UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number | 811-6325 | |||||
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| Dreyfus Midcap Index Fund, Inc. |
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c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 |
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| Michael A. Rosenberg, Esq. 200 Park Avenue New York, New York 10166 |
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Registrant's telephone number, including area code: | (212) 922-6000 | |||||
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Date of fiscal year end:
| 10/31 |
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Date of reporting period: | 04 /30 /11 |
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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 | A Letter from the Chairman and CEO |
| 3 | Discussion of Fund Performance |
| 6 | Understanding Your Fund’s Expenses |
| 6 | Comparing Your Fund’s Expenses With Those of Other Funds |
| 7 | Statement of Investments |
| 20 | Statement of Financial Futures |
| 21 | Statement of Assets and Liabilities |
| 22 | Statement of Operations |
| 23 | Statement of Changes in Net Assets |
| 24 | Financial Highlights |
| 25 | Notes to Financial Statements |
| 33 | Information About the Renewal of the Fund’s Management Agreement |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus
Midcap Index Fund, Inc.
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Midcap Index Fund, Inc., covering the six-month period from November 1, 2010, through April 30, 2011.
Multiple crosscurrents have influenced the global and U.S. economies.A modest slowdown in the middle quarters of 2010 gave way to renewed strength by early 2011.The recovery has been fueled by three important characteristics. First, macroeconomic policy has been stimulative in the United States and most of the world. Second, in response to inflation worries emerging countries have shifted policy from aggressively stimulative to neutral, but not restrictive, supporting ongoing demand for commodities. Third, corporate balance sheets around the world have strengthened due to cheap bond financing, rising profits and relatively slow growth in corporate spending. Although shocks emanating from events in the Middle East and Japan presented potential headwinds, U.S. equities generally rallied as investors increasingly recognized that otherwise positive forces would prevent a double-dip recession.
We expect the U.S. economy to continue to expand at a moderate rate, which generally should be good for stocks. However, in the wake of recent gains we believe that selectivity will become more impor-tant.We favor companies with higher growth potential, and we are also optimistic about the prospects of high-quality companies capable of generating dividend increases and share buybacks. As always, your financial advisor can help you align your investment portfolio with the opportunities and challenges that the future may have in store.
For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
May 16, 2011
2
DISCUSSION OF FUND PERFORMANCE
For the period of November 1, 2010, through April 30, 2011, Thomas J. Durante, CFA, Karen Q.Wong and Richard A. Brown, Portfolio Managers
Fund and Market Performance Overview
For the six-month period ended April 30, 2011, Dreyfus Midcap Index Fund produced a total return of 22.99%.1 The Standard & Poor’s MidCap 400 Index (the “S&P 400 Index”), the fund’s benchmark, produced a total return of 23.25% for the same period.2,3
Midcap stocks rallied during much of the reporting period as an economic recovery gained traction, commodity prices moved higher and corporate earnings grew.The difference in returns between the fund and the S&P 400 Index was primarily the result of transaction costs and operating expenses that are not reflected in the S&P 400 Index’s results.
The Fund’s Investment Approach
The fund seeks to match the total return of the S&P 400 Index by generally investing in all 400 stocks in the S&P 400 Index, in proportion to their respective weightings.The fund may also use stock index futures as a substitute for the sale or purchase of stocks.The S&P 400 Index is composed of 400 stocks of midsize domestic companies across 10 economic sectors. Each stock is weighted by its market capitalization; that is, larger companies have greater representation in the S&P 400 Index than smaller ones.
Stocks Rallied as the U.S. Economy Recovered
Investor sentiment improved dramatically in the weeks before the start of the reporting period, when a new round of quantitative easing of U.S. monetary policy from the Federal Reserve Board helped convince investors that the economy was unlikely to slip back into recession. A more optimistic investment outlook was reinforced by gains in employment and consumer spending, as well as better-than-expected corporate earnings across a number of industry groups. Later in the fall, the end of uncertainty surrounding national midterm elections and the passage of fiscally stimulative tax legislation lent further support to stock prices.
| The Fund | 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
Improving global economic conditions also supported U.S. stock prices. Investor confidence was buoyed by encouraging economic data in Europe and robust demand in the emerging markets for industrial commodities and equipment.
The market rally was interrupted in February when a wave of political unrest in the Middle East led to sharply higher crude oil prices, and again in March when a devastating earthquake, tsunami and nuclear disaster in Japan threatened one of the world’s largest economies. However, investors proved resilient, and the U.S. stock market bounced back by the reporting period’s end. Midcap stocks generally produced higher returns than their larger counterparts, and growth stocks typically outperformed value stocks during the reporting period.
Industrial Stocks Led the Market’s Advance
Strong demand for equipment and materials from the emerging markets and recovering manufacturing activity in the United States helped the industrials sector rank as the S&P 400 Index’s top performing industry group for the reporting period.The sector’s results were particularly robust among capital goods companies, including manufacturers of the heavy equipment used in mining and infrastructure construction. Engineering firms benefited from ongoing infrastructure development in the emerging markets, and transportation companies gained value when U.S. shipping volumes increased. Finally, acquisitions of smaller machinery producers by larger ones also supported prices of industrial stocks.
The information technology sector benefited as companies sought new methods to increase efficiency and productivity in the wake of workforce reductions during the recession, driving the earnings of software-and-services providers higher. Companies in the storage and networking industries flourished as more businesses moved toward cloud computing, in which applications and data are maintained over the Internet. Certain semiconductor manufacturers specializing in touchscreen technologies prospered as the popularity of smartphones and tablet computers soared.
4
In the health care sector, the search by large pharmaceutical developers for promising new drugs spurred an increase in mergers-and-acquisitions activity, sending the prices of some midcap drug producers higher. In addition, medical equipment and device manufacturers saw higher revenues from private health insurers as the job market improved.
The energy sector produced the highest absolute returns of any midcap market sector as oil and gas prices climbed, but its relatively small size in the S&P 400 Index limited its impact on the fund’s performance overall.
Laggards during the reporting period included the telecommunications services sector, which advanced at a single-digit rate as investors turned to more speculative investments in a rallying market.
Index Funds Offer Diversification Benefits
An as index fund, we attempt to replicate the returns of the S&P 400 Index by closely approximating the composition of the S&P 400 Index. In our view, one of the greatest benefits of an index fund is that it offers a broadly diversified investment vehicle that can help investors manage risks by limiting the impact on the overall portfolio of unexpected losses in any single industry group or holding.
