DREYFUS BOND MARKET INDEX FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
<TABLE>
<CAPTION>
We are pleased to report the performance of the Dreyfus Bond Market Index
Fund for the twelve-month reporting period ended October 31, 1997, as shown
in the following table:
Income Dividends
Total Return* (Approximate Per Share) Distribution Rate Per Share**
___________ _____________________ __________________________
<S> <C> <C> <C>
Investor Shares 8.29% $.572 5.72%
BASIC Shares 8.46% $.598 5.98%
</TABLE>
Lehman Brothers
Government/Corporate
Bond Index*** 8.81%
The Fund's performance figures were achieved while the Fund was seeking to
replicate the total return of the Lehman Brothers
Government/Corporate Bond Index, which was the Fund's investment objective
during the reporting period and through November 13, 1997. Effective
November 14, 1997, the Fund's investment objective was changed to seeking to
replicate the total return of the Lehman Brothers Aggregate Bond Index.****
THE ECONOMY
With the level of inflation as low as has been seen since 1964 and
unemployment still near a 23-year low, the economy continued its solid growth
over the reporting period. Gross Domestic Product (GDP) - the dollar total of
all goods and services produced in the United States - has grown in excess of
3% annualized for the past four quarters, a level and consistency of gain
unmatched since 1984. This extraordinary economic performance has been fueled
by huge business investment in new plant and equipment as well as a renewed
surge in consumer spending over the summer. Consumers play a substantial role
in determining the course of the economy since their spending accounts for
two thirds of all economic activity. Retail sales rose through the summer and
into September, although there was some sign of deceleration as the third
quarter progressed.
The big economic story continued to be the lack of inflation in an
economy now in its seventh year of expansion. This remarkable price
stability, at a time in the business cycle when inflationary pressures would
usually be apparent, has enabled the Federal Reserve Board (the "Fed") to
refrain from tightening monetary policy. The Federal Open Market Committee
(FOMC), the policy-making arm of the Fed, has raised interest rates just once
in over two years, a period roughly coinciding with the surge of growth in
the economy. The last increase in short-term interest rates came on March 25,
1997 when the FOMC increased the Federal Funds rate by a modest one quarter
of a percentage point to 5.50%. (The Federal Funds rate is the rate of
interest that banks charge one another for overnight loans.)
Of course, the recent financial market turbulence arising from currency
devaluations in some of the economically weaker Southeast Asian countries has
added a cautionary note to any Fed monetary actions that might further roil
investment markets. The Southeast Asian economies have been cooling or in
outright recession for some time and represent a large share of the global
economy and the U.S. import/export market. The recent crisis has boosted the
value of the U.S. dollar and could further dampen the demand for U.S. exports
to this region. This bodes well for continued low inflation in the U.S. and
weakens the argument that we are on the brink of price acceleration.
In fact, various economic measures indicate that inflation remains in
check. The Implicit Price Deflator, an indicator of inflation that measures
the prices of all goods and services in the U.S., has risen at an annual rate
of less than 2% for the past two quarters. This favorable trend in prices has
been mirrored by both the Consumer Price and Producer Price Indices. The
Labor Department's Employment Cost Index, a broad measure of changes in wages
and benefits, has indicated relatively modest increases in labor costs.
Still, the labor market remains tight, with the unemployment rate at a level
unmatched in 23 years.
Whether the economy will slow without further monetary restraint by the
Fed remains an open question. Industrial production has been strong, and
operating rates, an indicator of possible future price pressures, have edged
to their highest level in two years. Of paramount concern to Fed Chairman
Alan Greenspan is the possibility that continuing strong economic growth will
drive the unemployment rate even lower, which could cause an upsurge in wage
rates and reignite inflation. The performance of the economy over the coming
months appears crucial in determining whether the Fed will actively restrain
the economy. We remain alert to changes in economic trends that would
increase the risk of rising inflation and, consequently, the prospect of
higher interest rates.
THE MARKET AND THE PORTFOLIO
The bond market in early 1997 got off to a rough start as the U.S.
economy showed signs of strong growth. The fixed income markets anticipated
an increase in inflation as did the Fed, which increased short-term interest
rates in March. But the anticipated increase in inflation never materialized.
Bond yields began to decline and prices increased during the summer.
The bond market continued its positive tone into early fall. In October,
the fall of the Asian equity and currency markets rocked the rest of the
world including the U.S. equity and bond markets. Although U.S. Treasury
issues held their value as investors sought a safe haven in which to invest,
the corporate bond market (which comprised approximately 28% of the Fund as
of October 31, 1997) was subjected to spread widening, not only from Asian
sovereign issuers, but from all corporate sectors as profits were in jeopardy
due to the Asian crisis. The corporate sector of the Lehman Brothers
Government/Corporate Bond Index (the "Government/Corporate Bond Index"),
which normally outperforms the government sector, underperformed governments
by 21 basis points through October year-to-date.
Through November 13, 1997, the Fund's investment objective had been to
replicate the total return of the Lehman Brothers Government/Corporate Bond
Index. The Fund has sought to match the duration, sector weightings and
pattern of reinvested cash flow in the Government/Corporate Bond Index. The
number of bonds in the Government/Corporate Bond Index universe is too
numerous for the Fund to own all of them, so the Fund has utilized sampling
techniques to replicate the characteristics of the Government/Corporate Bond
Index. Being matched to that Index, the Fund's performance relative to its
benchmark was little affected by the changes in interest rates and widening
sector spreads.
Effective November 14, 1997, the Fund's investment objective changed to
seeking to replicate the total return of the Lehman Brothers Aggregate Bond
Index (the "Aggregate Bond Index"). The Aggregate Bond Index consists of the
types of securities comprising the Government/Corporate Bond Index and also
includes certain mortgage- and asset-backed securities. Management believes
that the Aggregate Bond Index more completely represents the overall bond
market and that mortgage- and asset-backed securities have a potential
advantage in certain market conditions.
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 appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Laurie Carroll signature logo]
Laurie Carroll
Portfolio Manager
November 18, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
** Distribution rate per share is based upon dividends per share paid from
net investment income during the period, divided by the net asset value per
share at the end of the period.
***SOURCE: LEHMAN BROTHERS - The Lehman Brothers Government/Corporate Bond
Index, which is intended to measure the performance of the domestic
fixed-rate, investment-grade debt markets, is a widely accepted unmanaged
index of government and corporate bond market performance composed of U.S.
Government and agency securities, fixed-income securities and nonconvertible
investment-grade corporate debt.
