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COMBINED PROSPECTUS JANUARY 15, 1998
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 January 15, 1998,
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, a
nd 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>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Fee Table....................................................................... 4
Condensed Financial Information................................................. 5
Description of the Funds........................................................ 8
Management of the Funds......................................................... 12
How to Buy Shares............................................................... 13
How to Redeem Shares............................................................ 15
Shareholder Services............................................................ 18
Shareholder Services Plan....................................................... 18
Dividends, Distributions and Taxes.............................................. 18
Performance Information......................................................... 20
General Information............................................................. 20
Appendix........................................................................ 22
</TABLE>
[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>
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%.
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 Expens
es 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. Further financial data, related notes
and reports of independent auditors accompany the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
DREYFUS S&P 500 INDEX FUND _ 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 the Fund
for each year indicated. This information has been derived from the Fund's
financial statements audited 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 1997
________ _______ _______ _______ _______ ______ _______ _______
<S> <C> <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 $22.06
________ _______ _______ _______ _______ ______ _______ _______
Investment Operations:
Investment income-net..... .17 .34 .41 .30 .39 .36 .33 .34
Net realized and
unrealized gain (loss)
on investments.............. (1.81) 3.18 .97 1.86 .11 3.36 3.89 6.37
________ _______ _______ _______ _______ ______ _______ _______
Total from Investment
Operations (1.64) 3.52 1.38 2.16 .50 3.72 4.22 6.71
________ _______ _______ _______ _______ ______ _______ _______
Distributions:............... __ __ __ __ __ __ __ __
Dividends from investment
income-net................... __ (.22) (.38) (.40) (.31) (.42) (.32) (.38)
Dividends from net realized gain
on investments............... __ __ __ (.04) (.66) (1.33) (.22) (.66)
________ _______ _______ _______ _______ ______ _______ _______
Total Distributions........ __ (.22) (.38) (.44) (.97) (1.75) (.54) (1.04)
________ _______ _______ _______ _______ ______ _______ _______
Net asset value, end of year. $10.86 $14.16 $15.16 $16.88 $16.41 $18.38 $22.06 $27.73
======== ======= ======= ======= ======== ======= ======= ======
TOTAL INVESTMENT RETURN...... (13.12%)(2) 32.85% 9.90% 14.49% 3.14% 25.68% 23.41% 31.46%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets __ __ __ .39% .61% .55% .57% .50%
Ratio of net investment income to
average net assets........... 3.46%(2) 3.45% 3.04% 2.36% 2.26% 2.75% 1.90% 1.52%
Decrease reflected in
above expense ratios
due to undertakings....... 1.42%(2) .78% .65% .14% .03% __ __ .05%
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% 2.26%
Average Commission Rate Paid(3) __ __ __ __ __ __ $.0297 $.0301
Net Assets, end of year
(000's omitted) $29,266 $69,211 $92,598 $281,403 $245,202 $336,147 $591,631 $1,279,451
(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 (CONTINUED)
DREYFUS MIDCAP INDEX FUND _ 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 the Fund's financial statements audited 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 1997
_______ _______ _______ _______ ______ _______ _______
Net asset value, beginning of year.... $12.50 $13.69 $15.02 $17.63 $17.14 $19.40 $21.32
_______ _______ _______ _______ ______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Operations:
Investment income-net................. .11 .17 .30 .26 .29 .28 .25
Net realized and unrealized gain
on investments 1.08 1.29 2.83 .08 3.00 2.81 6.25
_______ _______ _______ _______ ______ _______ _______
Total from Investment Operations...... 1.19 1.46 3.13 .34 3.29 3.09 6.50
Distributions:
Dividends from investment income-net.. __ (.08) (.27) (.27) (.28) (.30) (.27)
Dividends from net realized
gain on investments __ (.05) (.25) (.56) (.75) (.87) (1.00)
_______ _______ _______ _______ ______ _______ _______
Total Distributions................. __ (.13) (.52) (.83) (1.03) (1.17) (1.27)
_______ _______ _______ _______ ______ _______ _______
Net asset value, end of year.......... $13.69 $15.02 $17.63 $17.14 $19.40 $21.32 $26.55
======= ======= ======= ======== ======= ======= ======
TOTAL INVESTMENT RETURN................. 9.52%(2) 10.69% 21.22% 1.89% 20.78% 16.65% 32.02%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets __ __ .09% .40% .50% .50% .50%
Ratio of net investment income to
average net assets .87%(2) 2.22% 1.97% 1.68% 1.80% 1.49% 1.07%
Decrease reflected in above expense ratios
due to undertakings................... 1.19%(2) 1.17% .77% .43% .35% .17% .09%
Portfolio Turnover Rate............... 2.18%(2) 16.31% 16.80% 19.81% 20.46% 14.66% 20.15%
Average Commission Rate Paid (1)...... __ __ __ __ __ $.0338 $.0316
Net Assets, end of year (000's omitted) $5,436 $45,989 $65,690 $75,404 $122,982. $170,987 $221,017
(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>
[Page 6]
FINANCIAL HIGHLIGHTS (CONTINUED)
DREYFUS SMALL CAP STOCK INDEX FUNd _ 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
Small Cap Stock Index Fund for the period from June 30, 1997 (commencement of
operations) to October 31, 1997. This information has been derived from the
Fund's financial statements audited by Coopers & Lybrand L.L.P., the Fund's
independent accountants.
<TABLE>
<CAPTION>
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period...................................... $12.50
_______
INVESTMENT OPERATIONS:
Investment Income-net..................................................... .02
Net realized and unrealized gain on investments........................... 1.38
_______
TOTAL FROM INVESTMENT OPERATIONS.......................................... 1.40
_______
Net asset value, end of period............................................ $13.90
=========
TOTAL INVESTMENT RETURN..................................................... 11.20%(1,2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... .17%(2)
Ratio of net investment income to average net assets...................... .13%(2)
Portfolio Turnover Rate................................................... .10.59%(2)
Average Commission Rate Paid(3)........................................... $.0325
Net Assets, end of period (000's omitted)................................. $18,081
(1) Not annualized.
