N-30D 1 lp1-763.txt ANNUAL REPORT Dreyfus Stock Index Fund, Inc. ANNUAL REPORT December 31, 2002 The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund. Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the Chairman 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 23 Statement of Financial Futures 24 Statement of Assets and Liabilities 25 Statement of Operations 26 Statement of Changes in Net Assets 28 Financial Highlights 30 Notes to Financial Statements 36 Report of Independent Accountants 37 Important Tax Information 38 Board Members Information 40 Officers of the Fund FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Stock Index Fund, Inc. LETTER FROM THE CHAIRMAN Dear Shareholder: We present this annual report for Dreyfus Stock Index Fund, covering the 12-month period from January 1, 2002 through December 31, 2002. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio managers, Steve Falci and Thomas Durante. In 2002, investors witnessed the third consecutive year of negative returns for the U.S. stock market. Moreover, with the S&P 500 Index down dramatically since its peak in mid-2000, this bear market ranks as the worst since the 1970s. Virtually every industry group, capitalization range and investment style suffered losses in 2002, leaving investors few shelters from the storm. However, the market' s disappointing start to the 21st century may be good news for today' s growth-oriented investors as, historically, growth opportunities have generally been greatest when the economic news is bad, prices are down and investors shun stocks. At the same time, no one can say for sure what direction the markets will take or which investment style will prevail, which is why we continue to encourage you to maintain a long-term perspective and an ongoing dialogue with your financial advisor. Investors with the patience and discipline to weather today's market uncertainty may reap the potential benefits of the better economic times that we believe lie ahead. Sincerely, /s/Stephen E. Canter Stephen E. Canter Chairman and Chief Executive Officer The Dreyfus Corporation January 15, 2003 DISCUSSION OF FUND PERFORMANCE Steven Falci and Thomas Durante, Portfolio Managers How did Dreyfus Stock Index Fund perform relative to its benchmark? For the 12-month period ended December 31, 2002, Dreyfus Stock Index Fund produced total returns of -22.36% for its Initial shares and -22.55% for its Service shares.(1) In contrast, the fund's benchmark, the Standard & Poor's 500 Composite Stock Price Index (" S& P 500 Index"), produced a total return of -22.10% for the same period.(2) The difference in returns is primarily due to transaction costs and other fund operating expenses. We attribute the stock market's disappointing performance to a weak economy in 2002, which put pressure on corporate earnings. Economic factors were intensified by several accounting and corporate governance scandals as well as concerns over a potential war with Iraq. What is the fund's investment approach? The fund seeks to match the total return of the S&P 500 Index. To pursue this goal, the fund generally invests in all 500 stocks in proportion to their weightings in the S& P 500 Index. Often considered a barometer for the stock market in general, the S&P 500 Index is made up of 500 widely held common stocks and is dominated by large-cap, blue chip stocks which, when combined, cover nearly 75% of the total U.S. market capitalization. However, it is important to note that the S&P 500 Index is not composed of the 500 largest companies; rather, it is designed to capture the returns of many different sectors of the U.S. economy. Accordingly, it is composed of approximately 375 industrial, 40 utility, 75 financial and 10 transportation stocks. Each stock is weighted by its market capitalization. Overall, larger companies have greater representation in the S&P 500 Index than smaller ones. The fund may also use stock index futures as a substitute for the sale or purchase of stocks. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) Dreyfus Stock Index Fund uses a passive management approach -- all investment decisions are made based on the fund's objective, which is to seek to match the performance of the S& P 500 Index. The fund does not attempt to manage market volatility. What other factors influenced the fund's performance? When the reporting period began, many investors expected a full economic recovery in the United States, especially in light of the relative brevity of the previous year's recession. Instead, what ensued was a year of inconsistent economic growth, a stock market plagued by pricing pressures and decreased profitability levels, an absence of capital spending by corporations and numerous corporations entangled in accounting and corporate governance scandals While all of the industry groups within the S&P 500 Index reported negative returns for the reporting period, the vast majority of the stock market's negative performance can be attributed to four key areas: technology, telecommunications, financial services and health care. Within technology, semiconductor stocks performed poorly, primarily due to a lack of capital spending by corporations in an uncertain economy as well as disappointing year-end sales of high-ticket consumer electronics products. While technology stocks enjoyed a brief rally in October and November, semiconductor companies ranked among the worst performing stocks of the reporting period. Telecommunications stocks, which also rallied later in the year, continued to suffer from low customer demand and excess capacity, which adversely affected their earnings and stock prices. Within financial services, major banks posted lackluster returns throughout the reporting period. Several of these companies