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COMBINED PROSPECTUS JUNE 30, 1997
DREYFUS INDEX FUNDS
DREYFUS S&P 500 INDEX FUND
DREYFUS MIDCAP INDEX FUND
DREYFUS SMALL CAP STOCK INDEX FUND
DREYFUS INTERNATIONAL STOCK INDEX FUND
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Dreyfus Index Funds are open-end, management investment companies,
known as mutual funds. Through this Prospectus, you may invest in any of four
separate non-diversified funds (each, a "Fund" and, collectively, the
"Funds"). Each Fund seeks to match, as closely as possible, the performance
of a different stock market benchmark or index:
Dreyfus S&P 500 Index Fund seeks to provide investment results that
correspond to the price and yield performance of publicly-traded common
stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.
Dreyfus MidCap Index Fund seeks to provide investment results that
correspond to the price and yield performance of publicly-traded common
stocks of medium-size domestic companies in the aggregate, as represented by
the Standard & Poor's MidCap 400 Index.
Dreyfus Small Cap Stock Index Fund seeks to provide investment
results that correspond to the total return performance of predominantly
small capitalization common stocks in the aggregate, as represented by the
Standard & Poor's SmallCap 600 Index.
Dreyfus International Stock Index Fund seeks to provide investment
results that correspond to the net dividend, total return performance of
equity securities of international issuers in the aggregate, as represented
by the Morgan Stanley Capital International Europe, Australia, Far East
(Free)Registration Mark Index.
The Dreyfus Corporation professionally manages each Fund's
portfolio.
In some cases, shareholders who redeem shares within six months of
the opening of their account will be charged a 1% redemption fee which will
be deducted from redemption proceeds.
This Prospectus sets forth concise information about the Funds that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated June 30, 1997, which
may be revised from time to time, provides a further discussion of certain
areas in this Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. The Securities and Exchange Commission
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Funds. For a free copy of the Statement of
Additional Information, write to the Funds 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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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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TABLE OF CONTENTS
Page
Fee Table.............................................................. 4
Condensed Financial Information........................................ 5
Description of the Funds............................................... 6
Management of the Funds................................................ 11
How to Buy Shares...................................................... 13
How to Redeem Shares................................................... 15
Shareholder Services................................................... 17
Shareholder Services Plan.............................................. 18
Dividends, Distributions and Taxes..................................... 18
Performance Information................................................ 19
General Information.................................................... 20
Appendix............................................................... 22
Page 2
[This Page Intentionally Left Blank]
Page 3
<TABLE>
<CAPTION>
FEE TABLE
Dreyfus Dreyfus Dreyfus Small Dreyfus
S&P 500 MidCap Cap Stock International
INDEX FUND INDEX FUND INDEX FUND STOCK INDEX FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Redemption Fees (as a percentage of
amount redeemed) 1.00% 1.00% 1.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees .25% .25% .25% .35%
Other Expenses .25% .25% .25% .25%
Total Fund Operating Expenses .50% .50% .50% .60%
EXAMPLE
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:
Dreyfus Dreyfus Dreyfus Small Dreyfus
S&P 500 MidCap Cap Stock International
INDEX FUND INDEX FUND INDEX FUND STOCK INDEX FUND
1 year $ 5 $ 5 $ 5 $ 6
3 years $16 $16 $16 $19
5 years $28 $28 $28 $33
10 years $63 $63 $63 $75
</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, a 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 each Fund and investors, the
payment of which will reduce investors' annual return. The redemption fee is
charged upon certain redemptions of Fund shares occurring within six months
of the opening of an account and is retained by the Fund. Effective as of
June 30, 1997, The Dreyfus Corporation has agreed to pay all of the Funds'
expenses, except management fees, brokerage commissions, taxes, interest, fees
and expenses of non-interested Board members, fees and expenses of
independent counsel to the Fund and to the non-interested Board members,
Shareholder Services Plan fees, and extraordinary expenses. The Dreyfus
Corporation also has agreed to reduce its management fee in an amount equal
to the Fund's allocable portion of the accrued fees and expenses of
non-interested Board members and fees and expenses of independent counsel to
the Fund and to the non-interested Board members. Annual Fund Operating
Expenses noted above for Dreyfus S&P 500 Index Fund and Dreyfus MidCap Index
Fund have been restated to reflect The Dreyfus Corporation's agreement to pay
such Fund expenses. Certain Service Agents (as defined below) may charge their
clients direct fees for effecting transactions in Fund shares; such fees are
not reflected in the foregoing table. See "Management of the Funds," "How to
Buy Shares," "How to Redeem Shares" and "Shareholder Services Plan."
Page 4
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by the
indicated Fund's independent auditors, whose reports thereon appear in the
Statement of Additional Information. Further financial data and related notes
for Dreyfus S&P 500 Index Fund and Dreyfus MidCap Index Fund are included in
the Statement of Additional Information, available upon request. No financial
information is provided for Dreyfus Small Cap Stock Index Fund or Dreyfus
International Stock Index Fund which had not commenced operations as of the
date of the financial statements.
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 Dreyfus S&P 500 Index Fund for each
year indicated. This information has been derived from Dreyfus S&P 500 Index
Fund's financial statements prepared by Coopers & Lybrand L.L.P., the Fund's
independent accountants.
