485BPOS
2012-08-31
0000878092
2013-01-01
DREYFUS MUNICIPAL FUNDS INC
false
2012-12-26
2013-01-01
The fund is non-diversified, which means that the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Therefore, the
fund's performance may be more vulnerable to changes in the market value of a
single issuer or group of issuers and more susceptible to risks associated with
a single economic, political or regulatory occurrence than a diversified fund.
<tt>The fund pays transaction costs, such as commissions, when it buys and sells<br />securities (or "turns over" its portfolio). A higher portfolio turnover may<br />indicate higher transaction costs and may result in higher taxes when fund<br />shares are held in a taxable account. These costs, which are not reflected in<br />annual fund operating expenses or in the example, affect the fund's performance.<br />During the most recent fiscal year, the fund's portfolio turnover rate was<br />26.27% of the average value of its portfolio.</tt>
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<tt>As its primary goal, the fund seeks high current income exempt from federal<br />income tax.</tt>
<tt>The Example is intended to help you compare the cost of investing in the fund<br />with the cost of investing in other mutual funds. The Example assumes that you<br />invest $10,000 in the fund for the time periods indicated and then redeem all of<br />your shares at the end of those periods. The Example also assumes that your<br />investment has a 5% return each year and that the fund's operating expenses<br />remain the same. Although your actual costs may be higher or lower, based on<br />these assumptions your costs would be:</tt>
reflects no deduction for fees, expenses or taxes
<tt>To pursue its goals, the fund normally invests at least 80% of its net assets,<br />plus any borrowings for investment purposes, in municipal bonds that provide<br />income exempt from federal income tax. The fund invests at least 50% of its<br />assets in municipal bonds rated BBB/Baa or lower by independent rating agencies<br />or the unrated equivalent as determined by The Dreyfus Corporation. Municipal<br />bonds rated below investment grade (BB/Ba or lower) are commonly known as "high<br />yield" or "junk" bonds. These bonds typically offer higher yields than investment <br />grade bonds, but involve greater risks, including the possibility of default, <br />and increased market price volatility. The fund may invest up to 10% of its <br />assets in defaulted municipal bonds. The fund may invest up to 50% of its<br />assets in higher quality municipal bonds (those rated AAA/Aaa to A or the<br />unrated equivalent as determined by The Dreyfus Corporation).<br /> <br />The dollar-weighted average maturity of the fund's portfolio is not restricted,<br />but normally exceeds ten years.<br /> <br />The portfolio managers focus on identifying undervalued sectors and securities.<br />To select municipal bonds for the fund, the portfolio managers use fundamental<br />credit analysis to estimate the relative value and attractiveness of various<br />sectors and securities and actively trade among various sectors, based on their<br />apparent values.<br /> <br />Although the fund seeks to provide income exempt from federal income tax, the<br />fund may invest without limitation in municipal bonds the income from which is<br />subject to the federal alternative minimum tax. In addition, the fund may invest<br />temporarily in taxable obligations.</tt>
Fund Summary
<tt>As a secondary goal, the fund may seek capital appreciation to the extent <br />consistent with its primary goal.</tt>
You may qualify for sales charge discounts if you and your family invest, or agree
to invest in the future, at least $50,000 in certain funds in the Dreyfus Family
of Funds.
Example
After-tax returns are calculated using the historical highest individual federal
marginal tax rates, and do not reflect the impact of state and local taxes.
Investment Objective
The fund's past performance (before and after taxes) is not necessarily an indicator of how the fund will perform in the future.
It is not a complete investment program. The fund's share price fluctuates,
sometimes dramatically, which means you could lose money.
Principal Risks
Shareholder Fees (fees paid directly from your investment)
0.2627
Actual after-tax returns depend on the investor's tax situation and may differ
from those shown, and the after tax returns shown are not relevant to investors
who hold their shares through tax-deferred arrangements such as 401(k) plans or
individual retirement accounts.
Year-by-Year Total Returns as of 12/31 each year (%) -- Class Z
Sales charges, if any, are not reflected in the bar chart, and if those charges
were included, returns would have been less than those shown.
Performance
50000
The following bar chart and table provide some indication of the risks of investing in the fund.
