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PROSPECTUS MAY 1, 1996
AS REVISED SEPTEMBER 1, 1996
DREYFUS STOCK INDEX FUND
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DREYFUS STOCK INDEX FUND (THE "FUND") IS AN OPEN-END,
NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND, THAT
IS INTENDED TO BE A FUNDING VEHICLE FOR VARIABLE ANNUITY CONTRACTS AND
VARIABLE LIFE INSURANCE POLICIES TO BE OFFERED BY THE SEPARATE ACCOUNTS OF
LIFE INSURANCE COMPANIES (THE "PARTICIPATING INSURANCE COMPANIES").
THE FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE INVESTMENT RESULTS THAT
CORRESPOND TO THE PRICE AND YIELD PERFORMANCE OF PUBLICLY TRADED COMMON
STOCKS IN THE AGGREGATE, AS REPRESENTED BY THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX. IN ANTICIPATION OF TAKING A MARKET POSITION, THE
FUND IS PERMITTED TO PURCHASE AND SELL STOCK INDEX FUTURES. THE FUND IS
NEITHER SPONSORED BY NOR AFFILIATED WITH STANDARD & POOR'S.
THE DREYFUS CORPORATION ("DREYFUS") SERVES AS THE FUND'S MANAGER.
DREYFUS HAS ENGAGED ITS AFFILIATE, MELLON EQUITY ASSOCIATES ("MELLON
EQUITY"), TO SERVE AS THE FUND'S INDEX FUND MANAGER AND PROVIDE DAY-TO-DAY
MANAGEMENT OF THE FUND'S INVESTMENTS. DREYFUS AND MELLON EQUITY ARE
COLLECTIVELY REFERRED TO AS THE "ADVISERS."
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1996, WHICH MAY
BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS
IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
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<TABLE>
TABLE OF CONTENTS
Page
<S> <C> <C>
Condensed Financial Information................................................ 2
Description of the Fund........................................................ 2
Management of the Fund......................................................... 5
How to Buy Shares.............................................................. 6
How to Redeem Shares........................................................... 6
Shareholder Services Plan...................................................... 7
Dividends, Distributions and Taxes............................................. 7
Performance Information........................................................ 8
General Information............................................................ 8
Appendix....................................................................... 10
</TABLE>
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants, whose report thereon
covering the periods ending 1991 to 1995 appears in the Statement of
Additional Information. Further financial data and related notes are included
in the Statement of Additional Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common 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. The Fund's
total investment return shown below does not include expenses charged a
separate account or related insurance policy by a Participating Insurance
Company, inclusion of which would reduce the Fund's total investment return
for each period indicated.
<TABLE>
FOUR MONTHS
ENDED YEAR ENDED
YEAR ENDED AUGUST 31, DECEMBER 31, DECEMBER 31,
---------------------- -------------- --------------------
PER SHARE DATA: 1990(1) 1991 1992 1992(2) 1993 1994 1995
------- ------- ------- ------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year................. $12.50 $11.62 $14.20 $14.87 $15.32 $13.20. $12.94
------- ------- ------- ------- ------ ------ -----
INVESTMENT OPERATIONS:
Investment income-net.............................. .38 .39 .37 .13 .37 .32 .33
Net realized and unrealized gain (loss)
on investments.................................. (.95) 2.60 .68 .77 1.04 (.21) 4.39
------- ------- ------- ------- ------ ------ -----
TOTAL FROM INVESTMENT OPERATIONS (.57) 2.99 1.05 .90 1.41 .11 4.72
------- ------- ------- ------- ------ ------ -----
DISTRIBUTIONS:
Dividends from investment income-net............... (.31) (.39) (.38) (.21) (.34) (.31) (.33)
Dividends in excess of investment income-net....... .-- .-- .-- .-- (.03) .-- .--
Dividends from net realized gain on investments.... ._ (.02) ._ (.24) (3.00) .--(.13)
Dividends in excess of net realized gain
on investments.................................. ._ ._ ._ ._ (.16) (.06) .--
------- ------- ------- ------- ------ ------ -----
TOTAL DISTRIBUTIONS (.31) (.41) (.38) (.45) (3.53) (.37) (.46)
Net asset value, end of year $11.62 $14.20 $14.87 $15.32 $13.20 $12.94 $17.20
======= ======= ======= ======= ====== ====== =====
TOTAL INVESTMENT RETURN... (4.73%)(3) 26.26% 7.49% 6.05%(3) 9.33% .88% 36.78%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .37%(3) .40% .40% .13%(3) .40% .40% .39%
Ratio of net investment income to average
net assets...................................... 3.12%(3) 3.05% 2.63% .85%(3) 2.38% 2.56% 2.38%
Decrease reflected in above expense ratios due to
undertakings.................................... .17%(3) .11% .13% .03%(3) .27% .16% .03%
Portfolio Turnover Rate............................ .99%(3) 1.02% 7.66% 6.94%(3) 71.71% 2.82% 11.95%
Net Assets, end of year (000's omitted) ........... $48,184 $62,400 $74,446 $70,072 $61,319 $96,806 $312,686
(1)From September 29, 1989 (commencement of operations) to August 31, 1990.