<TABLE>
<CAPTION>
Year Ended October 31,
____________________________________________________________________
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995 1996
______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $12.50 $10.86 $14.16 $15.16 $16.88 $16.41 $18.38
______ ______ ______ ______ ______ ______ ______
Investment Operations:
Investment income-net................. .17 .34 .41 .30 .39 .36 .33
Net realized and unrealized gain (loss)
on investments........................ (1.81) 3.18 .97 1.86 .11 3.36 3.89
______ ______ ______ ______ ______ ______ ______
Total from Investment Operations...... (1.64) 3.52 1.38 2.16 .50 3.72 4.22
______ ______ ______ ______ ______ ______ ______
Distributions:........................ _ _ _ _ _ _ _
Dividends from investment income-net.. _ (.22) (.38) (.40) (.31) (.42) (.32)
Dividends from net realized gain on investments _ _ _ (.04) (.66) (1.33) (.22)
______ ______ ______ ______ ______ ______ ______
Total Distributions................... _ (.22) (.38) (.44) (.97) (1.75) (.54)
______ ______ ______ ______ ______ ______ ______
Net asset value, end of year.......... $10.86 $14.16 $15.16 $16.88 $16.41 $18.38 $22.06
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN................. (13.12%)(2) 32.85% 9.90% 14.49% 3.14% 25.68% 23.41%
RATIOS/SUPPLEMENTAL DATA:............... _ _ _ _ _ _ _
Ratio of expenses to average net assets. _ _ _ .39% .61% .55% .57%
Ratio of net investment income to
average net assets.................... 3.46%(2) 3.45% 3.04% 2.36% 2.26% 2.75% 1.90%
Decrease reflected in above expense ratios
due to undertakings................... 1.42%(2) .78% .65% .14% .03% _ _
Decrease reflected in above expense ratios
due to redemption fee................. .08%(2) .10% _ _ _ _ _
Portfolio Turnover Rate............... 1.21%(2) .69% 3.10% 3.77% 18.81% 3.66% 5.22%
Average Commission Rate Paid(3)....... _ _ _ _ _ _ $.0297
Net Assets, end of year (000's omitted) $29,266 $69,211 $92,598 $281,403 $245,202 $336,147 $591,631
(1) From January 2, 1990 (commencement of operations) to October 31, 1990.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
</TABLE>
Page 5
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 Dreyfus MidCap Index Fund for each
year indicated. This information has been derived from Dreyfus MidCap Index
Fund's financial statements prepared by Ernst & Young LLP, the Fund's
independent auditors.
<TABLE>
<CAPTION>
Year Ended October 31,
___________________________________________________________
PER SHARE DATA: 1991(1) 1992 1993 1994 1995 1996
______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $12.50 $13.69 $15.02 $17.63 $17.14 $19.40
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income-net................. .11 .17 .30 .26 .29 .28
Net realized and unrealized gain on investments 1.08 1.29 2.83 .08 3.00 2.81
______ ______ ______ ______ ______ ______
Total from Investment Operations...... 1.19 1.46 3.13 .34 3.29 3.09
Distributions:
Dividends from investment income-net.. _ (.08) (.27) (.27) (.28) (.30)
Dividends from net realized gain on investments _ (.05) (.25) (.56) (.75) (.87)
______ ______ ______ ______ ______ ______
Total Distributions................... _ (.13) (.52) (.83) (1.03) (1.17)
______ ______ ______ ______ ______ ______
Net asset value, end of year.......... $13.69 $15.02 $17.63 $17.14 $19.40 $21.32
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN................. 9.52%(2) 10.69% 21.22% 1.89% 20.78% 16.65%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets _ _ .09% .40% .50% .50%
Ratio of net investment income to average net assets .87%(2) 2.22% 1.97% 1.68% 1.80% 1.49%
Decrease reflected in above expense ratios
due to undertakings................... 1.19%(2) 1.17% .77% .43% .35% .17%
Portfolio Turnover Rate............... 2.18%(2) 16.31% 16.80% 19.81% 20.46% 14.66%
Average Commission Rate Paid (3)...... _ _ _ _ _ $.0338
Net Assets, end of year (000's omitted) $5,436 $45,989 $65,690 $75,404 $122,982 $170,987
(1) From June 19, 1991 (commencement of operations) to October 31, 1991.
(2) Not annualized.
(3) For fiscal years beginning November 1, 1995, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
</TABLE>
Further information about the performance of Dreyfus S&P 500 Index
Fund and Dreyfus MidCap Index Fund is contained in the relevant 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 FUNDS
INVESTMENT OBJECTIVE
Each Fund's investment objective is to match, as closely as
possible, the performance of a specific stock market index, as set forth on
the cover page of this Prospectus. The differences in the respective stock
market indexes and management policies of the Funds determine the types of
portfolio securities in which each Fund invests and can be expected to affect
the degree of risk to which each Fund is subject and each Fund's return. Each
Fund's investment objective 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 such Fund's outstanding voting shares. There can be no
assurance that each Fund's investment objective will be achieved.
MANAGEMENT POLICIES
Each Fund seeks to match the investment results of its respective
Index, as set forth below:
DREYFUS S&P 500 INDEX FUND seeks to match the investment results of
the Standard & Poor's 500 Composite Stock Price Index* (the "S&P 500 Index"),
which is composed of 500 selected common stocks, most of which are listed on
the New York Stock Exchange. Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., chooses the stocks to be included in the S&P 500 Index
solely on a statistical basis. The weightings of stocks in the S&P 500 Index
are based on each stock's relative total market capitalization; that is, its
market price per share times the number of shares outstanding. Because of
this weighting, as of May 30, 1997, 49.2% of the S&P 500 Index was composed
of the 50 largest companies. The Dreyfus Corporation will select stocks for
the Fund's portfolio in order of their weightings in the S&P 500 Index
beginning with the heaviest weighted stocks. The Fund attempts to be fully
invested at all times in the stocks that comprise the S&P 500 Index and stock
index futures as described below and, in any event, at least 80% of the
Fund's net assets will be so invested. With respect to the Fund's assets
invested in the stocks in the S&P 500 Index, the percentage of such assets
invested in each stock is expected to be approximately the same as the
percentage it represents in the S&P 500 Index.