**** SOURCE: LEHMAN BROTHERS -The Lehman Brothers Aggregate Bond Index
is a widely accepted index of corporate, government and government agency
debt instruments, mortgage-backed securities, and asset-backed securities.
DREYFUS BOND MARKET INDEX FUND
OCTOBER 31, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS BOND MARKET
INDEX FUND BASIC SHARES WITH THE LEHMAN BROTHERS AGGREGATE BOND INDEX AND THE
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[Exhibit A:
$12,950
Lehman Brothers
Aggregate Bond Index*
Dollars
$12,849
Lehman Brothers
Government/Corporate
Bond Index*
$12,623
Dreyfus Bond Market
Index Fund
(BASIC Shares)
*Source: Lehman Brothers]
Average Annual Total Returns
<TABLE>
<CAPTION>
Investor Shares* BASIC Shares*
_______________________________________________________ _______________________________________________________
Period Ended 10/31/97 Period Ended 10/31/97
_____________________ _____________________
<S> <C> <C> <C>
1 Year 8.29% 1 Year 8.46%
From Inception (4/28/94) 7.62 From Inception (11/30/93) 6.12
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in BASIC shares of Dreyfus
Bond Market Index Fund on 11/30/93 (Inception Date) to a $10,000 investment
made on that date in the Lehman Brothers Aggregate Bond Index as well as to
the Lehman Brothers Government/Corporate Bond Index which are described
below. All dividends and capital gain distributions are reinvested.
Performance for Investor shares will vary from the performance of BASIC
shares shown above due to differences in charges and expenses.
Effective November 14, 1997, the Fund's investment objective changed to
seeking to replicate the total return of the Lehman Brothers Aggregate Bond
Index. The Fund's investment policies also changed as of November 14, 1997 to
permit the Fund to invest in mortgage-backed and asset-backed securities in
seeking to replicate the Lehman Brothers Aggregate Bond Index. The Fund's
performance shown in the line graph was achieved based on the Fund seeking to
replicate the Lehman Brothers Government/Corporate Bond Index, the Fund's
former investment objective, and takes into account all applicable fees and
expenses. Of course, the changes to the Fund's investment objective and
policies do not guarantee any particular performance. The Lehman Brothers
Aggregate Bond Index is a widely accepted, unmanaged index of corporate,
government and government agency debt instruments, mortgage-backed
securities, and asset-backed securities. The Lehman Brothers
Government/Corporate Bond Index is intended to measure the performance of the
domestic fixed-rate, investment grade debt market. The Indices do not take
into account charges, fees and other expenses. Further information relating
to Fund performance, including expense reimbursements, if applicable, is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
* Effective August 15, 1997, the Fund's Institutional shares were
redesignated as Investor shares and Retail shares were redesignated as BASIC
shares.
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Principal
Bonds and Notes-97.1% Amount Value
____________ ____________
Aerospace and
Aviation-1.3% Boeing, Deb.,
<S> <C> <C>
8.10%, 2006.......................... $.......25,000 $ 28,032
85\8%, 2031.......................... 10,000 12,414
Lockheed,
Notes, 63\4%, 2003................... 25,000 25,439
Raytheon, Notes:
6.45%, 2002.......................... 300,000 301,404
61\2%, 2005.......................... 25,000 24,934
Rockwell International:
Deb., 87\8%, 1999.................... 15,000 15,776
Notes, 63\4%, 2002................... 30,000 30,757
____________
438,756
____________
Automotive-.5%..Chrysler,
Deb., 7.45%, 2027.................... 50,000 52,241
Ford Motor,
Deb., 87\8%, 2022.................... 20,000 24,557
General Motors:
Deb:
91\8%, 2001..................................... 15,000..........16,423
87\8%, 2003..................................... 25,000 27,984
7.40%, 2025........................... 10,000 10,496
Notes, 7%, 2003...................... 40,000 41,321
____________
173,022
____________
Banking-3.6% BNY Capital I,
Gtd. Capital Securities, Ser. B, 7.97%, 2026........... 100,000 103,579
Banc One,
Sub. Notes, 97\8%, 2009.............. 5,000 6,253
BankAmerica, Sub. Notes:
73\4%, 2002.......................... 25,000 26,474
63\4%, 2005.......................... 15,000 15,117
6.20%, 2006.......................... 15,000 14,585
BankAmerica Capital II,
Gtd. Capital Securities, Ser. 2, 8%, 2026.................. 55,000 57,358
Bankers Trust New York,
Sub. Notes, 71\2%, 2015.............. 75,000 77,702
Capital One Bank,
Sr. Notes, 6.83%, 1999............... 150,000 151,472
Chase Manhattan:
Sub. Deb.:
71\8%, 2005..................................... 35,000 36,001
61\2%, 2009..................................... 10,000 9,840
Sub. Notes, 73\4%, 1999.............. 40,000 41,369
Chemical,
Sub. Notes, 61\8%, 2008.............. 15,000 14,515
Citicorp,
Sub. Notes, 71\8%, 2003.............. 20,000 20,769
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Banking (continued) FBS Capital I,
Gtd. Capital Securities, 8.09%, 2026. $.....100,000 $ 107,184
First Bank System,
Sub. Notes, 75\8%, 2005.............. 55,000 58,676
First Chicago,
Sub. Notes, 97\8%, 2000.............. 20,000 21,896
First Union, Sub. Notes:
8%, 2002............................. 15,000 16,125
7%, 2006............................. 75,000 76,850
Fleet Financial Group,
Sr. Notes, 71\8%, 2000............... 40,000 41,054
Morgan (J.P.),
Sub. Notes, 61\4%, 2009.............. 20,000 19,579
NCNB,
Deb., 93\8%, 2009.................... 20,000 24,449
NationsBank:
Sr. Notes, 65\8%, 1998............... 25,000 25,040
Sub Notes:
67\8%, 2005..................................... 10,000 10,184
75\8%, 2005..................................... 30,000 31,838
Norwest Corp.,
Sub. Deb., 6.65%, 2023............... 15,000 14,292
Republic New York Corp., Sub. Notes:
71\4%, 2002.......................... 100,000 104,174
57\8%, 2008.......................... 25,000 23,842
Wachovia,
Sub. Notes, 63\8%, 2003.............. 15,000 15,102
