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Merrill Lynch Index Funds, Inc.
Supplement dated August 11, 1999
to the Prospectus and Statement of Additional Information dated April 30, 1999
Effective August 2, 1999, Fund Asset Management, L.P. ("FAM") has replaced
Merrill Lynch Asset Management, L.P. ("MLAM") as the investment adviser of the
underlying "master" series. FAM is an affiliate of MLAM which shares
substantially the same investment personnel, including the personnel responsible
for providing management services to the underlying "master" series. There will
be no change in the nature and quality of services provided as a result of the
change from MLAM to FAM.
At a board meeting on August 2, 1999, the Directors of Merrill Lynch Index
Funds, Inc. (the "Fund") approved new administrative fees with respect to each
series of the Fund. Due to expense reimbursements and/or fee waivers by MLAM
and/or FAM, the change in administrative fees will not impact the actual total
operating expenses of any series.
Effective immediately, the new administrative fees payable to the
administrator, the total annual fund operating expenses, expense reimbursement
and net total annual fund operating expenses after contractual fee waivers by
FAM will be as follows:
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Fund Adminis- Total Annual Expense Net Total
trative Fund Operating Reimbursement** Annual Fund
Fees Expenses* Operating
Expenses***
- -------------------------------------------------------------------------------
Class A Class D Class A Class D Class A Class D
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Merrill Lynch S&P 0.245% 0.445% 0.695% 0.045% 0.045% 0.40% 0.65%
500 Index Fund
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Merrill Lynch 0.29% 0.91% 1.16% 0.07% 0.07% 0.84% 1.09%
Small Cap Index
Fund
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Merrill Lynch 0.19% 0.45% 0.70% 0.05% 0.05% 0.40% 0.65%
Aggregate Bond
Index Fund
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Merrill Lynch 0.34% 0.86% 1.12% 0.10% 0.10% 0.76% 1.02%
International
Index Fund
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* Includes the expenses of both the "feeder" fund and its pro rata share of
the expenses of the "master" series.
** Includes pro rata share of the contractual expense reimbursement of the
"master" series. FAM has entered into contractual arrangements with the
"master" fund to provide that the aggregate administrative and management
fees charged to each series of the Fund and the corresponding "master"
series will not exceed the following amounts: Merrill Lynch S&P 500 Index
Fund: 0.25%; Merrill Lynch Small Cap Index Fund: 0.30%; Merrill Lynch
Aggregate Bond Index Fund: 0.20%; and Merrill Lynch International Index
Fund: 0.35%.
*** Includes the expenses of both the "feeder" fund and its pro rata share of
the expenses of the "master" series. In addition to the contractual expense
reimbursement described in the previous footnote and reflected in the
table, MLAM and/or FAM have agreed to voluntarily waive management fees
and/or reimburse expenses of the series of the Fund and/or the
corresponding "master" series. The Net Total Annual Fund Operating Expenses
shown in the table do not reflect any such voluntary management fee waivers
and/or reimbursement of expenses because they may be discontinued by MLAM
and/or FAM at any time without notice. After taking into account the new
fee levels described above and the voluntary fee waivers and/or expense
reimbursements, net total annual fund operating expenses were as follows:
0.39% for Class A shares and 0.64% for Class D shares of the Merrill Lynch
S&P 500 Index Fund; 0.50% for Class A shares and 0.75% for Class D shares
of the Merrill Lynch Small Cap Index Fund; 0.35% for Class A shares and
0.60% for Class D shares of the Merrill Lynch Aggregate Bond Index Fund;
and 0.64% for Class A shares and 0.89% for Class D shares of the Merrill
Lynch International Index Fund.