May 16, 2011
| Equity funds are subject generally to market, market sector, market liquidity, issuer and investment | |
| style risks, among other factors, to varying degrees, all of which are more fully described in the | |
| fund’s prospectus. Stocks of mid-cap companies often experience sharper price fluctuations than | |
| stocks of large-cap companies. | |
| 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. | |
| 2 | SOURCE: LIPPER INC. — Reflects reinvestment of dividends and, where applicable, capital |
| gain distributions.The Standard & Poor’s MidCap 400 Index is a widely accepted, unmanaged | |
| total return index measuring the performance of the midsize company segment of the U.S. market. | |
| Investors cannot invest directly in any index. | |
| 3 | “Standard & Poor’s®,” “S&P®,” and “S&P MidCap 400®” are registered trademarks of |
| Standard & Poor’s Financial Services LLC, and have been licensed for use on behalf of the fund. | |
| The fund is not sponsored, managed, advised, sold or promoted by Standard & Poor’s and its | |
| affiliates and Standard & Poor’s and its affiliates make no representation regarding the | |
| advisability of investing in the fund. |
| The Fund | 5 |
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Midcap Index Fund, Inc. from November 1, 2010 to April 30, 2011. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| Expenses and Value of a $1,000 Investment | ||
| assuming actual returns for the six months ended April 30, 2011 | ||
| Expenses paid per $1,000† | $2.76 | |
| Ending value (after expenses) | $ 1,229.90 | |
| COMPARING YOUR FUND’S EXPENSES |
| WITH THOSE OF OTHER FUNDS (Unaudited) |
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment assuming a hypothetical 5% annualized return for the six months ended April 30, 2011
| Expenses paid per $1,000† | $2.51 | |
| Ending value (after expenses) | $1,022.32 |
† Expenses are equal to the fund’s annualized expense ratio of .50%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
6
| STATEMENT OF INVESTMENTS |
| April 30, 2011 (Unaudited) |
| Common Stocks—95.0% | Shares | Value ($) | |
| Consumer Discretionary—12.5% | |||
| 99 Cents Only Stores | 98,957a | 1,994,973 | |
| Aaron’s | 153,261 | 4,412,384 | |
| Advance Auto Parts | 171,361 | 11,217,291 | |
| Aeropostale | 180,591a | 4,610,488 | |
| American Eagle Outfitters | 418,056 | 6,504,951 | |
| American Greetings, Cl. A | 85,883 | 2,112,722 | |
| Ann | 114,911a | 3,586,372 | |
| Ascena Retail Group | 150,041a | 4,694,783 | |
| Bally Technologies | 113,954a | 4,443,066 | |
| Barnes & Noble | 88,705 | 974,868 | |
| Bob Evans Farms | 65,972 | 2,068,882 | |
| BorgWarner | 239,438a | 18,494,191 | |
| Boyd Gaming | 119,011a | 1,063,958 | |
| Brinker International | 190,383 | 4,586,326 | |
| Career Education | 132,331a | 2,886,139 | |
| Cheesecake Factory | 131,479a | 3,868,112 | |
| Chico’s FAS | 379,110 | 5,546,379 | |
| Collective Brands | 131,849a | 2,768,829 | |
| Deckers Outdoor | 82,447a | 6,996,452 | |
| Dick’s Sporting Goods | 189,452a | 7,754,270 | |
| Dollar Tree | 268,205a | 15,421,788 | |
| DreamWorks Animation SKG, Cl. A | 156,901a | 4,156,307 | |
| Eastman Kodak | 590,947a | 1,642,833 | |
| Foot Locker | 331,185 | 7,127,101 | |
| Fossil | 108,202a | 10,363,588 | |
| Gentex | 304,758 | 9,554,163 | |
| Guess? | 135,477 | 5,824,156 | |
| Hanesbrands | 209,974a | 6,826,255 | |
| Harte-Hanks | 86,448 | 803,102 | |
| International Speedway, Cl. A | 61,521 | 1,882,543 | |
| ITT Educational Services | 49,470a,b | 3,548,483 | |
| John Wiley & Sons, Cl. A | 101,012 | 5,144,541 | |
| KB Home | 160,710b | 1,897,985 | |
| Lamar Advertising, Cl. A | 124,607a | 4,052,220 | |
| Life Time Fitness | 90,734a | 3,549,514 | |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Common Stocks (continued) | Shares | Value ($) | |
| Consumer Discretionary (continued) | |||
| LKQ | 316,827a | 7,990,377 | |
| Matthews International, Cl. A | 62,687 | 2,516,256 | |
| MDC Holdings | 81,966b | 2,392,588 | |
| Meredith | 79,997 | 2,673,500 | |
| Mohawk Industries | 120,307a | 7,223,232 | |
| New York Times, Cl. A | 259,750a | 2,111,768 | |
| NVR | 12,607a | 9,320,733 | |
| Office Depot | 608,948a | 2,624,566 | |
| Panera Bread, Cl. A | 67,290a | 8,149,492 | |
| PetSmart | 251,661 | 10,612,544 | |
| Phillips-Van Heusen | 143,401 | 10,096,864 | |
| Polaris Industries | 74,318 | 7,835,347 | |
| Regis | 124,294 | 2,112,998 | |
| Rent-A-Center | 135,443 | 4,124,239 | |
| Ryland Group | 95,233 | 1,648,483 | |
| Saks | 353,046a,b | 4,222,430 | |
| Scholastic | 54,136 | 1,422,694 | |
| Scientific Games, Cl. A | 144,674a | 1,521,970 | |
| Service Corporation International | 512,601 | 6,033,314 | |
| Sotheby’s | 143,353 | 7,242,194 | |
| Strayer Education | 28,106 | 3,481,771 | |
| Thor Industries | 92,553 | 2,870,069 | |
| Timberland, Cl. A | 81,215a | 3,670,106 | |
| Toll Brothers | 314,919a | 6,616,448 | |
| Tractor Supply | 155,746 | 9,636,005 | |
| Tupperware Brands | 134,293 | 8,550,435 | |
| Under Armour, Cl. A | 76,976a | 5,269,777 | |
| Warnaco Group | 93,271a | 6,002,922 | |
| Wendy’s/Arby’s Group, Cl. A | 704,953 | 3,397,873 | |
| Williams-Sonoma | 224,839 | 9,760,261 | |
| WMS Industries | 126,348a | 4,144,214 | |
| 347,655,485 | |||
| Consumer Staples—3.8% | |||
| Alberto-Culver | 183,382 | 6,847,484 | |
| BJ’s Wholesale Club | 116,560a | 5,981,859 | |
| Church & Dwight | 152,643 | 12,589,995 | |
8
| Common Stocks (continued) | Shares | Value ($) | |
| Consumer Staples (continued) | |||
| Corn Products International | 165,288 | 9,107,369 | |
| Energizer Holdings | 151,184a | 11,418,928 | |
| Flowers Foods | 160,751 | 4,912,551 | |
| Green Mountain Coffee Roasters | 248,735a | 16,655,296 | |
| Hansen Natural | 148,491a | 9,822,680 | |