(2)Effective September 1, 1992, the Fund changed its fiscal year-end
from August 31 to December 31. The figures provided are from
September 1, 1992 to December 31, 1992.
(3).Not annualized.
</TABLE>
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
GENERAL
The Fund is intended to be a funding vehicle for variable annuity
contracts ("VA contracts") and variable life insurance policies ("VLI
policies") to be offered by the Participating Insurance Companies. The Fund
currently does not foresee any disadvantages to the holders of VA contracts
and VLI policies arising from the fact
Page 2
that the interests of the holders of such contracts and policies may differ.
Nevertheless, the Fund's Board intends to monitor events in order to
identify any material conflicts which may arise and to determine what
action, if any, should be taken in response thereto. The VA contracts and
the VLI policies are described in the separate prospectuses issued by the
Participating Insurance Companies over which the Fund assumes no
responsibility.
Individual VA contract holders and VLI policy holders are not the
"shareholders" of the Fund. Rather, the Participating Insurance Companies and
their separate accounts are the shareholders (the "shareholders"), although
such companies may pass through voting rights to their VA contract holders
and VLI policy holders.
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide investment results that
correspond to the price and yield performance of publicly traded common
stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index* (the "Index"). It cannot be changed without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of the Fund's outstanding voting
shares. There can be no assurance that the Fund's investment objective will
be achieved.
MANAGEMENT POLICIES
The Fund attempts to duplicate the investment results of the Index, which is
composed of 500 selected common stocks, most of which are listed on the New
York Stock Exchange. Standard & Poor's ("S&P"). chooses the stocks to be
included in the Index solely on a statistical basis. The Fund attempts to be
fully invested at all times in the stocks that comprise the Index and stock
index futures as described below and, in any event, at least 80% of the
Fund's net assets will be so invested. Inclusion of a stock in the Index in
no way implies an opinion by S&P as to its attractiveness as an investment.
The Fund uses the Index as the standard performance comparison because it
represents approximately 70% of the total market value of all common stocks
and is well known to investors. An investment in the Fund involves risks
similar to those of investing in common stocks.
The weightings of stocks in the Index are based on each stock's
relative total market capitalization; that is, its market price per share
times the number of shares outstanding. Because of this weighting, as of
December 31, 1995, approximately 46% of the Index was composed of the 50
largest companies. The Advisers generally select stocks for the Fund's
portfolio in the order of their weightings in the Index beginning with the
heaviest weighted stocks. With respect to the Fund's assets invested in the
stocks in the Index, the percentage of such assets invested in each stock is
approximately the same as the percentage it represents in the Index.
No attempt is made to manage the portfolio in the traditional sense
using economic, financial and market analysis. The Fund is managed using a
computer program to determine which stocks are to be purchased or sold to
replicate the Index to the extent feasible. From time to time, administrative
adjustments may be made in the Fund's portfolio because of changes in the
composition of the Index, but such changes should be infrequent.