(2) Exclusive of redemption fee.
(3) The Fund is required to disclose its average commission rate
paid per share for purchases and sales of investment securities.
DREYFUS INTERNATIONAL STOCK INDEX FUNd _ 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 International Stock Index Fund for the period
from June 30, 1997 (commencement of operations) to October 31, 1997. This
information has been derived from the Fund's financial statements audited by
Coopers & Lybrand L.L.P., the Fund's independent accountants.
PER SHARE DATA:
Net asset value, beginning of period...................................... $12.50
_______
INVESTMENT OPERATIONS:
Investment Income-net..................................................... .07
Net realized and unrealized gain (loss) on investments.................... (1.30)
_______
TOTAL FROM INVESTMENT OPERATIONS.......................................... (1.23)
_______
Net asset value, end of period............................................ $11.27
=========
TOTAL INVESTMENT RETURN..................................................... (9.84%)(1,2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... .20%(1)
Ratio of net investment income to average net assets...................... .62%(1)
Portfolio Turnover Rate................................................... .16%(1)
Average Commission Rate Paid(3)........................................... $.0314
Net Assets, end of period (000's omitted)................................. $9,246
(1) Not annualized.
(2) Exclusive of redemption fee.
(3) 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 Funds' performance 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.
[Page 7]
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 October 31, 1997, approximately 50% 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.
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 $50 million and $10 billion. The median market
capitalization of the stocks in the S&P 400 Index is approximately $2.7
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 October 31, 1997, approximately 32% of the S&P 400 Index was composed
of the 50 largest companies. Of the companies, most are listed on the New
York Stock Exchange, others are quoted on The Nasdaq Stock Market and a few
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.
* "Standard & Poor'sRegistration Mark," "Standard & Poor's 500," "S&P 500
Registration Mark"and "S&PRegistration Mark"are trademarks of The McGraw-Hill
Companies, Inc., and have been licensed for use by the Fund.
** "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 Small Cap 600 Index" is a trademark of The McGraw-Hill
Companies, Inc.
[Page 8]
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 selected common stocks of domestic companies with
market capitalizations ranging generally between $38 million and $2.7 billion.
The median market capitalization of the stocks in the S&P 600 Index is
approximately $508 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. Of the
companies, most are listed on the New York Stock Exchange, with others quoted
on The Nasdaq Stock Market or 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 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 October 31,
1997, approximately 50% 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.
[Page 9]
#
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 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 anticipa
tion 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) Each of these Funds may purchase the securities of
smaller capitalization companies, the prices of which 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.
[Page 10]
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 developments, 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 the market value of a single issuer or industry. Howev
er, 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.
[Page 11]
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 September 30, 1997, The Dreyfus Corporation
managed or administered approximately $93 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
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
$299 billion in assets as of September 30, 1997, including approximately $102
billion in proprietary mutual fund assets. As of September 30, 1997, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.488 trillion in
assets, including approximately $60 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 .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, Dreyfus S&P 500 Index Fund
had agreed to pay The Dreyfus Corporation a monthly management fee at the
annual rate of .295 of 1% of the value of the Fund's average daily net
assets, and The Dreyfus Corporation had agreed to pay Mellon Equity
Associates, pursuant to an index management agreement, which 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.
During the period from January 1, 1997 through June 30, 1997, the index manage
ment fee was reduced to .05 of 1% of the value of the Fund's average daily
net assets up to $1 billion and .075 of 1% when the value of the Fund's
average daily net asssets exceeded $1 billion. For the period prior to June
30, 1997, including the fiscal year ended October 31, 1996, Dreyfus MidCap
Index Fund had 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 had agreed to pay Mellon Equity
Associates, pursuant to an index management agreement
[Page 12]
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, 1997, Dreyfus
S&P 500 Index Fund and Dreyfus MidCap Index Fund paid The Dreyfus Corporation
a monthly management fee at the effective annual rate of .25 and .31
respectively, of 1% of the value of the relevant Fund's average daily net
assets. For the period November 1, 1996 through June 30, 1997, The Dreyfus
Corporation paid Mellon Equity Associates a monthly index management fee at
the effective annual rate of .095 of 1% of the value of the relevant Fund's
average daily net assets pursuant to undertakings in effect. For the period
June 30, 1997 (commencement of operations) through October 31, 1997, Dreyfus
Small Cap Stock Index Fund and Dreyfus International Stock Index Fund paid
The Dreyfus Corporation a monthly management fee at the effective annual rate
of .25 and .35, respectively, of 1% of the relevant Fund's average daily net
assets.
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.
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 cus
[Page 13]
tomers 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 Family of Funds, P.O. Box 9387, 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/D
reyfus International Stock Index Fund. 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 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 entity authorized to receive orders on behalf of the Fund. If an
order is received in proper form by the Transfer Agent by the close of
trading on the floor of the New
[Page 14]
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
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 by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund, 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
[Page 15]
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 submi
tted 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.
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.
[Page 16]
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
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. 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.
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, telephone or letter
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.
[Page 17]
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 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.
Each Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
RETIREMENT PLANS _ Each Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs (including regular IRAs, spousal IRAs for
a non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs), 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. If you
elect to receive dividends and distributions in cash, and your dividend or
distribution check is returned to the Fund as undeliverable or remains
uncashed for six months, the Fund reserves the right to reinvest such
dividend or distribution and all future dividends and distributions payable
to you in additional Fund shares at net asset
[Page 18]
value. No interest will accrue on amounts represented by uncashed
distribution or redemption checks. 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 an individual generally
will be taxed on his or her net capital gain at a maximum rate of 28% with
respect to capital gain from securities held for more than one year but not
more than 18 months and at a maximum rate of 20% with respect to capital gain
from securities held for more than 18 months. 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. 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, IRS individual taxpayer
identification 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 Fund has qualified for the fiscal
year ended October 31, 1997 as a "regulated investment company" under the
Code. Each Fund intends to continue to so qualify if such qualification is in
the best interest of its shareholders. Qualification as a regulated
investment company relieves the Fund of any liability for Federal income 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.