<tt>Best Quarter                         <br />Q3, 2009: 13.47%                     <br />Worst Quarter                        <br />Q4, 2008: -17.47%      <br />              <br />The year-to-date total return of the fund's Class Z shares as of 9/30/12 was    <br />11.14%.</tt>
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Average Annual Total Returns (as of 12/31/11)
<tt>The bar chart shows changes in the performance of the fund's Class Z shares <br />from year to year. Sales charges, if any, are not reflected in the bar chart, <br />and if those charges were included, returns would have been less than those shown.</tt>
Portfolio Turnover
<tt>An investment in the fund is not a bank deposit. It is not insured or guaranteed<br />by the Federal Deposit Insurance Corporation (FDIC) or any other government<br />agency. It is not a complete investment program. The fund's share price<br />fluctuates, sometimes dramatically, which means you could lose money.<br /> <br />o Municipal bond market risk. The amount of public information available about<br />municipal bonds is generally less than that for corporate equities or bonds.<br />Special factors, such as legislative changes, and state and local economic and<br />business developments, may adversely affect the yield and/or value of the fund's<br />investments in municipal bonds. Other factors include the general conditions of<br />the municipal bond market, the size of the particular offering, the maturity of<br />the obligation and the rating of the issue. Changes in economic, business or<br />political conditions relating to a particular municipal project, municipality,<br />or state in which the fund invests may have an impact on the fund's share price.<br /> <br />o Interest rate risk. Prices of municipal bonds tend to move inversely with<br />changes in interest rates. Typically, a rise in rates will adversely affect <br />bond prices and, accordingly, the fund's share price. The longer the effective<br />maturity and duration of the fund's portfolio, the more the fund's share price<br />is likely to react to interest rates.<br /> <br />o Credit risk. Failure of an issuer to make timely interest or principal<br />payments, or a decline or perception of a decline in the credit quality of a<br />municipal bond, can cause the bond's price to fall, potentially lowering the<br />fund's share price. The lower a bond's credit rating, the greater the chance -<br />in the rating agency's opinion - that the bond issuer will default or fail to<br />meet its payment obligations. To the extent the fund invests in high yield<br />("junk") bonds, its portfolio is subject to heightened credit risk.<br /> <br />o Liquidity risk. When there is little or no active trading market for specific<br />types of securities, it can become more difficult to sell the securities at or<br />near their perceived value. In such a market, the value of such securities and<br />the fund's share price may fall dramatically, even during periods of declining<br />interest rates. The secondary market for certain municipal bonds tends to be <br />less well developed or liquid than many other securities markets, which may <br />adversely affect the fund's ability to sell such municipal bonds at attractive <br />prices.<br /> <br />o Non-diversification risk. The fund is non-diversified, which means that the<br />fund may invest a relatively high percentage of its assets in a limited number<br />of issuers. Therefore, the fund's performance may be more vulnerable to changes<br />in the market value of a single issuer or group of issuers and more susceptible<br />to risks associated with a single economic, political or regulatory occurrence<br />than a diversified fund.</tt>
Fees and Expenses
After-tax performance is shown only for Class Z shares. After-tax performance of the fund's other share classes will vary.
