DREYFUS BOND MARKET INDEX FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
During the six-month fiscal period ended April 30, 1996, the bond market
lost ground due to fears that inflation might once again force interest rates
up. In actual fact, as explained in the "Economic Review" below, inflationary
pressures were quite modest. Nonetheless, interest rates reacted to fears of
potential future inflation, which adversely affected bond prices during the
period.
For the six-month period ended April 30, 1996, the Fund's Investor shares
and Class R shares provided total returns of -0.27% and -0.16% respectively.*
For the same period the Fund's benchmark index, the Lehman Brothers
Government/Corporate Bond Index returned 0.04%, slightly ahead of the Fund.**
The Dreyfus Bond Market Index Fund seeks to replicate the returns of the
domestic bond market's major benchmark, the Lehman Brothers
Government/Corporate Bond Index.
ECONOMIC REVIEW
Concerns that the economy was heading toward recession were eased by the
recent release of brighter-than-expected reports on employment and consumer
spending. Consequently, the Federal Reserve Board refrained from making any
further reductions in the Federal Funds rate between the last easing of this
benchmark interest rate on January 31 and the close of the Fund's fiscal
period on April 30. In reaction to the more optimistic economic news (and the
related fears of a potential rekindling of inflation), long-term interest
rates as measured by 30-year Treasury bonds have risen nearly one percentage
point since February.
The rosier outlook for the economy was spearheaded by reports of large
gains in employment for two consecutive months (February and March).
Furthermore, personal income and expenditures data indicated that consumers
continued to spend, despite their present high level of installment credit.
Retail sales reports have correspondingly edged higher, confirming a modest
recovery in consumer spending from its year-end slump.
Supporting the growing consensus that the economy has picked up steam
were reports of slow but steady growth in the manufacturing sector. After
adjusting data for the 17-day General Motors strike, industrial output rose
modestly. New orders for durable goods, a closely watched indicator of future
hiring and production, also posted gains.
Despite the economy's apparent recovery from its year-end pause,
inflation has in fact remained under control. Through March of this year, the
Consumer Price Index rose at an annual rate of 2.8%. There appear to be few
signs of inflationary pressure in the economy. Factories are running at a
relatively comfortable rate of capacity (82.5%), markedly below this
expansion's peak of 85.1% reached over a year ago. With major industries
trying to reduce inventories, there is little to suggest that product pricing
will surge upwards. Reflecting this absence of so-called pipeline
inflationary pressure, price increases at both the wholesale and production
levels of the economy remained similarly under control. The cautionary stance
of the Federal Reserve regarding additional reductions in interest rates,
combined with the fiscal restraint from reduced government spending, should
serve as additional moderating forces against any resurgence in inflation.
We are mindful, however, of several signals that prompt us to be alert to
a potential change in what has been a benign inflation picture. The recent
rise in oil prices, along with strength in other commodity prices such as
grain, is not to be dismissed lightly. While they may be only aberrations of
a temporary
nature, they could also represent early warning signs of a fundamental
change in inflation which will be seen later in the year.
THE MARKET
Interest rates surged higher following the April 5th release of the
government's March employment report. The surprising growth in jobs was
widely interpreted as a sign that the economy might be overheating. The Fund
had a duration that matched its benchmark index. There was a slight emphasis
on the corporate sector compared to the benchmark index that enabled the Fund
to participate in the incremental yield advantages found in these areas.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely yours,
[Laurie Carroll signature logo]
Laurie Carroll
Portfolio Manager
May 16, 1996
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Lehman Brothers
Government/Corporate Bond Index is a widely accepted unmanaged index of
government and corporate bond market performance composed of U.S. Government,
Treasury and agency securities, fixed-income securities and nonconvertible
investment-grade corporate debt.