[Page 19]
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. Advertisem
ents 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 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.
[Page 20]
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.
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 relevant Indexes which
are determined, composed and calculated by S&P without regard to the Funds.
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 tr
ading 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 1998 Dreyfus Service Corporation INDXp0198
[Page 24]
DREYFUS INDEX FUNDS
DREYFUS S&P 500 INDEX FUND
DREYFUS MIDCAP INDEX FUND
DREYFUS SMALL CAP STOCK INDEX FUND
DREYFUS INTERNATIONAL STOCK INDEX FUND
COMBINED PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 15, 1998
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current combined
Prospectus of the funds named above (each, a "Fund" and, collectively, the
"Funds"), dated January 15, 1998, as it may be revised from time to time.
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"), an open-end management investment company, and Dreyfus MidCap
Index Fund is a separate open-end, management investment company. To obtain
a copy of the Funds' Prospectus, please write to the Funds 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. -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as each Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies B-2
Management of the Funds B-9
Management Agreements B-14
Shareholder Services Plan B-17
Purchase of Shares B-18
Redemption of Shares B-18
Shareholder Services B-20
Determination of Net Asset Value B-21
Dividends, Distributions and Taxes B-21
Portfolio Transactions B-23
Performance Information B-24
Information About the Funds B-25
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-26
Financial Statements and Reports of Independent Auditors B-26
Appendix B-27
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Funds' Prospectus entitled "Description of the
Funds" and "Appendix."
Other Portfolio Securities
Money Market Instruments. Each Fund may invest, in the circumstances
described under "Description of the Funds - Management Policies" in the
Funds' 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 Funds' custodian or sub-custodian will have custody of, and
will hold in a segregated account, securities acquired by a Fund under a
repurchase agreement. Repurchase agreements are considered by the staff of
the Securities and Exchange Commission to be loans by the Fund that enters
into them. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, each Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of $1 billion, 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. Each 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 each 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 Ratings
Group ("S&P"), (b) issued by companies having an outstanding unsecured debt
issue currently rated at least Aa by Moody's or at least AA- by S&P, or (c)
if unrated, determined by Dreyfus 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, each 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 must terminate the loan and regain the
right to vote the securities if a material event adversely affecting the
investment occurs.
Derivatives. Each Fund may invest in Derivatives (as defined in the
Funds' Prospectus) in anticipation of taking a market position when, in the
opinion of Dreyfus, available cash balances do not permit an economically
efficient trade in the cash market. Derivatives may provide a cheaper,
quicker or more specifically focused way for the Funds to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Engaging in futures transactions involves risk of loss to a Fund which
could adversely affect the value of the Fund's net assets. Although each
Fund intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.
Successful use of futures by a Fund also is subject to the ability of
Dreyfus to predict correctly movements in the direction of the relevant
market and to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. In addition,
the price of stock index futures may not correlate perfectly with the
movement in the stock index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index
and futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation
by speculators in the futures market also may cause temporary price
distortions. Because of the possibility of price distortions in the futures
market and the imperfect correlation between movements in the stock index
and movements in the price of stock index futures, a correct forecast of
general market trends still may not result in a successful hedging
transaction.
Each Fund may purchase and sell stock index futures contracts. A stock
index future obligates the Fund to pay or receive an amount of cash equal to
a fixed dollar amount specified in the futures contract multiplied by the
difference between the settlement price of the contract on the contract's
last trading day and the value of the index based on the stock prices of the
securities that comprise it at the opening of trading in such securities on
the next business day.
Dreyfus International Stock Index Fund may purchase and sell currency
futures. A foreign currency future obligates the Fund to purchase or sell
an amount of a specific currency at a future date at a specific price.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Fund may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting a Fund's ability otherwise
to invest those assets.
Investment Restrictions
Dreyfus S&P 500 Index Fund. 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. Dreyfus S&P 500 Index Fund may not:
1. 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.
2. Invest in commodities, except that the Fund may invest in futures
contracts as described in the Prospectus and Statement of Additional
Information.
3. Purchase, hold or deal in real estate, or oil and gas interests, 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 (which, if permitted by applicable
regulatory authority, may be from Mellon Bank, N.A. or Boston Safe Deposit
and Trust Company, affiliates of Dreyfus) 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.
Transactions in futures and options do not involve any borrowing for
purposes of this restriction.
5. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 15% of the value of its total assets, but only to secure
borrowings for temporary or emergency purposes. Collateral
arrangements with respect to initial or variation margin for futures
contracts will not be deemed to be pledges of the Fund's assets.
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 Directors.
7. Act as an underwriter of securities of other issuers or purchase
securities subject to restrictions on disposition under the Securities Act
of 1933 (so-called "restricted securities"). The Fund may not enter into
repurchase agreements providing for settlement in more than seven days after
notice or purchase securities which are not readily marketable, 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 (including banking), except to the extent
the Standard & Poor's 500 Composite Stock Price Index also is so
concentrated, 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 fundamental policies, Dreyfus S&P 500
Index Fund may not (i) engage in arbitrage transactions, (ii) purchase
warrants (excluding those acquired by the Fund in units or attached to
securities), (iii) sell securities short, but reserves the right to sell
securities short against the box (a transaction in which the Fund enters
into a short sale of a security which the Fund owns) or (iv) 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.
* * *
Dreyfus MidCap Index Fund. 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 1940 Act)
of the Fund's outstanding voting shares. Dreyfus MidCap Index Fund may not:
11. 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
12. 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.
13. Invest in commodities, except that the Fund may invest in
futures contracts as described in the Prospectus and Statement of Additional
Information.
14. Purchase, hold or deal in real estate, real estate investment trust
securities, real estate limited partnership interests, or oil, gas or
other mineral leases or 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.
15. 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.