came under scrutiny amid allegations of malfeasance, accounting irregularities and questionable credibility over research recommendations. As a result of these factors, several of the fund's holdings in this area saw their credit ratings downgraded by the major independent rating agencies. Finally, many large pharmaceutical companies suffered during the reporting period. As corporations sought to offset lower earnings by cutting costs, they put pressure on drug companies to reduce their prices or face being excluded by the companies' medical benefits packages. One bright spot among large-cap stocks was the consumer staples group, where steady demand and reliable earnings helped many household product companies post positive returns. What is the fund's current strategy? As an index fund, our strategy remains: to attempt to replicate the returns of the S& P 500 Index by investing in each industry group in a way that closely approximates its representation in the S&P 500 Index. January 15, 2003 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE FUND'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS. (2) SOURCE: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS DAILY AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Stock Index Fund, Inc. Initial shares and Service shares and the Standard & Poor's 500 Composite Stock Price Index -------------------------------------------------------------------------------- Average Annual Total Returns AS OF 12/31/02
1 Year 5 Years 10 Years ------------------------------------------------------------------------------------------------------------------------------------ INITIAL SHARES (22.36)% (0.89)% 8.92% SERVICE SHARES (22.55)% (1.00)% 8.86%
THE DATA FOR SERVICE SHARES PRIMARILY REPRESENTS THE RESULTS OF INITIAL SHARES. ACTUAL SERVICE SHARES' AVERAGE ANNUAL TOTAL RETURN AND HYPOTHETICAL GROWTH RESULTS WOULD HAVE BEEN LOWER. SEE NOTES BELOW. ((+)) SOURCE: LIPPER INC. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. THE FUND'S PERFORMANCE SHOWN IN THE GRAPH AND TABLE DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE FUND'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS WHICH WILL REDUCE RETURNS. THE GRAPH COMPARES A $10,000 INVESTMENT MADE IN INITIAL AND SERVICE SHARES OF DREYFUS STOCK INDEX FUND, INC. ON 12/31/92 TO A $10,000 INVESTMENT MADE IN THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX (THE "INDEX") ON THAT DATE. THE FUND'S INITIAL SHARES ARE NOT SUBJECT TO A RULE 12B-1 FEE. THE FUND'S SERVICE SHARES ARE SUBJECT TO A 0.25% ANNUAL RULE 12B-1 FEE. THE PERFORMANCE FIGURES FOR SERVICE SHARES REFLECT THE PERFORMANCE OF THE FUND'S INITIAL SHARES FROM THEIR INCEPTION DATE THROUGH DECEMBER 30, 2000, AND THE PERFORMANCE OF THE FUND'S SERVICE SHARES FROM DECEMBER 31, 2000 (INCEPTION DATE OF SERVICE SHARES) TO DECEMBER 31, 2002 (BLENDED PERFORMANCE FIGURES). THE PERFORMANCE FIGURES FOR EACH SHARE CLASS REFLECT CERTAIN EXPENSE REIMBURSEMENTS, WITHOUT WHICH THE PERFORMANCE OF EACH SHARE CLASS WOULD HAVE BEEN LOWER. IN ADDITION, THE BLENDED PERFORMANCE FIGURES HAVE NOT BEEN ADJUSTED TO REFLECT THE HIGHER OPERATING EXPENSES OF THE SERVICE SHARES. IF THESE EXPENSES HAD BEEN REFLECTED, THE BLENDED PERFORMANCE FIGURES WOULD HAVE BEEN LOWER. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FUND FEES AND EXPENSES (AFTER ANY EXPENSE REIMBURSEMENTS). THE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE, AND INCLUDES THE REINVESTMENT OF DIVIDENDS DAILY. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT. The Fund STATEMENT OF INVESTMENTS December 31, 2002
COMMON STOCKS--97.4% Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ ALCOHOL & TOBACCO--1.7% Adolph Coors, Cl. B 13,850 848,313 Anheuser-Busch Cos. 326,150 15,785,660 Brown-Forman, Cl. B 26,100 1,705,896 Philip Morris Cos. 788,300 31,949,799 R.J. Reynolds Tobacco Holdings 33,600 1,414,896 UST 64,400 2,152,892 53,857,456 CONSUMER CYCLICAL--9.5% AMR 59,100 (a) 390,060 Albertson's 144,527 3,217,171 AutoZone 37,600 (a) 2,656,440 Bed Bath & Beyond 111,500 (a) 3,850,095 Best Buy 122,550 (a) 2,959,582 Big Lots 44,200 (a) 584,766 Brunswick 34,300 681,198 CVS 149,750 3,739,257 Cendant 395,398 (a) 4,143,771 Circuit City Stores--Circuit City Group 80,000 593,600 Cooper Tire & Rubber 28,000 429,520 Costco Wholesale 173,650 (a) 4,872,619 Dana 56,606 665,686 Darden Restaurants 65,200 1,333,340 Delphi 212,653 1,711,856 Delta Air Lines 46,900 567,490 Dillard's, Cl. A 32,100 509,106 Dollar General 126,987 1,517,494 Eastman Kodak 111,200 3,896,448 Eaton 26,900 2,101,159 Family Dollar Stores 65,850 2,055,179 Federated Department Stores 74,800 (a) 2,151,248 Ford Motor 699,280 6,503,304 Gap 336,850 5,227,912 General Motors 213,600 7,873,296 Genuine Parts 66,600 2,051,280 Harley-Davidson 115,300 5,326,860 Harrah's Entertainment 42,600 (a) 1,686,960 Hasbro 65,975 762,011 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER CYCLICAL (CONTINUED) Hilton Hotels 143,450 1,823,250 Home Depot 886,300 21,235,748 International Game Technology 33,050 (a) 2,509,156 J.C. Penney 102,100 2,349,321 Johnson Controls 33,850 2,713,755 Jones Apparel Group 49,100 (a) 1,740,104 Kohl's 128,450 (a) 7,186,778 Kroger 294,700 (a) 4,553,115 Limited 199,300 2,776,249 Liz Claiborne 40,600 1,203,790 Lowe's Cos. 297,400 11,152,500 Marriott International, Cl. A 90,600 2,978,022 Mattel 166,650 3,191,348 May Department Stores 109,800 2,523,204 Maytag 29,700 846,450 McDonald's 483,750 7,778,700 NIKE, Cl. B 101,050 4,493,694 Navistar International 23,000 (a) 559,130 Nordstrom 51,600 978,852 Office Depot 117,700 (a) 1,737,252 PACCAR 44,200 2,038,946 RadioShack 64,200 1,203,108 Reebok International 22,700 (a) 667,380 Safeway 168,100 (a) 3,926,816 Sears, Roebuck & Co. 120,500 2,885,975 Southwest Airlines 295,175 4,102,933 Staples 179,300 (a) 3,281,190 Starbucks 148,000 (a) 3,016,240 Starwood Hotels & Resorts Worldwide 75,900 1,801,866 TJX Cos. 201,250 3,928,400 Target 346,150 10,384,500 Tiffany & Co. 55,500 1,327,005 Toys R Us 80,900 (a) 809,000 V.F. 41,400 1,492,470 Visteon 49,825 346,782 Wal-Mart Stores 1,682,050 84,960,346 Walgreen 390,600 11,401,614 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER CYCLICAL (CONTINUED) Wendy's International 44,000 1,191,080 Whirlpool 26,000 1,357,720 Winn-Dixie Stores 53,500 817,480 Yum! Brands 112,870 (a) 2,733,711 302,063,688 CONSUMER STAPLES--6.9% Alberto-Culver, Cl. B 22,100 1,113,840 Archer-Daniels-Midland 246,437 3,055,819 Avon Products 89,700 4,832,139 Campbell Soup 156,200 3,666,014 Clorox 83,850 3,458,813 Coca-Cola 944,750 41,398,945 Coca-Cola Enterprises 171,200 3,718,464 Colgate-Palmolive 205,150 10,756,015 ConAgra Foods 204,650 5,118,297 Fortune Brands 56,850 2,644,094 General Mills 140,200 6,582,390 Gillette 402,050 12,206,238 H.J. Heinz 133,400 4,384,858 Hershey Foods 51,950 3,503,508 International Flavors & Fragrances 36,000 1,263,600 Kellogg 155,600 5,332,412 Kimberly-Clark 196,050 9,306,494 Newell Rubbermaid 101,871 3,089,748 Pepsi Bottling Group 106,850 2,746,045 PepsiCo 658,120 27,785,826 Procter & Gamble 495,100 42,548,894 SUPERVALU 50,900 840,359 Sara Lee 297,100 6,687,721 Sysco 250,250 7,454,948 Tupperware 22,200 334,776 Wm. Wrigley, Jr. 85,900 4,714,192 218,544,449 ENERGY--6.4% Amerada Hess 34,000 1,871,700 Anadarko Petroleum 94,751 4,538,573 Apache 54,850 3,125,901 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ ENERGY (CONTINUED) BJ Services 59,700 (a) 1,928,907 Baker Hughes 127,970 4,119,354 Burlington Resources 76,740 3,272,961 CMS Energy 54,800 517,312 ChevronTexaco 407,069 27,061,947 ConocoPhillips 257,963 12,482,830 Devon Energy 59,750 2,742,525 Dominion Resources 117,093 6,428,406 EOG Resources 44,000 1,756,480 El Paso 228,206 1,588,314 Exxon Mobil 2,564,238 89,594,476 Halliburton 166,350 3,112,408 Kerr-McGee 38,258 1,694,829 KeySpan 54,150 1,908,246 Kinder Morgan 46,400 1,961,328 Marathon Oil 118,950 2,532,445 McDermott International 24,100 (a) 105,558 Nabors Industries 55,200 (a) 1,946,904 Nicor 16,800 571,704 NiSource 93,000 1,860,000 Noble 51,000 (a) 1,792,650 Occidental Petroleum 143,650 4,086,843 Peoples Energy 13,500 521,775 Rowan Cos. 35,700 810,390 Schlumberger 221,300 9,314,517 Sempra Energy 78,041 1,845,670 Sunoco 29,100 965,538 Transocean 121,650 2,822,280 Unocal 98,300 3,006,014 Williams Cos. 196,700 531,090 202,419,875 HEALTH CARE--14.4% Abbott Laboratories 595,450 23,818,000 Allergan 49,300 2,840,666 AmerisourceBergen 40,350 2,191,408 Amgen 490,444 (a) 23,708,063 Anthem 53,900 (a) 3,390,310 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (CONTINUED) Applera--Applied Biosystems Group 79,750 1,398,815 Bausch & Lomb 20,600 741,600 Baxter International 226,050 6,329,400 Becton, Dickinson & Co. 97,800 3,001,482 Biogen 56,850 (a) 2,277,411 Biomet 99,000 2,837,340 Boston Scientific 155,450 (a) 6,609,734 Bristol-Myers Squibb 738,200 17,089,330 C.R. Bard 19,700 1,142,600 Cardinal Health 168,675 9,983,873 Chiron 71,650 (a) 2,694,040 Forest Laboratories 69,000 (a) 6,777,180 Genzyme 81,750 (a) 2,417,348 Guidant 116,500 (a) 3,594,025 HCA 195,550 8,115,325 HEALTHSOUTH 150,900 (a) 633,780 Health Management Associates, Cl. A 90,800 1,625,320 Humana 61,800 (a) 618,000 Johnson & Johnson 1,132,060 60,802,943 King Pharmaceuticals 91,700 (a) 1,576,323 Eli Lilly & Co. 428,050 27,181,175 Manor Care 36,700 (a) 682,987 McKesson 110,946 2,998,870 MedImmune 95,700 (a) 2,600,169 Medtronic 465,000 21,204,000 Merck & Co. 855,700 48,441,177 Millipore 18,400 625,600 Pfizer 2,348,325 71,788,295 Pharmacia 492,707 20,595,153 Quest Diagnostics 37,300 (a) 2,122,370 Schering-Plough 558,900 12,407,580 St. Jude Medical 67,650 (a) 2,687,058 Stryker 75,450 5,064,204 Tenet Healthcare 185,800 (a) 3,047,120 Thermo Electron 62,300 (a) 1,253,476 UnitedHealth Group 116,050 9,690,175 Waters 49,250 (a) 1,072,665 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (CONTINUED) Watson Pharmaceuticals 40,700 (a) 1,150,589 WellPoint Health Networks 56,650 (a) 4,031,214 Wyeth 505,200 18,894,480 Zimmer Holdings 74,320 (a) 3,085,766 456,838,439 INTEREST SENSITIVE--23.0% ACE 100,050 2,935,467 AFLAC 196,600 5,921,592 Aetna 57,349 2,358,191 Allstate 267,900 9,909,621 Ambac Financial Group 40,350 2,269,284 American Express 500,850 17,705,047 American International Group 994,039 57,505,156 AmSouth Bancorporation 135,400 2,599,680 Aon 118,025 2,229,492 BB&T 182,500 6,750,675 Bank of America 570,346 39,678,971 Bank of New York 276,750 6,630,930 Bank One 443,760 16,219,428 Bear Stearns Cos. 36,627 2,175,644 CIGNA 53,250 2,189,640 Capital One Financial 84,500 2,511,340 Charles Schwab 512,025 5,555,471 Charter One Financial 86,140 2,474,802 Chubb 65,300 3,408,660 Cincinnati Financial 61,550 2,311,202 Citigroup 1,957,322 68,878,161 Comerica 66,550 2,877,622 Concord EFS 193,900 (a) 3,051,986 Countrywide Financial 48,200 2,489,530 Equity Office Properties Trust 156,900 3,919,362 Equity Residential 103,250 2,537,885 Fannie Mae 379,200 24,393,936 Fifth Third Bancorp 220,222 12,893,998 First Tennessee National 47,800 1,717,932 FleetBoston Financial 399,948 9,718,736 Franklin Resources 99,000 3,373,920 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ INTEREST SENSITIVE (CONTINUED) Freddie Mac 265,150 15,657,107 General Electric 3,792,200 92,340,070 Golden West Financial 58,450 4,197,294 Goldman Sachs Group 181,950 12,390,795 H&R Block 68,900 2,769,780 Hartford Financial Services Group 97,250 4,418,068 Household International 180,475 5,019,010 Huntington Bancshares 89,758 1,679,372 J.P. Morgan Chase & Co. 760,830 18,259,920 Jefferson-Pilot 54,675 2,083,664 John Hancock Financial Services 109,750 3,062,025 