The Fund believes that the indexing approach described above is an
effective method of substantially duplicating percentage changes in the
Index. It is a reasonable expectation that there will be a close correlation
between the Fund's performance and that of the Index in both rising and
falling markets. The Fund will attempt to achieve a correlation between the
performance of its portfolio and that of the Index of at least 0.95, without
taking into account expenses. A correlation of 1.00 would indicate perfect
correlation, which would be achieved when the Fund's net asset value,
including the value of its dividends and capital gains distributions,
increases or decreases in exact proportion to changes in the Index. The
Fund's ability to correlate its performance with the Index, however, may be
affected by, among other things, changes in securities markets, the manner in
which the Index is calculated by S&P and the timing of purchases and
redemptions. In the future, the Fund's Board, subject to the approval of
shareholders, may select another index if such a standard of comparison is
deemed to be more representative of the performance of common stocks.
The Fund's ability to duplicate the performance of the Index also
depends to some extent on the size of the Fund's portfolio and the size of
cash flows into and out of the Fund. Investment changes to accommodate these
cash
- ----------------
*"Standard & Poor's 500," "S&P 500Registration Mark" are trademarks of The
McGraw-Hill Companies and have been licensed for use. The Fund is not
sponsored,
endorsed, sold or promoted by S&P or The McGraw-Hill Companies, Inc.
Page 3
flows are made to maintain the similarity of the Fund's portfolio to the
Index to the maximum practicable extent.
From time to time to increase its income, the Fund may lend
securities from its portfolio. See "Appendix _ Investment Techniques." When
the Fund has cash reserves, the Fund may invest in money market instruments
consisting of U.S. Government securities, time deposits, certificates of
deposit, bankers' acceptances, high-grade commercial paper, and repurchase
agreements. See the Statement of Additional Information for a description of
these instruments. The Fund also may purchase stock index futures in
anticipation of taking a market position when, in the opinion of the
Advisers, available cash balances do not permit an economically efficient
trade in the cash market. The Fund also may sell stock index futures to
terminate existing positions it may have as a result of its purchases of
stock index futures.
See also "Investment Considerations and Risks" and "Appendix _ Investment
Techniques" below, and "Investment Objective and Management Policies" in the
Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake
the risks involved. See "Investment Objective and Management
Policies_Management Policies" in the Statement of Additional Information for
a further discussion of certain risks.
EQUITY SECURITIES -- Equity securities fluctuate in value, often based on
factors unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in the value of the Fund's
investments will result in changes in the value of its shares and thus the
Fund's total return to investors.
FOREIGN SECURITIES -- Since the stocks of some foreign issuers are included
in the Index, the Fund's portfolio may contain securities of such foreign
issuers which may subject the Fund to additional investment risks with
respect to those securities that are different in some respects from those
incurred by a fund which invests only in securities of domestic issuers. Such
risks include possible: adverse political and economic developments, seizure
or nationalization of foreign deposits or adoption of governmental restriction
s which might adversely affect the payment of principle and interest on the
foreign securities or restrict the payment of principal and interest to
investors located outside the country of the issuer, whether from currency
blockage or otherwise.
USE OF DERIVATIVES -- The Fund may invest, to a limited extent, in
derivatives ("Derivatives"). These are financial instruments which derive
their performance, at least in part, from the performance of an underlying
asset or index. The Derivatives the Fund may use include stock index futures.
While Derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase the
volatility of the Fund's net asset value, can decrease the liquidity of the
Fund's portfolio and make more difficult the accurate pricing of the Fund's
portfolio. See "Appendix _Investment Techniques _ Use of Derivatives" below
and " Investment Objective and Management Policies _ Management Policies _
Derivatives" in the Statement of Additional Information.
