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PROSPECTUS MARCH 1, 1996
DREYFUS EDISON ELECTRIC INDEX FUND, INC.
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DREYFUS EDISON ELECTRIC INDEX FUND, INC. (THE "FUND") IS AN OPEN-END,
NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS AN INDEX FUND. 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 OF INVESTOR-OWNED COMPANIES ENGAGED IN THE GENERATION, TRANSMISSION
OR DISTRIBUTION OF ELECTRIC ENERGY, AS REPRESENTED BY AN INDEX COMPRISING THE
COMMON STOCKS OF COMPANIES THAT ARE MEMBERS OF THE EDISON ELECTRIC INSTITUTE
("EEI"). THE FUND IS NOT SPONSORED BY EEI.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY.
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 referred
to collectively 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 MARCH 1, 1996, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS THAT 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
<S> <C> <C>
Page
Annual Fund Operating Expenses.................... 3
Condensed Financial Information................... 3
Description of the Fund........................... 4
Management of the Fund............................ 6
How to Buy Fund Shares............................ 7
How to Redeem Fund Shares......................... 8
Shareholder Services.............................. 10
Shareholder Services Plan......................... 11
Dividends, Distributions and Taxes................ 11
Performance Information........................... 12
General Information............................... 13
Appendix.......................................... 14
</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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[This Page Intentionally Left Blank]
Page 2
<TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C> <C>
Management Fee ............................................................................... .25%
Other Expenses................................................................................ .55%
Total Fund Operating Expenses ................................................................ .80%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $8 $26 $44 $99
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. You can purchase Fund shares without charge
directly from the Fund's distributor; you may be charged a nominal fee if you
effect transactions in Fund shares through a securities dealer, bank or other
financial institution. See "Management of the Fund," "How to Buy Fund
Shares," "How to Redeem Fund Shares" and "Shareholder Services Plan."
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
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 year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
Year Ended October 31,
-------------------------------------------------
1992(1) 1993 1994 1995
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year.......................... $12.50 $13.05 $14.69 $11.27
------------ ----------- ---------- ----------
Investment Operations:
Investment income--net ..................................... .60 .62 .72 .72
Net realized and unrealized gain (loss) on investments...... .51 1.66 (3.23) 2.04
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Total from Investment Operations............................ 1.11 2.28 (2.51) 2.76
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Distributions:
Dividends from investment income-net........................ (.56) (.63) (.70) (.75)
Dividends from net realized gain on investments............. -- (.01) (.21) --
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Total Distributions......................................... (.56) (.64) (.91) (.75)
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Net asset value, end of year................................ $13.05 $14.69 $11.27 $13.28
============ =========== ========== ==========
Total Investment Return....................................... 9.11%(2) 17.71% (17.41%) 25.34%
Ratios / Supplemental Data:
Ratio of expenses to average net assets .................... .24%(2) .75% .74% .80%
Ratio of net investment income to average net assets ....... 5.31%(2) 4.80% 5.66% 5.92%
Decrease reflected in above expense ratios due to undertakings .95%(2) .09% -- --
Portfolio Turnover Rate..................................... 2.76%(2) 14.14% 8.92% 5 9.75%
Net Assets, end of year (000's omitted)..................... $36,861 $117,835 $71,587 $79,993
(1) From December 6, 1991 (commencement of operations) to October 31, 1992.
(2) Not annualized.
</TABLE>
Page 3
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
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 of investor-owned companies engaged in the
production, transmission or distribution of electric energy, as represented
by an index comprising the common stocks of companies that are members of EEI
(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 approximately 101 publicly-traded common stocks of EEI
member companies. EEI is a trade association representing 180 investor-owned
companies engaged in the generation, transmission and distribution of
electric energy. EEI members generate approximately three-fourths of the
nation's electricity and make up 99% of the investor-owned segment of the
United States electric utility industry. The Fund attempts to be fully
invested at all times in the stocks that comprise the Index, and, in any
event, at least 80% of the Fund's net assets will be so invested. Because the
Fund's portfolio is concentrated in the securities of such companies, the
shares of the Fund are particularly affected by developments in the electric
utility industry. See "Investment Considerations and Risks" below.
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. However, no such stock will represent
less than .10% of the Index regardless of such stock's relative total market
capitalization. Because of this weighting, as of December 31, 1995, 35.4% of
the Index was composed of the ten largest companies in EEI. 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 Fund's portfolio in the traditional
sense using economic, financial and market analysis. The Fund is managed
using a computer program to determine which securities 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. The composition of the Index will
change only in response to changes in the composition of the publicly-traded
common stocks of EEI member companies, such as when electric utility
companies consolidate or join or resign from EEI.
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, particularly
those affecting the electric utility industry, and the timing of purchases
and redemptions. In the future, the Fund's Board, subject to the
Page 4
approval of shareholders, may select or develop another index if such a
standard of comparison is deemed to be more representative of
the performance of the common stocks of EEI member companies.
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 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.
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.
The securities of the smaller companies in which the Fund may
invest may be subject to more abrupt or erratic market movements than larger,
more established companies, because these securities typically are traded in
lower volume and the issuers typically are subject to a greater degree to
changes in earnings and prospects.
INVESTING IN THE ELECTRIC UTILITY INDUSTRY -- Because the Fund's portfolio is
concentrated in the electric utility industry, the Fund is subject to greater
risk of loss due to unfavorable developments associated with such industry
than an investment company with a portfolio that is not so concentrated. In
particular, the Fund will be affected by developments associated with
investor-owned companies engaged in the production, transmission and
distribution of electric energy that are members of EEI. Electric utility
companies historically have been subject to the risks of increases in fuel
and other operating costs, high interest costs on borrowings needed for
capital construction programs, costs associated with compliance with
environmental and nuclear safety regulations, and changes in the regulatory
climate. In particular, regulatory changes with respect to nuclear and
conventionally fueled generating facilities could increase costs or impair
the ability of investor-owned electric utility companies to operate such
facilities, thus reducing such utility companies' earnings or resulting in
losses. There also can be no assurance that regulatory policies or accounting
standard changes will not negatively affect investor-owned electric utility
companies' earnings or dividends.
NON-DIVERSIFIED STATUS _ The Fund's classification 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, the Fund's portfolio may be more sensitive to
changes in the market value of a single issuer. 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 accounts and investment companies
advised by Dreyfus or Mellon Equity. However, if such other accounts or
investment companies are prepared to invest in, or desire
to dispose of, securities in
Page 5
which the Fund invests, 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.
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 January 31, 1995,
Dreyfus managed or administered approximately $82 billion in assets for
approximately 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 serves as the investment adviser of 62 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 and Mellon Equity, Mellon managed more
than $209 billion in assets as of September 30, 1995, including approximately
$80 billion in proprietary mutual fund assets. As of September 30, 1995,
Mellon, through various subsidiaries, provided non-investment services, such
as custodial or administration services, for more than $717 billion in
assets, including approximately $55 billion in mutual fund assets.
