.15%, Series B, 5/8/96 (Insured; FGIC).. 1,500,000 1,500,000
Jeanette Health Service Authority, HR, VRDN (Jeanette District Memorial
Hospital Project) 4.30% (LOC; PNC Bank) (a,b)........................ 600,000 600,000
Lehigh County Industrial Development Authority, PCR, VRDN
(Allegheny Electric Co-Op) 3.50% (LOC; Rabobank Nederland) (a,b)..... 120,000 120,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ ________ ________
PENNSYLVANIA (CONTINUED)
Moon Industrial Development Authority, IDR, VRDN
(Executive Office Association Project) 4.15% (LOC; PNC Bank) (a,b)... $ 1,250,000 $ 1,250,000
Philadelphia Hospitals and Higher Education Facilities Authority, HR
(Philadelphia Project) 8.625%, 8/1/96 (Escrowed in; U.S. Treasury Securities) 2,000,000 2,065,109
Warren County Hospital Authority, Revenue, VRDN
(Warren General Hospital Project) 4.15%, Series B (LOC; PNC Bank) (a,b) 1,000,000 1,000,000
Washington County Industrial Development Authority, IDR, Refunding, VRDN
(Wetterau Finance Co. Project) 4.15% (LOC; PNC Bank) (a,b)........... 500,000 500,000
SOUTH CAROLINA-3.1%
State of South Carolina, Revenue (State Institution) 3.80%, Series B, 11/1/96 100,000 100,973
South Carolina Education Assistance Authority, Refunding
4.75%, Series A-2, 9/1/96 (LOC; Student Loan Marketing Association) (b) 500,000 501,433
South Carolina Job-Economic Development Authority, VRDN
(Wellman Inc. Project):
4.45% (LOC; Wachovia Bank and Trust Co.) (a,b)..................... 500,000 500,000
EDR 4.45% (LOC; Wachovia Bank and Trust Co.) (a,b)................. 500,000 500,000
City of Walhalla, Revenue, Refunding, VRDN (Avondale Mills Inc. Project)
4.15% (LOC; Trust Co. Bank) (a,b).................................... 1,600,000 1,600,000
York County, PCR (North Carolina Electric Project):
3.25%, Series N-6, 9/15/96 (Corp. Guaranty; National Rural Utility Co-Op) 2,250,000 2,250,000
VRDN 4.15%, Series N-2 (Corp. Guaranty; National Rural Utility Co-Op) (a) 800,000 800,000
SOUTH DAKOTA-.2%
South Dakota Housing Development Authority, Revenue
(Homeownership Mortgage) 6.50%, Series A, 5/1/96..................... 500,000 500,000
TENNESSEE-.9%
Knox County Industrial Development Board, Industrial Revenue, VRDN
(Service Merchandise Co., Inc. Project)
3.50% (LOC; Industrial Bank of Japan) (a,b).......................... 400,000 400,000
Metro Nashville Airport Authority, Special Facilities Revenue, Refunding,
VRDN
(American Airlines Project) 4.20%, Series A (LOC; Credit Suisse) (a,b) 1,400,000 1,400,000
TEXAS-13.8%
City of Austin, Utilities Systems Revenue, Refunding
5.20%, 11/15/96 (Insured; AMBAC)..................................... 1,775,000 1,789,177
Dallas Industrial Development Corporation, IDR, VRDN (Sealed Power Corp.)