| Lancaster Colony | 42,317b | 2,585,992 | |
| Ralcorp Holdings | 117,549a | 9,145,312 | |
| Ruddick | 92,675 | 3,847,866 | |
| Smithfield Foods | 355,042a | 8,364,790 | |
| Tootsie Roll Industries | 55,318 | 1,639,626 | |
| Universal | 49,335 | 2,140,152 | |
| 105,059,900 | |||
| Energy—6.7% | |||
| Arch Coal | 347,860 | 11,931,598 | |
| Atwood Oceanics | 120,060a | 5,394,296 | |
| Bill Barrett | 101,765a | 4,246,653 | |
| CARBO Ceramics | 41,066 | 6,609,162 | |
| Cimarex Energy | 183,286 | 20,269,599 | |
| Comstock Resources | 102,637a | 3,290,542 | |
| Dril-Quip | 74,644a | 5,714,745 | |
| Exterran Holdings | 137,421a,b | 2,983,410 | |
| Forest Oil | 243,023a | 8,726,956 | |
| Frontier Oil | 230,061 | 6,427,904 | |
| Helix Energy Solutions Group | 228,849a | 4,332,112 | |
| Northern Oil and Gas | 118,535a,b | 2,816,392 | |
| Oceaneering International | 115,801a | 10,123,323 | |
| Oil States International | 108,877a | 9,037,880 | |
| Overseas Shipholding Group | 57,565b | 1,603,761 | |
| Patriot Coal | 194,777a | 4,904,485 | |
| Patterson-UTI Energy | 329,915 | 10,263,656 | |
| Plains Exploration & Production | 299,843a | 11,406,028 | |
| Pride International | 379,253a | 16,652,999 | |
| Quicksilver Resources | 264,806a | 3,932,369 | |
| SM Energy | 135,733 | 10,296,705 | |
| Southern Union | 266,467 | 7,967,363 | |
| Superior Energy Services | 168,573a | 6,476,575 | |
| The Fund | 9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Common Stocks (continued) | Shares | Value ($) | |
| Energy (continued) | |||
| Tidewater | 109,890 | 6,539,554 | |
| Unit | 86,828a | 5,471,901 | |
| 187,419,968 | |||
| Financial—18.6% | |||
| Affiliated Managers Group | 111,129a | 12,121,951 | |
| Alexandria Real Estate Equities | 118,540c | 9,738,061 | |
| AMB Property | 362,743c | 13,203,845 | |
| American Financial Group | 163,603 | 5,852,079 | |
| Apollo Investment | 424,406 | 5,029,211 | |
| Arthur J. Gallagher & Co. | 232,081 | 6,911,372 | |
| Aspen Insurance Holdings | 150,097 | 4,288,271 | |
| Associated Banc-Corp | 369,602 | 5,396,189 | |
| Astoria Financial | 180,476 | 2,611,488 | |
| BancorpSouth | 159,720 | 2,164,206 | |
| Bank of Hawaii | 102,288 | 4,990,632 | |
| BRE Properties | 138,306c | 7,014,880 | |
| Brown & Brown | 249,696 | 6,454,642 | |
| Camden Property Trust | 149,226c | 9,363,932 | |
| Cathay General Bancorp | 170,509 | 2,907,178 | |
| City National | 100,457 | 5,737,099 | |
| Commerce Bancshares | 165,345 | 7,037,083 | |
| Corporate Office Properties Trust | 142,814c | 5,028,481 | |
| Cousins Properties | 223,536c | 2,011,824 | |
| Cullen/Frost Bankers | 130,806 | 7,748,947 | |
| Duke Realty | 548,695c | 8,367,599 | |
| East West Bancorp | 317,522 | 6,709,240 | |
| Eaton Vance | 254,720 | 8,601,894 | |
| Equity One | 104,670c | 2,074,559 | |
| Essex Property Trust | 68,793c | 9,320,076 | |
| Everest Re Group | 116,472 | 10,612,929 | |
| Federal Realty Investment Trust | 131,700c | 11,531,652 | |
| Fidelity National Financial, Cl. A | 477,991 | 7,380,181 | |
| First American Financial | 228,013 | 3,557,003 | |
| First Niagara Financial Group | 672,181 | 9,679,409 | |
| FirstMerit | 230,677 | 4,029,927 | |
| Fulton Financial | 432,563 | 5,052,336 | |
10
| Common Stocks (continued) | Shares | Value ($) | |
| Financial (continued) | |||
| Greenhill & Co. | 54,942b | 3,241,578 | |
| Hanover Insurance Group | 98,802 | 4,171,420 | |
| HCC Insurance Holdings | 245,621 | 7,992,507 | |
| Highwoods Properties | 155,736c | 5,746,658 | |
| Hospitality Properties Trust | 263,609c | 6,366,157 | |
| International Bancshares | 115,733 | 2,039,215 | |
| Jefferies Group | 306,433 | 7,406,486 | |
| Jones Lang LaSalle | 91,689 | 9,387,120 | |
| Liberty Property Trust | 244,958c | 8,615,173 | |
| Macerich | 279,144c | 14,744,386 | |
| Mack-Cali Realty | 188,464c | 6,656,548 | |
| Mercury General | 78,213 | 3,108,185 | |
| MSCI, Cl. A | 256,072a | 9,082,874 | |
| Nationwide Health Properties | 270,716c | 11,857,361 | |
| New York Community Bancorp | 936,184 | 15,540,654 | |
| Old Republic International | 553,987 | 7,019,015 | |
| Omega Healthcare Investors | 218,951c | 5,027,115 | |
| PacWest Bancorp | 68,488 | 1,574,539 | |
| Potlatch | 87,187c | 3,373,265 | |
| Prosperity Bancshares | 102,313 | 4,691,051 | |
| Protective Life | 182,702 | 4,916,511 | |
| Raymond James Financial | 215,950 | 8,098,125 | |
| Rayonier | 173,508c | 11,513,991 | |
| Realty Income | 268,907c | 9,559,644 | |
| Regency Centers | 175,045c | 8,237,618 | |
| Reinsurance Group of America | 168,820 | 10,686,306 | |
| SEI Investments | 310,282 | 6,928,597 | |
| Senior Housing Properties Trust | 303,119c | 7,189,983 | |
| SL Green Realty | 168,999c | 13,947,487 | |
| StanCorp Financial Group | 97,936 | 4,221,042 | |
| SVB Financial Group | 92,091a | 5,565,980 | |
| Synovus Financial | 1,709,177b | 4,272,943 | |
| Taubman Centers | 119,162c | 6,929,270 | |
| TCF Financial | 332,999 | 5,191,454 | |
| Transatlantic Holdings | 133,149 | 6,562,914 | |
| Trustmark | 123,455 | 2,869,094 | |
| The Fund | 11 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Common Stocks (continued) | Shares | Value ($) | |
| Financial (continued) | |||
| UDR | 390,421c | 10,108,000 | |
| Unitrin | 108,654 | 3,285,697 | |
| Valley National Bancorp | 353,827 | 5,066,803 | |
| W.R. Berkley | 247,282 | 8,063,866 | |
| Waddell & Reed Financial, Cl. A | 183,632 | 7,530,748 | |
| Washington Federal | 238,968 | 3,844,995 | |
| Webster Financial | 160,955 | 3,463,752 | |
| Weingarten Realty Investors | 257,378c | 6,797,353 | |
| Westamerica Bancorporation | 61,420 | 3,119,522 | |
| 518,141,178 | |||
| Health Care—10.3% | |||
| Allscripts Healthcare Solutions | 404,248a | 8,707,502 | |
| Bio-Rad Laboratories, Cl. A | 42,325a | 5,295,704 | |