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-96.8% AMOUNT VALUE
______ ______
<S> <C> <C>
AEROSPACE AND
AVIATION-1.1%........... Boeing,
.................... Deb., 8.10%, 2006 $ 25,000 $ 26,856
......................... Lockheed,
........................... Notes, 63/4%, 2003 10,000 9,838
.......................... Raytheon,
............................. Notes, 61/2%, 2005 10,000 9,607
................ Rockwell International,
............................ Notes, 63/4%, 2002 30,000 29,802
__________
76,103
__________
AUTOMOTIVE-.6%.......... General Motors,
...................... Notes, 7%, 2003 40,000 39,707
__________
BANKING-4.5%........... BankAmerica,
........................ Sub. Notes, 73/4%, 2002 25,000 25,878
....................... Chase Manhattan:
......................... Sub. Deb., 71/8%, 2005 25,000 24,737
........................ Sub. Notes, 73/4%, 1999 20,000 20,631
................. Fleet Financial Group,
......................... Sr. Notes, 71/8%, 2000 40,000 40,297
........................ NationsBank:
......................... Sr. Notes, 65/8%, 1998 25,000 25,115
........................ Sub. Notes, 75/8%, 2005 20,000 20,398
..................... Norwest Financial,
......................... Sr. Notes, 51/2%, 1998 25,000 24,635
..................... Wells Fargo & Co.,
.................... Deb., 8.20%, 1996 115,000 116,340
__________
298,031
__________
CHEMICALS-1.0% E.I. du Pont de Nemours and Co.,
............................. Notes, 63/4%, 2002 40,000 39,657
...................... Eastman Chemical,
............................. Notes, 63/8%, 2004 15,000 14,310
...........................Monsanto,
.................... Deb., 8.20%, 2025 10,000 10,411
__________
64,378
__________
CONSUMER-.1%.................... IBM,
....................... Deb., 7%, 2025 5,000 4,600
__________
ENTERTAINMENT-.1%.......... Walt Disney,
......................... Sr. Notes, 63/4%, 2006 10,000 9,717
__________
FINANCIAL SERVICES-8.9% AVCO Financial Service,
......................... Sr. Notes, 71/2%, 1996 50,000 50,457
............... American Express Credit,
......................... Sr. Notes, 61/8%, 2001 25,000 24,226
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
FINANCIAL SERVICES (CONTINUED) American General Finance,
......................... Sr. Notes, 65/8%, 1997 $ 20,000 $ 20,129
..... Associates Corp. of North America,
......................... Sr. Notes, 71/2%, 1999 50,000 51,358
............................ Beneficial,
............................. Deb., 91/8%, 1998 50,000 52,343
.................... Chrysler Financial,
............................. Notes, 53/8%, 1998 50,000 48,776
........ Commercial Credit Group, Notes:
.......................... 6.70%, 1999 25,000 25,034
............................... 63/8%, 2002 20,000 19,429
........................ FINOVA Capital,
............................. Notes, 91/8%, 2002 20,000 21,942
..................... Ford Motor Credit,
...................... Notes, 8%, 2002 40,000 41,801
............................GMAC,
............................. Notes, 73/4%, 1997 100,000 101,615
.............. General Electric Capital,
............................. Notes, 71/2%, 1998 70,000 71,603
........... International Lease Finance,
............................. Notes, 43/4%, 1997 50,000 49,591
.............. Sears Roebuck Acceptance,
............................. Notes, 61/8%, 2006 15,000 13,705
__________
592,009
__________
FOOD AND BEVERAGES-1.7% Archer-Daniels-Midland,
.............................. Deb., 81/8%, 2012 25,000 26,783
............................. Coca-Cola,
............................. Notes, 65/8%, 2002 35,000 34,555
......................... Hershey Foods,
.................... Deb., 8.80%, 2021 25,000 28,348
.............................PepsiCo,
.............................. Deb., 75/8%, 1998 25,000 25,719
__________
115,405
__________
INDUSTRIAL-2.2% Aluminum Co. of America,
............................. Notes, 53/4%, 2001 50,000 47,690
................ American Home Products,
................... Notes, 7.70%, 2000 20,000 20,671
.................... Emerson Electric,
................... Notes, 6.30%, 2005 25,000 23,792
................ Procter & Gamble, Deb.:
.......................... 8.70%, 2001 30,000 32,618
.......................... 6.45%, 2026 5,000 4,400
...................... WMX Technologies,
............................. Notes, 63/8%, 2003 20,000 19,124
__________
148,295
__________
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
OIL AND GAS-1.1% BP America (Gtd. by British Petroleum plc),
.............................. Deb., 97/8%, 2004 $ 20,000 $ 23,368
................................. Mobil,