3.50% (LOC; National Bank of Detroit) (a,b).......................... 1,100,000 1,100,000
Gulf Coast Waste Disposal Authority, Water Pollution Control, Contract
Revenue
(Amoco Oil) 3.60%, 7/15/96 (Corp. Guaranty; Amoco Credit)............ 2,640,000 2,640,000
Houston Independent School District, Refunding (School House)
3.65%, 8/15/96....................................................... 200,000 201,846
Lonestar Airport Improvement Authority, Revenue, VRDN (American Airlines)
4.20%, Series B-4 (LOC; Royal Bank of Canada) (a,b).................. 1,000,000 1,000,000
Lower Colorado River Authority, Revenue, CP
3.55%, Series B, 6/10/96 (Liquidity; Morgan Guaranty Trust Co.)...... 3,300,000 3,300,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ ________ ________
TEXAS (CONTINUED)
North Texas Higher Education Authority, Student Loan Revenue, VRDN:
4.15%, Series F (Insured; AMBAC) (a)................................. $ 1,100,000 $ 1,100,000
Refunding
4.15%, Series A (BPA; Student Loan Marketing
Association and Insured; AMBAC) (a)...................................... 2,000,000 2,000,000
Nueces County Health Facilities Development Corporation, Revenue, VRDN
(Driscoll Foundation Children) 4.15% (LOC; Bank One) (a,b)........... 2,395,000 2,395,000
San Antonio, Sewer Revenue, Prerefunded
5%, 5/1/96 (Escrowed in; U.S. Treasuries)............................ 4,950,000 5,049,000
State of Texas, TRAN:
4.75%, Series A, 8/30/96............................................. 2,500,000 2,505,335
(Veterans' Land) 6.70%, 12/1/96...................................... 630,000 639,985
Texas Public Finance Authority, Revenue, GO, CP
3.20%, Series A, 7/25/96 (Guaranteed by; Texas Public Finance Authority) 2,000,000 2,000,000
Tyler Health Facilities Development Corporation, HR, CP
(East Texas Medical Center Regional Health)
3.35%, Series C, 5/13/96 (LOC; Banque Paribas) (b)................... 2,300,000 2,300,000
UTAH-3.2%
Intermountain Power Agency, Utah Power Supply Revenue, Prerefunded
5%, Series F, 7/1/96 (Escrowed in; U.S. Treasury Seucrities)......... 1,700,000 1,742,982
State of Utah Board of Regents, Student Loan Revenue, VRDN:
4.05%, Series B (BPA; Dredsner Bank and Insured; AMBAC) (a).......... 200,000 200,000
4.15%, Series C (BPA; Dredsner Bank and Insured; AMBAC) (a).......... 300,000 300,000
Utah County, Environmental Improvement Revenue, Refunding
(USX Corp. Project) 5%, 5/1/96 (LOC; Wachovia Bank) (b).............. 1,100,000 1,100,000
City of West Jordan, TRAN 5%, 6/28/96.................................... 3,255,000 3,255,000
VIRGINIA-1.1%
Fairfax County, Revenue, Prerefunded
6.60%, Series B, 11/1/96 (Escrowed in; U.S. Treasury Securities)..... 300,000 307,352
Virginia Housing Development Authority, Commonwealth Mortgage
3.35%, Series D-Subseries D, 7/16/96................................. 2,000,000 2,000,000
WASHINGTON-1.8%
Marysville, Water and Sewer Revenue, Refunding
4.20%, 12/1/96 (Insured; MBIA)....................................... 200,000 201,027
Port Seattle Industrial Development Corporation, Revenue, Refunding, VRDN
(Sysco Food Services Project) 4.25% (a).............................. 1,000,000 1,000,000
State of Washington:
5%, Series C, 7/1/96................................................. 1,000,000 1,002,669
Refunding (Motor Vehicle Fuel) 3.70%, Series B, 9/1/96............... 1,000,000 1,000,000
Washington State Health Care Facilities Authority, Revenue, VRDN
(Fred Hutchinson Cancer)
4.20%, Series C (LOC; Morgan Guaranty Trust Co.) (a,b)............... 500,000 500,000
WEST VIRGINIA-1.7%
Putnam County, IDR, VRDN (FMC Corp.)