Pursuant to the terms of the Management Agreement, the Fund has
agreed to pay Dreyfus a monthly fee at the annual rate of .245 of 1% of the
value of the Fund's average daily net assets. Under the Index Management
Agreement, Dreyfus has agreed to pay Mellon Equity a monthly fee at the
annual rate of .095 of 1% of the Fund's average daily net assets, which fee
includes payment 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 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, for the fiscal year ended October 31, 1995, the Fund paid WFNIA
and Dreyfus .10% and .15%, respectively, of the value of the Fund's average
daily net assets.
The imposition of the Fund's management fees, 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. From time to time,
Dreyfus and/or Mellon Equity or one of their affiliates may waive receipt of
their 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 at the time such amounts are waived or assumed,
as the case may be. The Fund will not pay Dreyfus and/or Mellon Equity or
their affiliates at a later time for any amounts which may be waived, nor
will the Fund reimburse Dreyfus and/or Mellon Equity or their affiliates for
any amounts which may be assumed.
Page 6
Dreyfus may pay the Fund's distributor for shareholder services from
its own assets, including past profits but not including the management fee
paid by the Fund. The Fund's distributor may use part or all of such payments
to pay securities dealers or others in respect of these services.
EEI _ Pursuant to an agreement with Dreyfus, EEI has agreed to provide
certain statistical and factual information with respect to the companies
which comprise EEI and the general economic condition of the electric utility
industry. As compensation for such services, Dreyfus has agreed to pay EEI
out of its own funds, including past profits or any other source available to
it, a monthly fee at the annual rate of .075 of 1% of the value of the Fund's
average daily net assets over $25 million. EEI has no responsibility with
respect to the Fund's investments.
CUSTODIAN AND TRANSFER AGENT AND DIVIDEND DISBURSING AGENT -- Boston Safe
Deposit and Trust Company, One Boston Place, Boston, Massachusetts 02108
("Boston Safe"), is the custodian of the Fund's investments. Boston Safe is
an indirect subsidiary of Mellon. Dreyfus Transfer, Inc., a wholly-owned
subsidiary of Dreyfus, P.O. Box 9671, Providence, Rhode Island 02903, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent").
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.
HOW TO BUY FUND SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution. The Fund's shares are available
for purchase by pension and profit-sharing plans. The Fund does not issue
share certificates. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a securities dealer, bank or other financial institution which has
made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. The initial investment must be
accompanied by the Fund's Account Application.
You may purchase Fund shares by check or wire. Checks should be made
payable to "Dreyfus Edison Electric Index Fund, Inc." For subsequent
investments, your Fund account number also should appear on the check.
Payments which are mailed should be sent to Dreyfus Edison Electric Index
Fund, Inc., P.O. Box 6647, Providence, Rhode Island 02940-6647, together with
your investment slip or, when opening a new account, your Account
Application. Payments to purchase shares for Dreyfus retirement plan accounts
should be mailed to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Neither initial nor subsequent
investments should be made by third party check. Purchase orders may be
delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE
FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900188278/Dreyfus Edison
Electric Index Fund, Inc., for purchase of Fund shares in your name. The wire
must include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, please call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be made in
U.S. dol-
Page 7
lars and, to avoid fees and delays, should be drawn only on U.S.
banks. A charge will be imposed if any check used for investment in your
account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs, or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000. Shares of funds in
the Dreyfus Family of Funds then held by such employee benefit plans or
programs will be aggregated to determine the fee payable. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Fund shares are sold on a continuous basis at the net asset value per
share next determined after your order is received in proper form by the
Transfer Agent or other agent. If an order is received in proper form by the
Transfer 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 given day, Fund shares
will be purchased at the net asset value determined as of such close of
trading on that day. 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. To permit the Fund to invest
your money as promptly as possible after receipt, thereby maximizing the
Fund's ability to track the Index, you are urged to transmit your purchase
order in proper form so that it may be received by the Transfer Agent prior
to 3:00 p.m., New York time, on the day you want your purchase order to be
effective.
The Fund's 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. 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 Fund investments, see "Determination of Net Asset Value" in the
Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value, which may be more or less than their
original cost. To maxi-
Page 8
mize the Fund's ability to track the Index, you are urged to transmit your
redemption request so that it may be received by the Transfer Agent prior to
3:00 p.m., New York time, on the day you want your redemption request to be
effective.
The Fund imposes no charge when shares are redeemed. Securities
dealers, banks and other financial institutions may charge their clients a
nominal fee for effecting redemptions of Fund shares.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
accordance with the procedures described below, except as provided by the
rules of the Securities and Exchange Commission. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY
TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR THE DREYFUS-
AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED.
THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE
PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES
You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
filed the Shareholder Services Form with the Transfer Agent, through the Wire
Redemption Privilege or the Telephone Redemption Privilege. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the
right to refuse any request made by wire or telephone, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. The Fund may modify or terminate any redemption
Privilege at any time or charge a service fee upon notice to shareholders. No
such fee currently is contemplated.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege, you authorize the Transfer Agent to act on telephone instructions
from any person representing himself or herself to be you, and reasonably
believed by the Transfer Agent to be genuine. The Fund will require the
Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine and, if it
does not follow such procedures, the Fund or the Transfer Agent may be liable
for any losses due to unauthorized or fraudulent instructions. Neither the
Fund nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption of Fund shares. In such cases, you should consider using
the other redemption procedures described herein. Use of these other
redemption procedures may result in your redemption request being processed
at a later time than it would have been if telephone redemption had been
used. During the delay, the Fund's net asset value may fluctuate.
Page 9
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." Redemption requests
must be signed by each shareholder, including each owner of a joint account,
and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper
form generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guarantee request.
Your written redemption request may direct that the redemption
proceeds be used to purchase shares of other funds advised or administered by
Dreyfus. Before you make such a request, you must obtain and should review
a copy of the current prospectus of the fund being purchased; and your
redemption proceeds will be invested in shares of such other fund on the next
business day. Prospectuses may be obtained by calling 1-800-645-6561. The
prospectus will contain information concerning minimum investment requirements
and other conditions that may apply to your purchase. No other fees
currently are charged shareholders directly in connection with this
procedure, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. This procedure may be
modified or terminated at any time upon not less than 60 days' notice to
shareholders.
Upon request, proceeds from the redemption of shares of other funds
in the Dreyfus Family of Funds by an employee benefit plan will be applied to
purchase Fund shares on the date of redemption, if the plan's recordkeeper
has entered into an appropriate agency agreement with the Fund and such other
funds.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day)made out to the owners of record and mailed
to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. Shares
held under Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this Privilege.
SHAREHOLDER SERVICES
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark -- Dreyfus-Automatic Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated
Page 10
by you. At your option, the bank account designated by you will be debited
in the specified amount, and Fund shares will be purchased, once a month, on
either the first or fifteenth day, or twice a month, on both days. Only an
account maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. This Privilege may provide you
with a convenient way to invest for long-term financial goals. You should be
aware, however, that periodic investment plans do not guarantee a profit and
will not protect an investor against loss in a declining market. To establish
a Dreyfus-Automatic Asset Builder account, you must file an authorization form
with the Transfer Agent. You may obtain the necessary authorization form by
calling 1-800-645-6561. You may cancel this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
RETIREMENT PLANS -- The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
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 of
providing personal services and/or maintaining shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares and pays dividends from its net
investment income quarterly, and automatically reinvests them in additional
Fund shares at net asset value or, at your option, pays them in cash. The
Fund will make distributions from net realized securities gains, if any,
generally 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. You may choose whether to receive distributions in
cash or to reinvest them in additional Fund shares at net asset value. All
expenses are accrued daily and deducted before declaration of dividends to
investors.