Transactions in futures and options do not involve any borrowing for
purposes of this restriction.
16. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes. Collateral
arrangements with respect to initial or variation margin for futures
contracts will not be deemed to be pledges of the Fund's assets.
17. 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 Directors.
18. 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.
19. 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.
20. Purchase, sell or write puts, calls or combinations thereof.
21. Invest more than 25% of its assets in investments in any particular
industry or industries (including banking), except to the extent
the Standard & Poor's MidCap 400 Index also is so concentrated, 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 fundamental policies, Dreyfus MidCap
Index Fund may not (i) engage in arbitrage transactions, (ii) purchase
warrants (excluding those acquired by the Fund in units or attached to
securities), or (iii) sell securities short, but reserves the right to sell
securities short against the box (a transaction in which the Fund enters
into a short sale of a security which the Fund owns).
* * *
Dreyfus Small Cap Stock Index Fund and Dreyfus International Stock
Index Fund. Each of these Funds has adopted investment restrictions
numbered 1 through 8 below as fundamental policies, which cannot be changed,
as to a Fund, without approval by the holders of a majority (as defined in
the 1940 Act) of such Fund's outstanding voting securities. Investment
restrictions numbered 9 through 11 are not fundamental policies and may be
changed by vote of a majority of the Company's Board members at any time.
Neither Dreyfus Small Cap Stock Index Fund nor Dreyfus International Stock
Index Fund may:
1. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
2. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or 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.
3. Borrow money, except to the extent permitted under the 1940 Act (which
currently limits borrowing to no more than 33-1/3% of the value of the
Fund's total assets). For purposes of this investment restriction, the
Fund's entry into options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts or indexes shall
not constitute borrowing.
4. Make loans to others, except through the purchase of debt obligations
and the entry into repurchase agreements. However, the Fund may lend its
portfolio securities in an amount not to exceed 33-1/3% 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
Company's Board.
5. Act as an underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
6. Invest more than 25% of its assets in the securities of issuers in any
single industry (except to the extent the Fund's benchmark Index as
described in the Prospectus also is so concentrated), provided that there
shall be no limitation on the purchase of obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
7. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 1, 3 and 9 may be deemed to give rise to a senior security.
8. Purchase securities on margin, but the Fund may make margin deposits in
connection with transactions in options, forward contracts, futures
contracts, including those relating to indexes, and options on futures
contracts or indexes.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts, including those
relating to indexes, and options on futures contracts or indexes.
10. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of the Fund's net assets would be
so invested.
11. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
* * *
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.
A Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of its shares in certain states.
Should a 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 the Fund's shares in the state
involved.
MANAGEMENT OF THE FUNDS
Board members and officers of the Funds, together with information as
to their principal business occupations during at least the last five years,
are shown below.
Board Members of the Funds
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
a director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk
management services to health and other benefit programs, The Noel
Group, Inc., a venture capital company, Staffing Resources, Inc., a
temporary placement agency; Carlyle Industries, Inc. (formerly, Belding
Heminway Company, Inc.), a button packager and distributor, and
International Alliance Services, Inc., a provider of various
outsourcing functions for small and medium size companies. For more
than five years prior to January 1995, 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. From August 1994 until December
31, 1994, he was a director of Mellon Bank Corporation. He is 54 years
old and his address is 200 Park Avenue, New York, New York 10166.
DAVID P. FELDMAN, Board Member. Trustee of Corporate Property Investors, a
real estate investment company, and a director of several mutual funds
in the 59 Wall Street Mutual Funds Group, and of the Jeffrey Company, a
private investment company. He was employed by AT&T from July 1961 to
his retirement in April 1997, most recently serving as Chairman and
Chief Executive Officer of AT&T Investment Management Corporation. He
is 58 years old and his address is c/o AT&T One Oak Way, Berkley
Heights, New Jersey 07922.
JOHN M. FRASER, JR., Board Member. President of Fraser Associates, a
service company for planning and arranging corporate meetings and other
events. From September 1975 to June 1978, he was Executive Vice
President of Flagship Cruises, Ltd. Prior thereto, he was Senior Vice
President and Resident Director of the Swedish-American Line for the
United States and Canada. He is 76 years old and his address is 133
East 64th Street, New York, New York 10021.
EHUD HOUMINER, Board Member. Since July 1991, Professor and
Executive-in-Residence at the Columbia Business School, Columbia
University. Since January 1996, principal of Lear, Yavitz and
Associates, a management consulting firm. He was President and Chief
Executive Officer of Philip Morris USA, manufacturers of consumer
products, from December 1988 to September 1990. He also is a Director
of Avnet Inc. He is 57 years old and his address is c/o Columbia
Business School, Columbia University, Uris Hall, Room 526, New York,
New York 10027.
DAVID J. MAHONEY, Board Member. President of David Mahoney Ventures since
1983. From 1968 to 1983, he was Chairman and Chief Executive Officer
of Norton Simon Inc., a producer of consumer products and services.
Mr. Mahoney is also a director of National Health Laboratories Inc.,
Bionaire Inc. and Good Samaritan Health Systems, Inc. He is 74 years
old and his address is 745 Fifth Avenue, Suite 700, New York, New York
10151.
GLORIA MESSINGER, Board Member. From 1981 to 1993, Managing Director and
Chief Executive Officer of ASCAP (American Society of Composers,
Authors and Publishers). She is a member of the Board of Directors of
the Yale Law School Fund and Theater for a New Audience, Inc., and was
secretary of the ASCAP Foundation and served as a Trustee of the
Copyright Society of the United States. She is also a member of
numerous professional and civic organizations. She is 68 years old and
her address is 747 Third Avenue, 11th Floor, New York, New York 10017.
JACK R. MEYER, Board Member. 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 52 years old and his address is 600 Atlantic Avenue, Boston,
Massachusetts 02210.
JOHN SZARKOWSKI, Board Member. Director Emeritus of Photography at The
Museum of Modern Art. Consultant in Photography. He is 72 years old
and his address is Bristol Road, Box 221, East Chatham, New York 12060.