3.50% (LOC; Union Bank of Switzerland)(a,b).......................... 700,000 700,000
DREYFUS MUNICIPAL RESERVES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________________________ _______ _______
WEST VIRGINIA (CONTINUED)
West Virginia Public Energy Authority, Energy Revenue, CP
(Morgantown Association Project)
3.35%, Series A, 5/13/96 (LOC; Swiss Bank Corp.) (b)..................... $ 2,800,000 $ 2,800,000
WISCONSIN-3.4%
City of Carlton, PCR, VRDN (Wisconsin Power and Light) 4.25% (a)......... 1,000,000 1,000,000
City of Platteville, IDR, VRDN (Woodward Communications Project)
4.40% (LOC; Harris Trust and Savings Bank) (a,b)..................... 3,050,000 3,050,000
Sheboygan, PCR, Refunding, VRDN (Wisconsin Electric Power Co.) 4.25% (a). 2,850,000 2,850,000
____________
TOTAL INVESTMENTS (cost $203,128,941).................................... $203,128,941
===============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
BAN Bond Anticipation Notes Insurance Association
BPA Bond Purchase Agreement MFHR Multi-Family Housing Revenue
COP Certificate of Participation MFMR Multi-Family Mortgage Revenue
CP Commercial Paper PCR Pollution Control Revenue
EDR Economic Development Revenue RAN Revenue Anticipation Notes
FGIC Financial Guaranteed Insurance Company SAAN State Aid Anticipation Notes
FNMA Federal National Mortgage Association SBPA Standby Bond Purchase Agreement
GO General Obligation SWDR Solid Waste Disposal Revenue
HR Hospital Revenue TRAN Tax and Revenue Anticipation Notes
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ---------------- --------------------
<S> <C> <S> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 78.7%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 13.9%
Not Rated (f) Not Rated (f) Not Rated (f) 7.4%
______
100.0%
=========
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities
payable on demand. The interest rate, which is subject to change, is based
upon bank prime rates or an index of market interest rates.
(b) Secured by
letters of credit. At April 30, 1996, 54.8% of the Fund's net assets are
backed by letters of credit issued by domestic banks, foreign banks,
government agencies and brokerage firms.
(c) Fitch currently provides creditworthiness information for a
limited number of investments.
(d) P1 and A1 are the highest ratings assigned tax-exempt commercial paper
by Moody's and Standard & Poor's, respectively.
(e) Notes which are not F, MIG or SP rated are represented by bond
ratings of the issuers.
(f) 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.
</TABLE>
See notes to financial statements.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $203,127,629)-see Statement of Investments $203,128,941
Cash.................................................................... 93,522
Receivable for investment securities sold............................... 2,449,597
Interest receivable..................................................... 1,593,587
______________
207,265,647
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)................................ $180,178
Due to Distributor...................................................... 2,758
Dividends payable....................................................... 202,880
Directors' fees payable-Note 2 (c)...................................... 28,062 413,878
__________ ______________
NET ASSETS.................................................................. $206,851,769
================
REPRESENTEDBY:
Paid-in capital......................................................... $206,704,776
Accumulated distributions in excess of investment income-net............ (1,575)
Accumulated undistributed net realized gain on investments.............. 147,256
Accumulated gross unrealized appreciation on investments................ 1,312
______________
NET ASSETS at value......................................................... $206,851,769
===============
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
(1 billion shares of $.001 par value Capital Stock authorized)
($16,160,692 3 16,151,919 shares of Capital Stock outstanding)........ $1.00
======
Class R Shares
(1 billion shares of $.001 par value Capital Stock authorized)
($190,691,077 3 190,552,254 shares of Capital Stock outstanding)...... $1.00
======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $4,427,827
EXPENSES:
Investment management fee-Note 2(a)................................... $587,372
Distribution fee (Investor shares)-Note 2(b).......................... 17,506
Directors' fees and expenses-Note 2(c)................................ 11,987
__________
TOTAL EXPENSES.................................................... 616,865
____________
INVESTMENT INCOME-NET ............................................ 3,810,962
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 1(b).............................. $148,109
Net unrealized appreciation on investments.............................. 1,312
__________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 149,421
____________
NETINCREASEINNETASSETSRESULTINGFROMOPERATIONS............................... $3,960,383
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995
__________________ _________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 3,810,962 $ 7,580,263
Net realized gain (loss) on investments.............................. 148,109 (853)
Net unrealized appreciation on investments........................... 1,312 -
_______________ ___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. 3,960,383 7,579,410
_______________ ___________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Investor Shares.................................................... (262,585) (665,686)
Class R Shares..................................................... (3,548,377) (6,913,817)
_______________ ___________
TOTAL DIVIDENDS.................................................. (3,810,962) (7,579,503)
_______________ ___________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Investor Shares.................................................... 6,118,658 13,061,878
Class R Shares..................................................... 469,266,286 744,180,112
Issued in exchange for shares of Dreyfus/Laurel Tax Free Money Fund:
Investor Shares.................................................... - 21,402,629
Class R Shares..................................................... - 17,563,875
Dividends reinvested:
Investor Shares.................................................... 260,264 582,123
Class R Shares..................................................... 1,076,711 2,258,237
Cost of shares redeemed:
Investor Shares.................................................... (7,991,153) (18,443,197)
Class R Shares..................................................... (485,164,969) (763,734,703)
_______________ ___________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS (16,434,203) 16,870,954
_______________ ___________
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ (16,284,782) 16,870,861
NET ASSETS:
Beginning of period.................................................. 223,136,551 206,265,690
_______________ ___________
End of period (including distributions in excess of investment income-net:
$1,575 and $1,575, respectively)................................. $206,851,769 $223,136,551
============== ===============
</TABLE>
See notes to financial statements.