- -------------------
*"Standard & Poor'sRegistration Mark," "Standard & Poor's 500," "S&P
500Registration Mark"and "S&PRegistration Mark"are trademarks of The McGraw-Hill
Companies, Inc., and have been licensed for use by the Fund.
Page 6
DREYFUS MIDCAP INDEX FUND seeks to match the investment results of
the Standard & Poor's MidCap 400 Index** (the "S&P 400 Index"), which is
composed of 400 selected common stocks of medium-size domestic companies,
which may include some Canadian issuers, with market capitalizations ranging
generally between $56 million and $9.6 billion. The median market
capitalization of the stocks in the S&P 400 Index is approximately $1.1
billion. Standard & Poor's chooses the stocks to be included in the S&P 400
Index on the basis of market size, liquidity and industry group
representation. The weightings of stocks in the S&P 400 Index are based on
each stock's relative total market capitalization. Because of this weighting,
as of May 30, 1997, 31.4% of the S&P 400 Index was composed of the 50 largest
companies. Of the companies, approximately 74% are listed on the New York
Stock Exchange, 24% are quoted on the National Association of Securities
Dealers Automated Quotation System and 2% are listed on the American Stock
Exchange. The Dreyfus Corporation will select stocks for the Fund's portfolio
in order of their weightings in the S&P 400 Index beginning with the heaviest
weighted stocks. The Fund attempts to be fully invested at all times in the
stocks that comprise the S&P 400 Index and stock index futures as described
below and, in any event, at least 80% of the Fund's net assets will be so
invested. With respect to the Fund's assets invested in the stocks in the S&P
400 Index, the percentage of such assets invested in each stock is expected
to be approximately the same as the percentage it represents in the S&P 400
Index. Since some of the stocks that comprise the S&P 400 Index may be thinly
traded, comparatively small investments could cause relatively volatile price
fluctuations.
DREYFUS SMALL CAP STOCK INDEX FUND seeks to match the investment
results of the Standard & Poor's SmallCap 600 Index*** (the "S&P 600 Index"),
which is composed of 600 common stocks of domestic companies with market
capitalizations ranging between $39 million and $2.7 billion as of May 30,
1997. The median market capitalization of the stocks in the S&P 600 Index is
approximately $423 million. Standard & Poor's chooses the stocks to be
included in the S&P 600 Index on the basis of market size, liquidity and
industry group representation. The weightings of stocks in the S&P 600 Index
are based on each stock's relative total market capitalization. Because of
this weighting, as of May 30, 1997, 23.4% of the S&P 600 Index was composed
of the 50 largest companies. Of the companies, approximately 50% are listed
on the New York Stock Exchange, 46% are quoted on the National Association of
Securities Dealers Automated Quotation System and 4% are listed on the
American Stock Exchange. Ordinarily, the Fund will invest in a sample of the
stocks in the S&P 600 Index, rather than attempt to replicate the Index, and
expects to invest in approximately 500 or more of these stocks. The Dreyfus
- --------------------
**"Standard & Poor's MidCap 400 Index" is a trademark of The McGraw-Hill
Companies, Inc., and have been licensed for use by the Fund.
*** "Standard & Poor's SmallCap 600 Index" is a trademark of The McGraw-Hill
Companies, Inc.
Page 7
Corporation will select stocks for the Fund's portfolio based primarily on
market capitalization, industry weightings and other benchmark
characteristics. At times, however, the Fund may be fully invested in the
stocks that comprise the S&P 600 Index and stock index futures as described
below. At times when the Fund is so invested, the percentage of the Fund's
assets invested in each stock in the S&P 600 Index is expected to be
approximately the same as the percentage it represents in the Index. Since
some of the stocks that comprise the S&P 600 Index may be thinly traded,
comparatively small investments could cause relatively volatile price
fluctuations.
DREYFUS INTERNATIONAL STOCK INDEX FUND seeks to match the
investment results of the Morgan Stanley Capital International Europe,
Australia, Far East (Free) IndexRegistration Mark ("EAFE Index"), a broadly
diversified international index composed of the equity securities of
approximately 1,000 companies located outside the United States. The
weightings of stocks in the EAFE Index are based on each stock's relative
total market capitalization. Because of this weighting, as of December 31,
1996, approximately 32% of the EAFE Index was composed of equity securities
of Japanese issuers. The Fund will invest in a sample of the stocks in the
EAFE Index, rather than attempt to replicate the Index, and expects,
ordinarily, to invest in approximately 550 or more of these stocks. The
Dreyfus Corporation will select stocks for the Fund's portfolio based
primarily on country, market capitalization, industry weightings and other
benchmark characteristics. The Fund may enter into foreign currency forward
and foreign currency futures contracts to maintain the approximate currency
exposure of the EAFE Index. See "Appendix - Investment Techniques."