NON-DIVERSIFIED STATUS -- The classification of the Fund as a
"non-diversified" investment company means that the proportion of the Fund's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. A "diversified" investment company is required by
the 1940 Act generally, with respect to 75% of its total assets, to invest
not more than 5% of such assets in the securities of a single issuer. Since a
relatively high percentage of the Fund's assets may be invested in the
securities of a limited number of issuers, some of which may be within the
same economic sector, the Fund's portfolio may be more sensitive to the
changes in market value of a single issuer or industry. However, to meet
Federal tax requirements, at the close of each quarter the Fund may not have
more than 25% of its total assets invested in any one issuer and, with
respect to 50% of total assets, not more than 5% of its total assets invested
in any one issuer. These limitations do not apply to U.S. Government
securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of the other investment companies or accounts
advised by Dreyfus or Mellon Equity. If, however, such other investment
companies or accounts desire to invest in, or dispose of, the same securities
as the Fund, available investments or opportunities for sales will be
allocated equitably to each. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by the Fund or
the price paid or received by the Fund.
Page 4
MANAGEMENT OF THE FUND
ADVISERS -- Dreyfus, located at 200 Park Avenue, New York, New York 10166,
was formed in 1947 and serves as the Fund's manager. Dreyfus is a
wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-owned
subsidiary of Mellon Bank Corporation ("Mellon"). As of March 29, 1996,
Dreyfus managed or administered approximately $82 billion in assets for more
than 1.7 million investor accounts nationwide.
Dreyfus supervises and assists in the overall management of the
Fund's affairs under a Management Agreement with the Fund, subject to the
authority of the Fund's Board in accordance with Maryland law.
Dreyfus has engaged Mellon Equity, located at 500 Grant Street,
Pittsburgh, Pennsylvania 15258, to serve as the Fund's index fund manager.
Mellon Equity, a registered investment adviser formed in 1957, is an indirect
wholly-owned subsidiary of Mellon and, thus, an affiliate of Dreyfus. As of
December 31, 1995, Mellon Equity and its employees managed approximately $8.8
billion in assets and served as the investment adviser of 13 other investment
companies.
Mellon Equity, subject to the supervision and approval of Dreyfus,
provides the day-to-day management of the Fund's investments, as well as
statistical information, under an Index Management Agreement with Dreyfus,
subject to the overall authority of the Fund's Board in accordance with
Maryland law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including Dreyfus, Mellon managed more than $233 billion in
assets as of December 31, 1995, including approximately $81 billion in
proprietary mutual fund assets. As of December 31, 1995, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $786 billion in assets, including
approximately $60 billion in mutual fund assets.
For the period November 13, 1995 (effective date of the Management
Agreement and Index Management Agreement) through December 31, 1995, the end
of the Fund's fiscal year, the Fund paid Dreyfus a monthly management fee at
the effective annual rate of .245 of 1% of the value of the Fund's average
daily net assets, and Dreyfus paid Mellon Equity an index management fee at
the effective annual rate of .095 of 1% of the value of the Fund's average
daily net assets. Under the Index Management Agreement, Mellon Equity has
agreed to pay for the provision of custody services to the Fund by Boston
Safe Deposit and Trust Company.
Prior to November 13, 1995, Wells Fargo Nikko Investment Advisors
("WFNIA") served as the Fund's index fund manager pursuant to an Index
Management Agreement with the Fund and Dreyfus served as the Fund's
administrator pursuant to an Administration Agreement with the Fund. Pursuant
to such agreements, the Fund agreed to pay WFNIA and Dreyfus each at an
annual rate of .15 of 1% of the value of the Fund's average daily net assets.
For the period January 1, 1995 through November 12, 1995 (termination date of
such agreements), the Fund paid each of WFNIA and Dreyfus at the effective
annual rate of .10 of 1% of the value of the Fund's average daily net assets.
