In the auditorium of the Murch Elementary School in Northwest, the children squirm and fidget in their seats. Greg Reynolds stands on stage.

"There is a special box in my hands with magic gifts for all of you," he says of the empty space in front of him. Then Reynolds invites his young audience to bring the magic of their imaginations to what they are about to see.

"Now pretend you are at a state fair. Do you smell the cows and pigs? And the prize-winning apple pie? If you listen closely, you can hear a man strunning on a guitar."

The numbers of the Greg Reynolds Dance Quintet came out and perform Strummin; a sweet and slapstick country dance. The children watch, transfixed.

It has been a decade since Greg Reynolds left his native Anacostia to study dance at Sarah Lawrence College and then join the Paul Taylor Company and tour the world.

Now at age 29 he is back with a boxful of choreographic tricks and a troupe of dancers that can breathe magic into anyone's life.

Reynolds, the fifth of seven children, spent his early years in the Barry Farm public housing project in Anacostia. He attributes his early interest in art to his mother, Marian Reynolds.

"I used to bring him pencil stubs and scrap paper," aid Marian Reynolds, a retired GSA custodian.

While studying art at McKinley High School NE a teacher took an interest in Reynolds and made special arrangements for him to attend the John Kennedy High School in Wheaton as a paying student.

The school offered him the academic freedom to pursue his interest in art and dance. For two years he boarded with Wheaton families, returning to Anacostia on the weekends.

Reynolds graduated from Kennedy in 1979 and went on to study dance at Sarah Lawrence, where he graduated in 1974. He paid his high school tutition with the money he made dancing with Paul Taylor.

Reynolds said his dream has always been to establish an internationally touring modern dancing company in Washington.

"When I told my dancers in 1979 I wanted to leave New York and relocate in Washington, they said, 'What? And die of cultural starvation?" But I told them culture is where you create it and moved here anyway," said Reynolds, who then had to rebuild his company with local dancers.

In the two past years the Quintet has been in town the company has expanded from an obscure dance troupe with a bank account of $175 to an established, solvent company with a growing international reputation.

So far the Quintet has toured the Soviet Union. Australia and much of the United States.In the past year alone the company gave 97 performances in 12 states to 27.000 people, Reynolds estimated.

This summer the troupe has been invited to perform in the Adirondack Arts Festival in Lake Plaid, N.Y., where the Paul Taylor Company got its start. A South American tour and a trip to Japan are in the works for 1982, Reynolds said.

Like all struggling young performance groups, the Quintet dreams of meeting a wealthy, anonymous benefactor who will finance the company for the next decade.

"Until then, we live pretty much foot-to-mouth," joked company manager Martin Petersilia.

Despite the lure of performing on the concert stage, Reynolds does not shy away from less glamorous environments -- the schools and churches, old age homes and prisons, where often the magic of dance is felt most strongly.

In fact, it is the willingness to perform for the community in such places as the Anacostia Museum, the library, the Washington Monument and Alderson Prison in West Virginia that sets the Quintet apart from other nationally touring companies.

"Our contacts with the community are extremely important. We always learn as much from the people we teach as they do from us," said dancer Betsy Beckman, who gives workshops in liturgical movement in churches.

Members Charaine Thorpe and Pamela Lasswell teach children in the city's schools. Geoffrey Harrison teaches dances to senior citizens. Carmen Castaneda works in Washington's only modern dance program for Hispanics at the YMCA. Susan Jamieson has taught at the Rockville Jewish Community Center.

Reynolds said he strives for contact with everyone in the community through his choreography.

"So much of modern dance is abstract today. You look at a piece and unless you are a dancer it makes no sense because you are not familiar with the movement vocabulary. My dance is accessible because it is built on emotion. It brings people together because it celebrates their common experience," Reynolds said.

The company itself is a multi-ethnic community of dancers. Thorne is from South Africa, Castaneda is a refugee from El Salvador, Barbara Cahn is a Chinese-American Harrison grew up in England and Adrain Engel's parents came from Germany.

Their studio, appropriately enough, is in the Gordon School in Georgetown, a multi-ligual adult education center. Soon the company will take up residence in the Washington Humanities and Arts Center in the Lansburgh's Building downtown.

"Many of us have led difficult lives. We have seen wars, hatred, the ugly side of life. We bring a richness to the dances which touches people," said Thorpe, who ran a dance program in Lesotho.

Some critics have found fault with Reynolds because they say a dance troupe run by a black man should have more emphasis on the black experience.

"They tell me my dances aren't black enough because they aren't jazz. But why limit yourself? Any art a black man makes is black art," Reynolds said.

He said his "black dance" is in the beginning stages.

"I wanted to wait until I found the perfect dance. I wanted it to be something special, something you can't find anywhere else."

After years of searching, Reynolds said, he finally settled on a piece about the Gullah people, a group of ex-slaves who formed villages in rural South Carolina. He found the simple dignity and pastoral beauty of their lives inspirational and plans a multi-media presentation with dance, films, slides and improvisation.

"It is something that 95 percent of blacks don't even know about. This piece will be a learning experience for everyone, black and white."

When asked why his "Quintet" has nine dancers, Reynolds smiled mysteriously. "Five is the number of magic. It represents the five senses. It marks the midpoint between the sacred and the profane."