NOTE 1--Significant Accounting Policies:
Dreyfus Municipal Reserves (the "Fund") is a series of The Dreyfus/Laurel Funds, Inc. (the "Company") which 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 sixteen series including the Fund. The Fund's
investment objective is to seek a high level of current income consistent with stability of principal by investing in
high-grade money market instruments. 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") is the distributor of the Fund's shares. The Fund is
authorized to issue 1 billion of $.001 par value Capital Stock in each of the following classes of shares: Investor
and Class R. 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.
The Fund's financial statements are prepared in accordance with generally accepted accounting principles which
may require the use of management estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in accordance with Rule 2a-7 of the Investment
Company Act of 1940, which has be