Principal Investment Strategy
www.dreyfus.com
<tt>The following bar chart and table provide some indication of the risks of<br />investing in the fund. The table compares the average annual total returns <br />of the fund's shares to those of a broad measure of market performance. The <br />fund's past performance (before and after taxes) is not necessarily an <br />indicator of how the fund will perform in the future. More recent performance<br />information may be available at www.dreyfus.com.</tt>
<tt>This table describes the fees and expenses that you may pay if you buy and hold<br />shares of the fund. You may qualify for sales charge discounts if you and your<br />family invest, or agree to invest in the future, at least $50,000 in certain<br />funds in the Dreyfus Family of Funds. More information about these and other<br />discounts is available from your financial professional and in the Shareholder<br />Guide section on page 9 of the prospectus and in the How to Buy Shares section<br />and the Additional Information About How to Buy Shares section on page II-1 and<br />page III-1, respectively, of the fund's Statement of Additional Information.<br />Class A shares bought without an initial sales charge as part of an investment<br />of $1 million or more may be charged a deferred sales charge of 1.00% if<br />redeemed within one year.</tt>
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You would pay the following expenses if you did not redeem your shares:
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<tt>After-tax performance is shown only for Class Z shares. After-tax performance of<br />the fund's other share classes will vary. After-tax returns are calculated using<br />the historical highest individual federal marginal tax rates, and do not reflect<br />the impact of state and local taxes. Actual after-tax returns depend on the<br />investor's tax situation and may differ from those shown, and the after tax<br />returns shown are not relevant to investors who hold their shares through<br />tax-deferred arrangements such as 401(k) plans or individual retirement<br />accounts.<br /> <br />Performance figures for the fund's Class A, Class C and Class I shares for<br />periods prior to the inception date of such classes reflect the performance of<br />the fund's Class Z shares adjusted to reflect any applicable sales charge. Such<br />performance figures have not been adjusted, however, to reflect applicable class<br />fees and expenses; if such fees and expenses had been reflected, the performance<br />shown for Class A and Class C shares for such periods may have been lower.</tt>
An investment in the fund is not a bank deposit. It is not insured or guaranteed
by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
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Barclays Municipal Bond Index reflects no deduction for fees, expenses or taxes
0.1070
0.0522
0.0507
Class Z returns after taxes on distributions and sale of fund shares
0.0735
0.0237
0.0401
2005-09-30
Class Z returns after taxes on distributions
0.0842
0.0192
0.0380
2005-09-30
DHMBX
Worst Quarter
Best Quarter
0.0000
2012-09-30
Class Z returns before taxes
97
2009-09-30
97
303
-0.1747
0.0328
1166
-0.0200
525
-0.0187
0.1347
0.0848
0.0015
-0.2297
0.0060
2008-12-31
1166
0.2994
0.0193
303
525
year-to-date total return
0.0848
0.0020
0.0095
0.1091
0.0383
2005-09-30
0.1114
0.0000
DYBIX
0.0000
Class I returns before taxes
80
80
249
966
-0.0200
433
0.0871
0.0018
0.0060
966
0.0197
249
433
0.0000
0.0078
0.0386
2008-12-15
0.0000
DHYCX
0.0000
Class C returns before taxes
281
181
560
2095
-0.0200
964
0.0663
0.0043
0.0060
2095
0.0109
560
964
0.0075
0.0178
0.0315
2007-03-15
0.0100
DHYAX
0.0450
Class A returns before taxes
549
549
760
1642
-0.0200
988
0.0363
0.0042
0.0060
1642
0.0089
760
988
0.0000
0.0102
0.0298
2007-03-15
0.0000
The fund is non-diversified, which means that the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Therefore, the
fund's performance may be more vulnerable to changes in the market value of a
single issuer or group of issuers and more susceptible to risks associated with
a single economic, political or regulatory occurrence than a diversified fund.
<tt>The fund pays transaction costs, such as commissions, when it buys and sells<br />securities (or "turns over" its portfolio). A higher portfolio turnover may<br />indicate higher transaction costs and may result in higher taxes when fund<br />shares are held in a taxable account. These costs, which are not reflected in<br />annual fund operating expenses or in the example, affect the fund's performance.<br />During the most recent fiscal year, the fund's portfolio turnover rate was<br />22.11% of the average value of its portfolio.</tt>
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<tt>The fund seeks as high a level of current income exempt from federal income tax<br />as is consistent with the preservation of capital.</tt>
<tt>The Example is intended to help you compare the cost of investing in the fund<br />with the cost of investing in other mutual funds. The Example assumes that you<br />invest $10,000 in the fund for the time periods indicated and then redeem all <br />of your shares at the end of those periods. The Example also assumes that your<br />investment has a 5% return each year and that the fund's operating expenses<br />remain the same. The one-year example and the first year of the three-, five-<br />and ten-years examples are based on net operating expenses, which reflect the<br />expense waiver/reimbursement by The Dreyfus Corporation. Although your actual<br />costs may be higher or lower, based on these assumptions your costs would be:</tt>
reflects no deduction for fees, expenses or taxes
<tt>To pursue its goal, the fund normally invests substantially all of its net<br />assets in municipal bonds that provide income exempt from federal income tax.<br />The fund also seeks to provide income exempt from the federal alternative<br />minimum tax. The fund invests at least 65% of its assets in municipal bonds <br />with an A or higher credit rating, or the unrated equivalent as determined <br />by The Dreyfus Corporation. The fund may invest the remaining 35% of its <br />assets in municipal bonds with a credit rating lower than A, including <br />municipal bonds rated below investment grade ("high yield" or "junk" bonds), <br />or the unrated equivalent as determined by The Dreyfus Corporation.<br /> <br />The dollar-weighted average maturity of the fund's portfolio normally exceeds<br />ten years, but the fund may invest without regard to maturity.<br /> <br />The portfolio managers focus on identifying undervalued sectors and securities.<br />To select municipal bonds for the fund, the portfolio managers use fundamental<br />credit analysis to estimate the relative value and attractiveness of various<br />sectors and securities and actively trade among various sectors based on their<br />apparent values.<br /> <br />Although the fund seeks to provide income exempt from federal income tax, the<br />fund may invest temporarily in taxable bonds, including when the portfolio<br />managers believe acceptable municipal bonds are not available for investment.</tt>
Fund Summary
You may qualify for sales charge discounts if you and your family invest, or
agree to invest in the future, at least $50,000 in certain funds in the Dreyfus
Family of Funds.