Dividends paid by the Fund out of net investment income and
distributions from net realized short-term securities gains of the Fund will
be taxable to U.S. shareholders as ordinary income whether received in cash
or reinvested in additional shares. Depending on the composition of the
Fund's income, a portion of the dividends from net investment income may
qualify for the dividends received deduction allowable to certain U.S.
corporations. Distributions from net realized long-term securities gains of th
e 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 shares. The Code provides that the net realized
capital gain of an individual generally will not
Page 11
be subject to Federal income tax at a rate in excess of 28%. Dividends and
distributions may be subject to state and local taxes.
Dividends derived from net investment income and distributions from
net realized short-term securities gains paid by the Fund to a foreign
investor generally are subject to U.S. nonresident withholding taxes at the
rate of 30%, unless the investor claims the benefit of a lower rate specified
in a tax treaty. Distributions from net realized long-term securities gains
paid by the Fund to a foreign investor as well as the proceeds of any
redemptions from a foreign investor's account, regardless of the extent to
which gain or loss may be realized, generally will not be subject to U.S.
nonresident withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor certifies
his non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended October 31, 1995 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. Such qualification relieves the
Fund of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. 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.
Each investor should consult its tax adviser 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.
Page 12
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 inv
estments or other investment companies using a different method of
calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from the Wilshire
5000 Index, Standard & Poor's 500 Composite Stock Price Index, Standard &
Poor's MidCap 400 Index, Lipper Analytical Services, Inc., the Dow Jones
Industrial Average, 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), 1982, 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 March 20, 1991, and
commenced operations on December 6, 1991. The Fund is authorized to issue 200
million shares of Common Stock, par value $.001 per share. Each share has one
vote.
Under the terms of a License Agreement between the Fund and EEI, EEI
has granted the Fund a non-exclusive royalty free license to use the name
"Edison Electric." The license is to continue for successive ten year
periods, unless the Fund's investment objective is no longer to provide
investment results that correspond to the price and yield performance of
publicly-traded common stocks in the aggregate of investor-owned companies
engaged in the generation, transmission or distribution of electric energy,
as represented by an index comprising the common stocks of companies which
are members of EEI at which time the Fund has agreed to cease its use of the
name "Edison Electric."
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 Directors 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
Director from office and for any other purpose. Fund shareholders may remove
a Director 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 Directors if, at any time, less than
a majority of the Directors then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, 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.
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.
page 13
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 15% 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. While borrowings exceed 5% of the Fund's total assets,
the Fund will not make any additional investments.
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. In connection with such
loans, the Fund continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned securities.
Loans of portfolio securities afford the Fund an opportunity to earn interest
on the amount of the loan and at the same time to earn income on the loaned
securities' collateral. Loans of portfolio securities may not exceed 30% of
the value of the Fund's total assets. In connection with such loans, 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 portfolio a loan transaction breaches its agreement with
the Fund.
Page 14
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Page 15
DREYFUS
Edison
Electric
Index Fund, Inc.
Prospectus
(LION LOGO)
Copy Rights 1996 Dreyfus Service Corporation
114p8030196
Registration Mark
DREYFUS EDISON ELECTRIC INDEX FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 1, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Edison Electric Index Fund, Inc. (the "Fund"), dated March 1, 1996,
as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call 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 Dreyfus Corporation ("Dreyfus") serves as the Fund's manager.
Dreyfus has engaged its affiliate, Mellon Equity Associates ("Mellon
Equity"), to serve as Fund's index fund manager and provide day-to-day
management of the Fund's investments. Dreyfus and Mellon Equity are
referred to collectively as the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . B-5
Management Arrangements . . . . . . . . . . . . . . . . . . . . . B-9
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . B-11
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . B-12
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . B-12
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . B-14
Determination of Net Asset Value. . . . . . . . . . . . . . . . . B-14
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . B-15
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . B-16
Performance Information . . . . . . . . . . . . . . . . . . . . . B-16
Information About the Fund. . . . . . . . . . . . . . . . . . . . B-17
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Accountants . . . . . . . . . . . . . . B-17
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . B-19
Report of Independent Accountants . . . . . . . . . . . . . . . . B-26
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the
Fund" and "Appendix."
Certain Portfolio Securities
Money Market Instruments. The Fund may invest, in the circumstances
described under "Description of the Fund - Management Policies" in the
Fund's Prospectus, in the following types of money market instruments.
U.S. Government Securities. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others, by the right of the issuer to borrow from the Treasury;
others, by discretionary authority of the U.S. Government to purchase
certain obligations from the agency or instrumentality; and others, only by
the credit of the agency or instrumentality. These securities bear fixed,
floating or variable rates of interest. While the U.S. Government provides
financial support for such U.S. Government-sponsored agencies and
instrumentalities, no assurance can be given that it will always do so since
it is not so obligated by law.
Repurchase Agreements. In a repurchase agreement, the Fund buys, and
the seller agrees to repurchase, a security at a mutually agreed upon time
and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. The Fund's custodian or sub-custodian will have custody of, and
will hold in a segregated account, securities acquired by the Fund under a
repurchase agreement. Repurchase agreements are considered by the staff of
the Securities and Exchange Commission to be loans by the Fund. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement,
the Fund will enter into repurchase agreements only with domestic banks with
total assets in excess of one billion dollars or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the value of the
securities purchased should decrease below resale price. Repurchase
agreements could involve risks in the event of a default or insolvency of
the other party to the agreement, including possible delays or restrictions
upon the Fund's ability to dispose of the underlying securities.
Bank Obligations. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such
securities issued by foreign subsidiaries or foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, the Fund may be
subject to additional investment risks that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and the drawer to pay the face
amount of the instruments upon maturity. The other short-term obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Fund will consist only of direct obligations which,
at the time of their purchase, are (a) rated at least Prime-1 by Moody's
Investors Service, Inc. ("Moody's) or A-1 by Standard & Poor's Rating Group,
a division of The McGraw Hill Companies Inc. ("S&P"), (b) issued by
companies having an outstanding unsecured debt issue currently rated not
lower than Aa3 by Moody's or AA- by S&P, or (c) if unrated, determined by
the Advisers to be of comparable quality to those rated obligations which
may be purchased by the Fund.
Management Policies
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned securities may pass
to the borrower, the Fund's Board of Directors must terminate the loan and
regain the right to vote the securities if a material event adversely
affecting the investment occurs. These conditions may be subject to future
modification.
Investment Restrictions
The Fund has adopted the following investment restrictions as
fundamental policies, which 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. The Fund
may not:
1. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.
2. Purchase securities of closed-end investment companies except (a)
in the open market where no commission other than the ordinary broker's
commission is paid, which purchases are limited to a maximum of (i) 3% of
the total outstanding voting stock of any one closed-end investment company,
(ii) 5% of the Fund's net assets with respect to the securities issued by
any one closed-end investment company and (iii) 10% of the Fund's net assets
in the aggregate, or (b) those received as part of a merger or
consolidation. The Fund may not purchase the securities of open-end
investment companies other than itself.