Each Fund is managed by determining which stocks are to be
purchased or sold to match, to the extent feasible, the investment
characteristics of its respective benchmark Index. Each Fund will attempt to
achieve a correlation between the performance of its portfolio and that of
the Fund's Index, in both rising and falling markets, 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 gain distributions,
increases or decreases in exact proportion to changes in its Index. Each
Fund's ability to correlate its performance with that of its Index, however,
may be affected by, among other things, changes in securities markets, the
manner in which the total return of the Fund's benchmark Index is calculated,
the size of the Fund's portfolio, the amount of cash or cash equivalents held
in the Fund's portfolio, and the timing, frequency and size of shareholder
purchases and redemptions. Each Fund will use cash flows from shareholder
purchase and redemption activity to maintain, to the extent feasible, the
similarity of its portfolio to the securities comprising the Fund's benchmark
Index. Inclusion of a security in an Index in no way implies an opinion by
the sponsor of the Index as to its attractiveness as an investment. In the
future, subject to the approval of the relevant Fund's shareholders, a Fund
may select a different index if such a standard of comparison is deemed to be
more representative of the performance of the securities such Fund seeks to
match. None of the Funds is sponsored, endorsed, sold or promoted by the
sponsor of its respective Index.
Dreyfus Small Cap Stock Index Fund may not, and Dreyfus
International Stock Index Fund will not, hold all of the issues that comprise
their respective Index because of the costs involved and the illiquidity of
certain of the securities which comprise such Index. Instead, each of these
Funds will attempt to hold a representative sample of the securities in its
respective Index so that, in the aggregate, the investment characteristics of
the Fund's portfolio resemble those of its Index. The stocks to be included
in each of these Funds' portfolio will be selected using a statistical
process known as "sampling." This process will be used to select stocks so
that the market capitalizations, industry weightings, dividend yield, beta
and, with
Page 8
respect to Dreyfus International Stock Index Fund only, country
weightings closely approximate those of the relevant Index. The sampling
techniques utilized by Dreyfus Small Cap Stock Index Fund and Dreyfus
International Stock Index Fund are expected to be an effective means of
substantially duplicating the investment performance of the respective Index;
however, neither of these Funds is expected to track its benchmark Index with
the same degree of accuracy that complete replication of such Index would
have provided. Over time, the portfolio composition of these Funds will be
altered (or "rebalanced") to reflect changes in the composition of the
respective Index.
From time to time to increase its income, each Fund may lend
securities from its portfolio. See "Appendix _ Investment Techniques." When a
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. Each Fund also may purchase stock index futures in
anticipation of taking a market position when available cash balances do not
permit an economically efficient trade in the cash market. Each Fund also may
sell stock index futures to terminate existing positions it may have as a
result of its purchases of stock index futures. Under normal market
conditions, each of Dreyfus Small Cap Stock Index Fund and Dreyfus
International Stock Index Fund will invest at least 65% of the value of its
total assets in common stocks. See also "Investment Considerations and Risks"
and "Appendix _ Investment Techniques" below, and "Investment Objective and
Management Policies" in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL _ Since each Fund will pursue different types of investments, the
risks of investing will vary depending on the Fund selected for investment.
Before selecting a Fund in which to invest, the investor should assess the
risks associated with the types of investments made by the Fund. Each Fund's
net asset value per share should be expected to fluctuate. Investors should
consider each 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" 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.
SMALLER COMPANY SECURITIES _ (Dreyfus MidCap Index Fund and Dreyfus Small
Cap Stock Index Fund only) The securities of the smaller companies in which
each of these Funds will 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
more subject to changes in earnings and prospects.
FOREIGN SECURITIES _ (Dreyfus International Stock Index Fund and, to a
limited extent, Dreyfus S&P 500 Index Fund and Dreyfus MidCap Index Fund)
Foreign securities markets generally are not as developed or efficient as
those in the United States. Securities of some foreign issuers are less
liquid and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can be greater
than in the United States.
Because evidences of ownership of such securities usually are held
outside the United States, the Fund will be subject to additional risks which
include possible adverse political and economic develop-
Page 9
ments, seizure or nationalization of foreign deposits and adoption of
governmental restrictions which might adversely affect or restrict the payment
of principal and interest on the foreign securities to investors located
outside the country of the issuer, whether from currency blockage or
otherwise.
Developing countries have economic structures that are generally
less diverse and mature, and political systems that are less stable, than
those of developed countries. The markets of developing countries may be more
volatile than the markets of more mature economies; however, such markets may
provide higher rates of return to investors. Many developing countries have
experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have adverse effects on the economies and
securities markets of certain of these countries.
Investors should realize that Japanese securities comprise a large
percentage of the EAFE Index. Therefore stocks of Japanese companies will
represent a correspondingly large component of Dreyfus International Stock
Index Fund's investment assets. Such a large investment in the Japanese stock
market may entail a higher degree of risk than with more diversified
international portfolios, especially considering that by fundamental measures
of corporate valuation, such as its high price-earnings ratios and low
dividend yields, the Japanese market as a whole may appear expensive relative
to other world stock markets.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.
FOREIGN CURRENCY TRANSACTIONS _ (Dreyfus International Stock Index Fund
only) Currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by the forces of supply and demand in
the foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. Currency exchange
rates also can be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or abroad. See
"Appendix_Investment Techniques_Foreign Currency Transactions."