Example
After-tax returns are calculated using the historical highest individual federal
marginal tax rates, and do not reflect the impact of state and local taxes.
Investment Objective
The fund's past performance (before and after taxes) is not necessarily an indicator of how the fund will perform in the future.
The fund's share price fluctuates, sometimes dramatically, which means you could lose money.
Principal Risks
Shareholder Fees (fees paid directly from your investment)
0.2211
Actual after-tax returns depend on the investor's tax situation and may
differ from those shown, and the after tax returns shown are not relevant
to investors who hold their shares through tax-deferred arrangements such
as 401(k) plans or individual retirement accounts.
Year-by-Year Total Returns as of 12/31 each year (%) -- Class Z
Sales charges, if any, are not reflected in the bar chart, and if those
charges were included, returns would have been less than those shown.
Performance
50000
The following bar chart and table provide some indication of the risks of investing in the fund.
<tt>Best Quarter    <br />Q3, 2009: 8.67% <br />Worst Quarter   <br />Q4, 2010: -5.08%<br /><br />The year-to-date total return of the fund's Class Z shares as of                 <br />9/30/12 was 7.12%.</tt>
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Average Annual Total Returns (as of 12/31/11) Class (Inception Date)
<tt>The bar chart shows changes in the performance of the fund's Class Z <br />shares from year to year. Sales charges, if any, are not reflected in <br />the bar chart, and if those charges were included, returns would have <br />been less than those shown.</tt>
Portfolio Turnover
<tt>An investment in the fund is not a bank deposit. It is not insured or guaranteed<br />by the Federal Deposit Insurance Corporation (FDIC) or any other government<br />agency. It is not a complete investment program. The fund's share price<br />fluctuates, sometimes dramatically, which means you could lose money.<br /> <br />o Municipal bond market risk. The amount of public information available about<br />municipal bonds is generally less than that for corporate equities or bonds.<br />Special factors, such as legislative changes, and state and local economic and<br />business developments, may adversely affect the yield and/or value of the fund's<br />investments in municipal bonds. Other factors include the general conditions of<br />the municipal bond market, the size of the particular offering, the maturity of<br />the obligation and the rating of the issue. Changes in economic, business or<br />political conditions relating to a particular municipal project, municipality,<br />or state in which the fund invests may have an impact on the fund's share price.<br /> <br />o Interest rate risk. Prices of municipal bonds tend to move inversely with<br />changes in interest rates. Typically, a rise in rates will adversely affect bond<br />prices and, accordingly, the fund's share price. The longer the effective<br />maturity and duration of the fund's portfolio, the more the fund's share price<br />is likely to react to interest rates.<br /> <br />o Credit risk. Failure of an issuer to make timely interest or principal<br />payments, or a decline or perception of a decline in the credit quality of a<br />municipal bond, can cause the bond's price to fall, potentially lowering the<br />fund's share price. The lower a bond's credit rating, the greater the chance -<br />in the rating agency's opinion - that the bond issuer will default or fail to <br />meet its payment obligations. To the extent the fund invests in high yield <br />("junk") bonds, its portfolio is subject to heightened credit risk.<br /> <br />o Liquidity risk. When there is little or no active trading market for specific<br />types of securities, it can become more difficult to sell the securities at or<br />near their perceived value. In such a market, the value of such securities and<br />the fund's share price may fall dramatically, even during periods of declining<br />interest rates. The secondary market for certain municipal bonds tends to be<br />less well developed or liquid than many other securities markets, which may<br />adversely affect the fund's ability to sell such municipal bonds at attractive<br />prices.<br /> <br />o Non-diversification risk. The fund is non-diversified, which means that the<br />fund may invest a relatively high percentage of its assets in a limited number<br />of issuers. Therefore, the fund's performance may be more vulnerable to changes<br />in the market value of a single issuer or group of issuers and more susceptible<br />to risks associated with a single economic, political or regulatory occurrence<br />than a diversified fund.</tt>
Fees and Expenses
After-tax performance is shown only for Class Z shares. After-tax performance of the fund's other share classes will vary.