3. Purchase or sell real estate, real estate investment trust
securities, real estate limited partnership interests, commodities or
commodity contracts or oil, gas or other mineral exploration or development
programs, but the Fund may purchase and sell securities that are secured by
real estate or issued by companies that invest or deal in real estate.
4. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
5. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes.
6. Lend any funds or other assets except through the purchase of debt
securities, bankers' acceptances and commercial paper of corporations and
other entities. However, the Fund may lend its portfolio securities in an
amount not to exceed 30% of the value of its total assets. Any loans of
portfolio securities will be made according to guidelines established by the
Securities and Exchange Commission and the Fund's Board of Directors.
7. Act as an underwriter of securities of other issuers. The Fund
may not enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase illiquid securities, if, in the
aggregate, more than 10% of the value of the Fund's net assets would be so
invested.
8. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
9. Purchase, sell or write puts, calls or combinations thereof.
10. Invest more than 25% of its assets in investments in any
particular industry or industries other than the electric utility industry,
which includes companies engaged in the production, transmission or
distribution of electric energy, provided that, when the Fund has adopted a
temporary defensive posture, there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
In addition to the investment restrictions adopted as fundamental
policies set forth above, though not a fundamental policy, the Fund may not
engage in arbitrage transactions, nor may it purchase warrants (excluding
those acquired by the Fund in units or attached to securities), nor will the
Fund sell securities short, but reserves the right to sell securities short
against the box.
Notwithstanding Investment Restriction Nos. 3 and 5, the Fund reserves
the right to enter into futures contracts and options on futures contracts,
subject to the restrictions then in effect of the Securities and Exchange
Commission and the Commodity Futures Trading Commission and to the receipt
or taking, as the case may be, of appropriate consents, approvals and other
actions from or by those regulatory bodies. In any event, no such contracts
or options will be entered into until a general description of the terms
thereof are set forth in a subsequent prospectus and statement of additional
information, the Registration Statement with respect to which has been filed
with the Securities and Exchange Commission and has become effective.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the 1940 Act, is indicated by an asterisk.
Directors of the Fund
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For more
than five years prior thereto, he was President, a director and, until
August 1994, Chief Operating Officer of Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of Dreyfus and, until August 1994, the Fund's distributor.
From August 24, 1994 to December 31, 1994, he was a director of Mellon
Bank Corporation. He is Chairman of the Board of Directors of Noel
Group, Inc., a venture capital company; a trustee of Bucknell
University; and a director of the Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway, Inc., a manufacturer
and marketer of industrial threads, specialty yarns and home
furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals, and automotive and other
hardware, Simmons Outdoor Corporation and Staffing Resources, Inc. He
is 52 years old and his address is 200 Park Avenue, New York, New York
10166.
*DAVID P. FELDMAN, Director. Corporate Vice President-Investment Management
of AT&T. He is also a trustee of Corporate Property Investors, a real
estate investment company. He is 56 years old and his address is One
Oak Way, Berkeley Heights, New Jersey 07922.
JACK R. MEYER, Director. President and Chief Executive Officer of Harvard
Management Company, an investment management company, since September
1990. For more than five years prior thereto, he was Treasurer and
Chief Investment Officer of The Rockefeller Foundation. He is 50 years
old and his address is 600 Atlantic Avenue, Boston, Massachusetts
02210.
JOHN SZARKOWSKI, Director. Director Emeritus of Photography at The Museum
of Modern Art. Consultant in Photography. He is 70 years old and his
address is Bristol Road Box 221, East Chatham, New York 12060.
ANNE WEXLER, Director. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also a
director of Alumax, Comcast Corporation and The New England Electric
System, Nova Corporation, and a member of the Board of the Carter
Center of Emory University, the Council of Foreign Relations, the
National Park Foundation, Visiting Committee of the John F. Kennedy
School of Government at Harvard University and the Board of Visitors of
the University of Maryland School of Public Affairs. She is 65 years
old and her address is c/o The Wexler Group, 1317 F Street, N.W., Suite
600, Washington, D.C. 20004.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund who
are not "interested persons" of the Fund, as defined in the 1940 Act, will
be selected and nominated by the Directors who are not "interested persons"
of the Fund.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Director by the Fund for the fiscal year ended
October 31, 1995, and by all other funds in the Dreyfus Family of Funds for
which such person is a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation) for the year
ended December 31, 1995, were as follows:
<TABLE>
(3) (5)
(2) Pension or (4) Total Compensation
(1) Aggregate Retirement Benefits Estimated Annual From Fund and
Name of Board Compensation From Accrued as Part of Benefits Upon Fund Complex
Member Fund* Fund's Expenses Retirement Paid to Board Member
- ------------- ------------------ ----------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Joseph S. DiMartino $4,153 none none $445,000 (93)
David P. Feldman $4,000 none none $ 85,631 (27)
Jack R. Meyer $4,500 none none $ 21,875 (4)
John Szarkowski $4,500 none none $ 21,875 (4)
Anne Wexler $4,500 none none $ 26,329 (16)
____________________________
* Amount does not include reimbursed expenses for attending Board meetings, which
amounted to $487 for all Directors as a group.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Executive
Officer and a Director of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From December
1991 to July 1994, she was President and Chief Compliance Officer of
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President,
General Counsel, Secretary and Clerk of the Distributor and an officer
of other investment companies advised or administered by Dreyfus. From
February 1992 to July 1994, he served as Counsel for The Boston Company
Advisors, Inc. From August 1990 to February 1992, he was employed as
an associate at Ropes & Gray. He is 31 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate General
Counsel of the Distributor and an officer of other investment companies
advised or administered by Dreyfus. From September 1992 to August
1994, he was an attorney with the Board of Governors of the Federal
Reserve System. He is 31 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. She is 26 years old.
JOSEPH F. TOWER, III, Assistant Treasurer. Senior Vice President, Treasurer
and Chief Financial Officer of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the Distributor
and an officer of other investment companies advised or administered by
Dreyfus. From 1984 to July 1994, he was Assistant Vice President in
the Mutual Fund Accounting Department of Dreyfus. He is 60 years old.
MARGARET PARDO, Assistant Secretary. Legal Assistant with the Distributor
and an officer of other investment companies advised or administered by
Dreyfus. From June 1992 to April 1995, she was a Medical Coordination
Officer at ORBIS International. Prior to June 1992, she worked as
Program Coordinator at Physicians World Communications Group. She is
27 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of Common Stock outstanding on December 22, 1995.
The following persons are known by the Fund to own of record 5% or more
of the Fund's outstanding voting securities on December 22, 1995: State
Street Bank & Trust Co., as Trustee for Pacific Gas & Electric Co. Savings
Fund Plan, P.O. Box 1992, Boston, Massachusetts 02105-1992 -- 54.62; Charles
Schwab & Company, Inc., 101 Montgomery Street, San Francisco, California
94104-4122 -- 8.22.
Industry Advisory Board
The Fund also has an Industry Advisory Board which routinely provides
management of the Fund with information and data regarding the electric
utility industry. The members of the Industry Advisory Board, together with
information as to their principal business occupations during at least the
last five years, are set forth below.