| Charles River Laboratories International | 113,807a | 4,801,517 | |
| Community Health Systems | 198,301a | 6,093,790 | |
| Cooper | 98,786 | 7,399,071 | |
| Covance | 129,092a | 8,081,159 | |
| Endo Pharmaceuticals Holdings | 250,921a | 9,826,066 | |
| Gen-Probe | 103,153a | 8,553,447 | |
| Health Management Associates, Cl. A | 549,703a | 6,200,650 | |
| Health Net | 199,342a | 6,638,089 | |
| Henry Schein | 196,798a | 14,380,030 | |
| Hill-Rom Holdings�� | 134,617 | 6,059,111 | |
| Hologic | 558,387a | 12,295,682 | |
| IDEXX Laboratories | 122,657a | 9,987,960 | |
| Immucor | 152,908a | 3,337,982 | |
| Kindred Healthcare | 86,422a | 2,179,563 | |
| Kinetic Concepts | 136,615a | 8,064,383 | |
| LifePoint Hospitals | 109,549a | 4,558,334 | |
| Lincare Holdings | 205,569 | 6,458,978 | |
| Masimo | 130,317 | 4,533,728 | |
| Medicis Pharmaceutical, Cl. A | 125,379 | 4,445,939 | |
| Mednax | 102,523a | 7,270,931 | |
| Mettler-Toledo International | 69,191a | 12,966,393 | |
| Omnicare | 249,833 | 7,849,753 | |
| Owens & Minor | 138,401 | 4,767,914 | |
12
| Common Stocks (continued) | Shares | Value ($) | |
| Health Care (continued) | |||
| Perrigo | 177,975 | 16,081,821 | |
| Pharmaceutical Product Development | 246,139 | 7,593,388 | |
| Resmed | 328,022a | 10,460,622 | |
| STERIS | 128,981 | 4,648,475 | |
| Techne | 79,236 | 6,157,430 | |
| Teleflex | 87,485 | 5,512,430 | |
| Thoratec | 127,587a | 3,916,921 | |
| United Therapeutics | 108,621a | 7,273,262 | |
| Universal Health Services, Cl. B | 208,582 | 11,426,122 | |
| VCA Antech | 188,083a | 4,626,842 | |
| Vertex Pharmaceuticals | 438,088a | 24,103,602 | |
| WellCare Health Plans | 92,176a | 4,038,231 | |
| 286,592,822 | |||
| Industrial—14.9% | |||
| Acuity Brands | 92,189 | 5,420,713 | |
| Aecom Technology | 253,707a | 6,916,053 | |
| AGCO | 202,076a | 11,635,536 | |
| AirTran Holdings | 292,575a | 2,197,238 | |
| Alaska Air Group | 76,418a | 5,033,654 | |
| Alexander & Baldwin | 89,402 | 4,711,485 | |
| Alliant Techsystems | 72,668 | 5,133,994 | |
| AMETEK | 344,378 | 15,855,163 | |
| BE Aerospace | 218,609a | 8,436,121 | |
| Brink’s | 98,562 | 3,253,532 | |
| Bucyrus International | 174,478 | 15,956,013 | |
| Carlisle | 132,475 | 6,562,811 | |
| Clean Harbors | 49,782a | 4,903,527 | |
| Con-way | 120,082 | 4,673,591 | |
| Copart | 127,520a | 5,785,582 | |
| Corporate Executive Board | 75,835 | 3,022,025 | |
| Corrections Corp. of America | 233,040a | 5,800,366 | |
| Crane | 98,468 | 4,914,538 | |
| Deluxe | 108,698 | 2,943,542 | |
| Donaldson | 164,571 | 10,076,682 | |
| FTI Consulting | 92,876a | 3,705,752 | |
| Gardner Denver | 111,615 | 9,644,652 | |
| The Fund | 13 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Common Stocks (continued) | Shares | Value ($) | |
| Industrial (continued) | |||
| GATX | 100,423 | 4,244,880 | |
| Graco | 128,324 | 6,420,050 | |
| Granite Construction | 73,129 | 1,987,646 | |
| Harsco | 172,275 | 6,132,990 | |
| Herman Miller | 124,208 | 3,231,892 | |
| HNI | 98,634 | 2,714,408 | |
| Hubbell, Cl. B | 129,636 | 9,073,224 | |
| Huntington Ingalls Industries | 106,392a | 4,255,680 | |
| IDEX | 176,233 | 8,268,852 | |
| JB Hunt Transport Services | 186,843 | 8,908,674 | |
| JetBlue Airways | 440,707a | 2,494,402 | |
| Kansas City Southern | 219,801a | 12,772,636 | |
| KBR | 323,826 | 12,425,204 | |
| Kennametal | 175,529 | 7,410,834 | |
| Kirby | 114,647a | 6,509,657 | |
| Korn/Ferry International | 103,065a | 2,134,476 | |
| Landstar System | 102,059 | 4,837,597 | |
| Lennox International | 96,264 | 4,679,393 | |
| Lincoln Electric Holdings | 89,996 | 7,071,886 | |
| Manpowergroup | 175,258 | 11,610,843 | |
| Mine Safety Appliances | 67,648 | 2,684,273 | |
| MSC Industrial Direct, Cl. A | 96,185 | 6,885,884 | |
| Nordson | 145,882 | 8,310,898 | |
| Oshkosh | 193,888a | 6,138,494 | |
| Pentair | 210,396 | 8,449,503 | |
| Regal-Beloit | 84,150 | 6,377,729 | |
| Rollins | 134,722 | 2,825,120 | |
| Shaw Group | 181,691a | 7,067,780 | |
| SPX | 108,182 | 9,352,334 | |
| Terex | 233,326a | 8,115,078 | |
| Thomas & Betts | 111,576a | 6,468,061 | |
| Timken | 173,789 | 9,799,962 | |
| Towers Watson & Co., Cl. A | 98,641 | 5,658,048 | |
| Trinity Industries | 170,354 | 6,166,815 | |
| United Rentals | 128,964a | 3,794,121 | |
| URS | 172,384a | 7,714,184 | |
14
| Common Stocks (continued) | Shares | Value ($) | |
| Industrial (continued) | |||
| UTi Worldwide | 220,700 | 4,945,887 | |
| Valmont Industries | 46,470 | 4,893,291 | |
| Wabtec | 102,480 | 7,315,022 | |
| Waste Connections | 243,495 | 7,492,341 | |
| Watsco | 61,050 | 4,327,835 | |
| Werner Enterprises | 95,593 | 2,501,669 | |
| Woodward | 126,000 | 4,668,300 | |
| 415,720,423 | |||
| Information Technology—15.5% | |||
| ACI Worldwide | 73,623a | 2,432,504 | |
| Acxiom | 175,915a | 2,561,322 | |
| ADTRAN | 137,795 | 5,686,800 | |
| Advent Software | 70,210a | 1,911,818 | |
| Alliance Data Systems | 109,380a | 10,391,100 | |
| ANSYS | 196,412a | 10,859,619 | |
| AOL | 234,423a | 4,777,541 | |
| Arrow Electronics | 245,684a | 11,200,734 | |
| Atmel | 978,354a | 14,968,816 | |
| Avnet | 326,790a | 11,869,013 | |
| Broadridge Financial Solutions | 267,579 | 6,218,536 | |
| Cadence Design Systems | 585,851a | 6,081,133 | |
| Ciena | 205,271a | 5,796,853 | |
| Concur Technologies | 101,978a | 5,901,467 | |
| Convergys | 268,225a | 3,889,263 | |
| CoreLogic | 228,005a | 4,197,572 | |
| Cree | 234,070a | 9,536,012 | |
| Cypress Semiconductor | 371,106a | 8,075,267 | |
| Diebold | 140,346 | 4,743,695 | |
| Digital River | 82,586a | 2,687,348 | |
| DST Systems | 75,895 | 3,742,382 | |
| Equinix | 98,377a | 9,902,629 | |
| FactSet Research Systems | 99,179 | 10,851,174 | |
| Fair Isaac | 84,589 | 2,527,519 | |