Principal Investment Strategy
www.dreyfus.com
<tt>The following bar chart and table provide some indication of the risks of<br />investing in the fund. The table compares the average annual total returns <br />of the fund's shares to those of a broad measure of market performance. <br />The fund's past performance (before and after taxes) is not necessarily <br />an indicator of how the fund will perform in the future. More recent <br />performance information may be available at www.dreyfus.com.</tt>
<tt>This table describes the fees and expenses that you may pay if you buy and hold<br />shares of the fund. You may qualify for sales charge discounts if you and your<br />family invest, or agree to invest in the future, at least $50,000 in certain<br />funds in the Dreyfus Family of Funds. More information about these and other<br />discounts is available from your financial professional and in the Shareholder<br />Guide section on page 8 of the prospectus and in the How to Buy Shares section<br />and the Additional Information About How to Buy Shares section on page II-1 and<br />page III-1, respectively, of the fund's Statement of Additional Information.<br />Class A shares bought without an initial sales charge as part of an investment<br />of $1 million or more may be charged a deferred sales charge of 1.00% if<br />redeemed within one year.</tt>
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You would pay the following expenses if you did not redeem your shares:
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<tt>After-tax performance is shown only for Class Z shares. After-tax performance of<br />the fund's other share classes will vary. After-tax returns are calculated using<br />the historical highest individual federal marginal tax rates, and do not reflect<br />the impact of state and local taxes. Actual after-tax returns depend on the<br />investor's tax situation and may differ from those shown, and the after tax<br />returns shown are not relevant to investors who hold their shares through<br />tax-deferred arrangements such as 401(k) plans or individual retirement<br />accounts.<br /> <br />Performance figures for the fund's Class A, Class C and Class I shares for<br />periods prior to the inception date of such classes reflect the performance of<br />the fund's Class Z shares adjusted to reflect any applicable sales charge. Such<br />performance figures have not been adjusted, however, to reflect applicable class<br />fees and expenses; if such fees and expenses had been reflected, the performance<br />shown for Class A and Class C shares for such periods may have been lower.</tt>
An investment in the fund is not a bank deposit. It is not insured or guaranteed
by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
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Barclays Municipal Bond Index reflects no deduction for fees, expenses or taxes
0.1070
0.0522
0.0530
Class Z returns after taxes on distributions and sale of fund shares
0.0893
0.0451
0.0497
1994-05-06
Class Z returns after taxes on distributions
0.1121
0.0452
0.0502
1994-05-06
DRMBX
0.0945
Worst Quarter
Best Quarter
0.0000
2012-09-30
Class Z returns before taxes
51
2009-09-30
51
217
-0.0508
0.0461
-0.0026
0.0172
918
397
0.0225
0.0867
0.1121
0.0016
-0.0641
0.0060
2014-01-01
2010-12-31
918
0.1520
0.0452
0.0378
217
397
The year-to-date total return of the fund's Class Z shares
0.1121
0.0495
0.0000
0.0503
0.0050
0.0076
0.0499
1994-05-06
0.0712
0.0000
DMBIX
0.0000
Class I returns before taxes
46
46
205
-0.0028
880
378
0.1127
0.0013
0.0060
2014-01-01
880
0.0454
205
378
0.0000
0.0504
0.0045
0.0073
2008-12-15
0.0000
DMUCX
0.0000
Class C returns before taxes
248
148
518
-0.0028
2018
912
0.0918
0.0038
0.0060
2014-01-01
2018
0.0350
518
912
0.0075
0.0411
0.0145
0.0173
2003-03-31
0.0100
DMUAX
0.0450
Class A returns before taxes
518
518
719
-0.0027
1563
937
0.0600
0.0037
0.0060
2014-01-01
1563
0.0333
719
937
0.0000
0.0431
0.0070
0.0097
2003-03-31
0.0000
The fund is non-diversified, which means that the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Therefore, the
fund's performance may be more vulnerable to changes in the market value of a
single issuer or group of issuers and more susceptible to risks associated with
a single economic, political or regulatory occurrence than a diversified fund.