The imposition of the Fund's management fee, as well as other
operating expenses, will have the effect of reducing investors' return and
will affect the Fund's ability to track the Index exactly. Dreyfus has
undertaken that, until such time as it gives shareholders at least 180 days
notice to the contrary, if in any fiscal year the aggregate expenses of the
Fund (excluding brokerage commissions, transaction fees and extraordinary
expenses) exceed .40 of 1% of the value of the Fund's average net assets for
the fiscal year, the Fund may deduct from the payment to be made to Dreyfus,
or Dreyfus will bear, such excess expense. In addition, from time to time,
Dreyfus may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors. The Fund will
not
Page 5
pay Dreyfus at a later time for any amounts Dreyfus may waive, nor will
the Fund reimburse Dreyfus for any amounts Dreyfus may assume.
In allocating brokerage transactions for the Fund, the Advisers seek
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, the Advisers may consider, among other things,
the receipt of research services and/or the sale of shares of the Fund or
other funds advised by Dreyfus or Mellon Equity as factors in the selection
of broker-dealers to execute portfolio transactions for the Fund. See
"Portfolio Transactions" in the Statement of Additional Information.
Dreyfus may pay the Fund's distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The Fund's distributor may use part of all of such
payments to pay securities dealers, banks or other financial institutions in
respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's Transfer and Dividend Disbursing Agent (the
"Transfer Agent"). Boston Safe Deposit and Trust Company, an indirect
subsidiary of Mellon, One Boston Place, Boston, Massachusetts 02108, is the
Custodian of the Fund's investments.
HOW TO BUY SHARES
Separate accounts of the Participating Insurance Companies place
orders based on, among other things, the amount of premium payments to be
invested pursuant to VA contracts and VLI policies. Individuals may not place
orders directly with the Fund. See the prospectus of the separate account of
the applicable Participating Insurance Company for more information on the
purchase of Fund shares.
If an order is received by the Fund or its agent by the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time) on a business day, Fund shares will be purchased at the net asset
value determined as of such close of trading on the day the order is
received. Otherwise, Fund shares will be purchased at the net asset value
determined as of the close of trading on the floor of the New York Stock
Exchange on the next business day.
Fund shares are sold on a continuous basis. Net asset value per share
is determined as of the close of trading on the floor of the New York Stock
Exchange on each day the New York Stock Exchange is open for business. For
purposes of determining net asset value, futures contracts will be valued 15
minutes after the close of trading on the floor of the New York Stock
Exchange. Net asset value per share is computed by dividing the value of the
Fund's net assets (i.e., the value of its assets less liabilities) by the
total number of shares outstanding. The Fund's investments are valued based
on market value, or where market quotations are not readily available, based
on fair value as determined in good faith by the Fund's Board. For further
information regarding the methods employed in valuing the Fund's investments,
see "Determination of Net Asset Value" in the Statement of Additional
Information.
HOW TO REDEEM SHARES
Fund shares may be redeemed at any time by the separate accounts of
the Participating Insurance Companies. Individuals may not place redemption
orders directly with the Fund. When the Fund or its agent receives a request
in proper form by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), the Fund will redeem the
shares at the net asset value determined as of the close of such trading on
the day the request is received. To maximize the Fund's ability to track the
Index, shareholders are urged to transmit redemption requests so that they
may be received by the Fund or its agent prior to 12:00 noon, New York time,
on the day upon which shareholders want their redemption requests to be
effective. The value of the shares redeemed may be more or less than their
original cost, depending on the Fund's then-current net asset value. No
charges are imposed by the Fund when shares are redeemed.
Page 6
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission.
Should any conflict between VA contract holders and VLI policy
holders arise which would require that a substantial amount of net assets be
withdrawn, orderly portfolio management could be disrupted to the potential
detriment of such contract and policy holders.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, an amount not to exceed an annual rate of .25 of 1% of the value of
the Fund's average daily net assets for certain allocated expenses with
respect to servicing and/or maintaining shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares and pays dividends from net investment
income quarterly, and automatically reinvests them in additional Fund shares
at net asset value or, at the shareholder's option, pays them in cash. The
Fund makes distributions from net realized securities gains, if any, once a
year, but may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), in all events in a manner consistent with the provisions of the
1940 Act. The Fund will not make distributions from net realized securities
gains unless capital loss carryovers, if any, have been utilized or have
expired. If all shares in an account are redeemed at any time, all dividends
to which the shareholder is entitled will be paid along with the proceeds of
the redemption. An omnibus accountholder may indicate in a partial redemption
request that a portion of any accrued dividends to which such account is
entitled belongs to an underlying accountholder who has redeemed all shares
in his or her account, and such portion of the accrued dividends will be paid
to the accountholder along with the proceeds of the redemption. All expenses
are accrued daily and deducted before declaration of dividends to investors.