USE OF DERIVATIVES _ Each Fund may invest, to a limited extent, in
derivatives ("Derivatives"). These are financial instruments which derive
their performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Derivatives the Funds may use include
stock index futures and, with respect to Dreyfus International Stock Index
Fund, foreign currency futures contracts. While Derivatives can be used
effectively in furtherance of a Fund's investment objective, under certain
market conditions, they can increase the volatility of the Fund's net asset
value, decrease the liquidity of the Fund's portfolio and make more difficult
the accurate pricing of the Fund's portfolio. See "Appendix _Investment
Techniques _ Use of Derivatives" below and "Investment Objective and
Management Policies _ Management Policies _ Derivatives" in the Statement of
Additional Information.
NON-DIVERSIFIED STATUS _ The classification of each Fund as a
"non-diversified" investment company means that the proportion of the Fund's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. A "diversified" investment company is required by
the 1940 Act generally, with respect to 75% of its total assets, to invest
not more than 5% of such assets in the securities of a single issuer.
Depending upon the composition of its respective benchmark Index, a
relatively high percentage of a Fund's assets may be invested in the
securities of a limited number of issuers, some of which may be within the
same economic sector, consequently, the Fund's portfolio may be more
sensitive to changes in
Page 10
the market value of a single issuer or industry. However, to meet Federal tax
requirements, at the close of each quarter the Fund may not have more than
25% of its total assets invested in any one issuer and, with respect to 50% of
total assets, not more than 5% of its total assets invested in any one issuer.
SIMULTANEOUS INVESTMENTS _ Investment decisions for each Fund are made
independently from those of the other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire to
invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by a Fund or the price paid
or received by a Fund.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER _ The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as each Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of May 31, 1997, The Dreyfus Corporation managed
or administered approximately $87 billion in assets for approximately 1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of each Fund's affairs under a Management Agreement, subject to
the authority of the Board in accordance with applicable state law. The
primary portfolio manager for Dreyfus S&P 500 Index Fund, Dreyfus MidCap
Index Fund and Dreyfus Small Cap Stock Index Fund is Steven A. Falci. He has
held that position since November 13, 1995 with respect to Dreyfus S&P 500
Index Fund and Dreyfus MidCap Index Fund, and since the inception of Dreyfus
Small Cap Stock Index Fund and has been employed by The Dreyfus Corporation
since June 30, 1997 and by Mellon Equity Associates, an affiliate of The
Dreyfus Corporation, since April 1994. For more than five years prior
thereto, he was a managing director for pension investments at NYNEX
Corporation. The primary portfolio manager for Dreyfus International Stock
Index Fund is Susan Ellison. She has held that position since the inception
of the Fund and has been employed by The Dreyfus Corporation since August
1996 and by Mellon Capital Management Corporation, an affiliate of The
Dreyfus Corporation, since June 1988. The Dreyfus Corporation also provides
research services for each Fund and for other funds advised by The Dreyfus
Corporation through a professional staff of portfolio managers and securities
analysts.
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 The Dreyfus Corporation, Mellon managed more than
$259 billion in assets as of March 31, 1997, including approximately $88
billion in proprietary mutual fund assets. As of March 31, 1997, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.061 trillion in
assets, including approximately $58 billion in mutual fund assets.
Under the terms of the relevant Management Agreement, The Dreyfus
Corporation receives a monthly fee at the annual rate of .25 of 1% of the
value of each of Dreyfus S&P 500 Index Fund's, Dreyfus MidCap Index Fund's
and Dreyfus Small Cap Stock Index Fund's average daily net assets, and
Page 11
.35 of 1% of the value of Dreyfus International Stock Index Fund's average
daily net assets. With respect to each Fund, The Dreyfus Corporation has
agreed to reduce its management fee in an amount equal to the Fund's allocable
portion of the accrued fees and expenses of non-interested Board members and
fees and expenses of independent counsel to the Fund and to the non-interested
Board members. For the period prior to January 1, 1997, including for the
fiscal year ended October 31, 1996, The Dreyfus Corporation received a monthly
management fee at the annual rate of .295 of 1% of the value of Dreyfus S&P
500 Index Fund's average daily net assets, and The Dreyfus Corporation paid
Mellon Equity Associates, pursuant to an index management agreement
terminated as of June 30, 1997, a monthly index management fee at the annual
rate of .095 of 1% of the value of Dreyfus S&P 500 Index Fund's average daily
net assets. For the period prior to June 30, 1997, including the fiscal year
ended October 31, 1996, Dreyfus MidCap Index Fund agreed to pay The Dreyfus
Corporation a monthly management fee at the annual rate of .395 of 1% of the
value of the Fund's average daily net assets, and The Dreyfus Corporation
agreed to pay Mellon Equity Associates, pursuant to an index management
agreement terminated as of June 30, 1997, a monthly index management fee at
the annual rate of .095 of 1% of the value of Dreyfus MidCap Index Fund's
average daily net assets. For the fiscal year ended October 31, 1996, Dreyfus
MidCap Index Fund paid The Dreyfus Corporation a monthly management fee at
the effective annual rate of .23 of 1% of the value of the Fund's average
daily net assets, and The Dreyfus Corporation paid Mellon Equity Associates a
monthly index management fee at the effective annual rate of .05 of 1% of the
value of Dreyfus MidCap Index Fund's average daily net assets pursuant to
undertakings in effect.
In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of a
Fund or other funds managed, advised or administered by The Dreyfus
Corporation as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. Brokerage transactions for a Fund may be
conducted through Dreyfus Investment Services Corporation, an affiliate of
The Dreyfus Corporation, in accordance with procedures adopted by the Board.
See "Portfolio Transactions" in the Statement of Additional Information.