KeyCorp 162,150 4,076,451 Lehman Brothers Holdings 90,450 4,820,081 Lincoln National 67,500 2,131,650 Loews 70,750 3,145,545 MBIA 55,300 2,425,458 MBNA 486,930 9,261,409 MGIC Investment 38,300 1,581,790 Marsh & McLennan Cos. 204,650 9,456,877 Marshall & Ilsley 83,200 2,278,016 Mellon Financial 164,200 4,287,262 Merrill Lynch 329,400 12,500,730 MetLife 266,800 7,214,272 Morgan Stanley 413,684 16,514,265 National City 233,150 6,369,658 North Fork Bancorporation 61,500 2,075,010 Northern Trust 84,250 2,952,963 PNC Financial Services Group 108,250 4,535,675 Principal Financial Group 128,350 3,867,186 Progressive 82,950 4,116,809 Providian Financial 110,000 (a) 713,900 Prudential Financial 215,750 6,847,905 Regions Financial 84,250 2,810,580 SLM 58,500 6,075,810 Safeco 52,650 1,825,376 Simon Property Group 71,500 2,436,005 SouthTrust 132,200 3,285,170 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ INTEREST SENSITIVE (CONTINUED) St. Paul Cos. 86,340 2,939,877 State Street 123,650 4,822,350 Stilwell Financial 84,700 (a) 1,107,029 SunTrust Banks 108,050 6,150,206 Synovus Financial 114,300 2,217,420 T. Rowe Price Group 46,600 1,271,248 Torchmark 45,100 1,647,503 Travelers Property Casualty, Cl. B 382,522 (a) 5,603,947 U.S. Bancorp 729,979 15,490,154 Union Planters 75,500 2,124,570 UnumProvident 92,044 1,614,452 Wachovia 518,340 18,888,310 Washington Mutual 360,713 12,455,420 Wells Fargo 644,700 30,217,089 XL Capital, Cl. A 51,800 4,001,550 Zions Bancorporation 34,600 1,361,475 730,588,919 INTERNET--.4% eBay 117,650 (a) 7,979,023 Yahoo! 225,200 (a) 3,682,020 11,661,043 PRODUCER GOODS & SERVICES--9.2% Air Products & Chemicals 86,550 3,700,012 Alcoa 321,764 7,329,784 Allegheny Technologies 30,666 191,049 American Power Conversion 74,700 (a) 1,131,705 American Standard Cos. 27,600 (a) 1,963,464 Ashland 26,000 741,780 Avery Dennison 41,850 2,556,198 Ball 21,700 1,110,823 Bemis 20,200 1,002,526 Black & Decker 30,700 1,316,723 Boeing 319,924 10,554,293 Boise Cascade 22,200 559,884 Burlington Northern Santa Fe 143,850 3,741,538 CSX 81,200 2,298,772 Caterpillar 131,200 5,998,464 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ PRODUCER GOODS & SERVICES (CONTINUED) Centex 23,500 1,179,700 Cooper Industries, Cl. A 35,100 1,279,395 Crane 22,775 453,906 Cummins 15,700 441,641 Deere & Co. 90,900 4,167,765 Dow Chemical 347,176 10,311,127 E.I. du Pont de Nemours 378,582 16,051,877 Eastman Chemical 29,500 1,084,715 Ecolab 49,350 2,442,825 Emerson Electric 160,450 8,158,882 Engelhard 49,000 1,095,150 FedEx 113,640 6,161,561 Fluor 30,700 859,600 Freeport-McMoRan Copper & Gold , CI. B 55,200 (a) 926,256 General Dynamics 76,600 6,079,742 Georgia-Pacific 95,272 1,539,596 Goodrich 43,800 802,416 Goodyear Tire & Rubber 66,800 454,908 Great Lakes Chemical 19,100 456,108 Hercules 41,600 (a) 366,080 Honeywell International 312,912 7,509,888 ITT Industries 34,950 2,121,115 Illinois Tool Works 116,750 7,572,405 Ingersoll-Rand, Cl. A 64,500 2,777,370 International Paper 182,833 6,393,670 KB HOME 18,200 779,870 Leggett & Platt 74,400 1,669,536 Lockheed Martin 173,800 10,036,950 Louisiana-Pacific 39,800 (a) 320,788 Masco 187,500 3,946,875 MeadWestvaco 76,181 1,882,433 Molex 73,275 1,688,256 Monsanto 99,595 1,917,204 Newmont Mining 153,119 4,445,045 Norfolk Southern 148,150 2,961,518 Northrop Grumman 69,146 6,707,136 Nucor 29,800 1,230,740 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ PRODUCER GOODS & SERVICES (CONTINUED) PPG Industries 64,550 3,237,182 Pactiv 60,250 (a) 1,317,065 Pall 46,701 778,973 Parker-Hannifin 44,950 2,073,543 Phelps Dodge 33,833 (a) 1,070,814 Plum Creek Timber 70,450 1,662,620 Praxair 61,650 3,561,520 Pulte Homes 23,300 1,115,371 Raytheon 154,650 4,755,488 Rockwell Automation 70,800 1,466,268 Rockwell Collins 69,750 1,622,385 Rohm & Haas 84,256 2,736,635 Sealed Air 32,012 (a) 1,194,048 Sherwin-Williams 57,300 1,618,725 Sigma-Aldrich 27,300 1,329,510 Snap-On 22,250 625,448 Stanley Works 33,600 1,161,888 3M 148,650 18,328,545 Temple-Inland 20,500 918,605 Textron 52,500 2,256,975 Thomas & Betts 22,200 (a) 375,180 Tyco International 760,373 12,987,171 Union Pacific 96,500 5,777,455 United Parcel Service, Cl. B 425,550 26,843,694 United States Steel 38,800 509,056 United Technologies 180,500 11,180,170 Vulcan Materials 38,700 1,451,250 W.W. Grainger 34,800 1,793,940 Weyerhaeuser 83,400 4,104,114 Worthington Industries 32,600 496,824 290,821,526 SERVICES--6.5% ALLTEL 118,500 6,043,500 AOL Time Warner 1,703,450 (a) 22,315,195 AT&T Wireless Services 1,032,403 (a) 5,833,077 Allied Waste Industries 75,100 (a) 751,000 American Greetings, Cl. A 25,000 (a) 395,000 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ SERVICES (CONTINUED) Apollo Group, Cl. A 66,450 (a) 2,923,800 Automatic Data Processing 228,200 8,956,850 Carnival 223,600 5,578,820 Cintas 64,800 2,964,600 Clear Channel Communications 233,500 (a) 8,707,215 Comcast, Cl. A 879,519 (a) 20,730,263 Computer Sciences 65,400 (a) 2,253,030 Convergys 66,000 (a) 999,900 Deluxe 23,500 989,350 Dow Jones & Co. 31,400 1,357,422 Electronic Data Systems 181,550 3,345,966 Equifax 54,250 1,255,345 First Data 286,600 10,148,506 Fiserv 73,100 (a) 2,481,745 Gannett 101,850 7,312,830 IMS Health 107,050 1,712,800 Interpublic Group of Companies 146,950 2,069,056 Knight-Ridder 31,350 1,982,888 McGraw-Hill Cos. 73,850 4,463,494 Meredith 18,900 776,979 Moody's 57,550 2,376,240 NEXTEL Communications, Cl. A 367,050 (a) 4,239,428 New York Times, Cl. A 57,700 2,638,621 Omnicom Group 71,650 4,628,590 Paychex 143,375 4,000,163 Quintiles Transnational 44,800 (a) 542,080 R.R. Donnelley & Sons 43,050 937,198 Robert Half International 66,000 (a) 1,063,260 Ryder System 23,700 531,828 Sprint (PCS Group) 380,750 (a) 1,667,685 SunGard Data Systems 107,900 (a) 2,542,124 TMP Worldwide 42,500 (a) 480,675 Tribune 116,150 5,280,179 Univision Communications, Cl. A 87,200 (a) 2,136,400 Viacom, Cl. B 671,158 (a) 27,356,400 Walt Disney 778,250 12,693,257 Waste Management 231,922 5,315,652 204,778,411 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ TECHNOLOGY--13.7% ADC Telecommunications 303,300 (a) 633,897 Adobe Systems 90,050 2,243,145 Advanced Micro Devices 130,400 (a) 842,384 Agilent Technologies 177,850 (a) 3,194,186 Altera 145,800 (a) 1,799,172 Analog Devices 139,400 (a) 3,327,478 Andrew 37,350 (a) 383,958 Apple Computer 136,800 (a) 1,960,344 Applied Materials 628,000 (a) 8,182,840 Applied Micro Circuits 114,700 (a) 423,243 Autodesk 43,000 614,900 Avaya 137,870 (a) 337,782 BMC Software 89,700 (a) 1,534,767 Broadcom, Cl. A 105,100 (a) 1,582,806 CIENA 164,400 (a) 845,016 Cisco Systems 2,753,400 (a) 36,069,540 Citrix Systems 65,200 (a) 803,264 Computer Associates International 218,475 2,949,413 Compuware 144,000 (a) 691,200 Comverse Technology 71,200 (a) 713,424 Corning 437,000 (a) 1,446,470 Danaher 58,100 3,817,170 Dell Computer 986,950 (a) 26,391,043 Dover 77,050 2,246,778 EMC 838,300 (a) 5,147,162 Electronic Arts 53,800 (a) 2,677,626 Gateway 123,400 (a) 387,476 Hewlett-Packard 1,162,812 20,186,416 Intel 2,524,700 39,309,579 International Business Machines 644,050 49,913,875 Intuit 78,250 (a) 3,671,490 JDS Uniphase 539,100 (a) 1,331,577 Jabil Circuit 75,500 (a) 1,352,960 KLA-Tencor 71,900 (a) 2,543,103 LSI Logic 141,600 (a) 817,032 Lexmark International 47,950 (a) 2,900,975 Linear Technology 118,850 3,056,822 Lucent Technologies 1,307,247 (a) 1,647,131 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ TECHNOLOGY (CONTINUED) Maxim Integrated Products 122,050 4,032,532 Mercury Interactive 32,200 (a) 954,730 Micron Technology 230,550 (a) 2,245,557 Microsoft 2,037,450 (a) 105,336,165 Motorola 876,856 7,584,804 NCR 37,300 (a) 885,502 NVIDIA 58,300 (a) 671,033 National Semiconductor 69,000 (a) 1,035,690 Network Appliance 128,400 (a) 1,284,000 Novell 138,700 (a) 463,258 Novellus Systems 56,700 (a) 1,592,136 Oracle 2,041,000 (a) 22,042,800 PMC-Sierra 63,700 (a) 354,172 Parametric Technology 99,500 (a) 250,740 PeopleSoft 119,250 (a) 2,182,275 PerkinElmer 48,100 396,825 Pitney Bowes 90,100 2,942,666 Power-One 30,400 (a) 172,368 QLogic 35,600 (a) 1,228,556 QUALCOMM 299,200 (a) 10,887,888 Rational Software 74,400 (a) 773,016 Sabre Holdings 54,349 (a) 984,260 Sanmina-SCI 201,300 (a) 903,837 Scientific-Atlanta 58,800 697,368 Siebel Systems 184,650 (a) 1,381,182 Solectron 314,800 (a) 1,117,540 Sun Microsystems 1,186,950 (a) 3,691,415 Symbol Technologies 87,900 722,538 Tektronix 33,100 (a) 602,089 Tellabs 156,700 (a) 1,139,209 Teradyne 69,700 (a) 906,797 Texas Instruments 659,700 9,902,097 Unisys 123,700 (a) 1,224,630 VERITAS Software 156,833 2,449,731 Xerox 280,250 (a) 2,256,013 COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ TECHNOLOGY (CONTINUED) Xilinx 128,500 (a) 2,647,100 435,919,963 UTILITIES--5.7% AES 206,700 (a) 624,234 AT&T 293,615 7,666,288 Allegheny Energy 47,900 362,124 Ameren 58,500 2,431,845 American Electric Power 129,110 3,528,576 BellSouth 708,250 18,322,427 Calpine 143,500 (a) 467,810 CenterPoint Energy 115,839 984,631 CenturyTel 54,350 1,596,803 Cinergy 64,100 2,161,452 Citizens Communications 107,500 (a) 1,134,125 Consolidated Edison 81,400 3,485,548 Constellation Energy Group 62,750 1,745,705 DTE Energy 63,850 2,962,640 Duke Energy 339,818 6,640,044 Dynegy, Cl. A 138,900 163,902 Edison International 124,100 (a) 1,470,585 Entergy 84,650 3,859,193 Exelon 123,100 6,495,987 FPL Group 69,550 4,182,042 FirstEnergy 113,436 3,739,985 Mirant 153,032 (a) 289,230 PG&E 154,250 (a) 2,144,075 PPL 62,650 2,172,702 Pinnacle West Capital 34,500 1,176,105 Progress Energy 90,276 3,913,465 Public Service Enterprise Group 84,750 2,720,475 Qwest Communications International 646,087 3,230,435 SBC Communications 1,265,312 34,302,608 Southern 271,850 7,717,823 Sprint (FON Group) 340,850 4,935,508 TECO Energy 66,900 1,034,943 The Fund STATEMENT OF INVESTMENTS (CONTINUED) COMMON STOCKS (CONTINUED) Shares Value ($) ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES (CONTINUED) TXU 122,730 2,292,596 Verizon Communications 1,042,510 40,397,263 Xcel Energy 151,900 1,670,900 182,024,074 TOTAL COMMON STOCKS (cost $3,316,536,265) 3,089,517,843 ------------------------------------------------------------------------------------------------------------------------------------ Principal SHORT-TERM INVESTMENTS--2.4% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ REPURCHASE AGREEMENT--2.2% Greenwich Capital Markets, Tri-Party Repurchase Agreement, 1.05%, dated 12/31/2002, due 1/2/2003 in the amount of $69,434,050 (fully collateralized by $41,365,000 U.S. Treasury Bonds, 11.25%, 2/15/2015, value $70,824,637) 69,430,000 69,430,000 U.S. TREASURY BILLS--.2% 1.17%, 1/30/2003 1,000,000 (b) 999,100 1.18%, 2/20/2003 4,800,000 (b) 4,792,704 1.20%, 2/27/2003 350,000 (b) 349,394 6,141,198 TOTAL SHORT-TERM INVESTMENTS (cost $75,570,540) 75,571,198 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $3,392,106,805) 99.8% 3,165,089,041 CASH AND RECEIVABLES (NET) .2% 6,968,239 NET ASSETS 100.0% 3,172,057,280 (A) NON-INCOME PRODUCING. (B) PARTIALLY HELD BY THE BROKER IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF FINANCIAL FUTURES December 31, 2002
Market Value Unrealized Covered by (Depreciation) Contracts Contracts ($) Expiration at 12/31/2002 ($) ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL FUTURES LONG Standard & Poor's 500 373 81,957,425 March 2003 (2,088,721)
SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF ASSETS AND LIABILITIES December 31, 2002 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities-- See Statement of Investments--Note 1(b) 3,392,106,805 3,165,089,041 Cash 2,300,321 Dividends and interest receivable 4,869,256 Receivable for shares of Common Stock subscribed 1,350,822 Receivable for futures variation margin--Note 4 132,910 Receivable for investment securities sold 8,925 Prepaid expenses 14,547 3,173,765,822 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 703,998 Payable for shares of Common Stock redeemed 828,422 Accrued expenses and other liabilities 176,122 1,708,542 -------------------------------------------------------------------------------- NET ASSETS ($) 3,172,057,280 -------------------------------------------------------------------------------- COMPOSITION NET ASSETS ($): Paid-in capital 3,771,011,443 Accumulated undistributed investment income--net 379,027 Accumulated net realized gain (loss) on investments (370,226,705) Accumulated net unrealized appreciation (depreciation) on investments [including ($2,088,721) net unrealized (depreciation) on financial futures] (229,106,485) -------------------------------------------------------------------------------- NET ASSETS ($) 3,172,057,280 NET ASSET VALUE PER SHARE Initial Shares Service Shares -------------------------------------------------------------------------------- Net Assets ($) 3,093,295,474 78,761,806 Shares Outstanding 137,636,559 3,509,517 -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE ($) 22.47 22.44 SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF OPERATIONS Year Ended December 31, 2002 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INCOME: Cash dividends (net of $148,993 foreign taxes witheld at source) 58,540,949 Interest 1,095,664 Income on securities lending 11,829 TOTAL INCOME 59,648,442 EXPENSES: Management fee--Note 3(a) 9,108,447 Prospectus and shareholders' reports 363,559 Distribution fees (Service Shares)--Note 3(b) 114,063 Shareholder servicing costs (Initial Shares)--Note 3(c) 99,398 Directors' fees and expenses--Note 3(d) 98,297 Professional fees 84,157 Loan commitment fees--Note 2 44,188 Interest expense--Note 2 10,457 Miscellaneous 122,096 TOTAL EXPENSES 10,044,662 INVESTMENT INCOME--NET 49,603,780 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (358,656,346) Net realized gain (loss) on financial futures (12,410,424) NET REALIZED GAIN (LOSS) (371,066,770) Net unrealized appreciation (depreciation) on investments [including ($3,287,434) net unrealized depreciation on financial futures] (657,806,225) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,028,872,995) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (979,269,215) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended December 31, ------------------------------------- 2002 2001 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 49,603,780 50,662,234 Net realized gain (loss) on investments (371,066,770) (5,850,793) Net unrealized appreciation (depreciation) on investments (657,806,225) (684,896,895) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (979,269,215) (640,085,454) -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Initial shares (48,922,148) (50,538,356) Service shares (650,696) (123,696) Net realized gain on investments: Initial shares -- (23,226,545) Service shares -- (135,166) TOTAL DIVIDENDS (49,572,844) (74,023,763) -------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS ($): Net proceeds from shares sold: Initial shares 699,891,785 975,956,345 Service shares 68,157,465 28,389,753 Dividends reinvested: Initial shares 48,922,148 73,764,901 Service shares 650,696 258,862 Cost of shares redeemed: Initial shares (1,030,501,043) (1,078,261,283) Service shares (4,860,235) (1,556,104) INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS (217,739,184) (1,447,526) TOTAL INCREASE (DECREASE) IN NET ASSETS (1,246,581,243) (715,556,743) -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 4,418,638,523 5,134,195,266 END OF PERIOD 3,172,057,280 4,418,638,523 Undistributed investment income--net 379,027 607,665 Year Ended December 31, ---------------------------------- 2002 2001 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: INITIAL SHARES Shares sold 27,094,044 31,813,295 Shares issued for dividends reinvested 2,028,537 2,520,503 Shares redeemed (41,071,216) (35,768,506) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (11,948,635) (1,434,708) -------------------------------------------------------------------------------- SERVICE SHARES Shares sold 2,793,084 944,339 Shares issued for dividends reinvested 28,085 8,900 Shares redeemed (213,844) (51,061) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,607,325 902,178 SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements.
Year Ended December 31, ----------------------------------------------------------------------------- INITIAL SHARES 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 29.36 34.00 38.45 32.52 25.75 Investment Operations: Investment income--net .34(a) .34(a) .35(a) .40(a) .37 Net realized and unrealized gain (loss) on investments (6.89) (4.48) (3.88) 6.24 6.85 Total from Investment Operations (6.55) (4.14) (3.53) 6.64 7.22 Distributions: Dividends from investment income--net (.34) (.34) (.35) (.38) (.38) Dividends from net realized gain on investments -- (.16) (.57) (.33) (.07) Total Distributions (.34) (.50) (.92) (.71) .45) Net asset value, end of period 22.47 29.36 34.00 38.45 32.52 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (22.36) (12.18) (9.28) 20.60 28.21 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .27 .26 .26 .26 .26 Ratio of net investment income to average net assets 1.33 1.09 .95 1.13 1.35 Portfolio Turnover Rate 6.05 4.03 4.97 2.64 2.40 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 3,093,295 4,392,178 5,134,195 5,229,706 3,440,542 (A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
SEE NOTES TO FINANCIAL SATEMENTS.
