THE DREYFUS/LAUREL FUNDS, INC.
Dreyfus International Equity Allocation Fund
200 PARK AVENUE
NEW YORK, NEW YORK 10166
April 8, 1998
Dear Shareholder:
The Board of Directors of The Dreyfus/Laurel Funds, Inc. (the
"Company") has recently reviewed and unanimously endorsed a proposal for the
reorganization of Dreyfus International Equity Allocation Fund (the "Fund"),
a series of the Company, that the Directors judge to be in the best interests
of the shareholders of the Fund.
Under the terms of the proposal, Dreyfus International Stock Index
Fund (the "Acquiring Fund"), a series of Dreyfus Index Funds, Inc., would
acquire all the assets and assume the liabilities of the Fund. Holders of
Investor and Restricted Shares of the Fund would become shareholders of the
Acquiring Fund, receiving (in exchange for such shares) shares of the
Acquiring Fund with an aggregate net asset value equal to the aggregate net
asset value of their investment in the Fund at the time of the transaction,
and the Fund would be terminated. The transaction would, in the opinion of
counsel, be free from federal income tax to you and the Fund. The Board of
Directors of the Company has determined that the proposed reorganization
should provide benefits to shareholders due, in part, to enhanced operations.
Detailed information about the proposed transaction is described in
the enclosed prospectus/proxy statement.
The Board of Directors has called a Special Meeting of Shareholders
to be held June 9, 1998 to consider this transaction. WE STRONGLY INVITE YOUR
PARTICIPATION BY ASKING YOU TO REVIEW THE ENCLOSED MATERIAL, AND COMPLETE AND
RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
I thank you for your participation as a shareholder and urge you to
exercise your right to vote by completing, dating, signing and returning the
enclosed proxy card. A self-addressed, postage-paid envelope has been
enclosed for your convenience.
If you have any questions regarding the proposed transaction, please
call toll-free
1-800-645-6561.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED NO
LATER THAN JUNE 8, 1998.
Sincerely,
Marie E. Connolly,
President, THE DREYFUS/LAUREL
FUNDS, INC.
THE DREYFUS/LAUREL FUNDS, INC.
Dreyfus International Equity Allocation Fund
200 Park Avenue
New York, New York 10166
-------------------------------------------
Notice of Special Meeting of Shareholders
To Be Held on June 9, 1998
-------------------------------------------
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Dreyfus International Equity Allocation Fund (the "Acquired
Fund"), a series of The Dreyfus/Laurel Funds, Inc. (the "Company"), will be
held at the offices of the Company, 200 Park Avenue, New York, New York on
June 9, 1998 at 10:00 a.m. for the following purposes:
1.To approve or disapprove the Agreement and Plan of Reorganization
dated as of February 12, 1998 (the "Plan") providing
for (a) the acquisition of all the assets of the Acquired Fund by Dreyfus
International Stock Index Fund (the "Acquiring Fund"), a series of Dreyfus
Index Funds, Inc., in exchange solely for shares of the Acquiring Fund and
the assumption by the Acquiring Fund of the liabilities of the Acquired Fund,
(b) the distribution of those shares of the Acquiring Fund to the holders of
the Investor and Restricted Shares of the Acquired Fund, in each case in an
amount equal in net asset value to the Investor or Restricted Shares of the
Acquired Fund held by such holder, and (c) the subsequent termination of the
Acquired Fund.
2.To transact any other business that may properly come before the
Meeting or any adjournment or adjournments thereof.
The Directors of the Company have fixed the close of business on
March 30, 1998 as the record date for the determination of shareholders of
the Acquired Fund entitled to notice of and to vote at the Meeting or any
adjournment or adjournments thereof.
April 8, 1998 By order of the Board of Directors
Michael S. Petrucelli
Assistant Secretary
- -----------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN
PERSON ARE URGED WITHOUT DELAY TO SIGN AND RETURN THE ENCLOSED PROXY CARD
IN THE POSTAGE PREPAID ENVELOPE PROVIDED, SO THAT THEIR SHARES MAY BE
REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY
MATERIALS WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
- -----------------------------------------------------------------------------
DREYFUS INTERNATIONAL STOCK INDEX FUND
a series of DREYFUS INDEX FUNDS, INC.
--------------------------------------------
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
a series of THE DREYFUS/LAUREL FUNDS, INC.
--------------------------------------------
200 PARK AVENUE
NEW YORK, NEW YORK 10166
1-800-645-6561
PROSPECTUS/PROXY STATEMENT DATED APRIL 8, 1998
This Prospectus/Proxy Statement (the "Proxy Statement") is being
furnished to shareholders of Dreyfus International Equity Allocation Fund
(the "Acquired Fund"), a separate, diversified portfolio of The
Dreyfus/Laurel Funds, Inc. (formerly known as The Laurel Funds, Inc.) (the
"Company"), a management investment company, in connection with a proposed
Agreement and Plan of Reorganization (the "Plan") between the Company, on
behalf of the Acquired Fund, and Dreyfus Index Funds, Inc. (the "Index
Funds"), a management investment company, on behalf of Dreyfus International
Stock Index Fund (the "Acquiring Fund"), a separate, non-diversified
portfolio of the Index Funds, to be submitted to shareholders of the Acquired
Fund for consideration at a Special Meeting of Shareholders to be held on
June 9, 1998 at 10:00 a.m., Eastern time, at the offices of the Company, 200
Park Avenue, New York, New York, and any adjournments thereof (the
"Meeting"). A conformed copy of the Plan is attached to this Proxy Statement
as Appendix A.
AVAILABLE INFORMATION. This Proxy Statement, which should be
retained for future reference, sets forth concisely the information about the
Acquiring Fund that shareholders of the Acquired Fund should know before
voting on the Plan and receiving Acquiring Fund Shares (as defined below). A
Prospectus dated January 15, 1998 and Supplement to Prospectus dated March
12, 1998, describing the Acquiring Fund in greater detail, and the Acquiring
Fund's Annual Report for the period ended October 31, 1997 (including its
audited financial statements for the period then ended), accompany this Proxy
Statement. Certain relevant documents listed below have been filed with the
Securities and Exchange Commission ("SEC"), are incorporated herein in whole
or in part by reference, and are available upon request and without charge by
calling toll-free 1-800-645-6561 or by writing to 144 Glenn Curtiss
Boulevard, Uniondale, New York 11566-0144.