Wells Fargo Capital,
Gtd. Capital Securities, 7.96%, 2026. 30,000 31,004
____________
1,196,323
____________
Chemicals-.4% Air Products & Chemical,
Deb., 83\4%, 2021.................... 5,000 6,088
duPont, Deb,
6%, 2001............................. 15,000 14,917
duPont (E.I.) de Nemours,
Notes, 63\4%, 2002................... 40,000 40,990
Eastman Chemical,
Notes, 63\8%, 2004................... 30,000 29,943
Monsanto,
Deb., 8.20%, 2025.................... 20,000 21,606
Morton International,
Deb., 91\4%, 2020.................... 5,000 6,386
____________
119,930
____________
Consumer-.6% Clorox,
Deb., 8.80%, 2001.................... 10,000 10,851
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Consumer (continued) Kimberly-Clark,
Deb., 67\8%, 2014.................... $.........5,000 $........5,016
Maytag,
Deb., 93\4%, 2002.................... 5,000 5,655
Nike,
Notes, 63\8%, 2003................... 100,000 100,919
Procter & Gamble, Deb.:
8.70%, 2001.......................... 30,000 32,611
6.45%, 2026.......................... 15,000 14,370
The Employee Stock
Ownership Trust of the Procter & Gamble
Profit Sharing Trust and Employee Stock
Ownership Plan,
Deb. (Gtd. by Procter & Gamble), 9.36%, 2021............ 10,000 12,674
Whirlpool,
Deb., 9%, 2003....................... 10,000 11,170
____________
193,266
____________
Entertainment/Media-1.1% Carnival,
Notes, 7.05%, 2005................... 15,000 15,499
Cox Communications,
Notes, 63\8%, 2000................... 100,000 100,551
Disney (Walt):
Global Bonds, 63\4%, 2006............ 20,000 20,372
Medium-Term Notes, 5.80%, 2008....... 15,000 14,369
News America Holdings (Gtd. by The
News):
Deb., 73\4%, 2024.................... 15,000 15,114
Sr. Notes, 91\8%, 1999............... 200,000 209,938
____________
375,843
____________
Financial Services-5.0% Aetna Services,
Notes (Gtd. by Aetna), 75\8%, 2026... 50,000 53,123
American Express Credit,
Sr. Notes, 61\8%, 2001............... 40,000 39,990
American General Finance, Sr. Notes,
81\8%, 2009.......................... 10,000 11,018
Ameritech Capital Funding,
Notes, 61\8%, 2001................... 200,000 199,929
Associates Corp. of North America:
Deb., 7.95%, 1998.................... 10,000 (a) 11,239
Sr. Notes:
71\2%, 1999..................................... 50,000. 51,127
91\8%, 2000..................................... 15,000 16,007
65\8%, 2005..................................... 10,000 10,044
Bear Stearns, Sr. Notes:
83\4%, 2004.......................... 10,000 11,166
71\4%, 2006.......................... 75,000 77,742
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Financial Services (continued) Beneficial:
Deb., 8.40%, 1997.................... $.........5,000 (b) $ 5,774
Medium-Term Notes, 91\8%, 2001....... 5,000 5,477
Chrysler Financial,
Notes, 53\8%, 1998................... 50,000 49,804
Commercial Credit Group, Notes:
6.70%, 1999.......................... 25,000 25,270
61\2%, 2004.......................... 100,000 100,392
10%, 2008............................ 5,000 6,313
Dean Witter Discovery,
Notes, 61\4%, 2000................... 30,000 30,209
FINOVA Capital,
Notes, 91\8%, 2002................... 20,000 22,108
Ford Capital B.V.,
Deb., 97\8%, 2002.................... 25,000 28,477
Ford Motor Credit, Notes:
8%, 2002............................. 65,000 69,453
63\4%, 2008.......................... 20,000 20,328
GMAC
Deb.:
8.40%, 1999........................... 30,000 31,298
6%, 2011.............................. 70,000 64,956
Notes, 65\8%, 2005................... 20,000 20,034
General Electric Capital:
Deb., 8.30%, 1998.................... 15,000 (c) 17,276
Medium-Term Notes, 73\8%, 2004....... 130,000 138,638
General Electric Credit,
Deb., 51\2%, 2001.................... 10,000 9,776
Household Finance,
Notes, 8%, 2004...................... 15,000 16,228
Integra Financial,
Sub. Notes, 61\2%, 2000.............. 15,000 15,149
International Lease Finance,
Medium-Term Notes, 61\4%, 2000....... 40,000 40,167
Lehman Brothers Holdings,
Notes, 61\2%, 2002................... 220,000 220,370
Merrill Lynch,
Notes, 8.30%, 2002................... 15,000 16,337
Norwest Financial, Sr. Notes:
51\2%, 1998.......................... 25,000 24,974
7%, 2003............................. 15,000 15,445
Pitney Bowes Credit,
Deb., 91\4%, 1998.................... 15,000 (d) 18,229
Salomon Brothers,
Sr. Notes, 71\4%, 2000............... 10,000 10,230
Sears, Roebuck Acceptance,
Notes, 7%, 2007...................... 35,000 36,207
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Financial Services (continued) Transamerica Financial,
Deb., 61\2%, 2011.................... $.........5,000 $ 4,760
Travelers/Aetna Property & Casualty,
Notes, 63\4%, 2001................... 60,000 61,022
U.S. Leasing International,
Sr. Notes, 65\8%, 2003............... 30,000 30,374
U.S. West Capital Funding,
Notes (Gtd. by U.S. West), 6.31%, 2000 10,000 (e) 9,989
Xerox Credit,
Deb., 10%, 1999...................... 10,000 10,541
____________
1,656,990
____________
Food and Beverages-1.3% Anheuser-Busch, Deb:
83\4%, 1999.......................... 5,000 5,257
9%, 2009............................. 5,000 6,074
Archer-Daniels-Midland, Deb.:
Zero Coupon, 2002.................... 5,000 3,791
81\8%, 2012.......................... 40,000 46,262
Campbell Soup,
Deb., 87\8%, 2021.................... 5,000 6,189
Coca-Cola,
Deb., 65\8%, 2002.................... 35,000 35,736
Coca-Cola Enterprises:
Deb., 81\2%, 2022.................... 10,000 11,701
Notes, 77\8%, 2002................... 15,000 15,928
Dole Food,
Notes, 63\4%, 2000................... 15,000 15,191
Hershey Foods,
Deb., 8.80%, 2021.................... 30,000 36,970
McDonald's,
Notes, 63\4%, 2003................... 20,000 20,428
Nabisco,
Deb., 7.55%, 2015.................... 40,000 41,866
PepsiCo,
Deb., 75\8%, 1998.................... 40,000 40,764
Ralston-Purina Group,
Deb., 85\8%, 2022.................... 90,000 106,257
Seagram,
Deb., 8.35%, 2022.................... 10,000 11,372
Supervalu,
Notes, 7.80%, 2002................... 15,000 15,896
Sysco,