H. Peter Burg, Senior Vice President and Chief Financial Officer of Ohio
Edison Company. His address is 76 South Main Street, Akron, Ohio
44308.
H. Lowell Davis, Vice Chairman and Chief Financial Officer of Potomac
Electric Power Company. His address is 1900 Pennsylvania Avenue, N.W.,
Washington, D.C. 20068.
Gordon R. Smith, Vice President and Chief Financial Officer, since 1991, and
Vice President, Finance and Rates, from 1987 to 1991, of Pacific Gas
and Electric Company. His address is P.O. Box 770000, San Francisco,
California 94177.
Russel E. Olson, Vice President--Finance and Treasurer of Puget Sound
Power & Light Company. His address is P.O. Box 97034, Bellevue,
Washington 98009.
W. L. Westbrook, Financial Vice President of The Southern Company. His
address is 64 Perimeter Center East, Atlanta, Georgia 30346.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
Management Agreement. Dreyfus provides management services pursuant to
the Management Agreement (the "Management Agreement") dated November 13,
1995, with the Fund, which is subject (after May 14, 1997) to annual
approval by (i) the Fund's Board or (ii) vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of the Fund, provided
that in either event the continuance also is approved by a majority of the
Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund or Dreyfus, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Management Agreement was approved
by shareholders at a meeting held on November 3, 1995 and was last approved
by the Fund's Board, including a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of any party to the
Management Agreement, at a meeting held on August 9, 1995. The Management
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of the holders of a majority of the Fund's shares, or, upon
not less than 90 days' notice, by Dreyfus. The Management Agreement will
terminate automatically in the event of its assignment (as defined in the
1940 Act).
The following persons are officers and/or directors of Dreyfus: Howard
Stein, Chairman of the Board and Chief Executive Officer; W. Keith Smith,
Vice Chairman of the Board; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; Barbara E. Casey, Vice President-Dreyfus
Retirement Services; Diane M. Coffey, Vice President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales; William
F. Glavin, Jr., Vice President-Corporate Development; Henry D. Gottmann,
Vice President-Retail Sales and Service; Mark N. Jacobs, Vice President-
Legal and Secretary; Daniel C. Maclean, Vice President and General Counsel;
Jeffrey N. Nachman, Vice President-Mutual Fund Accounting; Andrew S. Wasser,
Vice President-Information Services; Katherine C. Wickham, Vice President-
Human Resources; Maurice Bendrihem, Controller; Elvira Oslapas, Assistant
Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman,
Lawrence M. Greene, Julian M. Smerling and David B. Truman, directors.
Dreyfus maintains office facilities on behalf of the Fund, and
furnishes the Fund statistical and research data, clerical help, accounting,
data processing, bookkeeping and internal auditing and certain other
required services to the Fund. Dreyfus also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
Index Management Agreement. Mellon Equity provides investment advisory
assistance and day-to-day management of the Fund's investments pursuant to
the Index Management Agreement (the "Index Management Agreement") dated
November 13, 1995 between Mellon Equity and Dreyfus. The Index Management
Agreement is subject (after May 14, 1997) to annual approval by (i) the
Fund's Board or (ii) vote of a majority (as defined in the 1940 Act) of the
Fund's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Board members who
are not "interested persons" (as defined in the 1940 Act) of the Fund or
Mellon Equity, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Index Management Agreement was approved by
shareholders on November 3, 1995, and was approved by the Fund's Board
including a majority of Board members who are not "interested persons" of
any party to the Index Management Agreement, at a meeting held on August 9,
1995. The Index Management Agreement is terminable without penalty (i) by
Dreyfus on 60 days' notice, (ii) by the Fund's Board or by vote of the
holders of a majority of the Fund's shares on 60 days' notice, or (iii) by
Mellon Equity on not less than 90 days' notice. The Index Management
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act) or upon the termination of the Management Agreement
for any reason.
The following persons are executive officers and/or directors of Mellon
Equity: Phillip R. Roberts, Chairman of the Board; William P. Rydell,
President and Chief Executive Officer; and W. Keith Smith, Director.
Mellon Equity provides day-to-day management of the Fund's investments
in accordance with the stated policies of the Fund, subject to the
supervision of Dreyfus and approval of the Fund's Board. All purchases and
sales are reported for the Board's review at the meeting subsequent to such
transactions. Mellon Equity has agreed to pay for the custody services
provided to the Fund by Boston Safe Deposit and Trust Company.
Expenses. All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by Dreyfus and/or
Mellon Equity. The expenses borne by the Fund include: organizational
costs, taxes, interest, loan commitment fees, interest and distributions
paid on securities sold short, brokerage fees and commissions, if any, fees
of Board members who are not officers, directors, employees or holders of 5%
or more of the outstanding voting securities of Dreyfus or Mellon Equity or
any of their affiliates, Securities and Exchange Commission fees, state Blue
Sky qualification fees, advisory fees, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing services, costs of
maintaining the Fund's existence, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing shareholders, costs
of shareholder's reports and meetings, and any extraordinary expenses.
As compensation for Dreyfus' services, the Fund has agreed to pay
Dreyfus a monthly fee at the annual rate of .245 of 1% of the value of the
Fund's average daily net assets. As compensation for Mellon Equity's
services, Dreyfus has agreed to pay Mellon Equity a monthly fee at the
annual rate of .095 of 1% of the value of the Fund's average daily net
assets. All fees and expenses are accrued daily and deducted before
declaration of dividends to shareholders.
From December 6, 1991 to November 13, 1995, Wells Fargo Nikko
Investment Advisers ("WFNIA") served as the Fund's index fund manager.
Pursuant to prior index management agreements with WFNIA, the Fund agreed to
pay a monthly fee at the annual rate of .10 of 1% of the value of the Fund's
average daily net assets. For the fiscal years ended October 31, 1993, 1994
and 1995, the index management fees payable to the prior index fund managers
amounted to $79,485, $88,756 and $77,508, respectively. However, no index
management fees were paid to the prior index fund managers pursuant to
undertakings in effect.
Prior to November 13, 1995, Dreyfus served as the Fund's administrator
pursuant to an administration agreement with the Fund. As compensation for
its administrative services, the Fund agreed to pay Dreyfus a monthly fee at
the annual rate of .15 of 1% of the value of the Fund's average daily net
assets. For the fiscal years ended October 31, 1993, 1994 and 1995, the
administrative fees payable to Dreyfus amounted to $119,228, $133,134 and
$230,555, respectively. However, administrative fees were reduced by
$72,895 for the fiscal year ended October 31, 1993, pursuant to an
undertaking in effect.
Dreyfus (and to a limited extent, Mellon Equity) have agreed that if in
any fiscal year the aggregate expenses of the Fund (including fees pursuant
to the Management Agreement, but excluding taxes, brokerage, interest on
borrowings and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may
deduct from the fees to be paid to Dreyfus, and Dreyfus may deduct from the
fees paid to Mellon Equity or Dreyfus and Mellon Equity will bear, such
excess expense in proportion to their management fee and index management
fee, to the extent required by state law. Such deduction or payment, if
any, will be estimated daily and reconciled and effected or paid, as the
case may be, on a monthly basis.