A Statement of Additional Information dated April 8, 1998, relating
to this Proxy Statement, incorporating by reference the audited financial
statements of the Acquiring Fund at October 31, 1997, and the audited
financial statements of the Acquired Fund at October 31, 1997, has been filed
with the SEC and is incorporated by reference in its entirety into this Proxy
Statement. A Statement of Additional Information relating to the Acquiring
Fund's Prospectus dated January 15, 1998, as revised March 12, 1998, has also
been filed with the SEC and is incorporated by reference in its entirety into
this Proxy Statement. Copies of such Statements of Additional Information are
available from the Acquiring Fund through the toll-free number and at the
address above.
- -----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE NET
ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
- -----------------------------------------------------------------------------
The SEC maintains a Web site (http://www.sec.gov) that contains the
Statements of Additional Information and other
material incorporated by reference, together with other information regarding
the Acquired Fund and the Acquiring Fund.
THE FUNDS. The Dreyfus Corporation ("Dreyfus") serves as investment
manager to the Acquiring Fund and the Acquired Fund (together, the "Funds",
or individually, a "Fund"). Dreyfus is a wholly-owned subsidiary of Mellon
Bank, N.A. ("Mellon Bank"), which is an indirect wholly-owned subsidiary of
Mellon Bank Corporation ("Mellon"). The Acquiring Fund seeks to provide
investment results that correspond to the net dividend, total return
performance of equity securities of international issuers in the aggregate,
as represented by the Morgan Stanley Capital International Europe,
Australasia, Far East (Free) Index Registration Mark ("EAFE Free Index"). The
Acquiring Fund is an index fund, which seeks to meet its investment objective
by investing in a sample of the stocks in the EAFE Free Index. The Acquiring
Fund offers a single class of shares. The Acquired Fund seeks to exceed the
total return of the Morgan Stanley Capital International Europe, Australasia,
Far East IndexRegistration Mark ("EAFE Index"). The EAFE Free Index and the
EAFE Index are similar but not identical indices of the performance of stock
markets in fifteen European countries, Australia, New Zealand, and the Far
East. See "Summary _ Investment Objectives, Policies and Restrictions." The
Acquired Fund, which is not an index fund, seeks to achieve its investment
objective through country allocation, stock selection, currency allocation,
and portfolio construction and risk management. The Acquired Fund offers two
classes of shares _ Investor Shares and Restricted Shares.
THE PLAN. The Plan provides for all the assets of the Acquired Fund
to be acquired by the Acquiring Fund in exchange solely for shares of the
Acquiring Fund (the "Acquiring Fund Shares") and the assumption by the
Acquiring Fund of the liabilities of the Acquired Fund. Those Acquiring Fund
Shares will then be distributed to holders of Investor and Restricted Shares
of the Acquired Fund (together, the "Acquired Fund Shares"), in liquidation
of the Acquired Fund, and the Acquired Fund will be terminated. (All such
transactions are referred to herein as the "Reorganization".) As a result of
the Reorganization, each holder of Acquired Fund Shares will receive that
number of full and fractional Acquiring Fund Shares having an aggregate net
asset value equal to the aggregate net asset value of such shareholder's
Acquired Fund Shares held as of the time of the Reorganization. The Funds have
been advised by counsel that the Reorganization will constitute a tax-free
reorganization for federal income tax purposes. Holders of Investor and
Restricted Shares of the Acquired Fund are requested to vote to approve the
Plan.
[Page 2]
TABLE OF CONTENTS
Page
Summary..................................................... 4
Reasons for the Reorganization.............................. 8
Information About the Reorganization........................ 8
Comparison of Investment Objectives and Policies............ 11
Risk Factors................................................ 13
Comparative Information on Shareholders' Rights............. 15
Additional Information About the Acquiring Fund and
the Acquired Fund 16
Other Business.............................................. 17
Voting Information.......................................... 17
Financial Statements and Experts............................ 18
Legal Matters............................................... 19
Appendix A: Agreement and Plan of Reorganization............ A-1
[Page 3]
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
ADDITIONAL INFORMATION CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT, THE PROSPECTUS OF THE ACQUIRING FUND DATED JANUARY 15, 1998, THE
PROSPECTUS OF THE ACQUIRED FUND DATED MARCH 1, 1998, AND THE PLAN, A COPY OF
WHICH IS ATTACHED TO THIS PROXY STATEMENT AS APPENDIX A.
PROPOSED REORGANIZATION. The Plan provides for the transfer of all
the assets of the Acquired Fund in exchange solely for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of the liabilities of the
Acquired Fund. Under the Plan, those Acquiring Fund Shares will then be
distributed to holders of the Acquired Fund Shares, in liquidation of the
Acquired Fund, and the Acquired Fund will be terminated. As a result of the
Reorganization, each holder of Acquired Fund Shares will receive that number
of Acquiring Fund Shares having an aggregate net asset value equal to the
aggregate net asset value of such shareholder's Acquired Fund Shares held as
of the close of trading on the floor of the New York Stock Exchange (the
"NYSE") on the date of the Reorganization (the "Closing Date"). See
"Information About the Reorganization."
For the reasons set forth below under "Reasons for the
Reorganization," the Board of Directors of the Company, including the
Directors who are not "interested persons", as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Company
or the Index Funds (the "non-interested" Directors), has unanimously
determined that the Reorganization is in the best interests of the Acquired
Fund and that the interests of the Acquired Fund's existing shareholders will
not be diluted as a result of the Reorganization. The Company's Board of
Directors has therefore submitted the Plan for the approval of the Acquired
Fund's shareholders. In addition, the Board of Directors of the Index Funds,
including its non-interested Directors, has unanimously determined that the
Reorganization is in the best interests of the Acquiring Fund and that the
interests of the Acquiring Fund's existing shareholders will not be diluted
as a result of the Reorganization.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
Approval of the Plan on the part of the Acquired Fund will require
the affirmative vote of two-thirds of the votes of the Acquired Fund eligible
to be cast at the Meeting. See "Voting Information."
If the shareholders of the Acquired Fund do not vote to approve the
Plan, the Directors of the Company will continue the management of the
Acquired Fund and may consider other alternatives in the best interests of
the shareholders.