ANNE WEXLER, Board Member. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also a
director of Alumax, Comcast Corporation, The New England Electric
System, and 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 67 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 plan described in the section captioned "Shareholder
Services Plan" remains in effect with respect to a Fund, the Board members
of the Fund who are not "interested persons" of the Fund, as defined in the
1940 Act, will be selected and nominated by the Board members who are not
"interested persons" of the Fund.
Each of the Company and Dreyfus MidCap Index 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 Board member by
the Company and Dreyfus MidCap Index Fund for the fiscal year ended October
31, 1997, 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, 1996, were as follows:
Total Compensation
Aggregate From the Funds and
Name of Board Compensation From the Fund Complex
Member Funds* Paid to Board Member
Dreyfus MidCap
Company Index Fund
Joseph S. DiMartino $8,438 $5,625 $517,075 (94)
David P. Feldman $6,750 $4,500 $122,257 (27)
John M. Fraser, Jr. $6,250 $4,000 $ 73,563 (12)
Ehud Houminer $6,250 $4,500 $ 48,769 (12)
David J. Mahoney $4,750 $3,000 $ 40,312 (14)
Gloria Messinger $6,750 $4,500 $ 11,444 (4)
Jack R. Meyer $6,250 $4,000 $ 18,868 (4)
John Szarkowski $6,250 $4,000 $ 21,377 (4)
Anne Wexler $6,750 $4,500 $ 62,034 (16)
____________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $864 and $5,219 for all Board members as a
group for the Company and Dreyfus MidCap Index Fund, respectively.
Officers of the Funds
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by Dreyfus. She is 40 years old.
ELIZABETH A. KEELEY, Vice President and Assistant Secretary. Vice President
of the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. She has been
employed by the Distributor since September 1995. She is 27 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From April
1993 to January 1995, he was a Senior Fund Accountant for Investors
Bank & Trust Company. From December 1991 to March 1993, he was
employed as a Fund Accountant at The Boston Company, Inc. He is 28
years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Executive Vice
President of the Distributor and Funds Distributor, Inc. and an officer
of other investment companies advised or administered by Dreyfus. From
March 1994 to November 1995, he was Vice President and Division Manager
for First Data Investor Services Group. From 1989 to 1994, he was Vice
President, Assistant Treasurer and Tax Director - Mutual Funds of The
Boston Company, Inc. He is 42 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 33 years old.
MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer. Senior Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From December
1989 through November 1996, he was employed by GE Investments where he
held various financial, business development and compliance positions.
He also served as Treasurer of the GE Funds and a Director of GE
Investment Services. He is 36 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc. 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 35 years old.
The address of each officer is 200 Park Avenue, New York, New York
10166.
Board members and officers, as a group, owned less than 1% of each
Fund's shares outstanding on December 1, 1997.
The following shareholders are known by the Fund to own of record 5% or
more of the Dreyfus S&P 500 Index Fund's shares of common stock outstanding
on December 1, 1997: (1) Nationwide Qualified Plans VAR A/C c/o IPO CO67,
P.O. Box 182029, Columbus, OH 43218-2029 (24.46%); (2) Charles Schwab & Co.
Inc. - Reinvest Account-Attention Mutual Funds, 101 Montgomery Street, San
Francisco, CA 94104-4122 (20.09%); (3) Dreyfus Trust Company TTEE - FDC
Incentive Savings Plan - First Data Corp., 1 Cabot Road, Medford, MA 02155-
5141 (9.01%) (4) Wachovia Bank NA - TTEE U/A 3/16/59 with Duke Power Co. for
Stock Purchase Savings Program, 301 N. Main Street, Winston Salem, NC 27150
(6.77%).
The following shareholders are known by the Fund to own of record 5% or
more of the Dreyfus MidCap Index Fund's shares of common stock outstanding
on December 1, 1997: (1) Charles Schwab & Co., Inc. - Reinvest Account -
Attention Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4122
(27.34%); (2) MAC & Co. A/C# CFKF682L002 - Mellon Bank, NA - Mutual Fund
Operations, P.O. Box 3198, Pittsburgh, PA 15230-3198 (6.03%).
The following shareholder is known by the Fund to own of record 5% or
more of each of Dreyfus Small Cap Stock Index Fund and Dreyfus International
Stock Index Fund's shares of common stock outstanding on December 1, 1997:
MBCIC c/o Mellon Bank - Attention Michael Botsford, 919 N. Market Street,
Wilmington, DE 19801-3023 (91.93%) and (97.50%). respectively.
MANAGEMENT AGREEMENTS
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "Management of the
Funds."
Management Agreements. Dreyfus provides management services pursuant
to separate Management Agreements (the "Management Agreement") dated
November 13, 1995, amended as of June 30, 1997, with the Company and Dreyfus
MidCap Index Fund, respectively. As to each Fund, the Management Agreement
is subject to annual approval by (i) the Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of such
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 of Dreyfus S&P 500 Index Fund and Dreyfus
MidCap Index Fund at a meeting held on November 3, 1995, and was last
approved by the 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 April 30, 1997. As to each Fund,
the Management Agreement is terminable without penalty, on 60 days' notice,
by the Board or by vote of the holders of a majority of such Fund's shares,
or, upon not less than 90 days' notice, by Dreyfus. The Management
Agreement will terminate automatically, as to the relevant Fund, in the
event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of Dreyfus: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, 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; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice
President--Corporate Communications; Mary Beth Leibig, Vice President--Human
Resources; Jeffrey N. Nachman, Vice President--Mutual Fund Accounting;
Andrew S. Wasser, Vice President--Information Systems; William V. Healey,
Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Frank V.
Cahouet and Richard F. Syron, directors.