| Fairchild Semiconductor International | 276,539a | 5,799,023 | |
| Gartner | 182,624a | 7,836,396 | |
| Global Payments | 170,588 | 9,082,105 | |
| The Fund | 15 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Common Stocks (continued) | Shares | Value ($) | |
| Information Technology (continued) | |||
| Informatica | 229,178a | 12,836,260 | |
| Ingram Micro, Cl. A | 340,539a | 6,378,295 | |
| Integrated Device Technology | 317,905a | 2,586,157 | |
| International Rectifier | 148,964a | 5,148,196 | |
| Intersil, Cl. A | 270,417 | 3,994,059 | |
| Itron | 88,446a | 4,814,116 | |
| Jack Henry & Associates | 187,963 | 6,385,103 | |
| Lam Research | 264,630a | 12,784,275 | |
| Lender Processing Services | 189,763 | 5,584,725 | |
| ManTech International, Cl. A | 49,660a | 2,179,577 | |
| Mentor Graphics | 240,283a | 3,544,174 | |
| MICROS Systems | 172,877a | 8,993,062 | |
| National Instruments | 190,224 | 5,771,396 | |
| NCR | 341,978a | 6,774,584 | |
| NeuStar, Cl. A | 156,860a | 4,217,965 | |
| Parametric Technology | 252,141a | 6,119,462 | |
| Plantronics | 105,924 | 3,926,603 | |
| Polycom | 187,595a | 11,223,809 | |
| QLogic | 224,109a | 4,029,480 | |
| Quest Software | 136,046a | 3,504,545 | |
| Rackspace Hosting | 210,518a | 9,723,826 | |
| RF Micro Devices | 602,164a | 4,010,412 | |
| Riverbed Technology | 323,062a | 11,352,399 | |
| Rovi | 241,818a | 11,742,682 | |
| Semtech | 136,785a | 3,839,555 | |
| Silicon Laboratories | 93,631a | 4,080,439 | |
| Skyworks Solutions | 397,047a | 12,491,099 | |
| Solera Holdings | 150,603 | 8,283,165 | |
| SRA International, Cl. A | 90,710a | 2,811,103 | |
| Synopsys | 322,836a | 8,842,478 | |
| Tech Data | 99,460a | 5,284,310 | |
| TIBCO Software | 354,071a | 10,618,589 | |
| Trimble Navigation | 261,604a | 12,253,531 | |
| ValueClick | 170,915a | 2,862,826 | |
16
| Common Stocks (continued) | Shares | Value ($) | |
| Information Technology (continued) | |||
| Varian Semiconductor Equipment Associates | 160,572a | 6,732,784 | |
| Vishay Intertechnology | 352,970a | 6,734,668 | |
| Zebra Technologies, Cl. A | 118,886a | 4,671,031 | |
| 430,658,381 | |||
| Materials—6.6% | |||
| Albemarle | 196,154 | 13,838,665 | |
| AptarGroup | 143,236 | 7,512,728 | |
| Ashland | 169,108 | 10,498,225 | |
| Cabot | 139,843 | 6,271,959 | |
| Carpenter Technology | 95,864 | 4,913,989 | |
| Commercial Metals | 250,840 | 4,204,078 | |
| Compass Minerals International | 71,281 | 6,957,738 | |
| Cytec Industries | 107,332 | 6,298,242 | |
| Greif, Cl. A | 66,149 | 4,107,853 | |
| Intrepid Potash | 96,446a | 3,304,240 | |
| Louisiana-Pacific | 288,652a | 2,684,464 | |
| Lubrizol | 137,297 | 18,469,192 | |
| Martin Marietta Materials | 97,305b | 8,873,243 | |
| Minerals Technologies | 38,557 | 2,621,876 | |
| NewMarket | 20,370 | 3,754,598 | |
| Olin | 172,063 | 4,428,902 | |
| Packaging Corp. of America | 218,612 | 6,237,000 | |
| Reliance Steel & Aluminum | 159,707 | 9,041,013 | |
| Rock-Tenn, Cl. A | 84,107b | 5,809,270 | |
| RPM International | 277,781 | 6,527,854 | |
| Scotts Miracle-Gro, Cl. A | 97,353 | 5,497,524 | |
| Sensient Technologies | 109,025 | 4,130,957 | |
| Silgan Holdings | 104,603 | 4,797,094 | |
| Sonoco Products | 214,385 | 7,409,146 | |
| Steel Dynamics | 466,094 | 8,478,250 | |
| Temple-Inland | 236,526 | 5,565,457 | |
| Valspar | 205,105 | 8,062,678 | |
| Worthington Industries | 117,073 | 2,525,265 | |
| 182,821,500 | |||
| The Fund | 17 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Common Stocks (continued) | Shares | Value ($) | |
| Telecommunication Services—.5% | |||
| Telephone & Data Systems | 194,871 | 6,539,871 | |
| TW Telecom | 321,518a | 6,925,498 | |
| 13,465,369 | |||
| Utilities—5.6% | |||
| AGL Resources | 166,634 | 6,916,977 | |
| Alliant Energy | 237,188 | 9,378,414 | |
| Aqua America | 299,922 | 6,763,241 | |
| Atmos Energy | 197,305 | 6,883,971 | |
| Black Hills | 84,619 | 2,940,510 | |
| Cleco | 132,934 | 4,665,983 | |
| DPL | 254,620 | 7,712,440 | |
| Energen | 154,170 | 10,022,592 | |
| Great Plains Energy | 289,684 | 5,961,697 | |
| Hawaiian Electric Industries | 206,514 | 5,264,042 | |
| IDACORP | 107,615 | 4,219,584 | |
| MDU Resources Group | 403,782 | 9,646,352 | |
| National Fuel Gas | 176,322 | 12,924,403 | |
| NSTAR | 221,660 | 10,262,858 | |
| NV Energy | 503,568 | 7,649,198 | |
| OGE Energy | 208,945 | 11,109,606 | |
| PNM Resources | 188,560 | 2,890,625 | |
| Questar | 377,639 | 6,635,117 | |
| UGI | 237,538 | 7,910,015 | |
| Vectren | 178,442 | 5,099,872 | |
| Westar Energy | 242,577 | 6,600,520 | |
| WGL Holdings | 110,622 | 4,371,781 | |
| 155,829,798 | |||
| Total Common Stocks | |||
| (cost $1,965,921,693) | 2,643,364,824 | ||
| Principal | |||
| Short-Term Investments—.3% | Amount ($) | Value ($) | |
| U.S. Treasury Bills; | |||
| 0.06%, 6/16/11 | |||
| (cost $8,619,386) | 8,620,000d | 8,619,983 | |
18
| Other Investment—3.9% | Shares | Value ($) | |
| Registered Investment Company; | |||
| Dreyfus Institutional Preferred | |||
| Plus Money Market Fund | |||
| (cost $107,721,000) | 107,721,000e | 107,721,000 | |
| Investment of Cash Collateral | |||
| for Securities Loaned—.8% | |||
| Registered Investment Company; | |||
| Dreyfus Institutional Cash | |||
| Advantage Plus Fund | |||
| (cost $22,291,979) | 22,291,979e | 22,291,979 | |
| Total Investments (cost $2,104,554,058) | 100.0% | 2,781,997,786 | |
| Cash and Receivables (Net) | .0% | 1,196,998 | |
| Net Assets | 100.0% | 2,783,194,784 | |
| a Non-income producing security. |
| b Security, or portion thereof, on loan.At April 30, 2011, the value of the fund’s securities on loan was $21,819,606 |
| and the value of the collateral held by the fund was $22,291,979. |
| c Investment in real estate investment trust. |
| d Held by a broker as collateral for open financial futures positions. |