Sr. Notes, 7%, 2006.................. 25,000 26,040
____________
445,722
____________
Health Care-.2% Baxter International,
Deb., 91\4%, 1999.................... 15,000 15,949
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Health Care (continued) Bristol-Myers Squibb,
Deb., 7.15%, 2023.................... $.......15,000 $ 15,944
Lilly (Eli), Notes:
63\4%, 1999.......................... 15,000 15,251
6.57%, 2016.......................... 30,000 29,715
____________
76,859
____________
Industrial-1.9% Aluminum Co. of America,
Notes, 53\4%, 2001................... 50,000 49,562
American Home Products,
Notes, 7.70%, 2000................... 50,000 51,575
Bass America,
Notes, 81\8%, 2002................... 15,000 16,084
Bowater,
Deb., 93\8%, 2021.................... 10,000 12,492
Browning-Ferris,
Deb., 7.40%, 2035.................... 10,000 10,433
Burlington Resources,
Deb., 67\8%, 2026.................... 70,000 69,268
Caterpillar, Deb:
93\8%, 2000.......................... 5,000 5,398
93\8%, 2011.......................... 10,000 12,610
Comdisco,
Notes, 63\8%, 2001................... 155,000 155,393
Crown Cork & Seal,
Bonds, 73\8%, 2026................... 75,000 77,374
Eaton,
Deb., 8.10%, 2022.................... 10,000 11,454
Emerson Electric,
Notes, 6.30%, 2005................... 35,000 35,000
Illinois Tool Works,
Notes, 57\8%, 2000................... 20,000 19,943
PPG Industries,
Notes, 73\8%, 2016................... 45,000 47,694
Tenneco,
Deb., 10.20%, 1998................... 15,000 (f) 19,017
WMX Technologies,
Notes, 63\8%, 2003................... 30,000 29,719
____________
623,016
____________
Oil and Gas-.4% Atlantic Richfield,
Deb., 9%, 2021....................... 15,000 18,808
Mobil,
Deb., 85\8%, 2021.................... 15,000 18,387
Occidental Petroleum,
Sr. Notes, 101\8%, 2001.............. 15,000 16,944
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Oil and Gas (continued) Pennzoil, Deb.:
95\8%, 1999.......................... $.......10,000 $ 10,621
101\8%, 2009......................... 5,000 6,350
Phillips Petroleum,
Notes, 6.65%, 2003................... 20,000 20,419
Texaco Capital (Gtd. by Texaco):
Deb., 67\8%, 2023.................... 25,000 24,431
Notes, 9%, 1999...................... 15,000 15,900
____________
131,860
____________
Paper Products-.3% Georgia-Pacific,
Deb., 95\8%, 2022.................... 25,000 28,540
Harnischfeger Industries,
Deb., 67\8%, 2007.................... 50,000 (g) 51,460
International Paper,
Notes, 75\8%, 2007................... 10,000 10,798
Weyerhaeuser,
Deb., 7.95%, 2025.................... 20,000 22,201
____________
112,999
____________
Publishing-.2% Gannett,
Notes, 5.85%, 2000................... 55,000 54,793
____________
Retail-1.6% Dayton Hudson, Deb.:
93\4%, 1998.......................... 5,000 5,171
81\2%, 2022.......................... 20,000 21,626
Gap,
Notes, 6.90%, 2007................... 80,000 82,486
Limited,
Deb., 71\2%, 2023.................... 10,000 9,774
Lowes,
Medium-Term Notes, 8.19%, 2022....... 50,000 56,405
May Department Stores,
Deb., 97\8%, 2002.................... 15,000 17,315
Penney (J.C.):
Deb.:
9.05%, 2001........................... 50,000 54,250
81\4%, 2022..................................... 15,000 16,041
71\8%, 2023..................................... 15,000 15,168
Notes, 71\4%, 2002................... 150,000 155,956
Sears, Roebuck,
Deb., 6%, 2000....................... 5,000 4,986
Wal-Mart Stores:
Deb., 9.10%, 2000.................... 10,000 10,762
Notes:
51\2%, 1998..................................... 50,000 49,950
57\8%, 2005..................................... 25,000 24,283
____________
524,173
____________
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Technology-1.7% IBM:
Deb., 7%, 2025....................... $.......20,000 $ 20,018
Notes, 63\8%, 2000................... 150,000 151,257
Johnson Controls,
Notes, 71\8%, 2017................... $.....100,000 $ 103,330
Motorola,
Notes, 7.60%, 2007................... 100,000 109,010
Seagate Technology,
Sr. Notes, 7.37%, 2007............... 100,000 104,678
United Technologies,
Deb., 87\8%, 2019.................... 5,000 6,174
Global Notes, 83\4%, 2021............ 50,000 61,126
Xerox,
Notes, 7.15%, 2004................... 15,000 15,649
____________
571,242
____________
Telephone &
Telegraph-3.4% AT&T:
Deb.:
51\8%, 2001..................................... 50,000 48,640
8.35%, 2025........................... 5,000 5,460
Notes, 7%, 2005...................... 15,000 15,550
Airtouch Communications,
Notes, 71\8%, 2001................... 100,000 102,708
Bellsouth Telecommunications,
Deb., 7%, 2025....................... 50,000 51,758
GTE,
Deb., 9.10%, 2003.................... 35,000 39,244
Lucent Technologies,
Notes, 6.90%, 2001................... 130,000 133,062
MCI Communications,
Sr. Notes, 61\4%, 1999............... 75,000 75,078
Michigan Bell Telephone,
Deb., 63\8%, 2005.................... 25,000 24,918
New England Telephone & Telegraph,
Deb., 73\8%, 2007.................... 10,000 10,270
New Jersey Bell Telephone, Deb.:
65\8%, 2008.......................... 30,000 30,293
8%, 2022............................. 25,000 28,746
New York Telephone:
Deb., 85\8%, 2010.................... 5,000 5,892
Mortgage, 73\4%, 2006................ 20,000 20,333
Notes, 61\4%, 2004................... 125,000 124,632
Northern Telecom,
Deb., 83\4%, 2001.................... 200,000 217,056
Pacific Bell Telephone, Deb.:
73\8%, 2025.......................... 75,000 76,129
71\8%, 2026.......................... 10,000 10,390
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Telephone &
Telegraph (continued) Pacific Telephone & Telegraph,
Deb., 45\8%, 1999.................... $.......70,000 $ 68,727
Southwestern Bell Telephone, Deb.:
73\4%, 2009.......................... 10,000 10,175
75\8%, 2013.......................... 10,000 10,253
U.S. West Communications,
Deb., 67\8%, 2033.................... 25,000 23,889
____________
1,133,203
____________
Tobacco-.3% Fortune Brands,
Deb., 85\8%, 2021.................... 5,000 5,904
Philip Morris, Deb.:
91\4%, 2000.......................... 40,000 42,506
6%, 2001............................. 20,000 19,699
83\8%, 2017.......................... 15,000 15,431
____________
83,540
____________
Transportation-.5% Federal Express,
Notes, 97\8%, 2002................... 15,000 17,015
Norfolk Southern, Deb:
9%, 2021............................. 10,000 12,236
7.80%, 2027.......................... 100,000 108,690
Ryder System,
Deb., 83\4%, 2017.................... 10,000 10,491
Seariver Maritime,
Deb. (Gtd. by Exxon), Zero Coupon, 2012 5,000 1,974
United Parcel Service,
Deb., 83\8%, 2020.................... 10,000 11,984
____________
162,390
____________
Utilities-3.2% Alabama Power,
First Mortgage, 6%, 2000............. 50,000 49,995
Baltimore Gas & Electric,
First and Refunding Mortgage:
71\2%, 2007..................................... 10,000 10,757
71\2%, 2023..................................... 40,000 41,229
Carolina Power & Light, First Mortgage:
53\8%, 1998.......................... 50,000 49,871
8.20%, 2022.......................... 15,000 16,287
Commonwealth Edison,
Mortgage, 81\8%, 2007................ 10,000 10,220
Consolidated Edison Co. of New York,
Deb., 61\4%, 1998.................... 25,000 25,044
Consolidated Natural Gas,
Deb., 57\8%, 1998.................... 40,000 40,020
Duke Power, First and Refunding Mortgage:
71\2%, 1999.......................... 50,000 51,020
73\8%, 2023.......................... 15,000 15,073
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Utilities (continued) Florida Power & Light, First Mortgage:
65\8%, 2003.......................... $.......30,000 $ 30,161
73\4%, 2023.......................... 25,000 26,171
Gulf State Utilities,
First Mortgage, 6.41%, 2001.......... 45,000 45,012
Houston Lighting & Power,
First Mortgage, 83\4%, 2022.......... 150,000 166,793
Illinois Power,
First Mortgage, 83\4%, 2021.......... 15,000 15,993
New York State Electric & Gas,
First Mortgage, 97\8%, 2020.......... 10,000 10,907
Pacific Gas & Electric:
First and Refunding Mortgage, 8.80%, 2024.......... 100,000 124,273
Notes, 7.45%, 1998................... 40,000 40,634
Pennsylvania Power & Light, First Mortgage:
61\2%, 2005.......................... 20,000 20,067
6.55%, 2006.......................... 25,000 25,038
Potomac Electric & Power,
First Mortgage, 57\8%, 2002.......... 10,000 9,817
Public Service Electric & Gas,
First and Refunding Mortgage:
83\4%, 1999..................................... 25,000 26,037
61\8%, 2002..................................... 20,000 19,949
61\2%, 2004..................................... 25,000 25,256
South Carolina Electric & Gas,
Mortgage, 9%, 2006................... 20,000 23,257
Southern California Gas,
First Mortgage, 73\8%, 2023.......... 20,000 20,529
Texas Utilities,
First Mortgage, 83\4%, 2023.......... 35,000 39,010
Union Electric,
First Mortgage, 63\4%, 2008.......... 25,000 25,610
Virginia Electric & Power,
First Mortgage, 75\8%, 2007.......... 25,000 27,166
Wisconsin Electric & Power,
First Mortgage, 7.70%, 2027.......... 20,000 21,062
____________
1,052,258
____________
Other-.1% Private Export Funding:
Deb., 9.45%, 12/31/1999.............. 5,000 5,371
Secured Notes (Gtd. by the Export-Import
Bank of the U.S.), 8.40%, 7/31/2001.. 30,000 32,517
____________
37,888
____________
Foreign-5.2% African Development Bank, Sub. Notes:
73\4%, 2001.......................... 15,000 15,864
67\8%, 2015.......................... 85,000 86,624
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Foreign (continued) Daimler-Benz of North America,
Medium-Term Notes (Gtd. by
Daimler-Benz AG),
73\8%, 2006.......................... $.....120,000 $ 127,141
Deutsche Bank Financial,
Unsecured Sub. Notes (Gtd. by Deutsche
Bank AG)
6.70%, 2006.......................... 100,000 101,615
Dresdner Bank-New York,
Sub. Deb., 71\4%, 2015............... 40,000 41,357
European Investment Bank,
Deb., 101\8%, 2000................... 20,000 22,198
Hydro-Quebec, Bonds,
(Gtd. by the Province of Quebec):
81\2%, 2029..................................... 10,000. 11,742
93\8%, 2030..................................... 20,000 25,682
91\2%, 2030..................................... 10,000 13,012
Italy Government Bonds,
67\8%, 2023.......................... 70,000 70,714
KFW International Finance, Deb.:
(Gtd. by the Federal Republic of Germany),
91\8%, 2001..................................... 10,000. 10,977
(Gtd. by KFW),
8%, 2010.............................. 35,000 39,965
Korea Development Bank,
Notes, 7%, 1999...................... 300,000 295,979
Province of Alberta,
Notes, 9.20%, 1997................... 20,000 20,030
Province of British Columbia:
Bonds, 61\2%, 2026................... 25,000 24,569
Deb., 7%, 2003....................... 20,000 20,781
Province of Manitoba, Bonds:
91\2%, 1998.......................... 5,000 5,163
8.80%, 2020.......................... 10,000 12,445
Province of New Brunswick,
Deb., 63\4%, 2013.................... 30,000 30,596
Province of Ontario:
Sr. Deb., 7%, 2005................... 40,000 41,803
Sr. Unsub. Deb., 73\8%, 2003......... 30,000 31,641
Province of Quebec:
Bonds, 91\8%, 2000................... 30,000 31,991
Deb., 71\2%, 2023.................... 50,000 52,587
Republic of Finland,
Bonds, 6.95%, 2026................... 25,000 25,688
Republic of Ireland,
Notes, 77\8%, 2001................... 150,000 159,408
Republic of Portugal,
Unsub. Notes, 53\4%, 2003............ 100,000 97,985
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
Foreign (continued) Royal Bank of Scotland,
Sub. Notes, 63\8%, 2011.............. $.......60,000 $ 58,020
Santander Finance Issuances,
Unsecured Sub. Notes
(Gtd. by Banco Santander, S.A.),
71\4%, 2006.......................... 100,000 104,208
Saskatchewan C.D.A.,
Bonds, 91\8%, 2021................... 10,000 12,721
Swiss Bank-New York,
Sub. Deb., 7%, 2015.................. 70,000 70,566
Union Bank of Switzerland-New York,
Sub. Notes, 71\4%, 2006.............. 80,000 84,139
____________
1,747,211
____________
U.S. Government -55.1% U.S. Treasury Bonds:
113\4%, 2/15/2001.................... 155,000 182,682