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<tt>The fund seeks as high a level of current income exempt from federal income tax<br />as is consistent with the preservation of capital and the maintenance of<br />liquidity.</tt>
<tt>The Example is intended to help you compare the cost of investing in the fund<br />with the cost of investing in other mutual funds. The Example assumes that you<br />invest $10,000 in the fund for the time periods indicated and then redeem all <br />of your shares at the end of those periods. The Example also assumes that your<br />investment has a 5% return each year and that the fund's operating expenses<br />remain the same. The one-year example and the first year of the three-, five-<br />and ten-years examples are based on net operating expenses, which reflect the<br />expense waiver/reimbursement by The Dreyfus Corporation. Although your actual<br />costs may be higher or lower, based on these assumptions your costs would be:</tt>
<tt>As a money market fund, the fund is subject to the maturity, quality, liquidity<br />and diversification requirements of Rule 2a-7 under the Investment Company Act<br />of 1940, as amended, which are designed to help money market funds maintain a<br />stable share price of $1.00. To pursue its goal, the fund normally invests<br />substantially all of its net assets in short-term, high quality municipal<br />obligations that provide income exempt from federal income tax. The fund also<br />may invest in high quality short-term structured notes, which are derivative<br />instruments whose value is tied to underlying municipal obligations.<br /> <br />Although the fund seeks to provide income exempt from federal income tax, income<br />from some of the fund's holdings may be subject to the federal alternative minimum <br />tax. In addition, the fund may invest temporarily in high quality, taxable money <br />market instruments, including when the portfolio manager believes acceptable <br />municipal obligations are not available for investment. During such periods, <br />the fund may not achieve its investment objective.</tt>
Fund Summary
Example
Investment Objective
The fund's past performance (before and after taxes) is not necessarily an indicator of how the fund will perform in the future.
Principal Risks
Shareholder Fees (charged if your account balance is less than $50,000)
Year-by-Year Total Returns as of 12/31 each year (%)
Performance
<tt>For the fund's current yield, call toll free 1-800-DREYFUS (inside the U.S. only).</tt>
The following bar chart and table provide some indication of the risks of investing in the fund.
<tt>Best Quarter                 <br />Q2, 2007: 0.84%              <br />Worst Quarter                <br />Q4, 2011: 0.00%  <br />            <br />The fund's year-to-date total return as of 9/30/12 was 0.00%.</tt>
1-800-DREYFUS
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Average Annual Total Returns as of 12/31/11
<tt>The bar chart shows changes in the performance of the fund's shares from <br />year to year.</tt>
Although the fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
<tt>An investment in the fund is not insured or guaranteed by the Federal Deposit<br />Insurance Corporation (FDIC) or any other government agency. Although the fund<br />seeks to preserve the value of your investment at $1.00 per share, it is<br />possible to lose money by investing in the fund.<br /> <br />The fund's yield will fluctuate as the short-term securities in its portfolio<br />mature and the proceeds are reinvested in securities with different interest<br />rates. Additionally, while the fund has maintained a constant share price since<br />inception, and will continue to try to do so, neither The Dreyfus Corporation<br />nor its affiliates are required to make a capital infusion, enter into a capital<br />support agreement or take other actions to prevent the fund's share price from<br />falling below $1.00. The following are the principal risks that could reduce the<br />fund's income level and/or share price:<br /> <br />o Interest rate risk. This risk refers to the decline in the prices of<br />fixed-income securities that may accompany a rise in the overall level of<br />interest rates. A sharp and unexpected rise in interest rates could cause <br />a money market fund's share price to drop below a dollar.