| e Investment in affiliated money market mutual fund. |
| Portfolio Summary (Unaudited)† | |||
| Value (%) | Value (%) | ||
| Financial | 18.6 | Utilities | 5.6 |
| Information Technology | 15.5 | Short-Term/ | |
| Industrial | 14.9 | Money Market Investments | 5.0 |
| Consumer Discretionary | 12.5 | Consumer Staples | 3.8 |
| Health Care | 10.3 | Telecommunication Services | .5 |
| Energy | 6.7 | ||
| Materials | 6.6 | 100.0 | |
| † Based on net assets. | |||
| See notes to financial statements. | |||
| The Fund | 19 |
| STATEMENT OF FINANCIAL FUTURES |
| April 30, 2011 (Unaudited) |
| Market Value | Unrealized | ||||
| Covered by | Appreciation | ||||
| Contracts | Contracts ($) | Expiration | at 4/30/2011 | ($) | |
| Financial Futures Long | |||||
| Standard & Poor’s | |||||
| Midcap 400 E-mini | 1,357 | 137,531,950 | June 2011 | 4,901,080 | |
| See notes to financial statements. | |||||
20
| STATEMENT OF ASSETS AND LIABILITIES |
| April 30, 2011 (Unaudited) |
| Cost | Value | |
| Assets ($): | ||
| Investments in securities—See Statement of Investments (including | ||
| securities on loan, valued at $21,819,606)—Note 1(b): | ||
| Unaffiliated issuers | 1,974,541,079 | 2,651,984,807 |
| Affiliated issuers | 130,012,979 | 130,012,979 |
| Cash | 3,253,784 | |
| Receivable for investment securities sold | 30,146,449 | |
| Receivable for shares of Common Stock subscribed | 4,042,881 | |
| Dividends and interest receivable | 1,163,334 | |
| Receivable for futures variation margin—Note 4 | 515,660 | |
| 2,821,119,894 | ||
| Liabilities ($): | ||
| Due to The Dreyfus Corporation and affiliates—Note 3(b) | 1,114,592 | |
| Liability for securities on loan—Note 1(b) | 22,291,979 | |
| Payable for investment securities purchased | 12,190,673 | |
| Payable for shares of Common Stock redeemed | 2,315,866 | |
| Loan commitment fees payable—Note 2 | 12,000 | |
| 37,925,110 | ||
| Net Assets ($) | 2,783,194,784 | |
| Composition of Net Assets ($): | ||
| Paid-in capital | 2,035,249,688 | |
| Accumulated undistributed investment income—net | 5,658,649 | |
| Accumulated net realized gain (loss) on investments | 59,941,639 | |
| Accumulated net unrealized appreciation (depreciation) | ||
| on investments (including $4,901,080 net unrealized | ||
| appreciation on financial futures) | 682,344,808 | |
| Net Assets ($) | 2,783,194,784 | |
| Shares Outstanding | ||
| (200 million shares of $.001 par value Common Stock authorized) | 89,003,173 | |
| Net Asset Value, offering and redemption price per share ($) | 31.27 | |
| See notes to financial statements. | ||
| The Fund | 21 |
| STATEMENT OF OPERATIONS |
| Six Months Ended April 30, 2011 (Unaudited) |
| Investment Income ($): | ||
| Income: | ||
| Cash dividends: | ||
| Unaffiliated issuers | 16,684,278 | |
| Affiliated issuers | 63,581 | |
| Income from securities lending—Note 1(b) | 141,324 | |
| Interest | 2,924 | |
| Total Income | 16,892,107 | |
| Expenses: | ||
| Management fee—Note 3(a) | 3,153,136 | |
| Shareholder servicing costs—Note 3(b) | 3,153,136 | |
| Directors’ fees—Note 3(a) | 66,802 | |
| Loan commitment fees—Note 2 | 12,000 | |
| Total Expenses | 6,385,074 | |
| Less—Directors’ fees reimbursed by the Manager—Note 3(a) | (66,802) | |
| Net Expenses | 6,318,272 | |
| Investment Income—Net | 10,573,835 | |
| Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
| Net realized gain (loss) on investments | 81,984,800 | |
| Net realized gain (loss) on financial futures | 14,160,436 | |
| Net Realized Gain (Loss) | 96,145,236 | |
| Net unrealized appreciation (depreciation) on investments | 410,188,135 | |
| Net unrealized appreciation (depreciation) on financial futures | 1,662,553 | |
| Net Unrealized Appreciation (Depreciation) | 411,850,688 | |
| Net Realized and Unrealized Gain (Loss) on Investments | 507,995,924 | |
| Net Increase in Net Assets Resulting from Operations | 518,569,759 | |
| See notes to financial statements. | ||
22
STATEMENT OF CHANGES IN NET ASSETS
| Six Months Ended | ||||
| April 30, 2011 | Year Ended | |||
| (Unaudited) | October 31, 2010 | |||
| Operations ($): | ||||
| Investment income—net | 10,573,835 | 21,292,347 | ||
| Net realized gain (loss) on investments | 96,145,236 | 98,002,035 | ||
| Net unrealized appreciation | ||||
| (depreciation) on investments | 411,850,688 | 347,035,577 | ||
| Net Increase (Decrease) in Net Assets | ||||
| Resulting from Operations | 518,569,759 | 466,329,959 | ||
| Dividends to Shareholders from ($): | ||||
| Investment income—net | (19,304,456) | (20,005,002) | ||
| Net realized gain on investments | (33,758,375) | — | ||
| Total Dividends | (53,062,831) | (20,005,002) | ||
| Capital Stock Transactions ($): | ||||
| Net proceeds from shares sold | 456,475,432 | 635,553,846 | ||
| Dividends reinvested | 49,197,626 | 18,547,196 | ||
| Cost of shares redeemed | (389,079,121) | (657,496,798) | ||
| Increase (Decrease) in Net Assets | ||||
| from Capital Stock Transactions | 116,593,937 | (3,395,756) | ||
| Total Increase (Decrease) in Net Assets | 582,100,865 | 442,929,201 | ||
| Net Assets ($): | ||||
| Beginning of Period | 2,201,093,919 | 1,758,164,718 | ||
| End of Period | 2,783,194,784 | 2,201,093,919 | ||
| Undistributed investment income—net | 5,658,649 | 14,389,270 | ||
| Capital Share Transactions (Shares): | ||||
| Shares sold | 15,867,165 | 26,641,400 | ||
| Shares issued for dividends reinvested | 1,753,164 | 808,509 | ||
| Shares redeemed | (13,326,421) | (27,836,890) | ||
| Net Increase (Decrease) in Shares Outstanding | 4,293,908 | (386,981) | ||
| See notes to financial statements. | ||||
| The Fund | 23 |
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated. 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.