Dreyfus manages each Fund's investments in accordance with the stated
policies of such Fund, subject to the approval of the Board. Dreyfus is
responsible for investment decisions and provides each Fund with portfolio
managers who are authorized by its Board to execute purchases and sales of
securities. 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 pursuant to a dual employee
agreement between The Dreyfus Corporation and Mellon Equity Associates, an
affiliate of The Dreyfus Corporation. Mr. Falci has been employed by Mellon
Equity Associates since April 1994. For more than five years prior thereto,
he was a managing director for pension investments at NYNEX. 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 pursuant to a
dual employee agreement between The Dreyfus Corporation and Mellon Capital
Management Corporation, an affiliate of The Dreyfus Corporation. Ms.
Ellison has been employed by Mellon Capital Management Corporation since
June 1988. Dreyfus also maintains a research department with a professional
staff of portfolio managers and securities analysts who provide research
services for each Fund and for other funds advised by Dreyfus.
Dreyfus maintains office facilities on behalf of the Funds, and
furnishes the Funds statistical and research data, clerical help,
accounting, data processing, bookkeeping and internal auditing and certain
other required services to the Funds. Dreyfus also may make such
advertising and promotional expenditures, using its own resources, as it
from time to time deems appropriate.
Expenses. All expenses incurred in the operation of the Funds are
borne by Dreyfus, except management fees, taxes, interest, brokerage fees
and commissions, if any, 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 any
extraordinary expenses.
As compensation for Dreyfus' services, the Company has agreed to pay
Dreyfus a monthly fee at the annual rate of .25 of 1% of the value of each
of Dreyfus S&P 500 Index Fund's and Dreyfus Small Cap Stock Index Fund's
average daily net assets and .35 of 1% of the value of Dreyfus International
Stock Index Fund's average daily net assets, and Dreyfus MidCap Index Fund
has agreed to pay Dreyfus a monthly fee at the annual rate of .25 of 1% of
the value of its average daily net assets. All fees and expenses are
accrued daily and deducted before declaration of dividends to shareholders.
With respect to each Fund, Dreyfus has agreed to reduce its management fee
in an amount equal to the Fund's allocable portion of the accrued fees and
expenses of the non-interested Board members and fees and expenses of
independent counsel to the Fund and to the non-interested Board members.
Prior to January 1, 1997, the Company had agreed to pay Dreyfus 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 Dreyfus had
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 S&P 500 Index Fund's
average daily net assets. Prior to June 30, 1997, Dreyfus MidCap Index Fund
had agreed to pay Dreyfus a monthly management fee at the annual rate of
.395 of 1% of the value of the Fund's average daily net assets, and Dreyfus
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 period from November 13, 1995 (effective
date of each Management Agreement) through October 31, 1996, and the fiscal
year ended October 31, 1997, the management fees paid to Dreyfus amounted to
$1,329,105 and $1,985,430 (after Dreyfus waived receipt of $429,005),
respectively, for Dreyfus S&P 500 Index Fund and $329,970 (after Dreyfus
waived receipt of $252,887) and $494,374 (after Dreyfus waived receipt of
$187,440), respectively, for Dreyfus MidCap Index Fund. For the periods
from November 13, 1995 (effective date of each index management agreement)
through October 31, 1996, and November 1, 1996 through June 30, 1997 (Date
of termination of each index management agreement), the index management
fees paid to Mellon Equity Associates by Dreyfus amounted to $428,017 and
$313,295, respectively, for Dreyfus S&P 500 Index Fund and $70,139 and
$117,950, respectively, for Dreyfus MidCap Index Fund. For the period June
30, 1997 (commencement of operations of Dreyfus Small Cap Stock Index Fund
and Dreyfus International Stock Index Fund) through October 31, 1997, the
management fees paid to Dreyfus amounted to $14,487 for Dreyfus Small Cap
Stock Index Fund and $11,776 for Dreyfus International Stock Index Fund.
The aggregate of the fees payable to Dreyfus is not subject to
reduction as the value of a Fund's net assets increases.
Prior Agreements. From April 4, 1990 to November 13, 1995, Wells Fargo
Nikko Investment Advisers ("WFNIA") served as Dreyfus S&P 500 Index Fund's
index fund manager. Pursuant to prior index management agreements with
WFNIA, Dreyfus S&P 500 Index 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 year ended October 31, 1995 and for the period November 1, 1995
through November 13, 1995 (termination date of the prior index management
agreement), the index management fees payable to WFNIA by Dreyfus S&P 500
Index Fund amounted to $280,472 and $11,274, respectively.
Prior to November 13, 1995, Dreyfus served as Dreyfus S&P 500 Index
Fund's administrator pursuant to an administration agreement with the
Company and not as the Company's investment adviser. As compensation for
its administrative services, Dreyfus S&P 500 Index Fund agreed to pay
Dreyfus a monthly fee at the annual rate of .20 of 1% of value of Dreyfus
S&P 500 Index Fund's average daily net assets. For the fiscal year ended
October 31, 1995 and for the period November 1, 1995 through November 13,
1995 (termination date of the administration agreement), the administrative
fees payable to Dreyfus by Dreyfus S&P 500 Index Fund amounted to $560,944
and $22,547, respectively.
From January 3, 1995 to November 13, 1995, World Asset Management
("World") served as Dreyfus MidCap Index Fund's index fund manager; from
February 24, 1994 to January 3, 1995, World Asset Management, Inc. ("WAM"
Capital Management, Inc. ("Woodbridge" and together with World, the "prior
index fund managers") served as Dreyfus MidCap Index Fund's index fund
manager. Pursuant to prior index management agreements with the prior index
fund managers, Dreyfus MidCap Index 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 year ended October 31, 1995, the index management
fees payable to the prior index fund managers amounted to $98,063; such
amount, however, was reduced by $39,687. For the period November 1, 1995
through November 12, 1995, no index management fee was paid to the prior
index fund managers.