The Dreyfus Corporation may pay the Funds' distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Funds. The
Funds' distributor may use part or all of such payments to pay Service Agents
in respect of these services.
The Dreyfus Corporation pays all of each Fund's expenses, except
management fees, brokerage commissions, taxes, interest, fees and expenses of
non-interested Board members, fees and expenses of independent counsel to the
Fund and to the non-interested Board members, Shareholder Services Plan fees
and extraordinary expenses. The imposition of the management fee, as well as
other operating expenses not borne by The Dreyfus Corporation, will have the
effect of reducing investors' return and will affect each Fund's ability to
track its benchmark Index exactly. From time to time, The Dreyfus Corporation
may waive receipt of its fees and/or voluntarily assume certain additional
expenses of a Fund, which would have the effect of lowering the expense ratio
of the Fund and increasing yield to investors. The Funds will not pay The
Dreyfus Corporation at a later time for any amounts it may waive, nor will
the Funds reimburse The Dreyfus Corporation for any amounts it may assume.
DISTRIBUTOR _ The Funds' distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
Page 12
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT AND CUSTODIAN _ Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Funds' Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). Boston Safe Deposit and
Trust Company, an indirect subsidiary of Mellon, One Boston Place, Boston,
Massachusetts 02109, is the custodian of the Funds' investments.
HOW TO BUY SHARES
Shares of each Fund are sold without a sales charge. You may be
charged a fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution (collectively, "Service Agents").
Stock certificates are issued only upon your written request. No certificates
are issued for fractional shares. Each 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 Service Agent which maintains an omnibus account in a Fund and
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 Account Application. For full-time or part-time employees
of The Dreyfus Corporation or any of its affiliates or subsidiaries,
directors of The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of each Fund's Board, or the spouse or
minor child of any of the foregoing, the minimum initial investment is
$1,000. For full-time or part-time employees of The Dreyfus Corporation or
any of its affiliates or subsidiaries who elect to have a portion of their
pay directly deposited into their Fund accounts, the minimum initial
investment is $50. Each Fund reserves the right to offer Fund shares without
regard to minimum purchase requirements to employees participating in certain
qualified or non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to the Fund. Each Fund reserves the right to vary further the
initial and subsequent investment minimum requirements at any time.
You may purchase Fund shares by check or wire. Checks should be
made payable to "The Dreyfus Family of Funds" or, if for Dreyfus retirement
plan accounts, to "The Dreyfus Trust Company, Custodian" and should specify
the Fund in which you are investing. Payments which are mailed should be sent
to Dreyfus Index Funds, P.O. Box 6647, Providence, Rhode Island 02940-6647.
If you are opening a new account, please enclose your Account Application.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed. For Dreyfus retirement plan
accounts, payments which are mailed should be sent 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, together with the applicable
Fund's DDA # as shown below, for purchase of Fund shares in your name: DDA
#8900119527/Dreyfus S&P 500 Index Fund; DDA #8900052732/Dreyfus MidCap Index
Fund; DDA #8900336625/Dreyfus Small Cap Stock Index Fund; or DDA #8900336633/
Dreyfus International Stock Index Fund. The wire must include your Fund
account number (for new accounts, your
Page 13
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 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. dollars 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. Each
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."
Fund shares are sold on a continuous basis at the net asset value
per share next determined after your order is received 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 each Fund to invest your money
as promptly as possible after receipt, thereby maximizing the Fund's ability
to track its Index, you are urged to transmit your purchase order in proper
form so that it may be received by the Transfer Agent prior to 12:00 noon,
New York time, on the day you want your purchase order to be effective. 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.
Each 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. For purposes of determining net
asset value per share, futures contracts will be valued 15 minutes after the
close of trading on the floor of the New York Stock Exchange. Net asset value
per share is computed by dividing the value of the Fund's net assets (i.e.,
the value of its assets less liabilities) by the total number of its shares
outstanding. Each 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 each Fund's investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
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 ("Eligible Benefit
Plans"). Shares of funds in the Dreyfus Family of Funds then held by Eligible
Benefit Plans will be aggregated to determine the fee payable. The
Distributor reserves the right to cease paying these fees at any time. The
Page 14
Distributor will pay such fees from its own funds, other than amounts
received from a Fund, including past profits or any other source available to
it.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the 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 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. To maximize each Fund's ability to track its
Index, you are urged to transmit your redemption requests so that they may be
received by the Transfer Agent prior to 12:00 noon, New York time, on the day
you want your redemption request to be effective.
Each Fund will deduct a redemption fee equal to 1% of the net asset
value of Fund shares redeemed where the redemption occurs within the initial
six-month period following the opening of a Fund account. The fee will be
retained by the Fund and used primarily to offset portfolio transaction
costs. It is expected that, as a result of this fee, the Fund will be able to
track its Index more closely. No redemption fee will be charged upon the
redemption of shares purchased through accounts that are reflected on the
records of the Transfer Agent as omnibus accounts approved by Dreyfus Service
Corporation or through accounts established by Service Agents approved by
Dreyfus Service Corporation that utilize the National Securities Clearing
Corporation's networking system. The redemption fee may be waived, modified
or discontinued and reintroduced at any time or from time to time. Service
Agents may charge their clients a fee for effecting redemptions of Fund
shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may
be more or less than their original cost, depending on the Fund's
then-current net asset value.
Each 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
BUILDERRegistration Mark 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 FUNDS 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.
Each 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.