153\4%, 11/15/2001................... 15,000 20,344
103\4%, 2/15/2003.................... 830,000 1,014,675
103\4%, 5/15/2003.................... 115,000 141,558
111\8%, 8/15/2003.................... 135,000 169,657
117\8%, 11/15/2003................... 10,000 13,028
123\8%, 5/15/2004.................... 135,000 182,166
103\4%, 8/15/2005.................... 465,000 603,628
75\8%, 2/15/2007..................... 60,000 63,788
83\4%, 11/15/2008.................... 225,000 256,113
123\4%, 11/15/2010................... 75,000 107,016
14%, 11/15/2011...................... 30,000 46,575
12%, 8/15/2013....................... 45,000 65,862
121\2%, 8/15/2014.................... 40,000 61,294
111\4%, 2/15/2015.................... 25,000 38,477
71\4%, 5/15/2016..................... 110,000 122,633
83\4%, 5/15/2017..................... 300,000 385,172
87\8%, 8/15/2017..................... 115,000 149,500
87\8%, 2/15/2019..................... 140,000 183,203
81\8%, 8/15/2019..................... 175,000 214,129
81\2%, 2/15/2020..................... 225,000 285,891
83\4%, 5/15/2020..................... 880,000 1,146,613
83\4%, 8/15/2020..................... 290,000 378,314
77\8%, 2/15/2021..................... 130,000 155,675
8%, 11/15/2021....................... 500,000 607,813
61\4%, 8/15/2023..................... 1,065,000 1,066,498
75\8%, 2/15/2025..................... 450,000 531,352
U.S. Treasury Notes:
51\8%, 11/30/1998.................... 200,000 199,031
51\8%, 12/31/1998.................... 285,000 283,620
63\8%, 1/15/1999..................... 100,000 100,906
57\8%, 1/31/1999..................... 1,280,000 1,283,800
51\2%, 2/28/1999..................... 30,000 29,948
57\8%, 3/31/1999..................... 205,000 205,737
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
U.S. Government (continued) 7%, 4/15/1999............... $.....200,000 $ 203,844
63\8%, 5/15/1999..................... 500,000 505,313
63\4%, 5/31/1999..................... 20,000 20,334
67\8%, 7/31/1999..................... 80,000 81,600
8%, 8/15/1999........................ 30,000 31,177
71\8%, 9/30/1999..................... 520,000 533,975
71\2%, 10/31/1999.................... 270,000 279,323
77\8%, 11/15/1999.................... 550,000 573,203
73\4%, 12/31/1999.................... 20,000 20,834
63\8%, 1/15/2000..................... 100,000 101,500
73\4%, 1/31/2000..................... 410,000 427,617
67\8%, 3/31/2000..................... 305,000 313,054
51\2%, 4/15/2000..................... 20,000 19,922
61\8%, 7/31/2000..................... 455,000 459,977
83\4%, 8/15/2000..................... 80,000 86,175
61\4%, 8/31/2000..................... 410,000 415,702
81\2%, 11/15/2000.................... 5,000 5,385
61\4%, 4/30/2001..................... 500,000 507,813
8%, 5/15/2001........................ 160,000 171,400
61\2%, 5/31/2001..................... 300,000 307,219
77\8%, 8/15/2001..................... 590,000 631,853
61\4%, 1/31/2002..................... 85,000 86,527
65\8%, 3/31/2002..................... 110,000 113,592
65\8%, 4/30/2002..................... 500,000 516,641
61\2%, 5/31/2002..................... 250,000 257,148
61\4%, 2/15/2003..................... 30,000 30,614
53\4%, 8/15/2003..................... 280,000 279,081
71\4%, 5/15/2004..................... 225,000 242,086
67\8%, 5/15/2006..................... 20,000 21,253
7%, 7/15/2006........................ 500,000 535,859
61\4%, 2/15/2007..................... 300,000 306,972
____________
18,383,691
____________
U.S. Government
Agencies-9.2% Federal Farm Credit Banks,
6.33%, 11/6/2000..................... 700,000 704,165
Federal Home Loan Banks,
8.60%, 1/25/2000..................... 15,000 15,880
Federal Home Loan Mortgage Corp.:
6.09%, 3/1/2000...................... 40,000 39,965
5.90%, 2/14/2006..................... 600,000 592,059
Federal National Mortgage Association:
8.20%, 3/10/1998..................... 30,000 30,271
5.23%, 11/25/1998.................... 205,000 204,033
5.30%, 12/10/1998.................... 200,000 199,045
9.55%, 3/10/1999..................... 30,000 31,474
8.70%, 6/10/1999..................... 15,000 15,673
8.45%, 7/12/1999..................... 15,000 15,648
8.35%, 11/10/1999.................... 25,000 26,228
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1997
Principal
Bonds and Notes (continued) Amount Value
____________ ____________
U.S. Government
Agencies (continued) Federal National Mortgage Association (continued):
6.20%, 7/10/2003..................... $.......90,000 $ 89,303
6.85%, 4/5/2004...................... 145,000 151,234
7.40%, 7/1/2004...................... 450,000 483,070
57\8%, 2/2/2006...................... 125,000 123,143
Financing Corp., Bonds:
9.65%, 11/2/2018..................... 10,000 13,658
8.60%, 9/26/2019..................... 40,000 49,955
Resolution Funding, Bonds:
81\8%, 10/15/2019.................... 75,000 90,341
87\8%, 7/15/2020..................... 75,000 96,694
85\8%, 1/15/2030..................... 15,000 19,202
Tennessee Valley Authority:
Deb.:
83\8%, 10/1/1999..................................... 15,000. 15,712
7.85%, 6/15/2044...................... 10,000 10,674
Global Bonds, 63\4%, 11/1/2025....... 60,000 61,686
____________
3,079,113
____________
TOTAL BONDS AND NOTES
(cost $31,241,410)................... $32,374,088
============
Short-Term Investments-7.6%
Repurchase Agreement; Goldman, Sachs & Co. Tri-Party
Repurchase Agreement, 5.67%
dated 10/31/1997, due 11/3/1997 in the amount
of $2,560,099 (fully collateralized by
$2,734,000 U.S. Treasury Bills,
due 9/17/1998, value $2,610,788)
(cost $2,558,890).................... $..2,558,890 $ 2,558,890
============
TOTAL INVESTMENTS (cost $33,800,300)... 104.7% $34,932,978
======= ============
LIABILITIES, LESS CASH AND RECEIVABLES (NET) (4.7%) $ (1,579,136)
======= ============
NET ASSETS............................. 100.0% $33,353,842
======= ============
Notes to Statement of Investments:
(a) Reflects date security can be redeemed at holders' option; the
stated maturity date is 2/15/2010.