The aggregate of the fees payable to Dreyfus and Mellon Equity is not
subject to reduction as the value of the Fund's net assets increase.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services
Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The service provided may include personal services
related to shareholder accounts, such an answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Fund's Board for its review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board, and by Board members
who are not "interested persons" (as defined in the 1940 Act) of the Fund
and have no direct or indirect financial interest in the operation of the
Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan is subject to annual approval by such
vote cast in person at a meeting called for the purpose of voting on the
Plan, and was last approved by the Directors at a meeting held on May 3,
1995. The Plan is terminable at any time by vote of a majority of Board
members who are not "interested persons" (as defined in the 1940 Act) of the
Fund and have no direct or indirect financial interest in the operation of
the Plan.
For the fiscal year ended October 31, 1995, $193,681 was charged to the
Fund under the Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.
Transactions through Securities Dealers. In some states, banks or
other financial institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes Dreyfus Transfer, Inc. (the "Transfer Agent") to act on wire or
telephone redemption instructions from any person representing himself or
herself to be the investor, and reasonably believed by the Transfer Agent to
be genuine. Ordinarily, the Fund will initiate payment for shares redeemed
pursuant to this Privilege on the next business day after receipt if the
Transfer Agent receives the redemption request in proper form. Redemption
proceeds will be transferred by Federal Reserve wire only to the commercial
bank account specified by the investor on the Account Application or
Shareholder Services Form, or to a correspondent bank if the investor's bank
is not a member of the Federal Reserve System. Fees ordinarily are imposed
by such bank and usually are borne by the investor. Immediate notification
by the correspondent bank to the investor's bank is necessary to avoid a
delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Signatures."
Signatures. Written redemption requests must be signed by each
shareholder, including each holder of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors. For more information with
respect to signature-guarantees, please call one of the telephone numbers
listed on the cover.
Redemption Commitment. The Fund has committed to pay in cash all
redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. Such commitment is irrevocable
without the prior approval of the Securities and Exchange Commission. In
the case of requests for redemption in excess of such amount, the Board of
Directors reserves the right to make payments in whole or part in securities
or other assets of the Fund in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In such event, the securities would be valued in the
same manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Corporate Pension, Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In addition,
the Fund makes available Keogh Plans, IRAs, including IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") and IRA "Rollover Accounts,"
and 403(b)(7) Plans. Plan support services also are available. Investors
can obtain details on the various plans by calling the following numbers
toll free: for Keogh Plans, please call 1-800-358-5566; for IRAs and IRA
"Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs, 401(k) Salary
Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.
A fee may be charged by the entity acting as custodian for Keogh Plans,
403(b)(7) Plans or IRAs, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity which acts as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans, and SEP-IRAs, with more than one participant, is
$2,500, with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans, with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA also may open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details as to
eligibility, service fees and tax implications, and should consult a tax
adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
Valuation of Portfolio Securities. The Fund's portfolio securities are
valued at the last sale price on the securities exchange or national
securities market on which such securities are primarily traded. Securities
not listed on an exchange or national securities market, or securities in
which there were no transactions, are valued at the average of the most
recent bid and asked prices. Bid price is used when no asked price is
available. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as determined
in good faith by the Fund's Board. Expenses and fees, including the index
management fee (reduced by the expense limitation, if any), are accrued
daily and taken into account for the purpose of determining the net asset
value of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends, Distributions
and Taxes."
Management of the Fund believes that the Fund qualified for the fiscal
year ended October 31, 1995 as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). The Fund intends to
continue to so qualify as long as such qualifications is in the best
interests of its shareholders. The term "regulated investment company" does
not imply the supervision of management or investment practices or policies
by any government agency.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. In addition, all or a portion of the
gain realized from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258. "Conversion transactions" are defined
to include certain forward, futures, option and "straddle" transactions,
transactions marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of his shares below the
cost of his investment. Such a distribution would be a return on the
investment in an economic sense although taxable as stated in the Fund's
Prospectus. In addition, the Code provides that if a shareholder holds
shares of the Fund for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of
such shares will be treated as a long-term capital loss to the extent of the
capital gain distribution received.
Depending on the composition of the Fund's income, all or a portion of
the dividends paid by the Fund from net investment income may qualify for
the dividends received deduction allowable to certain U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income
of the Fund distributed to qualifying corporate shareholders will be
eligible for the dividends received deduction only to the extent that (i)
the Fund's income consists of dividends paid by U.S. corporations and (ii)
the Fund would have been entitled to the dividends received deduction with
respect to such dividend income if the Fund were not a regulated investment
company. The dividends received deduction for qualifying corporate
shareholders may be further reduced if the shares of the Fund held by them
with respect to which dividends are received are treated as debt-financed or
deemed to have been held for less than 46 days. In addition, the Code
provides other limitations with respect to the ability of a qualifying
corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares.
PORTFOLIO TRANSACTIONS
The Advisers assume general supervision over placing orders on behalf
of the Fund for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in the best
judgment of the Advisers and in a manner deemed fair and reasonable to
shareholders. The primary consideration is prompt execution of orders at
the most favorable net price. Brokers also are selected because of their
ability to handle special executions such as are involved in large block
trades or broad distributions, provided the primary consideration is met.
Portfolio turnover may vary from year to year, as well as within a year.
High turnover rates are likely to result in comparatively greater brokerage
expenses. The overall reasonableness of brokerage commissions paid is
evaluated by the Advisers based upon their knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
For its portfolio securities transactions for the fiscal years ended
October 31, 1993, 1994 and 1995, the Fund paid total brokerage commissions
of $146,712, $67,988 and $157,957, respectively, none of which was paid to
the Distributor. There were no spreads or concessions on principal
transactions in fiscal 1993, 1994 and 1995.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's average annual total return for the 1 and 3.904 year periods
ended October 31, 1995 was 25.34% and 7.55%, respectively. Average annual
total return is calculated by determining the ending redeemable value of an
investment purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period)
and subtracting 1 from the result.
The Fund's total return for the period December 6, 1991 (commencement
of operations) to October 31, 1995 was 32.95%. Total return is calculated
by subtracting the amount of the Fund's net asset value per share at the
beginning of a stated period from the net asset value per share at the end
of the period (after giving effect to the reinvestment of dividends and
distributions during the period), and dividing the result by the net asset
value per share at the beginning of the period.
From time to time, advertising materials for the Fund may include
reference to, or discussion of, the dividend income or growth history of the
electric utility industry generally. From time to time, advertising
materials for the Fund also may refer to Morningstar ratings and related
analysis supporting such ratings.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights
and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT ACCOUNTANTS
Dreyfus Transfer, Inc., a wholly owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02903, serves as the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses.
Boston Safe Deposit and Trust Company (the "Custodian"), an indirect
wholly-owned subsidiary of Mellon Bank Corporation, is located at One Boston
Place, Boston, Massachusetts 02108, and serves as the custodian of the Fund.
Under its Custody Agreement with the Fund, the Custodian holds the Fund's
portfolio securities and keeps all necessary accounts and records. The
Custodian's fees for its services to the Fund are paid by Mellon Equity.
Neither the Transfer Agent nor the Custodian has any part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-
2696, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of the shares of
Common Stock being sold pursuant to the Fund's Prospectus.