Page 15
PROCEDURES
You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, or through the Telephone Redemption
Privilege which is granted automatically unless you specifically refuse it by
checking the applicable "No" box on the Account Application. The Telephone
Redemption Privilege may be established for an existing account by a separate
signed Shareholder Services Form or by oral request from any of the
authorized signatories on the account by calling 1-800-645-6561. You also may
redeem shares through the Wire Redemption Privilege, if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. Each Fund makes available to certain large institutions the ability to
issue redemption instructions through compatible computer facilities. Each
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. Each 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. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares for which the
certificates have been issued, are not eligible for the Wire Redemption or
Telephone Redemption Privilege.
The Telephone Redemption Privilege authorizes 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. Each
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 Funds 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.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
6647, Providence, Rhode Island 02940-6647, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. 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-guaranteed request.
Page 16
Your written redemption request may direct that the redemption
proceeds be used to purchase shares of other funds advised or administered by
The Dreyfus Corporation. The 1% redemption fee, described above, if
applicable, may be charged upon such redemption (depending upon how long your
Fund account has been open or the type of account from which shares are being
redeemed) and your redemption proceeds will be invested in shares of the
other fund on the next business day. Before you make such a request, you must
obtain and should review a copy of the current prospectus of the fund being
purchased. Upon request, proceeds from the redemption of shares of the Fund
by an employee benefit plan will be applied to purchase shares of other funds
in the Dreyfus Family of Funds on the date of redemption, if the plan's
recordkeeper has entered into an appropriate agency agreement with the Fund
and such other funds. 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 each Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal administrative 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.
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. 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.
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. The
Telephone Redemption Privilege is granted automatically unless you refuse it.
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 by you.
At your option, the 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 your participation in this Privilege
or change the amount of purchase at any time by mailing written notification
to Dreyfus Index Funds, P.O. Box 6647, Providence, Rhode Island 02940-6647,
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. Each
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
Page 17
RETIREMENT PLANS _ Each 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; or for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
SHAREHOLDER SERVICES PLAN
Each Fund has adopted a Shareholder Services Plan, pursuant to
which it pays the Distributor for the provision of certain services a fee at
the annual rate of .25 of 1% of the value of the Fund's average daily net
assets. 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. Under the Shareholder Services Plan, the
Distributor may make payments to Service Agents in respect of these services.
The Distributor determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund ordinarily pays dividends from net investment income and
distributes net realized securities gains, if any, once a year, but may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"),
in all events in a manner consistent with the provisions of the 1940 Act.
Each Fund will automatically reinvest dividends and distributions from
securities gains, if any, in additional Fund shares at net asset value or, at
your option, pay them in cash. No Fund will make distributions from net
realized securities gains unless its 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. If applicable, the 1% redemption fee, described under "How to
Redeem Shares," will be charged upon certain redemptions of shares received
through the automatic reinvestment of dividends or distributions. All
expenses are accrued daily and deducted before declaration of dividends to
investors.
Dividends paid by a Fund derived from 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 Fund 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 corporate shareholders
of the Fund. Distributions from net realized long-term securities gains of a
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 Fund shares. The Code provides that the net long-term capital
gain of an individual generally will not 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 a Fund to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate of
30%, unless the foreign 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.
Page 18
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 is
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 each 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 believes that each of Dreyfus S&P 500 Index Fund and
Dreyfus MidCap Index Fund has qualified for the fiscal year ended October 31,
1996 as a "regulated investment company" under the Code. Each of Dreyfus S&P
500 Index Fund and Dreyfus MidCap Index Fund intends to continue to so
qualify if such qualification is in the best interest of its shareholders. It
is expected that each of Dreyfus Small Cap Stock Index Fund and Dreyfus
International Stock Index Fund will qualify as a "regulated investment
company" under the Code so long as such qualification is in the best
interests of its shareholders. Qualification as a regulated investment
company 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. Each Fund is subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your 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 a 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 a 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 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
Page 19
the value of a hypothetical investment at the end of the period which assumes
the application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. Performance information, such
as that described above, may not provide a basis for comparison with other
investments or other investment companies using a different method of
calculating performance.
Comparative performance information may be used from time to time
in advertising or marketing Fund shares, including data from the S&P 500
Index, S&P 400 Index, S&P 600 Index, EAFE Index, Russell 2000Registration
Mark Index, Lipper Analytical Services, Inc., the Dow Jones Industrial
Average, Money Magazine, Morningstar, Inc. and other industry publications.
GENERAL INFORMATION
Each of Dreyfus S&P 500 Index Fund, Dreyfus Small Cap Stock Index
Fund and Dreyfus International Stock Index Fund are series of Dreyfus Index
Funds, Inc. (the "Company"). The Company was incorporated under Maryland law
on October 6, 1989, and commenced operations on January 2, 1990. Before June
30, 1997, the Company's name was Peoples Index Fund, Inc. and it operated
under the name Dreyfus S&P 500 Index Fund. The Company is authorized to issue
600 million shares of Common Stock (with 200 million shares allocated to each
series), par value $.001 per share. Dreyfus MidCap Index Fund is a separate
open-end, management investment company incorporated under Maryland law on
June 6, 1991, which commenced operations on June 19, 1991. On November 13,
1995, Dreyfus MidCap Index Fund, which is incorporated under the name Peoples
S&P MidCap Index Fund, Inc., began operating under its current name. Dreyfus
MidCap Index Fund is authorized to issue 200 million shares of Common Stock,
par value $.001 per share. Each share has one vote.