Prior to November 13, 1995, Dreyfus served as Dreyfus MidCap Index
Fund's administrator pursuant to an administration agreement with the Fund
and not as the Fund's investment adviser. As compensation for its
administrative services, Dreyfus MidCap Index Fund agreed to pay Dreyfus a
monthly fee at the annual rate of .30 of 1% of the value of the Fund's
average daily net assets. For the fiscal year ended October 31, 1995, and
for the period November 1, 1995 through November 12, 1995, the
administrative fees payable to Dreyfus amounted to $294,190 and $0,
respectively. No administrative fee was paid to Dreyfus for the fiscal year
ended October 31, 1995, pursuant to an undertaking in effect.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "Shareholder Services
Plan."
Each Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund pays the Distributor for the provision of certain services
to the Fund's shareholders. 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 such shareholder accounts. Under
the Shareholder Services Plan, the Distributor may make payments to certain
securities dealers, financial institutions and other financial industry
professionals (collectively, "Service Agents"), in respect of these
services.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
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. As to each Fund, the Plan is subject to annual
approval by such vote of the Board members cast in person at a meeting
called for the purpose of voting on the Plan. The Plan was last so approved
at a meeting held on April 30, 1997. As to each Fund, the Plan is
terminable at any time by vote of a majority of the 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 or in
any agreements entered into in connection with the Plan.
For the fiscal year ended October 31, 1997, $2,251,053, $376,149,
$14,487 and $8,412 was charged to Dreyfus S&P 500 Index Fund, Dreyfus MidCap
Index Fund, Dreyfus Small Cap Stock Index Fund and Dreyfus International
Stock Index Fund, respectively. Under prior shareholder services plans (the
"Prior Plans") which were terminated as of December 31, 1996 with respect to
Dreyfus S&P 500 Index Fund and as of June 30, 1997 with respect to Dreyfus
MidCap Index Fund, $154,770 and $136,903 was charged to Dreyfus S&P 500
Index Fund and Dreyfus MidCap Index Fund for the period November 1, 1996
through the respective termination date of such plan. Pursuant to the Prior
Plans, each such Fund reimbursed Dreyfus Service Corporation for certain
allocated expenses of providing personal services relating to shareholder
accounts.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as each 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.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "How to Redeem Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes Dreyfus Transfer, Inc. (the "Transfer Agent"), each Fund's
transfer and dividend disbursing agent, to act on wire, telephone or letter
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 ($1,000 minimum) 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 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 transmission:
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 "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also 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, such
as consular verification. For more information with respect to signature-
guarantees, please call one of the telephone numbers listed on the cover.
Redemption Commitment. Each Fund has committed to pay in cash all
redemption requests by any shareholder of record of the Fund, 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 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 relevant 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 Funds' Prospectus entitled "Shareholder Services."
Corporate Pension, Profit-Sharing and Personal Retirement Plans. Each
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In addition,
each Fund makes available Keogh Plans, IRAs, (including regular IRAs,
spousal IRAs for a non-working spouse, Roth IRAs, IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs") and rollover IRAs), 401(K)
Salary Reduction Plans 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; or 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 is $750 for Dreyfus-sponsored Keogh Plans, IRAs, (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plan with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases.
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 Funds' Prospectus entitled "How to Buy Shares."
Valuation of Portfolio Securities. Each 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 Board. With respect to Dreyfus International Stock
Index Fund, assets and liabilities initially expressed in foreign currencies
will be converted into U.S. dollars using the officially quoted daily
exchange rates determined by Morgan Stanley Capital International (MSCI) in
the calculation of their Europe, Australia and Far East (Free) Index. This
officially quoted daily exchange rate may be determined by MSCI prior to or
after the close of a particular foreign securities market. If such
quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Board. Expenses and fees,
including the 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, Martin
Luther King, Jr. 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 Funds' Prospectus entitled "Dividends, Distributions
and Taxes."
Taxation of the Funds. Management believes that each Fund qualified
for the fiscal year ended October 31, 1997 as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company, the Fund will pay no Federal income tax
on its net investment income and net realized capital gains to the extent
its earnings are distributed to shareholders in accordance with the
applicable provisions of the Code. 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.
Under Section 1256 of the Code, gain or loss realized by a Fund from
certain financial futures will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Gain or loss will arise upon
the exercise of such futures as well as from closing transactions. In
addition, any such futures remaining unexercised at the end of the Fund's
taxable year will be treated as sold for their then fair market value,
resulting in additional gain or loss to the Fund characterized in the manner
described above.
Offsetting positions held by a Fund involving futures contracts may
constitute "straddles." Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
straddles is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, override or modify the provisions of Section 1256. As
such, all or a portion of any short or long-term capital gain from certain
"straddle" and conversion transactions may be recharacterized to ordinary
income.
If a Fund were treated as entering into straddles by reason of its
futures transactions, such straddles could be characterized as "mixed
straddles" if the futures transactions comprising such straddles were
governed by Section 1256 of the Code. A Fund may make one or more elections
with respect to "mixed straddles." Depending upon which election is made,
if any, the results to the Fund may differ. If no election is made, to the
extent the straddle and conversion transactions rules apply to positions
established by the Fund, losses realized by the Fund will be deferred to the
extent of unrealized gain in any offsetting position. Moreover, as a result
of the straddle and conversion transaction rules, short-term capital loss on
straddle positions may be recharacterized as long-term capital loss, and
long-term capital gain on straddle positions may be recharacterized as
short-term capital gain or ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally will apply if the Fund either (1) holds an appreciated
financial position with respect to stock, certain debt obligations, or
partnership interests ("appreciated financial position") and then enters
into a short sale, futures, or forward contract, or offsetting notional
principal contract (collectively, a "Contract") with respect to the same
or substantially identical property or (2) holds an appreciated financial
position that is a Contract and then acquires property that is the same as,
or substantially identical to, the underlying property. In each instance,
with certain exceptions, the Fund generally will be taxed as if the
appreciated financial position were sold at its fair market value on the
date the Fund enters into the financial position or acquires the property,
respectively. Transactions that are identified hedging or straddle
transactions under other provisions of the Code can be subject to the
constructive sale provisions.