(b) Reflects date security can be redeemed at holders' option; the
stated maturity date is 4/1/2000.
(c) Reflects date security can be redeemed at holders' option; the
stated maturity date is 5/15/2008.
(d) Reflects date security can be redeemed at holders' option; the
stated maturity date is 6/15/2008.
(e) Reflects date security can be redeemed at holders' option; the
stated maturity date is 11/1/2005.
(f) Reflects date security can be redeemed at holders' option; the
stated maturity date is 3/15/2008.
(g) Reflects date security can be redeemed at holders' option; the
stated maturity date is 2/15/2027.
SEE NOTES TO FINANCIAL STATMENTS.
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1997
Cost Value
____________ ____________
ASSETS: Investments in securities-See Statement of Investments $33,800,300 $34,932,978
Cash....................................... 80,201
Interest receivable........................ 580,814
Receivable for investment securities sold.. 41,377
____________
35,635,370
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 4,107
Due to Distributor......................... 20
Payable for investment securities purchased 2,277,401
____________
2,281,528
____________
NET ASSETS.................................................................. $33,353,842
============
REPRESENTED BY: Paid-in capital............................ $32,043,361
Accumulated net realized gain (loss) on investments 177,803
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 3 1,132,678
____________
NET ASSETS.................................................................. $33,353,842
============
NET ASSET VALUE PER SHARE
_____________________________
Investor BASIC
Shares Shares
____________ ____________
Net Assets.................................................................. $119,727 $33,234,115
Shares Outstanding.......................................................... 11,989 3,323,180
NET ASSET VALUE PER SHARE................................................... $9.99 $10.00
======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1997
INVESTMENT INCOME
INCOME Interest Income............................ $2,115,186
EXPENSES: Management fee-Note 2(a)................... $ 114,334
Loan commitment fees-Note 4................ 367
Distribution fees (Investor shares)-Note 2(b) 190
___________
Total Expenses....................... 114,891
___________
INVESTMENT INCOME-NET....................................................... 2,000,295
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $ 199,887
Net unrealized appreciation (depreciation) on investments 494,107
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 693,994
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,694,289
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
October 31, 1997(1) October 31, 1996(2)
_________________ _________________
OPERATIONS:
<S> <C> <C>
Investment income-net............................................... $ 2,000,295 $ 1,044,007
Net realized gain (loss) on investments............................. 199,887 61,620
Net unrealized appreciation (depreciation) on investments........... 494,107 403,761
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations. 2,694,289 1,509,388
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Investor shares................................................... (1,995,878) (10,116)
BASIC shares...................................................... (4,417) (1,033,891)
_____________ _____________
Total Dividends................................................. (2,000,295) (1,044,007)
_____________ _____________
CAPITAL STOCK TRANSACTIONS-Note 5:
Net proceeds from shares sold:
Investor shares................................................... 49,970 124,870
BASIC shares...................................................... 16,797,940 30,960,062
Dividends reinvested:
Investor shares................................................... 4,125 8,203
BASIC shares...................................................... 1,914,516 966,638
Cost of shares redeemed:
Investor shares................................................... (16,579) (253,704)
BASIC shares...................................................... (19,156,787) (6,235,512)
_____________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions (406,815) 25,570,557
_____________ _____________
Total Increase (Decrease) in Net Assets....................... 287,179 26,035,938
NET ASSETS:
Beginning of Period................................................. 33,066,663 7,030,725
_____________ _____________
End of Period....................................................... $ 33,353,842 $ 33,066,663
============= =============
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS-Note 5:
Investor Shares
_______________
Shares sold......................................................... 5,057 12,838
Shares issued for dividends reinvested.............................. 422 837
Shares redeemed..................................................... (1,695) (26,266)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding................... 3,784 (12,591)
============= =============
BASIC Shares
_____________
Shares sold......................................................... 1,720,766 3,224,629
Shares issued for dividends reinvested.............................. 195,856 99,840
Shares redeemed..................................................... (1,959,827) (644,895)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding................... (43,205) 2,679,574
============= =============
(1) Effective August 15, 1997, Institutional Class shares were redesignated as Investor shares and Retail shares were redesignated
as BASIC shares.
(2) Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares and Class R shares were redesignated
as Retail shares.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
FINANCIAL HIGHLIGHTS
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.
Investor Shares
____________________________________________
Year Ended October 31,
____________________________________________
<S> <C> <C> <C> <C>
PER SHARE DATA: 1997(1) 1996(2) 1995 1994(3,4)
______ ______ ______ ________
Net asset value, beginning of period................... $9.78 $9.93 $9.15 $9.44
______ ______ ______ ______
Investment Operations:
Investment income-net.................................. .57 .57 .55 .24
Net realized and unrealized gain (loss)
on investments....................................... .21 (.15) .78 (.28)
______ ______ ______ ______
Total from Investment Operations....................... .78 .42 1.33 (.04)
______ ______ ______ ______
Distributions:
Dividends from investment income-net................... (.57) (.57) (.55) (.25)
______ ______ ______ ______
Net asset value, end of period......................... $9.99 $9.78 $9.93 $9.15
====== ====== ====== ======
TOTAL INVESTMENT RETURN.................................... 8.29% 4.36% 15.01% (.46%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................ .60% .65% .65% .65%(5)
Ratio of net investment income
to average net assets................................ 5.82% 5.80% 5.77% 4.81%(5)
Portfolio Turnover Rate................................ 48.86% 42.65% 40.16% 188.00%
Net Assets, end of period (000's Omitted).............. $120 $80 $207 $38
(1) Effective August 15, 1997, Institutional Class shares were redesignated as Investor shares.
(2) Effective July 15, 1996, Investor Class shares were redesignated as Institutional shares.