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for a Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of accountants. However, pursuant to the Fund's By-Laws, the
holders of at least 10% of the shares outstanding and entitled to vote may
require the Fund to hold a special meeting of shareholders for purposes of
removing a Board member from office and the holders of at least 25% of such
shares may require the Fund to hold a special meeting of shareholders for any
other purpose. Shareholders may remove a Board member by the affirmative vote
of a majority of the outstanding voting shares. In addition, the Board will
call a meeting of shareholders for the purpose of electing Board members if,
at any time, less than a majority of the Board members then holding office
have been elected by shareholders.
The Company is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio. To date, the Board of the Company has authorized the
creation of three series of shares. All consideration received by the Company
for shares of one of the series, and all assets in which such consideration
is invested, will belong to that series (subject only to the rights of
creditors of the Company) and will be subject to the liabilities related
thereto. The income attributable to, and the expenses of, one series would be
treated separately from those of the other series. The Company has the
ability to create, from time to time, new series without shareholder
approval.
Although each Fund is offering only its own shares, it is possible
that a Fund might become liable for any misstatement in this Prospectus about
another Fund. The Funds' Boards have considered this factor in approving the
use of this single combined Prospectus.
Page 20
The Transfer Agent maintains a record of your ownership and sends
you confirmation statements of account.
Shareholder inquiries may be made by writing to the Fund at l44
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll
free l-800-645-6561. In New York City, call 1-718-895-1206; outside the U.S.,
call 516-794-5452.
Dreyfus S&P 500 Index Fund, Dreyfus MidCap Index Fund and Dreyfus
Small Cap Stock Index Fund are not sponsored, endorsed, sold or promoted by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P
makes no representation or warranty, express or implied, to the owners of
such Funds or any member of the public regarding the advisability of
investing in securities generally or in the Fund particularly or the ability
of the S&P 500 Index, S&P 400 Index or S&P 600 Index to track general stock
market performance. S&P's only relationship to the Funds is the licensing of
certain trademarks and trade names of S&P and of the S&P 500 Index or S&P 400
Index which are determined, composed and calculated by S&P without regard to
Dreyfus S&P 500 Index Fund or Dreyfus MidCap Index Fund. S&P has no
obligation to take the needs of Dreyfus S&P 500 Index Fund, Dreyfus MidCap
Index Fund or Dreyfus Small Cap Stock Index Fund or the owners of such Funds
into consideration in determining, composing or calculating the S&P 500
Index, S&P 400 Index or S&P 600 Index, respectively. S&P is not responsible
for and has not participated in the calculation of any such Fund's net asset
value, nor is S&P a distributor of any such Fund. S&P has no obligation or
liability in connection with the administration, marketing or trading of
Dreyfus S&P 500 Index Fund, Dreyfus MidCap Index Fund, or Dreyfus Small Cap
Stock Index Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
S&P 500 INDEX, S&P 400 INDEX OR S&P 600 INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
DREYFUS S&P 500 INDEX FUND, DREYFUS MIDCAP INDEX FUND OR DREYFUS SMALL CAP
STOCK INDEX FUND, OWNERS OF SUCH FUNDS, OR ANY OTHER PERSON OR ENTITY FROM
THE USE OF THE S&P 500 INDEX, S&P 400 INDEX OR S&P 600 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX, S&P 400 INDEX OR S&P 600
INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN
NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
Page 21
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY _ Each of Dreyfus Small Cap Stock Index Fund and Dreyfus
International Stock Index Fund is permitted to borrow to the extent permitted
under the 1940 Act, which permits an investment company to borrow an amount
up to 33-1/3% of the value of its total assets. Each of Dreyfus Small Cap
Stock Index Fund and Dreyfus International Stock Index Fund currently intends
to, and each of Dreyfus S&P 500 Index Fund and Dreyfus MidCap Index Fund may,
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 a Fund's total assets, the Fund will not make any
additional investments.
FOREIGN CURRENCY TRANSACTIONS (Dreyfus International Stock Index Fund only)
_ Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. The Fund's success in these transactions will depend principally on
The Dreyfus Corporation's ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar.
USE OF DERIVATIVES _ Each Fund may invest in the types of Derivatives
enumerated under "Description of the Funds _ Investment Considerations and
Risks _ Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objective and Management
Policies _ Management Policies _ Derivatives" in the Statement of Additional
Information.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
Although none of the Funds will be a commodity pool, certain
Derivatives subject each Fund to the rules of the Commodity Futures Trading
Commission which limit the extent to which the Fund can invest in such
Derivatives. A Fund may not invest in futures contracts if the amount of
initial margin deposits with respect to such contracts, other than for bona
fide hedging purposes, exceeds 5% of the liquidation value of the Fund's
assets, after taking into account unrealized profits and unrealized losses on
such contracts.
LENDING PORTFOLIO SECURITIES _ Each Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities which affords the Fund an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33-1/3%
(30% with respect to Dreyfus S&P 500 Index Fund and Dreyfus MidCap Index
Fund) of the value of the Fund's total assets, and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to
at least 100% of the current market value of the loaned securities. Such
loans are terminable by the Fund at any time upon specified notice. The Fund
might experience risk of loss if the institution with which it has engaged in
a portfolio loan transaction breaches its agreement with the Fund.
Page 22
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN A
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. AS TO EACH 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 23
Dreyfus
Index Funds
Prospectus
Registration Mark
Copy Rights 1997 Dreyfus Service Corporation INDXp063097
Page 24