DREYFUS MUNICIPAL RESERVES
FINANCIAL HIGHLIGHTS
Contained below is per share performance data for a share of Capital
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
INVESTOR SHARES
__________________________________________________________
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1996 ____________________________
PER SHARE DATA: (UNAUDITED) 1995 1994(1)(2)
_________________ _______ ______
<S> <C> <C> <C>
Net asset value, beginning of period.............. $ 1.00 $ 1.00 $ 1.00
______ ______ ______
INVESTMENT OPERATIONS;
Investment income-net............................. .015 .032 .012
______ ______ ______
DISTRIBUTIONS;
Dividends from investment income-net.............. (.015) (.032) (.012)
______ ______ ______
Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
TOTAL INVESTMENT RETURN............................... 3.01%(3) 3.28% 1.23%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .70%(3) .70% .70%(3)
Ratio of net investment income to average net assets 2.99%(3) 3.33% 2.11%(4)
Net Assets, end of period (000's Omitted)......... $16,161 $17,764 $1,161
(1) Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(2) The Fund commenced selling Investor shares on April 20, 1994. Those
shares outstanding prior to April 4, 1994 were redesignated as Trust shares.
Effective October 17, 1994, the Fund's Trust shares were reclassified as
Class R shares.
(3) Annualized.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS MUNICIPAL RESERVES
FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share performance data for a share of Capital
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
CLASS R SHARES
--------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1996
-------------------------------------------------------------
PER SHARE DATA: (UNAUDITED) 1995 1994(1)(2) 1993 1992 1991
------------ ----- --------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----- ------ ------ ------ ------ ------
INVESTMENT OPERATIONS;
Investment income-net..... .016 .034 .023(3) .021 .029 .029
----- ------ ------ ------ ------ ------
DISTRIBUTIONS;
Dividends from investment
income-net.............. (.016) (.034) (.023) (.021) (.029) (.029)
----- ------ ------ ------ ------ ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======= ========
TOTAL INVESTMENT RETURN....... 3.23%(4) 3.48% 2.29% 2.10% 2.94% 2.94%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets...... .50%(4) .50% .51%(5) .50%(6) .50%(6) .50%(6)
Ratio of net investment income
to average net assets... 3.18%(4) 3.41% 2.30% 2.08% 2.90% 2.90%
Net Assets, end of period
(000's Omitted)......... $190,691 $205,373 $205,105 $187,830 $184,719 $184,719
(1) Effective October 17, 1994, The Dreyfus Corporation serves as the Fund's
investment manager. Prior to October 17, 1994, Mellon Bank, N.A. served as
the Fund's investment manager.
(2) The Fund commenced selling Investor shares on April 20, 1994. Those
shares outstanding prior to April 4, 1994 were redesignated as Trust shares.
Effective October 17, 1994, the Fund's Trust shares were reclassified as
Class R shares.
(3) Net investment income before expenses reimbursed by the investment
adviser for the year ended October 31, 1994 was $0.0218.
(4) Annualized.
(5) Annualized expense ratio before expenses reimbursed by the investment
adviser for the year ended October 31, 1994 was 0.61%.
(6) For the years ended October 31, 1993, 1992 and 1991, the investment
adviser reimbursed expenses of the Fund amounting to $.0024, $.0029 and
$.0036 per share, respectively.
</TABLE>
See notes to financial statements.