TAX CONSEQUENCES. The Company has been advised by its counsel,
Kirkpatrick & Lockhart LLP, to the effect that the Reorganization will
constitute a tax-free reorganization for federal income tax purposes and
that, accordingly, no gain or loss will be recognized for those purposes as a
result of the Reorganization either to the Acquired Fund (except, possibly,
with respect to certain hedging instruments held by the Acquired Fund) or to
its shareholders. Consequently, the holding period and aggregate tax basis of
the Acquiring Fund Shares that are to be received by each holder of Acquired
Fund Shares will be the same as the holding period and aggregate tax basis of
the Acquired Fund Shares previously held by such shareholder. In addition,
the holding period and tax basis of the assets to be transferred to the
Acquiring Fund (other than the instruments mentioned above) will be the same
in the Acquiring Fund's hands as in the Acquired Fund's hands immediately
prior to the Reorganization. See "Information About the Reorganization _
Federal Income Tax Consequences."
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Acquired
Fund's objective is to exceed the total return of the EAFE Index, a broadly
diversified international index comprised of the equity securities of
approximately 1,000 companies located outside the United States. The Acquired
Fund is not an index fund and pursues its objective through country
allocation, stock selection, currency allocation, and portfolio construction
and risk management. In addition to investing in securities of issuers in
countries represented in the EAFE Index, the Acquired Fund may invest up to
20% of its total assets in securities of issuers in emerging market
countries.
The Acquiring Fund seeks to match the investment results of the EAFE
Free Index. The EAFE Free Index is similar to the EAFE Index but excludes
those securities that are not free of foreign ownership limits or legal
restrictions at the security and country level. The weightings of stocks in
the EAFE Free Index are based on each stock's relative total market
capitalization. Because of this weighting, as of October 31, 1997,
approximately 28.7% of the EAFE Free Index was comprised of equity securities
[Page 4]
of Japanese issuers. The Acquiring Fund invests in a sample of stocks
in the EAFE Free Index and does not attempt to duplicate the EAFE Free Index.
The Acquiring Fund expects, ordinarily, to invest in approximately 550 or
more of these stocks. Dreyfus selects stocks for the Acquiring Fund's
portfolio based primarily on country, market capitalization, industry
weightings and other benchmark characteristics.
Although the respective investment objectives and policies of the
Funds are similar in that they concentrate in securities of companies in the
EAFE Index and the EAFE Free Index, respectively, shareholders of the
Acquired Fund should consider certain differences in such objectives and
policies. Specifically, the Acquired Fund, unlike the Acquiring Fund, is not
an index fund and is actively managed, so that its total return may differ
significantly from that of the EAFE Index. In addition, the Acquired Fund may
invest up to 20% of its total assets in securities of issuers in emerging
market countries that are not represented in the EAFE Index. The Acquiring
Fund is "non-diversified," so that the proportion of its assets that may be
invested in a single issuer is not limited by the the 1940 Act, while the
Acquired Fund is a "diversified" fund, as that term is used in the 1940 Act,
meaning that, with respect to 75% of its total assets, the Acquired Fund
generally may not invest more than 5% of its assets in the securities of a
single issuer. For additional information on these and other differences
between the Funds, see "Comparison of Investment Objectives and Policies." In
addition, shareholders of the Acquired Fund should recognize that the
Acquiring Fund has been in operation for only approximately nine months,
while the Acquired Fund has been in operation for approximately three years
and eight months.
MANAGEMENT AND OTHER SERVICE PROVIDERS. The business affairs of the
Company are managed by its Board of Directors, and the business affairs of
the Index Funds are managed by its Board of Directors.
Dreyfus, a wholly-owned subsidiary of Mellon Bank, serves as the
investment manager for both Funds. As of March 31, 1998, Dreyfus managed or
administered approximately $100 billion in assets for approximately 1.7
million investor accounts nationwide.
The Acquiring Fund's portfolio manager is Susan Ellison. Ms. Ellison
has held that position since the inception of the Acquiring Fund and has been
employed by Dreyfus as a portfolio manager since August 1996, and by Mellon
Capital Management Corporation ("MCM"), an affiliate of Dreyfus, since June
1988. She serves as a Senior Vice President and Director of Equity Portfolio
Management for MCM. She is a graduate of San Francisco State University and
is a Certified Financial Analyst with over 10 years of investment experience.
The Acquired Fund's portfolio manager is Charles J. Jacklin. Mr.
Jacklin has managed the Fund since August 5, 1996 and is a portfolio manager
at Dreyfus. He has also served as a Senior Vice President and Director of
Asset Allocation Strategies for MCM since January 1994. Prior to joining MCM,
Mr. Jacklin was an Assistant Professor at Stanford University. He also has
served as Senior Staff Economist for Financial Markets and Banking for the
President's Council of Economic Advisors.
Premier Mutual Fund Services, Inc. ("Premier") acts as distributor
for both Funds, and Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, is the transfer agent for both Funds. Boston Safe Deposit and Trust
Company, One Boston Place, Boston, Massachusetts 02109, an indirect
subsidiary of Mellon, serves as custodian for both Funds.
FEES AND EXPENSES. The Acquiring Fund has agreed to pay Dreyfus, as
its investment manager, a fee, computed daily and payable monthly, at the
annual rate of .35 of 1% of the value of its average daily net assets.
Dreyfus pays all of the Acquiring Fund's expenses, except management fees,
brokerage commissions, taxes, interest, fees and expenses of non-interested
Directors, fees and expenses of independent counsel to the Acquiring Fund and
the non-interested Directors, fees under a shareholder services plan
described below and extraordinary expenses. Dreyfus has agreed to reduce its
management fee in an amount equal to the Acquiring Fund's allocable portion
of the accrued fees and expenses of non-interested Directors and fees and
expenses of independent counsel to the Acquiring Fund and the non-interested
Directors. The Acquiring Fund's shares are also subject to a shareholder
services plan ("Shareholder Services Plan") whereby the Acquiring Fund pays
Premier for the provision of certain services to Acquiring Fund shareholders
a fee at the annual rate of .25 of 1% of the value of the Acquiring Fund's
average daily net assets. See "Purchase and Redemption Procedures." Total
operating expenses for the Acquiring Fund, for the period from the
commencement of operations, June 30, 1997, through October 31, 1997, were .60
of 1% of the value of the Acquiring Fund's average daily net assets on an
annualized basis. From time to time, Dreyfus may waive receipt of a portion
or
[Page 5]
all of its fees, or voluntarily assume certain other expenses of the
Acquiring Fund, either of which would have the effect of lowering the expense
ratio of the Acquiring Fund and increasing return to investors.