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New
York 10019-6013, independent accountants, have been selected as auditors of
the Fund.
APPENDIX
Description of S&P A-1 Commercial Paper Ratings:
The rating A is the highest rating and is assigned by S&P to issues
that are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the number 1, 2 or 3 to indicate
the relative degree of safety. Paper rated A-1 indicates that the degree of
safety regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.
Description of Moody's Prime-1 Commercial Paper Ratings:
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
<TABLE>
<CAPTION>
Dreyfus Edison Electric Index Fund, Inc.
- ----------------------------------------------------------------------------
Statement of Investments October 31, 1995
<S> <C> <C>
Shares Common Stocks--96.5% Value
------ -----------
35,950 Allegheny Power System............ $ 948,181
56,950 American Electric Power........... 2,171,219
16,100 Atlantic Energy................... 311,938
45,100 Baltimore Gas & Electric.......... 1,206,425
6,500 Bangor Hydro Electric............. 76,375
4,150 Black Hills....................... 104,269
13,575 Boston Edison..................... 371,616
3,825 CILCORP........................... 149,175
10,300 CIPSCO............................ 377,238
25,950 CMS Energy........................ 716,869
47,600 Carolina Power & Light............ 1,558,900
44,225 Centerior Energy.................. 442,250
58,650 Central & South West.............. 1,568,888
4,975 Central Hudson Gas &
Electric........................ 152,359
6,650 Central Louisiana Electric........ 178,719
9,375 Central Maine Power............... 130,078
5,800 Central Vermont Public Service.... 78,300
47,698 CiNergy........................... 1,353,431
2,975 Commonwealth Energy Systems....... 126,066
71,950 Consolidated Edison............... 2,185,481
32,500 DPL............................... 771,875
24,225 DQE............................... 666,188
17,725 Delmarva Power & Light............ 389,950
44,950 Detroit Edison.................... 1,517,063
53,125 Dominion Resources................ 2,111,719
62,750 Duke Power........................ 2,808,063
3,576 ESELCO............................ 86,271
5,800 Eastern Utilities Association..... 136,300
46,924(a) El Paso Electric.................. 17,362
4,500 Empire District Electric.......... 82,688
69,716 Entergy........................... 1,986,906
56,675 FPL Group......................... 2,373,266
28,412 Florida Progress.................. 941,148
35,575 General Public Utilities.......... 1,111,719
2,875 Green Mountain Power.............. 78,344
8,800 Hawaiian Electric Industries...... 343,200
40,150 Houston Industries................ 1,861,956
8,450 IES Industries.................... 224,981
11,375 IPALCO Enterprises................ 419,453
11,150 Idaho Power....................... 309,413
23,050 Illinova.......................... 654,044
2,950 Interstate Power.................. $ 85,550
11,400 KU Energy......................... 337,725
18,800 Kansas City Power & Light......... 467,650
9,950 LG&E Energy....................... 412,925
35,625 Long Island Lighting.............. 605,625
8,525 MDU Resources Group............... 180,091
3,075 Madison Gas & Electric............ 101,475
3,275 Maine Public Service.............. 76,144
30,444 MidAmerican Energy................ 487,104
9,400 Minnesota Power & Light........... 269,075
15,875 Montana Power..................... 361,156
20,075 NIPSCO Industries................. 732,738
13,575 Nevada Power...................... 296,953
19,825 New England Electric System....... 773,175
21,350 New York State Electric & Gas..... 539,088
43,725 Niagara Mohawk Power.............. 470,044
37,950 Northeast Utilities............... 939,263
20,700 Northern States Power............. 978,075
3,050 Northwestern Public Service....... 80,825
46,625 Ohio Edison....................... 1,066,547
12,275 Oklahoma Gas & Electric........... 491,000
4,025 Orange/Rockland Utilities......... 141,378
3,225 Otter Tail Power.................. 110,456
67,925 PECO Energy....................... 1,986,806
46,425 Pennsylvania Power &
Light........................... 1,044,563
130,125 Pacific Gas & Electric............ 3,822,422
86,975 PacifiCorp........................ 1,641,653
26,575 Pinnacle West Capital............. 730,813
15,025 Portland General.................. 407,553
35,775 Potomac Electric Power............ 894,375
18,250(a) Public Service Co. of Colorado.... 622,781
12,400 Public Service Co. of
New Mexico...................... 207,700
74,975 Public Service Enterprise
Group........................... 2,202,391
19,125 Puget Sound Power &
Light........................... 435,094
11,050 Rochester Gas & Electric.......... 259,675
28,400 SCANA............................. 720,650
136,600 SCEcorp........................... 2,322,200
2,425 St. Joseph Light & Power.......... 76,388
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- ----------------------------------------------------------------------------
Statement of Investments (continued) October 31, 1995
Shares Common Stocks (continued) Value
------ -----------
35,525 San Diego Gas & Electric.......... $ 825,956
8,575 Sierra Pacific Resources.......... 200,441
204,150 Southern.......................... 4,874,081
4,683 Southern Indiana Gas &
Electric........................ 158,051
12,350 Southwestern Public Service....... 406,006
35,250 TECO Energy....................... 832,781
4,325 TNP Enterprises................... 78,391
69,175 Texas Utilities................... 2,542,181
47,050 Tucson Electric Power............. 141,150
9,550 UGI............................... 200,550
3,788 UNITIL............................ 73,392
65,750 Unicom............................ 2,153,312
31,175 Union Electric.................... 1,215,824
4,175 United Illuminating............... 158,649
4,050 Upper Peninsula Power............. 78,468
13,375 UtiliCorp United.................. 386,202
9,125 WPL Holdings...................... $ 278,312
7,175 WPS Resources..................... 223,321
16,650 Washington Water Power............ 287,212
18,699 Western Resources................. 628,753
32,512 Wisconsin Energy.................. 959,103
-----------
TOTAL COMMON STOCKS
(cost $74,119,229).............. $77,180,948
===========
Principal
Amount SHORT-TERM INVESTMENTS--3.2%
--------
U.S.Treasury Bill:
$2,619,000 5 1/4%, 1/18/96
(cost $2,585,729)............... $ 2,585,729
===========
TOTAL INVESTMENTS
(cost $76,704,958)....................... 99.7% $79,766,677
====== ===========
CASH AND RECEIVABLES (NET)................. .3% $ 226,068
====== ===========
NET ASSETS................................. 100.0% $79,992,745
====== ===========
Note to Statement of Investments;
(a) Non-income producing.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- --------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $76,704,958)--see statement..................................... $79,766,677
Cash.................................................................... 879
Dividends receivable.................................................... 261,768
Receivable for subscriptions to Common Stock............................ 57,286
Prepaid expenses........................................................ 55,455
------------
80,142,065
LIABILITIES:
Due to Wells Fargo Nikko Investment Advisors............................ $26,973
Due to Wells Fargo Institutional Trust Company, N.A. ................... 16,041
Due to The Dreyfus Corporation.......................................... 9,941
Accrued expenses........................................................ 96,365 149,320
------- ------------
NET ASSETS.................................................................. $79,992,745
------------
------------
REPRESENTED BY:
Paid-in capital......................................................... $86,467,660
Accumulated undistributed investment income-net......................... 139,863
Accumulated net realized (loss) on investments.......................... (9,676,497)
Accumulated net unrealized appreciation on investments--Note 3.......... 3,061,719
------------
NET ASSETS at value applicable to 6,024,970 shares outstanding
(200 million shares of $.001 par value Common Stock authorized)......... $79,992,745
============
NET ASSET VALUE, offering and redemption price per share
($79,992,745 / 6,024,970)............................................... $13.28
=======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- ---------------------------------------------------------------------------
Statement of Operations year ended October 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Cash dividends........................................................ $ 5,105,863
Interest.............................................................. 102,499
------------
Total Income...................................................... $ 5,208,362