Notice as to the tax status of dividends and distributions will be
mailed to shareholders annually. Dividends derived from net investment
income, together with distributions of net realized short-term securities
gains paid by the Fund will be taxable as ordinary income whether received in
cash or reinvested in additional Fund shares. Distributions from net realized
long-term securities gains of the Fund will be taxable to U.S. shareholders
as long-term capital gains for Federal income tax purposes, regardless of how
long shareholders have held their Fund shares and whether such distributions
are received in cash or reinvested in additional Fund shares. The Code
provides that the net capital gain of an individual generally will not be
subject to Federal income tax at a rate in excess of 28%. Since the Fund's
shareholders are the Participating Insurance Companies and their separate
accounts, no discussion is included herein as to the Federal income tax
consequences to VA contract holders and VLI policy holders. Participating
Insurance Companies should consult their own tax advisers as to the
taxability of dividends and distributions paid to them.
Section 817(h) of the Code requires that the investments of a
segregated asset account of an insurance company be "adequately diversified''
as provided therein or in accordance with U.S. Treasury Regulations, in order
for the account to serve as the basis for VA contracts or VLI policies.
Section 817(h) and the U.S. Treasury Regulations issued thereunder provide
the manner in which a segregated asset account will treat investments in a
regulated investment company for purposes of the diversification requirements.
If the Fund satisfies certain conditions, a segregated asset account owning
shares of the Fund will be treated as owning multiple investments consisting
of the account's proportionate share of each of the assets of the Fund. The
Fund intends to satisfy these conditions so that the shares of the Fund owned
by a segregated asset account of a Participating Insurance Company will be
treated as multiple investments. Further, the Fund intends to satisfy the
diversification standards prescribed under Section 817(h) for segregated
accounts.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended December 31, 1995
Page 7
as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if such qualification is
in the best interest of its shareholders. Qualification as a regulated
investment company relieves the Fund of any liability for Federal income
taxes to the extent its earnings are distributed in accordance with
applicable provisions of the Code. In addition, the Fund is subject to a
non-deductible 4% excise tax, measured with respect to certain undistributed
amounts of taxable investment income and capital gains.
Participating Insurance Companies should consult their tax advisers
regarding specific questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For the purpose of advertising, performance is calculated on the
basis of average annual total return and/or total return.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter time periods depending
upon the length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. Performance information, such
as that described above, may not provide a basis for comparison with other
investments or other investment companies using a different method of
calculating performance.
The Fund's average annual total return and total return should not be
compared with other funds that offer their shares directly to the public
since the figures provided do not reflect charges of Participating Insurance
Companies. In addition, the Fund's total return should be distinguished from
the rate of return of a separate account or investment division of a separate
account of a Participating Insurance Company, which rate will reflect the
deduction of additional charges, including mortality and expense risk
charges, and therefore will be lower. VA contract holders and VLI policy
holders should consult the prospectus for such contract or policy.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Standard &
Poor's 500 Composite Stock Price Index, Standard & Poor's MidCap 400 Index,
Lipper Analytical Services, Inc., the Dow Jones Industrial Average, Money
Magazine, Morningstar, Inc. and other industry publications. The Fund may
cite in its advertisements or in reports or other communications to
shareholders, historical performance of unmanaged indices as reported in
Ibbotson, Roger G. and Rex A. Sinquefield, Stocks, Bonds, Bills and Inflation
(SBBI), updated annually in the SBBI Yearbook, Ibbotson Associates, Chicago.