The Acquiring Fund deducts a redemption fee equal to 1% of the net
asset value of shares redeemed where the redemption occurs within the initial
six-month period following the opening of a Fund account. Acquiring Fund
Shares received by holders of Acquired Fund Shares pursuant to the
Reorganization will not be subject to the 1% redemption fee. See "Purchase
and Redemption Procedures."
The Acquired Fund currently pays Dreyfus, as its investment manager,
a fee, computed daily and payable monthly, at the annual rate of 1.25% of the
value of the Acquired Fund's average daily net assets. Similar to the
Acquiring Fund, Dreyfus arranges and pays for all of the expenses of the
Acquired Fund, except management fees, brokerage fees, taxes, interest, fees
and expense of the non-interested Directors (including counsel fees), Rule
12b-1 fees (if applicable), and extraordinary expenses. In addition, the
Acquired Fund's Investor Shares are sold subject to a distribution plan
adopted by the Acquired Fund pursuant to Rule 12b-1 under the 1940 Act
("12b-1 Plan"), under which fees are assessed at an annual rate of .25 of 1%
of average daily net assets attributable to the Investor Shares. See
"Purchase and Redemption Procedures." Total operating expenses of the
Acquired Fund for the fiscal year ending October 31, 1997 were 1.50% and
1.25% of the average daily net assets of the Acquired Fund's Investor Shares
and Restricted Shares, respectively.
The following table shows the actual annual fund operating expenses
allocable to the Investor and Restricted Shares of the Acquired Fund for its
fiscal year ended October 31, 1997, the actual fund operating expenses paid
by the Acquiring Fund for its fiscal period ended October 31, 1997
(annualized), and estimated total annual fund operating expenses to be paid
by the Acquiring Fund after giving effect to the Reorganization (the
"Combined Fund" in the table).
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)*
<TABLE>
<CAPTION>
ACQUIRED FUND ACQUIRING FUND
(FISCAL YEAR (FISCAL PERIOD
ENDED 10/31/97) ENDED 10/31/97) COMBINED FUND
___________________________ ________________ _______________
INVESTOR RESTRICTED
SHARES SHARES
________ _________
<S> <C> <C> <C> <C>
Management Fees 1.25% 1.25% .35% .35%
12b-1 Fees .25% none none none
Other Expenses** .00% .00% .25%+ .25%+
________ _________ ________ ________
Total Fund
Operating Expenses 1.50% 1.25% .60% .60%
EXAMPLE:
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) redemption at the end of each
time period.
1 year $ 15 $ 13 $ 6 $ 6
3 years $ 47 $ 40 $19 $19
5 years $ 82 $ 69 $33 $33
10 years $179 $151 $75 $75
</TABLE>
* The table does not reflect a 1% redemption fee charged upon certain
redemptions of Acquiring Fund shares occurring within six months of the
opening of an account with the Acquiring Fund.
** Does not include fees and expenses of the non-interested Directors
(including counsel). The investment manager has agreed to reduce its
management fee in an amount equal to each Fund's allocable portion of such
fees and expenses and, with respect to the Acquiring Fund, the fees and
expenses of independent counsel to the Acquiring Fund.
+ The Acquiring Fund pays a fee of .25% of its average daily net
assets pursuant to its Shareholder Services Plan, which is included in "Other
Expenses."
THE AMOUNTS LISTED ABOVE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF PAST
OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, A FUND'S
ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN ACTUAL RETURNS GREATER OR LESS
THAN 5%.
[Page 6]
PURCHASE AND REDEMPTION PROCEDURES. The Acquiring Fund offers a
single class of shares that are offered to any investor.
The Acquired Fund offers two classes of shares: Investor and Restricted
Shares. Investor Shares are offered to any investor. Restricted Shares are
limited to purchases by bank trust departments and other financial service
providers (including Mellon Bank and its affiliates) acting on behalf of
customers who have a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Acquired Fund distributed to them by virtue of such an account or
relationship.
All shares of each Fund are sold without a sales charge at their
respective net asset values per share determined as of the close of trading
on the floor of the NYSE on the day the purchase order is deemed accepted.
The Acquiring Fund has adopted the Shareholder Services Plan pursuant to
which it pays Premier for the provision of certain services to Acquiring Fund
shareholders a fee at the annual rate of .25 of 1% of the value of that
Fund's average daily net assets. The services provided pursuant to the
Shareholder Services Plan may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Acquiring Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. The Acquiring Fund will
deduct a redemption fee equal to 1% of the net asset value of Acquiring Fund
shares redeemed where the redemption occurs within the initial six-month
period following the opening of an Acquiring Fund account. The fee will be
retained by the Acquiring Fund and used primarily to offset portfolio
transaction costs. It is expected that, as a result of this fee, the
Acquiring Fund will be able to track the EAFE Free Index more closely. No
redemption fee will be charged upon the redemption of shares purchased
through accounts that are reflected on the records of the transfer agent as
omnibus accounts approved by Dreyfus Service Corporation ("DSC"), an
affiliate of Dreyfus, or transfer accounts established by securities dealers,
banks or other financial institutions ("Service Agents") approved by DSC that
utilize the National Securities Clearing Corporation's networking system. The
redemption fee may be waived, modified or discontinued and reintroduced at
any time or from time to time. Service Agents may charge their clients a fee
for effecting redemptions of Acquiring Fund shares. ACQUIRING FUND SHARES
RECEIVED BY HOLDERS OF ACQUIRED FUND SHARES PURSUANT TO THE REORGANIZATION
WILL NOT BE SUBJECT TO THE 1% REDEMPTION FEE.
Investor Shares of the Acquired Fund are sold subject to the 12b-1
Plan, under which the Acquired Fund spends annually up to .25 of 1% of the
value of the average daily net assets attributable to Investor Shares to
compensate DSC for shareholder servicing activities and Premier for
shareholder servicing activities and for activities or expenses primarily
intended to result in the sale of Investor Shares.