............................. Notes, 61/2%, 1996 25,000 25,121
........................ Texaco Capital,
.............................. Deb., 67/8%, 2023 25,000 22,484
__________
70,973
__________
PAPER PRODUCTS-.1%..... Georgia-Pacific,
.............................. Deb., 95/8%, 2022 10,000 10,525
__________
PUBLISHING-.8%.................Gannett,
................... Notes, 5.85%, 2000 55,000 53,284
__________
RETAIL-3.1%............. J.C.Penney,
.................... Deb., 9.05%, 2001 50,000 54,234
.................. Sears, Roebuck & Co.,
.................... Deb., 8.55%, 1996 100,000 100,660
....................... Wal-Mart Stores,
............................. Notes, 51/2%, 1998 50,000 49,443
__________
204,337
__________
TELEPHONE AND
TELEGRAPH-3.6%......... AT&T,
.............................. Deb., 51/8%, 2001 50,000 46,575
.................... MCI Communications,
......................... Sr. Notes, 61/4%, 1999 50,000 49,603
............. New Jersey Bell Telephone,
....................... Deb., 8%, 2022 25,000 26,287
......... Pacific Telephone & Telegraph,
.............................. Deb., 45/8%, 1999 70,000 66,377
........... Southwestern Bell Telephone,
.............................. Deb., 41/2%, 1997 50,000 49,022
__________
237,864
__________
TOBACCO-.6%......... Philip Morris Cos.,
.............................. Deb., 91/4%, 2000 40,000 43,070
__________
UTILITIES-5.5%.......... . Alabama Power,
............. First Mortgage, 6%, 2000 50,000 48,618
................ Carolina Power & Light,
.................... First Mortgage, 53/8%, 1998 50,000 48,917
... Consolidated Edison Co. of New York,
.............................. Deb., 61/4%, 1998 25,000 24,901
.............. Consolidated Natural Gas,
.............................. Deb., 57/8%, 1998 40,000 39,559
............................ Duke Power,
.... First and Refunding Mortgage,
71/2%, 1999 50,000 51,205
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______-
UTILITIES (CONTINUED) Florida Power & Light,
.................... First Mortgage, 73/4%, 2023 $ 25,000 $ 24,615
............ Pennsylvania Power & Light,
.......... First Mortgage, 6.55%, 2006 25,000 23,503
....... Public Service Electric and Gas,
.................... First Mortgage, 83/4%, 1999 25,000 26,269
....................... Union Electric,
.................... First Mortgage, 51/2%, 1997 50,000 49,779
............. Virginia Electric & Power,
.................... First Mortgage, 75/8%, 2007 25,000 25,626
__________
362,992
__________
FOREIGN-1.6%... Canada Government Bonds,
.................................... 63/8%, 2005 25,000 23,906
...................... Dresdner Bank AG,
......................... Sub. Deb., 71/4%, 2015 15,000 14,429
......... . Province of British Colombia,
............................ Bonds, 61/2%, 2026 10,000 8,937
................... Province of Ontario,
................... Sr. Deb., 7%, 2005 30,000 29,782
................... Republic of Finland,
................... Bonds, 6.95%, 2026 10,000 9,381
................ Royal Bank of Scotland,
........................ Sub. Notes, 63/8%, 2011 20,000 17,850
__________
104,285
__________
U.S. GOVERNMENT AND
AGENCIES-60.2% Federal National Mortgage Association,
.................... 5.30%, 12/10/1998 200,000 194,717
............ Tennessee Valley Authority,
............................. Bonds, 63/4%, 11/1/2025 25,000 23,344
................... U.S. Treasury Bonds:
........................... 113/4%, 2/15/2001 100,000 121,859
........................... 103/4%, 5/15/2003 100,000 123,078
........................... 103/4%, 8/15/2005 325,000 414,375
............................ 83/4%, 11/15/2008 150,000 166,945
............................ 91/4%, 2/15/2016 50,000 61,594
............................ 83/4%, 5/15/2017 50,000 59,031
............................ 87/8%, 8/15/2017 100,000 119,484
............................ 81/2%, 2/15/2020 225,000 260,859
............................ 83/4%, 5/15/2020 130,000 154,578
............................ 83/4%, 8/15/2020 100,000 118,953
............................ 81/8%, 8/15/2021 150,000 168,000
............................ 71/8%, 2/15/2023 110,000 110,619
............................ 61/4%, 8/15/2023 90,000 81,155
................... U.S. Treasury Notes:
............................ 55/8%, 8/31/1997 100,000 99,719
............................ 87/8%, 11/15/1997 100,000 104,250
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
______ ______
U.S. GOVERNMENT AND
AGENCIES (CONTINUED)................. U.S. Treasury Notes (continued):
....................... 6%, 11/30/1997 $200,000 $ 200,125
....................................