<br /> <br />o Credit risk. Failure of an issuer to make timely interest or principal<br />payments, or a decline or perception of a decline in the credit quality of <br />a security, can cause the security's price to fall, potentially lowering the<br />fund's share price. Although the fund invests only in high quality debt<br />securities, any of the fund's holdings could have its credit rating downgraded<br />or could default. The credit quality of the securities held by the fund can<br />change rapidly in certain market environments, and the default of a single<br />holding could have the potential to cause significant deterioration of the<br />fund's net asset value.<br /> <br />o Liquidity risk. When there is little or no active trading market for specific<br />types of securities, it can become more difficult to sell the securities at or<br />near their perceived value. In such a market, the value of such securities may<br />fall dramatically, potentially lowering the fund's share price, even during<br />periods of declining interest rates. Also, during such periods, redemptions by <br />a few large investors in the fund may have a significant adverse effect on the<br />fund's net asset value and remaining fund shareholders.<br /> <br />o Tax risk. To be tax-exempt, municipal obligations generally must meet certain<br />regulatory requirements. If any such municipal obligation fails to meet these<br />regulatory requirements, the interest received by the fund from its investment<br />in such obligations and distributed to fund shareholders will be taxable.<br /> <br />o Structured notes risk. Structured notes, a type of derivative instrument, <br />can be volatile, and the possibility of default by the financial institution or<br />counterparty may be greater for these instruments than for other types of money<br />market instruments. Structured notes typically are purchased in privately<br />negotiated transactions from financial institutions and, thus, an active trading<br />market for such instruments may not exist.<br /> <br />o Non-diversification risk. The fund is non-diversified, which means that the<br />fund may invest a relatively high percentage of its assets in a limited number<br />of issuers. Therefore, the fund's performance may be more vulnerable to changes<br />in the market value of a single issuer or group of issuers and more susceptible<br />to risks associated with a single economic, political or regulatory occurrence<br />than a diversified fund.</tt>
Fees and Expenses
Principal Investment Strategy
www.dreyfus.com
<tt>The following bar chart and table provide some indication of the risks of<br />investing in the fund. The table shows the average annual total returns of <br />the fund's shares over time. The fund's past performance (before and after taxes) <br />is not necessarily an indicator of how the fund will perform in the future. More <br />recent performance information may be available at www.dreyfus.com.</tt>
<tt>This table describes the fees and expenses that you may pay if you buy and <br />hold shares of the fund.</tt>
<div style="display:none">~ http://www.dreyfus.com/role/OperatingExpensesData_S000000327Member column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div>
<div style="display:none">~ http://www.dreyfus.com/role/PerformanceTableData_S000000327Member column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div>
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency.
<div style="display:none">~ http://www.dreyfus.com/role/ShareholderFeesData_S000000327Member column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div>
DBMXX
0.0117
Worst Quarter
Best Quarter
5.00
2012-09-30
5.00
46
2007-06-30
199
0.0000
0.0084
-0.0025
0.0000
847
365
0.0332
0.0084
0.0000
0.0020
0.0214
0.0050
2014-01-01
2011-12-31
0.0042
0.0117
0.0206
year-to-date total return
0.0000
0.0070
0.0137
0.0045
0.0070
0.0309
0.0000
5.00
2.00
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The Dreyfus Corporation has contractually agreed, until January 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund so that total annual fund operating expenses do not exceed 0.45%. On or about January 1, 2014, The Dreyfus Corporation may terminate this expense waiver at any time.
The Dreyfus Corporation has contractually agreed, until January 1, 2014, to waive receipt of its fees and/or assume the expenses of the fund so that total annual fund operating expenses of none of the classes (excluding Rule 12b-1 fees, shareholder services fees, taxes, brokerage commissions, interest expenses, commitment fees on borrowings and extraordinary expenses) exceed 0.45%. On or after January 1, 2014, The Dreyfus Corporation may terminate this expense waiver at any time.
Other expenses include interest expense associated with the fund's investment in inverse floaters. Not shown in the table is the additional income generated by these investments which was approximately the same as the interest expense.