EXCHANGE PRIVILEGES. Shareholders of the Acquired Fund may exchange
those shares for shares of the same class of certain other eligible funds
advised or administered by Dreyfus. Currently, there is no limit on the
number of exchanges that may be made out of the Acquired Fund, but
shareholders who make more than four exchanges out of that Fund during any
calendar year or who make exchanges that appear to coincide with an active
market-timing strategy may be deemed to be engaged in excessive trading and
the availability of Fund exchanges to them may be terminated. The Acquiring
Fund does not currently offer exchange privileges.
DISTRIBUTIONS. The policies of the Funds with regard to dividends
and other distributions are similar. Each Fund's policy is to declare and pay
dividends from net investment income and to distribute net realized capital
and foreign currency gains, if any, once a year. Unless a shareholder
instructs that dividends and other distributions be paid in cash and credited
to the shareholder's account at the transfer agent, dividends and other
distributions will be reinvested automatically in additional shares of the
Fund at net asset value. Shareholders of the Acquired Fund that have elected
to receive dividends and other distributions in cash will continue to receive
distributions in such manner from the Acquiring Fund. Subsequent to the
Reorganization, former shareholders of the Acquired Fund that received
dividends or other distributions therefrom in cash may elect at any time to
have their dividends and other distributions from the Acquiring Fund
reinvested automatically in additional shares of the Acquiring Fund by writing
to the Acquiring Fund. See "Dividends, Distributions and Taxes" in the
accompanying Prospectus of the Acquiring Fund.
[Page 7]
REASONS FOR THE REORGANIZATION
The Board of Directors of the Company has determined that it is
advantageous to combine the Acquired Fund with the Acquiring Fund. The Funds
have similar investment objectives, restrictions and policies, and the same
adviser, transfer agent, custodian and distributor.
The Board of Directors of the Company has determined that the
Reorganization should provide certain benefits to the Acquired Fund
shareholders. In making such determination, the Board of Directors
considered, among other things: the benefit to the Acquired Fund of
consolidation that would promote more efficient operations through the
elimination of duplication of services and the greater portfolio
diversification and more efficient portfolio management resulting from a
larger asset base (including the possibility of reduced commissions or more
favorable pricing based on larger portfolio transactions); the comparative
investment management fees of the Funds; the comparative investment
performance of the Funds; and the advantages of eliminating duplication
inherent in marketing funds with similar investment objectives, which could
lead to increased growth of the combined Acquiring Fund following the
Reorganization.
The Board of Directors of the Company also noted that the total fund
operating expenses for the combined Acquiring Fund are anticipated to be .60
of 1% of the combined Acquiring Fund's average daily net assets, or .90 of 1%
and .65 of 1% lower than the total fund operating expenses of the Acquired
Fund's Investor and Restricted Shares, respectively. The Board recognized
that this reduction is due principally to the lower costs associated with the
Acquiring Fund's "indexing" strategy as opposed the Acquired Fund's "active"
investment approach.
In light of the foregoing, the Board of Directors of the Company,
including the non-interested Directors, determined that it is in the best
interests of the Acquired Fund and its shareholders to combine with the
Acquiring Fund and that a combination of the Funds will not result in a
dilution of the Acquired Fund's shareholders' interests.
INFORMATION ABOUT THE REORGANIZATION
PLAN OF REORGANIZATION. The following summary of the Plan is
qualified in its entirety by reference to the Plan (Appendix A hereto). The
Plan provides that the Acquiring Fund will acquire all the assets of the
Acquired Fund. In exchange for those assets, the Acquired Fund will receive
Acquiring Fund Shares with an aggregate net asset value equal to that of the
assets transferred minus the liabilities of the Acquired Fund, which will be
assumed by the Acquiring Fund on the Closing Date. Prior to the Closing Date,
the Acquired Fund will endeavor to discharge all of its known liabilities and
obligations. The number of full and fractional Acquiring Fund Shares to be
issued to the Acquired Fund's shareholders will be determined by dividing the
aggregate net asset value of the Acquired Fund by the net asset value of one
Acquiring Fund Share, each computed as of the close of trading on the floor
of the NYSE on the Closing Date (the "Valuation Time").
Both the Acquired Fund and the Acquiring Fund will utilize Dreyfus
as agent to determine the value of their respective portfolio securities. The
method of valuation employed by each Fund will be consistent with the
requirements set forth in the Fund's Prospectus, Rule 22c-1 under the 1940
Act, and the interpretation of such rule by the SEC's Division of Investment
Management.
As soon after the Closing Date as conveniently practicable, the
Acquired Fund will distribute PRO RATA to its shareholders of record as of
the Valuation Time, in liquidation of the Acquired Fund, the Acquiring Fund
Shares received by the Acquired Fund pursuant to the Reorganization. Such
distribution will be accomplished by establishing an account in the name of
each holder of Acquired Fund Shares on the share records of the Acquiring
Fund's transfer agent and transferring to each such account a number of
Acquiring Fund Shares equal to the aggregate net asset value of Acquired Fund
Shares held by such shareholder divided by the net asset value of each such
Acquiring Fund Share. Each account will represent the respective PRO RATA numb
er of full and fractional Acquiring Fund Shares due to such shareholder of
the Acquired Fund. After such distribution and the winding up of its affairs,
the Acquired Fund will be terminated.
On or before the Closing Date, the Acquired Fund shall have declared
a dividend and/or other distributions that, together with all previous
dividends and other distributions, shall have the effect of distributing to
the Acquired Fund's shareholders
[Page 8]
all investment company taxable income for all taxable years ended prior to
the Closing Date and for its current taxable year through the Closing Date
(computed without regard to any deduction for dividends paid) and all of its
net capital gain realized in all such taxable years (after reduction for any
capital loss carryforward).
The consummation of the Reorganization is subject to the conditions
set forth in the Plan, including the condition that the parties to the
Reorganization shall have received exemptive relief from the SEC with respect
to certain restrictions under the 1940 Act that could otherwise impede or
inhibit consummation of the Reorganization. Notwithstanding approval of the
Acquired Fund's shareholders, the Plan may be terminated at any time at or
prior to the Closing by either party because: (a) its governing board
determines that circumstances have developed that make proceeding with the
Reorganization inadvisable; (b) a material breach by the other party of any
representation, warranty, or agreement contained therein has occurred; or (c)
a condition to the obligation of the terminating party cannot reasonably be
met.