Expenses:
Index management fee--Note 2(a)....................................... 77,508
Administration fee--Note 2(a)......................................... 116,173
Shareholder servicing costs--Note 2(b)................................ 230,555
Custodian fees........................................................ 87,725
Professional fees..................................................... 45,090
Registration fees..................................................... 23,880
Directors' fees and expenses--Note 2(c)............................... 22,149
Prospectus and shareholders' reports.................................. 7,176
Organization expenses................................................. 4,759
Miscellaneous......................................................... 1,178
--------------
Total Expenses.................................................... 616,193
------------
INVESTMENT INCOME-NET............................................. 4,592,169
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................. $(8,325,383)
Net unrealized appreciation on investments.............................. 19,716,286
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 11,390,903
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $15,983,072
============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- ---------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended October 31,
--------------------------------------
1994 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................. $ 5,021,825 $ 4,592,169
Net realized (loss) on investments................................ (1,108,323) (8,325,383)
Net unrealized appreciation (depreciation) on investments for the year (23,241,389) 19,716,286
-------------- -------------
Net Increase (Decrease) In Net Assets Resulting From Operations. (19,327,887) 15,983,072
-------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................. (4,973,199) (4,763,996)
Net realized gain on investments.................................. (1,583,630) --
-------------- -------------
Total Dividends................................................. (6,556,829) (4,763,996)
-------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold..................................... 21,670,447 79,514,068
Dividends reinvested.............................................. 6,267,926 4,392,768
Cost of shares redeemed........................................... (48,302,007) (86,720,047)
-------------- -------------
(Decrease) In Net Assets From Capital Stock Transactions........ (20,363,634) (2,813,211)
-------------- -------------
Total Increase (Decrease) In Net Assets....................... (46,248,350) 8,405,865
NET ASSETS:
Beginning of year................................................. 117,835,230 71,586,880
-------------- -------------
End of year (including undistributed investment income-net:
$311,690 in 1994 and $139,863 in 1995).......................... $ 71,586,880 $ 79,992,745
============== =============
Shares Shares
-------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold....................................................... 1,734,060 6,573,543
Shares issued for dividends reinvested............................ 509,209 367,523
Shares redeemed................................................... (3,914,083) (7,266,122)
-------------- -------------
Net (Decrease) In Shares Outstanding............................ (1,670,814) (325,054)
============== =============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- ------------------------------------------------------------------------------
Financial Highlights
Reference is made to page 3 of the Fund's Prospectus dated March 1, 1996.
See notes to financial statments.
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1-Significant Accounting Policies:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Wells Fargo
Nikko Investment Advisors ("WFNIA") serves as the Fund's index manager. Wells
Fargo Investment Advisors ("WFIA") and a subsidiary of The Nikko Securities
Co., Ltd. ("Nikko") each own 50% of WFNIA. Wells Fargo Institutional Trust
Company, N.A. ("WFITC"), an affiliate of WFNIA, is the custodian of the
Fund's investments. The Dreyfus Corporation ("Dreyfus") serves as the Fund's
administrator. Dreyfus is a direct subsidiary of Mellon Bank, N.A. Premier
Mutual Fund Services, Inc. (the "Distributor") acts as the distributor of the
Fund's shares, which are sold to the public without a sales charge. The
Distributor, located at One Exchange Place, Boston, Massachusetts 02109, is a
wholly-owned subsidiary of FDI Distribution Services, Inc., a provider of
mutual fund administration services, which in turn is a wholly-owned
subsidiary of FDI Holdings, Inc., the parent company of which is Boston
Institutional Group, Inc.
Effective November 13, 1995, Dreyfus will serve as the Fund's manager and
Mellon Equity Associates, an affiliate of Dreyfus ("Mellon Equity"), will
serve as the Fund's index manager. In addition, Boston Safe Deposit and Trust
Company, an affiliate of Dreyfus, will serve as the Fund's custodian.
(a) Portfolio valuation: Investments in securities (including financial
futures) are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the
national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available. 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. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(c) Dividends to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a
quarterly basis. Dividends from net realized capital gain, if any, 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, if any,
can be offset by capital loss carryovers, it is the policy of the Fund not to
distribute such gain.
(d) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $4,075,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1995. If not
applied, $512,000 of the carryover expires in fiscal 2002 and $3,563,000 of
the carryover expires in fiscal 2003.
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2-Management Fee, Administration Fee and Other Transactions with
Affiliates:
(a) Fees paid by the Fund pursuant to the provisions of an Index
Management Agreement with WFNIA and an Administration Agreement with Dreyfus
are payable monthly. WFNIA and Dreyfus receive annual fees of .10 of 1% and
.15 of 1%, respectively, of the average daily value of the Fund's net assets.
The agreements further provide that if the aggregate expenses of the Fund,
exclusive of interest, taxes, brokerage and extraordinary expenses, exceed
the expense limitation of any state having jurisdiction over the Fund, the
Fund may deduct from the fees to be paid to each of WFNIA and Dreyfus, or
WFNIA and Dreyfus will bear, in the same proportion as in the agreements, the
amount of such excess to the extent required by state law. The most stringent
state expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2-1/2% of the first
$30 million, 2% of the next $70 million and 1-1/2% of the excess over $100
million of the average value of the Fund's net assets in accordance with
California "blue sky" regulations. There was no expense reimbursement for the
year ended October 31, 1995.
In addition, WFITC earned $87,725 for custodian services provided to the
Fund.
(b) Pursuant to the Fund's Shareholder Services Plan, 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 of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended October 31, 1995, the Fund was charged an aggregate of
$193,681 pursuant to the Shareholder Services Plan.
(c) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, for the year ended October 31, 1995
amounted to $45,451,679 and $50,092,732, respectively.
At October 31, 1995, accumulated net unrealized appreciation on
investments was $3,061,719,consisting of $4,154,156 gross unrealized
appreciation and $1,092,437 gross unrealized depreciation.
At October 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
Dreyfus Edison Electric Index Fund, Inc.
- ------------------------------------------------------------------------------
Report of Independent Accountants
To the Shareholders and Board of Directors of
Dreyfus Edison Electric Index Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Dreyfus Edison Electric Index Fund, Inc. (the Fund), including the statement
of investments, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended and for the
period from December 6, 1991 (commencement of operations) to October 31,
1992. 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 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, 1995 by correspondence with the custodian
and brokers. 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 Edison Electric Index Fund, Inc., at October 31, 1995,
the results of its operations, the changes in its net assets and the
financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
December 18, 1995