(3) The Fund commenced selling Investor shares on April 28, 1994.
(4) 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.
(5) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS BOND MARKET INDEX FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
BASIC Shares
____________________________________________
Year Ended October 31,
____________________________________________
PER SHARE DATA: 1997(1) 1996(2) 1995 1994(3,4)
______ ______ ______ ________
<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 9.80 $ 9.94 $ 9.15 $10.00
______ ______ ______ ______
Investment Operations:
Investment income-net.................................. .60 .59 .58 .49(5)
Net realized and unrealized gain (loss)
on investments....................................... .20 (.14) .79 (.85)
______ ______ ______ ______
Total from Investment Operations....................... .80 .45 1.37 (.36)
______ ______ ______ ______
Distributions:
Dividends from investment income-net................... (.60) (.59) (.58) (.49)
______ ______ ______ ______
Net asset value, end of period......................... $10.00 $ 9.80 $ 9.94 $ 9.15
====== ====== ====== ======
TOTAL INVESTMENT RETURN.................................... 8.46% 4.69% 15.41% (3.68%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................ .35% .40% .40% .40%(6,7)
Ratio of net investment income
to average net assets................................ 6.12% 6.02% 6.10% 5.05%(6)
Portfolio Turnover Rate................................ 48.86% 42.65% 40.16% 188.00%
Net Assets, end of period (000's Omitted).............. $ 33,234 $ 32,986 $ 6,824 $ 4,464
(1) Effective August 15, 1997, Retail shares were redesignated as BASIC shares.
(2) Effective July 15, 1996, Class R shares were redesignated as Retail shares.
(3) 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.
(4) 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.
(5) Net investment income before reimbursement of expenses by the investment adviser for the period ended
ended October 31, 1994 was $.39 per share.
(6) Annualized.
(7) 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
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Bond Market Index Fund (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
seventeen series including 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").
Effective November 14, 1997, the Fund's Investment objective is to seek
to replicate the total return of the Lehman Brother Aggregate Bond Index.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. Effective August 15, 1997 Institutional shares were
redesignated as Investor shares and Retail shares were redesignated as BASIC
shares. The Fund is authorized to issue 150 million of $.001 par value
Capital Stock. The Fund is currently authorized to issue two classes of
shares: Investor (50 million shares authorized) and BASIC (100 million shares
authorized). Investor shares are offered only to clients of banks, securities
brokers or dealers and other financial institutions (collectively, Service
Agents) that have entered into selling agreements with the Fund's distributor
and BASIC shares are offered to any investor. Other differences between the
two classes include the services offered to and the expenses borne by each
class.
Investment income, net of expenses (other than class specific expenses)
and 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 in securities (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
direction 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 investment, 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
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
collateral is at least equal, at all times, to the total amount of the
repurchase obligation, including interest. In the event of a counter party
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 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.
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 .15% of the value of the Fund's
average daily net assets. Prior to August 15, 1997, the annual rate was .40%.
Out of its fee, the Manager pays all of the expenses of the Fund except
brokerage fees, taxes, interest, commitment fees, 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).
Each director 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. The Chairman of the Board receives an
additional annual fee of $25,000 per year. These fees pertain to the
following funds: The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free
Municipal Funds, and The Dreyfus/Laurel Funds Trust. These fees and expenses
are allocated to each series based on net assets. Amounts required to be paid
by the Company directly to the non-interested Directors, that would be
applied to offset a portion of the management fee payable to the Manager, are
in fact paid directly by the Manager to the non-interested Directors.
(b) Distribution plan: Under the Fund's Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, 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 BASIC shares bear no distribution fee.
During the period ended October 31, 1997, the Fund was charged $190 for the
Investor shares pursuant to the Plan.
DREYFUS BOND MARKET INDEX FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
Investment Company and who have no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1997
amounted to $15,465,955 and $15,627,917, respectively.
At October 31, 1997, accumulated net unrealized appreciation on
investments was $1,132,678, consisting of $1,142,215 gross unrealized
appreciation and $9,537 gross unrealized depreciation.
At October 31, 1997, 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 4-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-Managed funds in a $600 million
redemption credit facility (Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended
October 31, 1997, the Fund did not borrow under the Facility.
NOTE 5-ACQUISITION OF COMMON TRUST ASSETS:
On May 10, 1996, the Fund acquired a portion of the assets of the EB MBA
Government and Corporate Bond Index Fund, a trust advised by a subsidiary of
Mellon Bank. The acquisition was accomplished by an exchange of 1,788,594
Retail shares of the Fund's Capital Stock for cash, securities and assumption
of liabilities of the trust totaling $17,134,730 which is included in net
proceeds from shares sold on the Statement of Changes in Net Assets.
DREYFUS BOND MARKET INDEX FUND
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dreyfus/Laurel Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Bond Market Index Fund of
The Dreyfus/Laurel Funds, Inc. as of October 31, 1997, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of October 31, 1997, by correspondence with the custodi
an. As to securities purchased and sold, but not received or delivered, we
performed other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Bond Market Index Fund of The Dreyfus/Laurel Funds, Inc.
as of October 31, 1997, the results of its operations for the year then
ended, changes in its net assets for each of the years in the two-year period
then ended and its financial highlights for each of the years or periods
indicated herein, in conformity with generally accepted accounting principles.
[KPMG Peat Marwick LLP signature logo]
New York, New York
December 17, 1997
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates
60.81% of the ordinary income dividends paid during its fiscal year ended
October 31, 1997 as attributable to interest income from direct obligations
of the United States. Such dividends are currently exempt from taxation for
individual income tax purposes in most states, including New York, California
and the District of Columbia.
Registration Mark
[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, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 310AR9710
Bond Market
Index Fund
Annual Report
October 31, 1997
Registration Mark
[Dreyfus logo]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS BOND MARKET INDEX FUND BASIC SHARES WITH THE
LEHMAN BROTHERS AGGREGATE BOND INDEX AND THE LEHMAN
BROTHERS GOVERNMENT / CORPORATE BOND INDEX
EXHIBIT A:
DREYFUS
BOND LEHMAN
MARKET LEHMAN BROTHERS
INDEX BROTHERS GOVERNMENT /
FUND AGGREGATE CORPORATE
PERIOD (BASIC BOND BOND
SHARES) INDEX * INDEX *
11/30/93 10,000 10,000 10,000
10/31/94 9,632 9,716 9,645
10/31/95 11,116 11,236 11,204
10/31/96 11,638 11,893 11,808
10/31/97 12,623 12,950 12,849
* Source: Lehman Brothers