The expenses of the Reorganization are expected to be approximately
$67,500. The Funds will bear these expenses PRO RATA according to their
respective net assets as of the Closing Date if the Reorganization is
consummated or, if it is not consummated, as of the date the Plan is
terminated or the Reorganization is abandoned.
If the Reorganization is not approved by the shareholders of the
Acquired Fund, the Board of Directors of the Company will continue the
management of the Acquired Fund and may consider other possible courses of
action.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
DESCRIPTION OF SHARES OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
Full and fractional shares of common stock of the Acquiring Fund (without
class) will be issued for both Investor and Restricted Shares of the Acquired
Fund in accordance with the procedures detailed in the Plan. All issued and
outstanding Acquired Fund Shares, including those represented by
certificates, will be canceled. Generally, the Acquiring Fund does not issue
share certificates to shareholders unless a specific written request is
submitted to its transfer agent. Similar to the Acquired Fund Shares, the
Acquiring Fund Shares to be issued in the Reorganization will have no
preemptive or conversion rights.
FEDERAL INCOME TAX CONSEQUENCES. The transfer of the Acquired Fund's
assets in exchange solely for Acquiring Fund Shares and the Acquiring Fund's
assumption of the liabilities of the Acquired Fund is intended to qualify for
federal income tax purposes as a tax-free reorganization under section
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code").
The Index Funds, on behalf of the Acquiring Fund, and the Company, on behalf
of the Acquired Fund, will receive an opinion from Kirkpatrick & Lockhart
LLP, the Company's counsel, substantially to the effect that, on the basis of
the facts and assumptions stated therein and the existing provisions of the
Code, U.S. Treasury regulations issued thereunder, current administrative
rules and pronouncements and court decisions, and conditioned on the
Reorganization being consummated in accordance with the Plan, for federal
income tax purposes:
(1) The Acquired Fund's transfer of all its assets to the
Acquiring Fund in exchange solely for Acquiring Fund
Shares and the assumption by the Acquiring Fund of the liabilities of the
Acquired Fund, followed by the Acquired Fund's distribution of those shares
to its shareholders constructively in exchange for Acquired Fund Shares, will
constitute a "reorganization" within the meaning of section 368(a)(1)(D) of
the Code, and each Fund will be a "party to a reorganization" within the
meaning of section 368(b) of the Code;
(2) No gain or loss will be recognized to the Acquired Fund
on the transfer of its assets to the Acquiring Fund
in exchange solely for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Acquired Fund's liabilities or on the subsequent
distribution of those shares to the Acquired Fund's shareholders in
constructive exchange for their Acquired Fund Shares;
(3) No gain or loss will be recognized to the Acquiring Fund
on its receipt of the assets from the Acquired Fund
in exchange solely for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Acquired Fund's liabilities;
(4) The Acquiring Fund's basis for the transferred assets
will be the same as the Acquired Fund's basis therefor
immediately before the Reorganization, and the Acquiring Fund's holding
period for those assets will include the period during which the assets were
held by the Acquired Fund;
[Page 9]
(5) No gain or loss will be recognized to an Acquired Fund
shareholder on the distribution thereto of Acquiring
Fund Shares constructively in exchange for all the shareholder's Acquired
Fund Shares; and
(6) An Acquired Fund shareholder's basis for the Acquiring
Fund Shares to be received by the shareholder in the
Reorganization will be the same as the basis for the shareholder's Acquired
Fund Shares to be constructively surrendered in exchange for those Acquiring
Fund Shares; and the shareholder's holding period for those Acquiring Fund
Shares will include the shareholder's holding period for those Acquired Fund
Shares, provided they are held as capital assets by the shareholder on the
Closing Date.
Notwithstanding the foregoing, such counsel's opinion may state that
no opinion is expressed as to the effect of the Reorganization on either Fund
or any Acquired Fund shareholder with respect to any asset as to which any
unrealized gain or loss is required to be recognized for federal income tax
purposes at the end of a taxable year (or on the termination or transfer
thereof) under a mark-to-market system of accounting.
Shareholders of the Acquired Fund should consult their tax advisers
regarding the effect, if any, of the Reorganization in light of their
individual circumstances. Because the foregoing discussion only relates to
the federal income tax consequences of the Reorganization, those shareholders
also should consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
CAPITALIZATION. The following table shows the capitalization of the
Acquiring Fund and the Acquired Fund as of October 31, 1997, and on a pro
forma basis as of that date, giving effect to the Reorganization:
<TABLE>
<CAPTION>
PRO FORMA
ACQUIRING AFTER
ACQUIRED FUND FUND REORGANIZATION*
________________________________ _________ __________________
INVESTOR RESTRICTED
____________ _____________
<S> <C> <C> <C> <C>
Net Assets $1,374,793 $14,332,018 $9,246,146 $25,078,899
Net Asset Value Per Share $10.65 $10.65 $11.27 $11.27
Shares Outstanding 129,141 1,345,908 820,153 2,225,011
</TABLE>
* Represents the net income effect of pro form adjustments.
As of March 13, 1998, there were 878,163 shares of the Acquiring
Fund outstanding.
As of March 13, 1998, the officers and Directors of the Company and
of the Index Funds, respectively, beneficially owned as a group less than 1%
of the outstanding shares of the Acquiring Fund. To the best knowledge of the
Directors of the Acquiring Fund, as of March 13, 1998, no shareholder or
"group" (as that term is defined in Section 13 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) owned beneficially or of record 5%
or more of the Acquiring Fund's outstanding shares, except as shown in the
table below:
<TABLE>
<CAPTION>
% OF TOTAL
SHARES
NUMBER OF % OF TOTAL AFTER
SHAREHOLDER SHARES SHARES REORGANIZATION
_________ _____________ __________ ____________________
MBC Investment Corporation
919 North Market Street
<S> <C> <C> <C>
Wilmington, DE 19801-3023 807,279 92% 59%
MAC & Co.
Mellon Bank, NA
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198 0 0 24%
</TABLE>
MBC Investment Corporation and MAC & Co. are both affiliates of
Dreyfus and Mellon Bank. For information with respect to the beneficial
ownership of the Acquired Fund, see the section of this Proxy Statement
entitled "Voting Information."