If the International Stock Index Fund invests in an entity that is
classified as a "passive foreign investment company" ("PFIC") for Federal
income tax purposes, the operation of certain provisions of the Code
applying to PFICs could result in the imposition of certain Federal income
taxes on the Fund. In addition, gain realized from the sale or other
disposition of PFIC securities held beyond the end of the Fund's taxable
year may be treated as ordinary income under Section 1291 of the Code and
will be taxable to the Fund, or, for tax years beginning after December 31,
1997, under Section 1296 of the Code with respect to PFIC securities that
are marked to market.
Shareholder Taxation. Depending on the composition of a 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 a 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.
However, Section 246(c) of the Code provides that if a qualifying corporate
shareholder has disposed of Fund shares held for less than 46 days, which 46
days generally must be during the 90 day period commencing 45 days before
the shares become ex-dividend, and has received a dividend from net
investment income with respect to such shares, the portion designated by the
Fund as qualifying for dividend received deduction will not eligible for
such shareholder's dividend received deduction. 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.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of his shares
below the cost of his investment. Such a dividend or distribution would be
a return on the investment in an economic sense, although taxable as stated
above. In addition, the Code provides that if a shareholder holds shares of
a 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.
PORTFOLIO TRANSACTIONS
Dreyfus assumes general supervision over placing orders on behalf of
the Funds for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in the best
judgment of Dreyfus 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 will be 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 Dreyfus based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
Consistent with the policy of obtaining the most favorable net price,
brokerage transactions may be conducted through Dreyfus or its affiliates,
including Dreyfus Investment Services Corporation. The Board has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that
all brokerage commissions paid to Dreyfus or its affiliates are reasonable
and fair. To date, no brokerage commissions have been paid to Dreyfus or
its affiliates.
For its portfolio securities transactions for the fiscal years ended
October 31, 1995, 1996 and 1997, Dreyfus S&P 500 Index Fund paid total
brokerage commissions of $22,591, $67,672 and $56,269, respectively, and
Dreyfus MidCap Index Fund paid total brokerage commissions of $58,043,
$70,701 and $67,612, respectively; no brokerage commissions were paid to the
Distributor or Dreyfus or its affiliates. For the period June 30, 1997
(commencement of operations) through October 31, 1997, Dreyfus International
Stock Index Fund and Dreyfus Small Cap Stock Index Fund paid total brokerage
commissions of $23 and $21,371, respectively; none of which was paid to the
Distributor or Dreyfus or its affiliates There were no spreads or
concessions on principal transactions in fiscal 1995, 1996 and 1997.
Dreyfus S&P 500 Index Fund and Dreyfus MidCap Index Fund's portfolio
turnover rates (exclusive of U.S. Government Securities and Short-term
investments) for the fiscal year ended October 31, 1997 were 2.26% and
20.15%, respectively. Dreyfus Small Cap Stock Index Fund and Dreyfus
International Stock Index Fund's portfolio turnover rates (exclusive of U.S.
Government Securities and Short-term investments) for the period from June
30, 1997 (commencement of operations) through October 31, 1997 were 10.59%
and .16%, respectively.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "Performance
Information."
Dreyfus S&P 500 Index Fund's average annual total return for the 1, 5
and 7.83 year periods ended October 31, 1997 was 31.46%, 19.21% and 15.32%,
respectively. Dreyfus MidCap Index Fund's average annual total return for
the 1, 5 and 6.37 year periods ended October 31, 1997 was 32.02%, 18.10% and
17.44%, respectively. Dreyfus International Stock Index Fund's average
annual total return for the period from June 30, 1997 (commencement of
operations) through October 31, 1997 was -28.41%. Dreyfus Small Cap Stock
Index Fund's average annual total return for the period from June 30, 1997
(commencement of operations) through October 31, 1997 was 32.67%.
Computations of average annual total return for periods of less than one
year represent an annualization of the Fund's actual total return. 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.
Dreyfus S&P 500 Index Fund's total return for the period January 2,
1990 (commencement of operations) to October 31, 1997 was 205.38%. Dreyfus
MidCap Index Fund's total return for the period June 19, 1991 (commencement
of operations) to October 31, 1997 was 178.51%. Dreyfus Small Cap Stock
Index Fund and Dreyfus International Stock Index Fund's total return for the
period June 30, 1997 (commencement of operations) to October 31, 1997 was
11.20% and -9.84%, respectively. 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.
A 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. A Fund also may cite in its advertisements 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.
From time to time, advertising materials for the Fund also may refer to
Morningstar ratings and related analysis supporting such ratings.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in conjunction
with the section in the Funds' 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.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Company, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
However, the Rule exempts the selection of independent accounts and the
election of Board members from the separate voting requirements of the Rule.
Each Fund will send annual and semi-annual financial statements to all
its shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is each Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement, the Transfer
Agent arranges for the maintenance of shareholder account records for each
Fund, the handling of certain communications between shareholders and the
Fund and the payment of dividends and distributions payable by each 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. For
the period November 1, 1996 through June 30, 1997, Dreyfus S&P 500 Index
Fund and Dreyfus MidCap Index Fund paid the Transfer Agent $71,550 and
$16,315, respectively. Effective as of July 1, 1997, Dreyfus agreed to pay
the Funds' transfer agency fees.
Boston Safe Deposit and Trust Company (the "Custodian"), an indirect
wholly-owned subsidiary of Mellon Bank Corporation, One Boston Place,
Boston, Massachusetts 02108, acts as the custodian of each Fund's
investments. Under a custody agreement, the Custodian holds each Fund's
portfolio securities and keeps all necessary accounts and records.
Effective as of July 1, 1997, Dreyfus agreed to pay the Funds' custody fees.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Funds, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Funds' 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 Company.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of Dreyfus MidCap Index
Fund.
FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT AUDITORS
The Funds' Annual Reports to Shareholders for the fiscal year ended
October 31, 1997 are separate documents supplied with this Statement of
Additional Information, and the financial statements, accompanying notes,
and reports of independent auditors appearing therein are incorporated by
reference into this Statement of Additional Information.
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.