DREYFUS MUNICIPAL RESERVES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Dreyfus/Laurel Funds, Inc. (the "Company") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company and operates as a series company currently offering
seventeen series including the Dreyfus Municipal Reserves (the "Fund"). The
Fund's investment objective is to seek income exempt from Federal income tax
consistent with stability of principal by investing in tax-exempt municipal
obligations. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund is currently authorized to issue
two classes of shares: Investor shares and Class R shares. Investor shares
are sold primarily to retail investors and bear a distribution fee. Class R
shares are sold primarily to bank trust departments and other financial
service providers (including Mellon Bank and its affiliates) acting on behalf
of customers having a qualified trust or investment account or relationship
at such institution, and bear no distribution fee. Each class of shares has
identical rights and privileges, except with respect to the distribution fee
and voting rights on matters affecting a single class.
Investment income, net of expenses (other than class specific expenses),
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost in
accordance with Rule 2a-7 of the Investment Company Act of 1940, which has
been determined by the Fund's Board of Directors to represent the fair value
of the Fund's investments.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for the Fund; the Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to enable it to do
so. There is no assurance, however, that the Fund will be able to maintain a
stable net asset value of $1.00.
(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 recognized on the accrual basis. Cost of investments represents
amortized cost.
(C) REPURCHASE AGREEMENTS: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund,
through its custodian and sub-custodian, takes possession of an underlying
debt obligation subject to an obligation of the seller to repurchase, and the
Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Fund's holding period. The value of the collateral is at least
equal, at all times, to the total amount of the repurchase obligation,
including interest. In the event of a counterparty default, the Fund has the
right to use the collateral to offset losses incurred. There is potential
loss to the Fund in the event the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during
the period while the Fund seeks to assert its rights. The Fund's manager,
acting under the supervision of the Board of Directors, reviews the value of
the collateral and the creditworthiness of those banks and dealers with which
the Fund enters into repurchase agreements to evaluate potential risks.
DREYFUS MUNICIPAL RESERVES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net; such
dividends are paid monthly. Dividends from net realized capital gain are
normally declared and paid annually, but the Fund may make distributions on a
more frequent basis to comply with the distribution requirements of the
Internal Revenue Code. To the extent that net realized capital gain can be
offset by capital loss carryovers, it is the policy of the Fund not to
distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $853
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1995. If not
applied, the carryover expires in fiscal 2003.
At April 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2-INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management
agreement with the Manager, the Manager provides or arranges for one or more
third parties and/or affiliates to provide investment advisory,
administrative, custody, fund accounting and transfer agency services to the
Fund. The Manager also directs the investments of the Fund in accordance with
its investment objective, policies and limitations. For these services, the
Fund is contractually obligated to pay the Manager a fee, calculated daily
and paid monthly, at the annual rate of .50% of the value of the Fund's
average daily net assets. Out of its fee, the Manager pays all of the
expenses of the Fund except brokerage fees, taxes, interest, Rule 12b-1
distribution fees and expenses, fees and expenses of non-interested Directors
(including counsel fees) and extraordinary expenses. In addition, the Manager
is required to reduce its fee in an amount equal to the Fund's allocable
portion of fees and expenses of the non-interested Directors (including
counsel).
(B) DISTRIBUTION PLAN: The Fund has adopted a distribution plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its Investor
shares. Under the Plan, the Fund may pay annually up to .25% of the value of
the average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder servicing activities and the Distributor for
activities primarily intended to result in the sale of Investor shares. The
Class R shares bear no distribution fee. For the six months ended April 30,
1996, the distribution fee for the Investor shares was $17,506.
Under its terms, the Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of those
Directors who are not "interested persons" of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan.
DREYFUS MUNICIPAL RESERVES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) DIRECTOR'S FEES: Each director who is not an "interested person" as
defined in the Act receives $27,000 per year, $1,000
for each Board meeting attended and $750 for each Audit Committee meeting
attended and is reimbursed for travel and out-of-pocket expenses. These expens
es are paid in total by the following funds: The Dreyfus/Laurel Funds, Inc.,
The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds
Trust. In addition the Chairman of the Board receives an annual fee of
$75,000 per year. These fees and expenses are charged and allocated to each
series based on net assets.
[Dreyfus lion "d" logo]
DREYFUS MUNICIPAL RESERVES
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 324/724SA964
[Dreyfus logo]
Municipal Reserves
Semi-Annual
Report
April 30, 1996