[Page 10]
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion comparing the investment objectives,
policies and restrictions of the Acquiring Fund and the
Acquired Fund is based upon and qualified in its entirety by the description
of investment objectives, policies and restrictions set forth in the
respective Prospectuses and Statements of Additional Information of the
Acquiring Fund and the Acquired Fund. For a full discussion of the investment
objective, policies and restrictions of the Acquiring Fund, please refer to
its Prospectus dated January 15, 1998 and Supplement to Prospectus dated
March 12, 1998 (each of which accompanies this Proxy Statement) under the
caption "Description of the Funds" and Statement of Additional Information
dated January 15, 1998, as revised March 12, 1998, (which is available upon
request) under the caption "Investment Objective and Management Policies."
For a discussion of these matters as they apply to the Acquired Fund, please
refer to its Prospectus and Statement of Additional Information dated
March 1, 1998 (which are available upon request) under the respective
captions "Description of the Fund" and "Investment Objective and
Management Policies." The policies described below in this "Comparison of
Investment Objectives and Policies" section can be changed without
shareholder approval, unless indicated otherwise or required by the 1940 Act.
INVESTMENT OBJECTIVES. The Acquiring Fund seeks to match the
investment results of the EAFE Free Index. The Acquiring Fund seeks to meet
this objective through investing in a sample of the stocks in the EAFE Free
Index. The Acquired Fund's investment objective is to exceed the total return
of the EAFE Index, an index similar to the EAFE Free Index. See "Primary
Investments." The Acquired Fund pursues its investment objective through
country allocation, stock selection, currency allocation, and portfolio
construction and risk management. There can be no assurance that either the
Acquiring Fund or the Acquired Fund will meet its investment objective.
Although different, the investment objectives of the Funds are
similar in that they emphasize investments in equity securities of issuers
represented in the EAFE Index or EAFE Free Index. The Acquired Fund, unlike
the Acquiring Fund, is not an index fund. In addition, the Acquired Fund may
invest up to 20% of its total assets in securities of issuers in emerging
market countries that are not represented in the EAFE Index. Moreover, the
Acquired Fund may invest in securities that are subject to foreign ownership
limits or legal restrictions at the security or country level, while the
Acquiring Fund may not do so. Although the Acquired Fund's investment
objective is considered non-fundamental and may be changed with approval by
the Company's Board of Directors, the investment objective of the Acquiring
Fund is fundamental and may not be changed without approval of a majority of
its voting securities (as defined in the 1940 Act). Because the Acquired Fund
is actively managed, an investment in it may result in a total return that
significantly exceeds or is less than that of the EAFE Index. Because the
Acquiring Fund is an index fund, its total return is expected to correlate
closely with that of the EAFE Free Index, although expenses incurred in
operation of the Acquiring Fund make it likely that its actual total return
will be less than that of the EAFE Free Index.
The Acquired Fund is a "diversified" fund, as that term is used in
the 1940 Act, meaning that, with respect to 75% of its total assets, the
Acquired Fund generally may not invest more than 5% of its assets in the
securities of a single issuer. The Acquiring Fund is "non-diversified," so
that the proportion of its assets that may be invested in a single issuer is
not limited by the 1940 Act. To meet federal tax requirements, however, at
the close of each quarter each Fund may not have more than 25% of its total
assets invested in any one issuer and, with respect to 50% of total assets,
not more than 5% of its total assets may be invested in any one issuer.
PRIMARY INVESTMENTS. The EAFE Index is a diversified,
capitalization-weighted index of equity securities of companies located in
Australia, New Zealand, fifteen countries in Europe and four countries in the
Far East. The countries represented in the EAFE Index are: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Portugal,
Singapore/Malaysia, Spain, Sweden, Switzerland and the United Kingdom. Stocks
in the EAFE Index are selected to represent proportionally each country and
each major industrial sector within each country. Each stock in the EAFE
Index is weighted according to its market value as a percentage of the total
market value of all stock in the EAFE Index. The EAFE Free Index includes
stocks in the EAFE Index other than those that are subject to foreign
ownership limits or legal restrictions at the security or country level. This
limitation on securities in the EAFE Free Index results in the exclusion from
the EAFE Free Index of certain securities of issuers in
[Page 11]
Singapore/Malaysia that are included in the EAFE Index, although other
securities of the same issuers may be included in the EAFE Free Index.
The Acquiring Fund invests in a sample of the stocks in the EAFE
Free Index, rather than attempting to replicate the EAFE Free Index, and
expects, ordinarily, to invest in approximately 550 or more of these stocks.
Dreyfus selects stocks for the Acquiring Fund's portfolio based primarily on
country, market capitalization, industry weightings and other benchmark
characteristics. The Acquiring Fund attempts to achieve a correlation between
the performance of its portfolio and that of the EAFE Free Index, in both
rising and falling markets, of at least .95 without taking into account
expenses. A correlation of 1.00 would indicate perfect correlation, which
would be achieved when the Acquiring Fund's net asset value, including the
value of its dividends and capital gain distributions, increases or decreases
in exact proportion to the changes in the EAFE Free Index. The sampling
technique utilized by the Acquiring Fund is expected to be an effective means
of substantially duplicating the investment performance of the EAFE Free
Index; however, the Fund is not expected to track the EAFE Free Index with
the same degree of accuracy that complete replication of that index would
provide. Under normal market conditions, the Acquiring Fund will invest at
least 65% of the value of its total assets in common stocks.
The Acquired Fund is not an index fund. The investment process
utilized by Dreyfus in structuring the Acquired Fund's portfolio has four
basic components: (1) country allocation; (2) stock selection; (3) currency
allocation; and (4) portfolio construction and risk management. The country
and currency allocation components employ a combination of quantitative
research using proprietary financial models and fundamental research. Under
normal circumstances, the Acquired Fund expects to be fully invested in
securities of issuers in countries included in the EAFE Index, securities of
emerging market countries, and derivative securities, except for such amounts
as are needed to meet short-term cash needs and redemptions and amounts
pending investment. Those amounts may be held as cash or temporarily invested
in repurchase agreements and in high quality short-term debt instruments of
the U.S. Government or foreign governments, their agencies or
instrumentalities. Generally, the Acquired Fund's assets are allocated to the
countries contained in the EAFE Index, with the exception of Australia,
France, Germany, Hong Kong, Italy, Japan, the Netherlands, Switzerland and
the United Kingdom, approximately in proportion to the weightings of such
countries within the EAFE Index (the "Tier One Country Allocation"). Dreyfus
uses its country allocation model to allocate the Acquired Fund's remaining
assets among Australia, France, Germany, Hong Kong, Italy, Japan, the
Netherlands, Switzerland and the United Kingdom, based generally on earning
and dividend forecasts of stocks in each of these countries (the "Tier Two
Country Allocation"). Dreyfus may, however, alter the amount of assets it
allocates between the Tier One Country Allocation and the Tier Two Country
Allocation if it believes it to be in the best interests of the Acquired Fund
and may reduce the amount of the assets it allocates pursuant to the Tier One
Country Allocation and/or the Tier Two Country Allocation to enable it to
invest in emerging market countries and derivative securities and to enable
it to maintain amounts needed to meet short-term cash needs and redemptions
and amounts pending investment. No more than 20% of the Acquired Fund's
assets will be invested in the securities of issuers in emerging market
countries. Under normal circumstances, the Acquired Fund will invest at least
65% of its assets in equity securities of issuers in at least three countries
outside of the United States.