Year Ended December 31, --------------------------------------------- SERVICE SHARES 2002 2001 2000(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 29.33 34.00 34.00 Investment Operations: Investment income--net .29(b) .24(b) -- Net realized and unrealized gain (loss) on investments (6.89) (4.48) -- Total from Investment Operations (6.60) (4.24) -- Distributions: Dividends from investment income--net (.29) (.27) -- Dividends from net realized gain on investments -- (.16) -- Total Distributions (.29) (.43) -- Net asset value, end of period 22.44 29.33 34.00 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (22.55) (12.46) -- ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .51 .57 -- Ratio of net investment income to average net assets 1.19 .83 -- Portfolio Turnover Rate 6.05 4.03 4.97 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 78,762 26,461 1 (A) THE FUND COMMENCED OFFERING SERVICE SHARES ON DECEMBER 31, 2000. (B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
SEE NOTES TO FINANCIAL STATEMENTS. The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Stock Index Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, that is intended to be a funding vehicle for variable annuity contracts and variable life insurance policies to be offered by the separate accounts of life insurance companies. The fund's investment objective is to match the total return of the Standard and Poor's 500 Composite Stock Price Index. The Dreyfus Corporation ("Dreyfus") serves as the fund's manager and Mellon Equity Associates ("Mellon Equity"), an affiliate of Dreyfus, serves as the fund' s index manager. Dreyfus is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund's shares, which are sold without a sales charge. The fund is authorized to issue 400 million shares of $.001 par value Common Stock in each of the following classes of shares: Initial shares (250 million shares authorized) and Service shares (150 million shares authorized). Initial shares are subject to a shareholder services fee and Service shares are subject to a distribution fee. Each class of shares has identical rights and privileges, except with respect to the distribution plan and shareholder services plan and the expenses borne by each class and certain voting rights. At a meeting held on April 23, 2002, the Board of Directors, on behalf of the fund, approved effective May 1, 2002 to change the name of the fund from Dreyfus Stock Index Fund to Dreyfus Stock Index Fund, Inc. The fund' s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (including financial futures) are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market. Securities not listed on an exchange of the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. Securities for which there are no such valuations are valued at fair value as determined in good faith under the direction of the Board of Directors. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, amortization of discount and premium on investments, is recognized on the accrual basis. The fund may enter into repurchase agreements with financial institutions, deemed to be creditworthy by Dreyfus, subject to the seller's agreement to repurchase and the fund' s agreement to resell such securities at a mutually agreed upon price. Securities purchased subject to repurchase agreements are deposited with the fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. If the value of the underlying securities falls below the value of the repurchase price plus accrued interest, the fund will require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults on its repurchase obligation, the fund maintains the right to sell the underlying securities at market value and may claim any resulting loss against the seller. The fund may lend securities to qualified institutions. At origination, all loans are secured by cash collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan will be maintained at all times. Cash collateral is invested in certain money market mutual funds managed by Dreyfus. The fund will be entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) security loaned is fully collateralized, the fund would bear the risk of delay in recovery of, or loss of rights in, the securities loaned should a borrower fail to return the securities in a timely manner. (C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date. Dividends from investment income-net are declared and paid on a quarterly basis. Dividends from net realized capital gain, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent that net realized capital gain can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes. At December 31, 2002, the components of accumulated earnings on a tax basis were as follows: undistributed ordinary income $379,027, accumulated capital losses $309,581,798 and unrealized depreciation $279,590,027. In addition, the fund had $10,161,365 of capital losses realized after October 31, 2002, which were deferred for tax purposes to the first day of the following fiscal year. The accumulated capital loss carryover is available to be applied against future net securities profits, if any, realized subsequent to December 31, 2002. If not applied, $309,581,798 of the carryover expires in fiscal 2010. The tax character of distributions paid to shareholders during the fiscal periods ended December 31, 2002 and December 31, 2001, respectively, were as follows: ordinary income $49,572,844 and $50,662,052 and long term capital gains $0 and $23,361,711. During the period ended December 31, 2002, as a result of permanent book to tax differences, the fund decreased accumulated undistributed investment income-net by $259,574 and increased net realized gain (loss) on investments by the same amount. Net assets were not affected by this reclassification NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowings. The average daily amount of borrowings outstanding under the Facility during the period ended December 31, 2002 was approximately $480,000, with a related weighted average annualized interest rate of 2.18%. NOTE 3--Management Fee, Index Management Fee and Other Transactions With Affiliates: (A) Pursuant to a Management Agreement with Dreyfus, the management fee is computed at the annual rate of .245 of 1% of the value of the fund's average daily net assets, and is payable monthly. Dreyfus has agreed to pay Mellon Equity a monthly index-management fee at the annual rate of .095 of 1% of the value of the fund' s average daily net assets. Dreyfus has undertaken from January 1, 2002 until such time as they give shareholders at least 180 days notice to the contrary that if any full fiscal year the fund's aggregate expenses exclusive of brokerage commissions, Rule 12b-1 fees, transaction fees and extraordinary expenses, exceed an annual rate of .40 of 1% of the fund's average daily net assets, the fund may deduct from the payments to be made to The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) Dreyfus, or Dreyfus will bear, such excess expense. During the period ended December 31, 2002, there was no expense reimbursement pursuant to the undertaking. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Service shares pay the Distributor for distributing their shares, for servicing and/or maintaining Service shares shareholder accounts and for advertising and marketing for Service shares. The Plan provides payments to be made at an annual rate of .25 of 1% of the value of the Service shares average daily net assets. The Distributor may make payments to Participating Insurance Companies and brokers and dealers acting as principal underwriter for their variable insurance products. The fees payable under the Plan are payable without regard to actual expenses incurred. During the period ended December 31, 2002, Service shares were charged $114,063 pursuant to the Plan. (C) Under the Shareholder Services Plan, Initial shares reimburses the Distributor an amount not to exceed an annual rate of .25 of 1% of the value of the Initial shares' average daily net assets for certain allocated expenses with respect to servicing and/or maintaining Initial shares shareholder accounts. During the period ended December 31, 2002, Initial shares were charged $69,538 pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended December 31, 2002, the fund was charged $1,046 pursuant to the transfer agency agreement. (D) Each Board member also serves as a Board member of other funds within the Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not an "affiliated person" as defined in the Act receives an annual fee of $25,000 and an attendance fee of $4,000 for each in person meeting and $500 for telephone meetings. These fees are allocated among the funds in the Fund Group. The chairman of the Board receives an additional 25% of such compensation. Subject to the fund's Emeritus Program Guidelines, Emeritus Board Members, if any, receive 50% of the annual retainer fee and per meeting fee paid at the time the Board member achieves emeritus status. NOTE 4--Securities Transactions: The aggregate amount of purchases and sales of investment securities, excluding short-term securities and financial futures, during the