| Six Months Ended | ||||||||
| April 30, 2011 | Year Ended October 31, | |||||||
| (Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | |||
| Per Share Data ($): | ||||||||
| Net asset value, | ||||||||
| beginning of period | 25.98 | 20.66 | 18.95 | 33.19 | 29.91 | 27.81 | ||
| Investment Operations: | ||||||||
| Investment income—neta | .12 | .25 | .26 | .31 | .38 | .28 | ||
| Net realized and unrealized | ||||||||
| gain (loss) on investments | 5.78 | 5.31 | 2.73 | (11.42) | 4.36 | 3.23 | ||
| Total from | ||||||||
| Investment Operations | 5.90 | 5.56 | 2.99 | (11.11) | 4.74 | 3.51 | ||
| Distributions: | ||||||||
| Dividends from | ||||||||
| investment income—net | (.22) | (.24) | (.32) | (.35) | (.28) | (.26) | ||
| Dividends from net realized | ||||||||
| gain on investments | (.39) | — | (.96) | (2.78) | (1.18) | (1.15) | ||
| Total Distributions | (.61) | (.24) | (1.28) | (3.13) | (1.46) | (1.41) | ||
| Net asset value, | ||||||||
| end of period | 31.27 | 25.98 | 20.66 | 18.95 | 33.19 | 29.91 | ||
| Total Return (%) | 22.99b | 27.05 | 17.89 | (36.64) | 16.45 | 12.95 | ||
| Ratios/Supplemental | ||||||||
| Data (%): | ||||||||
| Ratio of total expenses | ||||||||
| to average net assets | .51c | .51 | .51 | .51 | .51 | .50 | ||
| Ratio of net expenses | ||||||||
| to average net assets | .50c | .50 | .50 | .50 | .50 | .50 | ||
| Ratio of net investment | ||||||||
| income to average | ||||||||
| net assets | .84c | 1.07 | 1.45 | 1.16 | 1.20 | .95 | ||
| Portfolio Turnover Rate | 9.96b | 14.15 | 21.72 | 24.48 | 22.53 | 16.05 | ||
| Net Assets, | ||||||||
| end of period | ||||||||
| ($ x 1,000) | 2,783,195 | 2,201,094 | 1,758,165 | 1,581,926 | 2,491,415 | 2,270,969 | ||
| a | Based on average shares outstanding at each month end. |
| b | Annualized. |
| c | Not annualized. |
| See notes to financial statements. | |
24
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus Midcap 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. The fund’s investment objective seeks to match the performance of the Standard & Poor’s MidCap 400 Index. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold to the public without a sales charge.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices, except for open short positions, where the asked price is used
| The Fund | 25 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
for valuation purposes. Bid price is used when no asked price is available. U.S.Treasury Bills are valued at the mean price between quoted bid prices and asked prices by an independent pricing service approved by the Board of Directors. Registered investment companies that are not traded on an exchange are valued at their net asset value. When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Board of Directors. Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and futures contracts. For other securities that are fair valued by the Board of Directors, certain factors may be considered such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. Financial futures are valued at the last sales price.
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
26
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of April 30, 2011 in valuing the fund’s investments:
| Level 2—Other | Level 3— | |||
| Level 1— | Significant | Significant | ||
| Unadjusted | Observable | Unobservable | ||
| Quoted Prices | Inputs | Inputs | Total | |
| Assets ($) | ||||
| Investments in Securities: | ||||
| Equity Securities— | ||||
| Domestic† | 2,638,418,937 | — | — | 2,638,418,937 |
| Equity Securities— | ||||
| Foreign† | 4,945,887 | — | — | 4,945,887 |
| Mutual Funds | 130,012,979 | — | — | 130,012,979 |
| U.S. Treasury | — | 8,619,983 | — | 8,619,983 |
| Other Financial | ||||
| Instruments: | ||||
| Futures†† | 4,901,080 | — | — | 4,901,080 |
| † | See Statement of Investments for additional detailed categorizations. |
| †† | Amount shown represents unrealized appreciation at period end. |
In January 2010, FASB issued Accounting Standards Update (“ASU”) No. 2010-06 “Improving Disclosures about FairValue Measurements”. The portions of ASU No. 2010-06 which require reporting entities to prepare new disclosures surrounding amounts and reasons for signifi-
| The Fund | 27 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
cant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3 have been adopted by the fund. No significant transfers between Level 1 or Level 2 fair value measurements occurred at April 30, 2011.
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses 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, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by 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 is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by the Manager, U.S. Government and Agency securities or letters of credit.The fund is entitled to receive all income on securities loaned, in addition to income earned as a result of the lending transaction. Although each security loaned is fully collateralized, the fund bears 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. During the period ended April 30, 2011, The Bank of NewYork Mellon earned $60,567 from lending portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” in the Act.
28
The fund may invest in shares of certain affiliated investment companies also advised or managed by Dreyfus. Investments in affiliated investment companies for the period ended April 30, 2011 were as follows:
| Affiliated | |||||||
| Investment | Value | Value | Net | ||||
| Company | 10/31/2010 | ($) | Purchases ($) | Sales ($) | 4/30/2011 | ($) | Assets (%) |
| Dreyfus | |||||||
| Institutional | |||||||
| Preferred | |||||||
| Plus Money | |||||||
| Market Fund | 66,173,000 | 322,631,000 | 281,083,000 | 107,721,000 | 3.9 | ||
| Dreyfus | |||||||
| Institutional | |||||||
| Cash | |||||||
| Advantage | |||||||
| Plus Fund | 196,936,518 | 301,668,672 | 476,313,211 | 22,291,979 | .8 | ||
| Total | 263,109,518 | 624,299,672 | 757,396,211 130,012,979 | 4.7 | |||
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, 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 gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(e) 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.
As of and during the period ended April 30, 2011, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes
| The Fund | 29 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the three-year period ended October 31, 2010 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended October 31, 2010 was as follows: ordinary income $20,005,002. The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $225 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended April 30, 2011, the fund did not borrow under the Facilities.
NOTE 3—Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement (“Agreement”) with the Manager, the management fee is computed at the annual rate of .25% of the value of the fund’s average daily net assets and is payable monthly. Under the terms of the Agreement, the Manager has agreed to pay all the expenses of the fund, except management fees, brokerage fees and commissions, taxes, interest fees, commitment fees, Shareholder Services Plan fees, fees and expenses of non-interested Board members (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount
30
equal to the fund’s allocable portion of the accrued fees and expenses of the non-interested Board members (including counsel fees). Each Board member also serves as a Board member of other funds within the Dreyfus complex.Annual retainer fees and attendance fees are allocated to each fund based on net assets. During the period ended April 30, 2011, fees reimbursed by the Manager amounted to $66,802.