In its advertisements, the Fund also may cite the aggregate amount of assets
committed to index investing by pension funds and/or other institutional
investors, and may refer to or discuss then current or past economic or
financial conditions, developments or events.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on January 24, 1989, and
commenced operations on September 29, 1989. On May 1, 1994, the Fund, which
is incorporated under the name Dreyfus Life and Annuity Index Fund, Inc.,
began operating under the name Dreyfus Stock Index Fund. The Fund is
authorized to issue 200 million shares of Common Stock, par value $.001 per
share. Each share has one vote. In accordance with current law, the Fund
anticipates that a Participating Insurance Company issuing a VA contract
or
Page 8
VLI policy that participates in the Fund will request voting instructions
from contract and policy holders and will vote shares in proportion to the
voting instructions received. For further information on voting rights, see
the applicable prospectus of the Participating Insurance Company.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, pursuant to the Fund's By-Laws, the
holders of at least 10% of the shares outstanding and entitled to vote may
require the Fund to hold a special meeting of shareholders for purposes of
removing a Board member from office and the holders of at least 25% of such
shares may require the Fund to hold a special meeting of shareholders for any
other purpose. Fund shareholders may remove a Board member by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition, the
Fund's Board will call a meeting of shareholders for the purpose of electing
Board members if, at any time, less than a majority of the Board members then
holding office have been elected by shareholders.
The Transfer Agent maintains a record of shareholder ownership and
sends confirmations and statements of account.
Owners of policies and contracts issued by a Participating Insurance
Company for which shares of the Fund are an investment vehicle will receive
from the Participating Insurance Company unaudited semi-annual financial
statements and audited year-end financial statements certified by the Fund's
independent public accountants. Each report will show the investments owned
by the Fund and the market values thereof and will provide other information
about the Fund and its operations.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11566-0144, or by calling toll free
1-800-645-6561. In New York City, call 1-718-895-1206; outside the U.S. and
Canada, call 516-794-5452.
The Fund is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the owners of the
Fund or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of the S&P
500 Index to track general stock market performance. S&P's only relationship
to the Fund is the licensing of certain trademarks and trade names of S&P and
of the S&P 500 Index which is determined, composed and calculated by S&P
without regard to the Fund. S&P has no obligation to take the needs of the
Fund or the owners of the Fund into consideration in determining, composing
or calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the calculation of the Fund's net asset value, nor is S&P a
distributor of the Fund. S&P has no obligation or liability in connection
with the administration, marketing or trading of the Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, OWNERS OF THE FUND, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR
ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Page 9
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- The Fund is permitted to borrow money only for temporary
or emergency (not leveraging) purposes, in an amount up to 5% of the value of
its total assets (including the amount borrowed) valued at the lesser of cost
or market, less liabilities (not including the amount borrowed) at the time
the borrowing is made.
USE OF DERIVATIVES -- The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund -- Investment Considerations and
Risks -- Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objective and Management
Policies -- Management Policies -- Derivatives" in the Statement of
Additional Information.
Although the Fund will not be a commodity pool, Derivatives subject
the Fund to the rules of the Commodity Futures Trading Commission which limit
the extent to which the Fund can invest in certain derivatives. The Fund may
invest in stock index futures contracts for hedging purposes without limit.
However, the Fund may not invest in such contracts for other purposes if the
sum of the amount of initial margin deposits, other than for bona fide
hedging purposes, exceeds 5% of the liquidation value of the Fund's assets,
after taking into account unrealized profits and unrealized losses on such
contracts.
LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities which affords the Fund an
opportunity to earn interest on the amount of the loan and income on the
loaned securities' collateral. Loans of portfolio securities may not exceed
30% of the value of the Fund's total assets, and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to
at least 100% of the current market value of the loaned securities. Such
loans are terminable by the Fund at any time upon specified notice. The Fund
might experience risk of loss if the institution with which it has engaged in
a portfolio loan transaction breaches its agreement with the Fund.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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Stock
Index Fund
Prospectus
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
763p090196
Page 11