period ended December 31, 2002, amounted to $221,751,941 and $447,043,951, respectively. Included in proceeds of sales is $58,430,916 representing the value of securities disposed of in payment of redemptions in-kind, resulting in realized losses of $36,988,572. As a result of the redemption in-kind, net realized losses differ for financial statement and tax purposes. These realized losses have been reclassified from accumulated net realized loss on investments to paid-in capital. The fund may invest in financial futures contracts in order to gain exposure to or protect against changes in the market. The fund is exposed to market risk as a result of changes in the value of the underlying financial instruments. Investments in financial futures require the fund to "mark to market" on a daily basis, which reflects the change in the market value of the contract at the close of each day's trading. Typically, variation margin payments are received or made to reflect daily unrealized gains or losses. When the contracts are closed, the fund recognizes a realized gain or loss. These investments require initial margin deposits with a broker, which consist of cash or cash equivalents, up to approximately 10% of the contract amount. The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. Contracts open at December 31, 2002 are set forth in the Statement of Financial Futures. At December 31, 2002, the cost of investments for federal income tax purposes was $3,444,679,068; accordingly, accumulated net unrealized depreciation on investments was $279,590,027 consisting of $528,862,374 gross unrealized appreciation and $808,452,401 gross unrealized depreciation. The Fund REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Dreyfus Stock Index Fund, Inc. In our opinion, the accompanying statement of assets and liabilities, including the statements of investments and financial futures, and the related statements of operations and of changes in net assets and financial highlights present fairly, in all material respects the financial position of Dreyfus Stock Index Fund, Inc. (the "Fund") at December 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund' s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at December 31, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York January 24, 2003 IMPORTANT TAX INFORMATION (Unaudited) For federal tax purposes, the fund hereby designates 100% of the ordinary dividends paid during the fiscal year ended December 31, 2002 as qualifying for the corporate dividends received deduction. The Fund BOARD MEMBER INFORMATION (Unaudited) JOSEPH S. DIMARTINO (59) CHAIRMAN OF THE BOARD (1995) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Corporate Director and Trustee OTHER BOARD MEMBERSHIPS AND AFFILIATIONS: * The Muscular Dystrophy Association, Director * Levcor International, Inc., an apparel fabric processor, Director * Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director * The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 191 -------------- DAVID P. FELDMAN (63) BOARD MEMBER (1989) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Corporate Director and Trustee OTHER BOARD MEMBERSHIPS AND AFFILIATIONS: * 59 Wall Street Mutual Funds Group (11 Funds), Director * The Jeffrey Company, a private investment company, Director * QMED, a medical device company, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 53 -------------- EHUD HOUMINER (62) BOARD MEMBER (1996) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Professor and Executive-in-Residence at the Columbia Business School, Columbia University. * Principal of Lear, Yavitz and Associates, a management consulting firm OTHER BOARD MEMBERSHIPS AND AFFILIATIONS: * Avnet Inc., an electronics distributor, Director * Super Sol Limited, an Israeli supermarket chain, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 25 GLORIA MESSINGER (73) BOARD MEMBER (1996) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Arbitrator for American Arbitration Association and National Association of Securities Dealers, Inc. * Consultant in Intellectual Property OTHER BOARD MEMBERSHIPS AND AFFILIATIONS: * Yale Law School Fund, Director * Theater for a New Audience, Inc., Director * Brooklyn Philharmonic, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 18 -------------- JOHN SZARKOWSKI (77) BOARD MEMBER (1991) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Consultant in Photography OTHER BOARD MEMBERSHIPS AND AFFILIATIONS: * Photography Department at The Museum of Modern Art, Director Emeritus NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 18 -------------- ANNE WEXLER (72) BOARD MEMBER (1991) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Chairman of the Wexler Group, consultants specializing in government relations and public affairs OTHER BOARD MEMBERSHIPS AND AFFILIATIONS: * Wilshire Mutual Funds (5 funds), Director * Methanex Corporation, a methanol production company, Director * Member of the Council of Foreign Relations * Member of the National Park Foundation NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 18 -------------- ONCE ELECTED ALL BOARD MEMBERS SERVE FOR AN INDEFINITE TERM. ADDITIONAL INFORMATION ABOUT THE BOARD MEMBERS, INCLUDING THEIR ADDRESS IS AVAILABLE IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION WHICH CAN BE OBTAINED FROM DREYFUS FREE OF CHARGE BY CALLING THIS TOLL FREE NUMBER: 1-800-554-4611. JOHN M. FRASER, JR., EMERITUS BOARD MEMBER The Fund OFFICERS OF THE FUND (Unaudited) STEPHEN E. CANTER, PRESIDENT SINCE MARCH 2000. Chairman of the Board, Chief Executive Officer and Chief Operating Officer of Dreyfus, and an officer of 94 investment companies (comprised of 188 portfolios) managed by Dreyfus. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of Dreyfus. He is 57 years old and has been an employee of Dreyfus since May 1995. STEPHEN R. BYERS, EXECUTIVE VICE PRESIDENT SINCE NOVEMBER 2002. Chief Investment Officer, Vice Chairman and a Director of Dreyfus, and an officer of 94 investment companies (comprised of 188 portfolios) managed by Dreyfus. Mr. Byers also is an Officer, Director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of Dreyfus. He is 49 years old and has been an employee of Dreyfus since January 2000. Prior to joining Dreyfus, he served as an Executive Vice President-Capital Markets, Chief Financial Officer and Treasurer at Gruntal & Co., L.L.C. MARK N. JACOBS, VICE PRESIDENT SINCE MARCH 2000. Executive Vice President, Secretary and General Counsel of Dreyfus, and an officer of 95 investment companies (comprised of 204 portfolios) managed by Dreyfus. He is 56 years old and has been an employee of Dreyfus since June 1977 MICHAEL A. ROSENBERG, SECRETARY SINCE MARCH 2000. Associate General Counsel of Dreyfus, and an officer of 93 investment companies (comprised of 200 portfolios) managed by Dreyfus. He is 42 years old and has been an employee of Dreyfus since October 1991. STEVEN F. NEWMAN, ASSISTANT SECRETARY SINCE MARCH 2000. Associate General Counsel and Assistant Secretary of Dreyfus, and an officer of 95 investment companies (comprised of 204 portfolios) managed by Dreyfus. He is 53 years old and has been an employee of Dreyfus since July 1980 JAMES WINDELS, TREASURER SINCE NOVEMBER 2001. Director - Mutual Fund Accounting of Dreyfus, and an officer of 95 investment companies (comprised of 204 portfolios) managed by Dreyfus. He is 44 years old and has been an employee of Dreyfus since April 1985. ROBERT S. ROBOL, ASSISTANT TREASURER SINCE DECEMBER 2002. Senior Accounting Manager - Equity Funds of Dreyfus, and an officer of 28 investment companies (comprised of 119 portfolios) managed by Dreyfus. He is 38 years old and has been an employee of Dreyfus since October 1988. ROBERT SVAGNA, ASSISTANT TREASURER SINCE DECEMBER 2002. Senior Accounting Manager - Equity Funds of Dreyfus, and an officer of 28 investment companies (comprised of 119 portfolios) managed by Dreyfus. He is 35 years old and has been an employee of Dreyfus since November 1990. KENNETH J. SANDGREN, ASSISTANT TREASURER SINCE NOVEMBER 2001. Mutual Funds Tax Director of Dreyfus, and an officer of 95 investment companies (comprised of 204 portfolios) managed by Dreyfus. He is 48 years old and has been an employee of Dreyfus since June 1993. WILLIAM GERMENIS, ANTI-MONEY LAUNDERING COMPLIANCE OFFICER SINCE OCTOBER 2002. Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 90 investment companies (comprised of 199 portfolios) managed by Dreyfus. He is 32 years old and has been an employee of the Distributor since October 1998. Prior to joining the Distributor, he was a Vice President of Compliance Data Center, Inc. The Fund For More Information Dreyfus Stock Index Fund, Inc. 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Index Fund Manager Mellon Equity Associates 500 Grant Street Pittsburgh, PA 15258 Custodian Boston Safe Deposit and Trust Company One Boston Place Boston, MA 02109 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. 200 Park Avenue New York, NY 10166 Distributor Dreyfus Service Corporation 200 Park Avenue New York, NY 10166 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 2003 Dreyfus Service Corporation 763AR1202