(b) Under the Shareholder Services Plan, the fund pays the Distributor for the provision of certain services, at the annual rate of .25% 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. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended April 30, 2011, the fund was charged $3,153,136 pursuant to the Shareholder Services Plan.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $557,296 and shareholder services plan fees $557,296.
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 April 30, 2011, amounted to $270,409,130 and $243,564,985, respectively.
Futures Contracts: In the normal course of pursuing its investment objective, the fund is exposed to market risk, including equity price risk as a result of changes in value of underlying financial instruments. The fund invests in financial futures contracts in order to manage its exposure to or protect against changes in the market. A futures contract represents a commitment for the future purchase or a sale of an
| The Fund | 31 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
asset at a specified date. Upon entering into such contracts, these investments require initial margin deposits with a broker, which consist of cash or cash equivalents.The amount of these deposits is determined by the exchange or Board ofTrade on which the contract is traded and is subject to change. Accordingly, variation margin payments are received or made to reflect daily unrealized gains or losses which are recorded in the Statement of Operations. Futures contracts are valued daily at the last sales price established by the Board of Trade or exchange upon which they are traded.When the contracts are closed, the fund recognizes a realized gain or loss.There is minimal counter-party credit risk to the fund with futures since futures are exchange traded, and the exchange’s clearinghouse guarantees the futures against default. Contracts open at April 30, 2011 are set forth in the Statement of Financial Futures.
The following summarizes the average market value of derivatives outstanding during the period ended April 30, 2011:
| Average Market Value ($) | |
| Equity future contracts | 88,058,560 |
At April 30, 2011, accumulated net unrealized appreciation on investments was $677,443,728, consisting of $800,576,943 gross unrealized appreciation and $123,133,215 gross unrealized depreciation.
At April 30, 2011, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
32
| INFORMATION ABOUT THE RENEWAL OF THE |
| FUND’S MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board of Directors held on March 1, 2011, the Board considered the renewal of the fund’s Management Agreement pursuant to which Dreyfus provides the fund with investment advisory and administrative services (the “Agreement”). The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of Dreyfus. In considering the renewal of the Agreement, the Board considered all factors that it believed to be relevant, including those discussed below.The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
Analysis of Nature, Extent, and Quality of Services Provided to the Fund.The Board members considered information previously provided to them in presentations from representatives of Dreyfus regarding the nature, extent, and quality of the services provided to funds in the Dreyfus fund complex, and representatives of Dreyfus confirmed that there had been no material changes in this information. Dreyfus provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. Dreyfus also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the Dreyfus fund complex and Dreyfus’ corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including the distribution channel(s) for the fund.
The Board members also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that Dreyfus also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements.The Board members also
| The Fund | 33 |
| INFORMATION ABOUT THE RENEWAL OF THE FUND’S |
| MANAGEMENT AGREEMENT (Unaudited) (continued) |
considered Dreyfus’ extensive administrative, accounting, and compliance infrastructures.The Board also considered portfolio management’s brokerage policies and practices (including policies and practices regarding soft dollars) and the standards applied in seeking best execution.
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed reports prepared by Lipper, Inc. (“Lipper”), an independent provider of investment company data, which included information comparing (1) the fund’s performance with the performance of a group of comparable funds (the “Performance Group”) and with a broader group of funds (the “Performance Universe”), all for various periods ended December 31, 2010, and (2) the fund’s actual and contractual management fees and total expenses with those of a group of comparable funds (the “Expense Group”) and with a broader group of funds (the “Expense Universe”), the information for which was derived in part from fund financial statements available to Lipper as of October 31, 2010. Dreyfus previously had furnished the Board with a description of the methodology Lipper used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
Dreyfus representatives stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations that may be applicable to the fund and comparison funds.The Board members discussed the results of the comparisons and noted that the fund’s total return performance was above the Performance Group and Performance Universe medians. Dreyfus also provided a comparison of the fund’s calendar year total returns to the returns of the fund’s benchmark index.
The Board members also reviewed the range of actual and contractual management fees and total expenses of the Expense Group and Expense Universe funds and discussed the results of the comparisons. Taking into consideration the fund’s “unitary” fee structure, they
34
noted that the fund’s contractual management fee was below the Expense Group median, the fund’s actual management fee was above the Expense Group and Expense Universe medians and the fund’s total expenses were below the Expense Group median and at the Expense Universe median.
Representatives of Dreyfus reviewed with the Board members the management or investment advisory fees (1) paid by funds advised or administered by Dreyfus that are in the same Lipper category as the fund and (2) paid to Dreyfus or the Dreyfus-affiliated primary employer of the fund’s primary portfolio manager for advising any separate accounts and/or other types of client portfolios that are considered to have similar investment strategies and policies as the fund (the “Similar Clients”), and explained the nature of the Similar Clients. They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors, noting the fund’s “unitary” fee structure. The Board members considered the relevance of the fee information provided for the Similar Clients to evaluate the appropriateness and reasonableness of the fund’s management fee.
Analysis of Profitability and Economies of Scale. Dreyfus’ representatives reviewed the expenses allocated and profit received by Dreyfus and the resulting profitability percentage for managing the fund, and the method used to determine the expenses and profit. The Board concluded that the profitability results were not unreasonable, given the services rendered and service levels provided by Dreyfus. The Board previously had been provided with information prepared by an independent consulting firm regarding Dreyfus’ approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
| The Fund | 35 |
| INFORMATION ABOUT THE RENEWAL OF THE FUND’S |
| MANAGEMENT AGREEMENT (Unaudited) (continued) |
The Board’s counsel stated that the Board members should consider the profitability analysis (1) as part of their evaluation of whether the fees under the Agreement bear a reasonable relationship to the mix of services provided by Dreyfus, including the nature, extent and quality of such services, and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Dreyfus representatives noted that, as a result of shared and allocated costs among funds in the Dreyfus funds complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board members also considered potential benefits to Dreyfus from acting as investment adviser and noted that there were no soft dollar arrangements in effect for trading the fund’s investments.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreement. Based on the discussions and considerations as described above, the Board concluded and determined as follows.
The Board concluded that the nature, extent and quality of the services provided by Dreyfus are adequate and appropriate.
The Board was satisfied with the fund’s performance.
The Board concluded that the fee paid to Dreyfus was reasonable in light of the considerations described above.
36
The Board determined that the economies of scale which may accrue to Dreyfus and its affiliates in connection with the management of the fund had been adequately considered by Dreyfus in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year. In addition, it should be noted that the Board’s consideration of the contractual fee arrangements for this fund had the benefit of a number of years of reviews of prior or similar agreements during which lengthy discussions took place between the Board members and Dreyfus representatives. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board members’ conclusions may be based, in part, on their consideration of the same or similar arrangements in prior years. The Board members determined that renewal of the Agreement was in the best interests of the fund and its shareholders.
| The Fund | 37 |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable. [CLOSED END FUNDS ONLY]
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dreyfus Midcap Index Fund, Inc.
By: /s/ Bradley J. Skapyak |
Bradley J. Skapyak, President
|
Date: June 13, 2011 |
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. |
|
By: /s/ Bradley J. Skapyak |
Bradley J. Skapyak, President
|
Date: June 13, 2011 |
|
By: /s/ James Windels |
James Windels, Treasurer
|
Date: June 13, 2011 |
|
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)