51/8%, 4/30/1998 ................................ 100,000 98,328
............................ 43/4%, 8/31/1998 100,000 97,125
............................ 51/8%, 11/30/1998 75,000 73,172
............................ 63/8%, 1/15/1999 100,000 100,500
........................ 7%, 4/15/1999 150,000 153,094
............................ 63/8%, 1/15/2000 100,000 100,156
............................ 73/4%, 1/31/2000 75,000 78,492
............................ 67/8%, 3/31/2000 100,000 101,797
............................ 73/4%, 2/15/2001 100,000 105,453
........................ 8%, 5/15/2001 75,000 80,016
............................ 71/2%, 11/15/2001 150,000 157,055
............................ 53/4%, 8/15/2003 200,000 190,250
............................ 71/4%, 5/15/2004 80,000 82,975
__________
4,001,098
__________
TOTAL BONDS AND NOTES
(cost $6,476,371) $6,436,673
==========
SHORT-TERM INVESTMENTS-.2%
REPURCHASE AGREEMENT; Goldman, Sachs & Co., 5.31%
.. dated 4/30/96, due 5/1/1996 in the
amount of $15,268 (fully collateralized
by $11,000 U.S. Treasury Bonds, 123/4%,
11/15/2010, value $16,231)
(cost $15,266) $ 15,266 $ 15,266
==========
TOTAL INVESTMENTS (cost $6,491,637)......................................... 97.0% $6,451,939
==========
CASH AND RECEIVABLES (NET).................................................. 3.0% $ 195,528
==========
NET ASSETS.................................................................. 100.0% $6,647,467
==========
See notes to financial statements.
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED)
ASSETS:
Investments in securities, at value (cost $6,491,637)-see Statement
of Investments (including repurchase agreements of $15,266)........... $6,451,939
Cash.................................................................... 49,486
Interest receivable..................................................... 123,623
Receivable for investment securities sold............................... 8,779
Receivable for Capital Stock sold....................................... 2,750
Other receivables....................................................... 28,364
___________
6,664,941
LIABILITIES:
Due to The Dreyfus Corporation-Note 2(a)................................ $ 4,480
Payable for investment securities purchased............................. 9,159
Directors' fees payable-Note 2(c)....................................... 1,845
Payable for Capital Stock redeemed...................................... 40
Other liabilities....................................................... 1,950 17,474
________ ___________
NET ASSETS.................................................................. $6,647,467
===========
REPRESENTED BY:
Paid-in capital......................................................... $6,713,829
Accumulated undistributed investment income-net......................... 1,352
Accumulated net realized (loss) on investments.......................... (28,016)
Accumulated net unrealized (depreciation) on investments-Note 3......... (39,698)
___________
NET ASSETS at value......................................................... $6,647,467
===========
NET ASSET VALUE, offering and redemption price per share:
Investor Shares
(50 million shares of $.001 par value Capital Stock authorized)
($208,062 3 21,619 shares of capital stock outstanding)................. $9.62
======
Class R Shares
(100 million shares of $.001 par value Capital Stock authorized)
($6,439,405 3 669,006 shares of capital stock outstanding).............. $9.63
======
See notes to financial statements.
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 229,895
EXPENSES:
Investment management fee-Note 2(a)................................... $ 13,710
Directors' fees and expenses-Note 2(c)................................ 352
Distribution fees-Note 2(b)........................................... 248
__________
TOTAL EXPENSES.................................................... 14,310
__________
INVESTMENT INCOME-NET............................................. 215,585
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 55,688
Net unrealized (depreciation) on investments............................ (274,508)
__________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (218,820)
__________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (3,235)
==========
See notes to financial statements.
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995
____________ ___________
OPERATIONS:
Investment income-net........................................... $ 215,585 $ 402,998
Net realized gain (loss) on investments......................... 55,688 (14,771)
Net unrealized appreciation (depreciation) on investments for the period (274,508) 591,368
___________ ____________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS........................................... (3,235) 979,595
___________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Investor Shares............................................... (5,804) (8,778)
Class R Shares................................................ (208,429) (394,220)
___________ ____________
TOTAL DIVIDENDS............................................. (214,233) (402,998)
___________ ____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Investor Shares............................................... 23,970 853,158
Class R Shares................................................ 952,729 4,460,744
Dividends reinvested:
Investor Shares............................................... 5,052 6,274
Class R Shares................................................ 172,729 356,355
Cost of shares redeemed:
Investor Shares............................................... (21,228) (705,375)
Class R Shares................................................ (1,299,042) (3,019,117)
___________ ____________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK
TRANSACTIONS.............................................. (165,790) 1,952,039
___________ ____________
TOTAL INCREASE (DECREASE) IN NET ASSETS................... (383,258) 2,528,636
NET ASSETS:
Beginning of period............................................. 7,030,725 4,502,089
___________ ____________
End of period (including undistributed investment income-net;
$1,352 on April 30, 1996)..................................... $ 6,647,467 $ 7,030,725
=========== ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________________________________________
INVESTOR SHARES CLASS R SHARES
___________________________________ _________________________________
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
____________ ____________ ____________ ___________
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 2,427 88,106 96,102 481,015
Shares issued for dividends reinvested 509 651 17,379 37,460
Shares redeemed..................... (2,113) (72,136) (131,286) (319,718)
__________ __________ __________ __________
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING......... 823 16,621 (17,805) 198,757
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
DREYFUS BOND MARKET INDEX FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
Contained below is per share operating 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 CLASS R SHARES
_______________________________________ _______________________________________
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1996 ______________________ APRIL 30, 1996 _______________________
(UNAUDITED) 1995 1994(1)(2) (UNAUDITED) 1995 1994(2)(3)
___________ ____ ________ __________ _____ ___________
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $ 9.93 $ 9.15 $ 9.44 $ 9.94 $ 9.15 $10.00
______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net.......... .29 .55 .24 .30 .58 .49(4)
Net realized and unrealized gain (loss)
on investments............... (.31) .78 (.28) (.31) .79 (.85)
______ ______ ______ ______ ______ ______
TOTAL FROM INVESTMENT
OPERATIONS................. (.02) 1.33 (.04) (.01) 1.37 (.36)
______ ______ ______ ______ ______ ______
DISTRIBUTIONS;
Dividends from investment income-net (.29) (.55) (.25) (.30) (.58) (.49)
______ ______ ______ ______ ______ ______
Net asset value, end of period. $ 9.62 $ 9.93 $ 9.15 $ 9.63 $ 9.94 $ 9.15
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN............ (.54%)(5) 15.01% (.46%) (.32%)(5) 15.41% (3.68%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .65%(5) .65% .65%(5) .40%(5) .40% .40%(5)(
6)
Ratio of net investment income to
average net assets........... 5.87%(5) 5.77% 4.81%(5) 6.12%(5) 6.10% 5.05%(5)
Portfolio Turnover Rate........ 17.78% 40.16% 188.00% 17.78% 40.16% 188.00%
Net Assets, end of period
(000's Omitted).............. $208 $207 $38 $6,439 $6,824 $4,464
(1) The Fund commenced selling Investor shares on April 28, 1994.
(2) 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.
(3) The Fund commenced operations on November 30, 1993. On April 28, 1994
the Fund began selling Investor shares and the shares existing prior to April
28, 1994 were designated Trust shares. Effective October 17, 1994 the Fund's
Trust shares were redesignated Class R shares.
(4) Net investment income before reimbursement of expenses by the investment
adviser for the period ended October 31, 1994 was $0.39 per share.
(5) Annualized.
(6) Annualized expense ratio before reimbursement of expenses by investment
adviser for the period ended October 31, 1994 was 1.41%.
</TABLE>
See notes to financial statements.
DREYFUS BOND MARKET INDEX FUND
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 Bond Market Index Fund (the
"Fund"). The Fund's investment objective is to seek to replicate the total
return of the Lehman Brothers Government/Corporate Bond Index. 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: The Fund's investments (excluding short-term
investments and U.S. Government obligations) are valued each business day by
an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the dire
ction of the Board of Directors. Investments in U.S. Government obligations
are valued at the mean between quoted bid and asked prices. Short-term
investments are carried at amortized cost, which approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and discounts on investments,
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 repurchas
e, 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
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
(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, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately
$84,000 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, $69,000 of the carryover expires in fiscal 2002 and
$15,000 of the carryover expires in fiscal 2003.
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 .40% 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 Fund's average daily net assets attributable to its Investor shares to
compensate the Distributor and Dreyfus Service Corporation, an affiliate of
the Manager, for shareholder
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 $248.
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.
(C) DIRECTORS' FEES: Each director who is not an "interest 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 expenses are paid in total by
the following funds: The Dreyfus/Laurel Fund, Inc., The Dreyfus/Laurel
Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust. In addition
the Chairman of the Board receives and annual fee of $75,000 per year. These
fees and expenses are charged and allocated to each series based on net
assets.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchase and sales of investment securities,
excluding short-term securities, during the six months ended April 30, 1996,
amounted to $1,193,927 and $1,349,627, respectively.
At April 30, 1996, accumulated net unrealized depreciation on
investments was $39,698, consisting of $91,491 gross unrealized appreciation
and $131,189 gross unrealized depreciation.
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).
[Dreyfus lion "d" logo]
DREYFUS BOND MARKET
INDEX FUND
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. 310/710SA964
[Dreyfus logo]
Bond Market
Index Fund
Semi-Annual
Report
April 30, 1996