Unless all of the stocks contained in the EAFE Index can be
purchased on behalf of the Acquired Fund, Dreyfus will utilize statistical
sampling techniques to purchase a representative sample of stocks from each
industry sector included in the EAFE Index in proportion to the industry
weighting in the EAFE Index for the Acquired Fund's portfolio. Dreyfus
employs an active process for selecting stocks of emerging market countries
for the Fund's portfolio.
The Acquired Fund may invest in forward foreign currency exchange
contracts, futures contracts, options on securities and on foreign
currencies, currency indices, futures contracts, and securities indices to
adjust its risk exposure relative to the EAFE Index and to its investment in
emerging market countries. Dreyfus manages currency exposure for the Acquired
Fund utilizing its proprietary currency allocation model, which is designed
to forecast the movement of foreign currencies based generally on differences
in real interest rates among countries. Dreyfus manages and monitors the
total risk of the Acquired Fund's portfolio, including the country and
currency exposure resulting from the implementation of its country and
currency models.
[Page 12]
Both the Acquiring Fund and the Acquired Fund may lend portfolio
securities, and engage in foreign currency
transactions. The Acquiring Fund may borrow money to the extent permitted by
the 1940 Act (currently 33-1/3% of the Acquiring Fund's total assets). The
Acquiring Fund, however, currently intends to borrow money only for temporary
or emergency (not leveraging) purposes, in an amount up to 15% of the value
of its total assets (including the amount borrowed) valued at the lesser of
cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. The Acquired Fund may borrow money up to 33-1/3%
of its total assets. The Acquired Fund, however, intends to borrow only for
temporary administrative purposes. Neither Fund may purchase any security
while borrowing representing more than 5% of the Fund's total assets are
outstanding. Both Funds may also invest in derivative instruments. The
Acquiring Fund may purchase stock index futures in anticipation of taking a
market position and sell stock index futures to terminate existing positions.
The Acquiring Fund also may enter into foreign currency forward and futures
contracts to maintain the appropriate currency exposure of the EAFE Free
Index. The Acquired Fund may purchase and sell various financial instruments,
including financial futures contracts (such as interest rate, index and
foreign currency futures contracts), options (such as options on securities,
indices, foreign currencies and futures contracts), forward currency
contracts and interest rate, equity index and currency swaps, caps, collars
and floors.
The Acquired Fund may purchase put or call options on specific
securities in an amount up to 5% of its total assets, represented by the
premium paid. In addition, the Acquired Fund may engage in short settlement
transactions, when-issued and delayed-delivery transactions, and repurchase
agreements.
CERTAIN FUNDAMENTAL POLICIES. Both the Acquiring Fund and the
Acquired Fund have adopted certain fundamental polices which may not be
changed without the approval of a majority of that Fund's outstanding voting
securities (as defined in the 1940 Act). Neither Fund may: (i) borrow in
excess of 33-1/3% of the Fund's total assets; or (ii) invest more than 25% of
the Fund's assets in securities of issuers in any industry (excluding U.S.
Government Securities and, in the case of the Acquired Fund, certain
investments in domestic banks and, in the case of the Acquiring Fund, except
to the extent that the EAFE Free Index is also so concentrated). In addition,
the policy that, with respect to 75% of its total assets, the Acquired Fund
may not invest more than 5% of its assets in the securities of a single
issuer is fundamental. For a complete list of each Fund's fundamental
investment restrictions, see "Investment Objective and Management Policies _
Investment Restrictions" in the Statement of Additional Information of the
respective Fund.
RISK FACTORS
Due to the similarities of investment objectives and policies of the
Acquiring Fund and Acquired Fund, many of the Funds' investment risks are
generally similar. Such risks, and certain differences in the risks
associated with investing in the Acquiring Fund or Acquired Fund, are
discussed under the caption "Description of the Funds" in the Prospectus of
the Acquiring Fund enclosed with this Proxy Statement and under the caption
"Description of the Fund" in the Prospectus of the Acquired Fund (which is
available upon request).
EQUITY SECURITIES. Each Fund invests a significant portion of its
assets in equity securities. Equity securities fluctuate in value, often
based on factors unrelated to the value of the issuer of the securities, and
such fluctuations can be pronounced. Changes in the value of a Fund's
investments will result in changes in the value of its shares and thus the
Fund's total return to investors.
FOREIGN SECURITIES. Both the Acquiring Fund and the Acquired Fund
invest in securities of foreign issuers. Investment in foreign securities
presents certain risks. The Acquired Fund may also invest in obligations of
foreign branches of domestic banks. In making foreign investments, each Fund
considers the following factors, among others.
Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some foreign issuers
are less liquid and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can be greater
than in the United States.
Because evidences of ownership of foreign securities usually are
held outside the United States, each Fund will be subject to additional risks
which include: adverse political and economic developments, seizure or
nationalization of foreign deposits
[Page 13]
and adoption of governmental restrictions which might adversely affect the
payment of principal and interest on the foreign securities or might restrict
the payment of principal and interest to investors located outside the
country of the issuer, whether from currency blockage or otherwise.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.
Investors should realize that Japanese securities comprise a large
percentage of the EAFE Index and EAFE Free Index. Therefore stocks of
Japanese companies will represent a correspondingly large component of
investment assets of both the Acquiring Fund and the Acquired Fund. Such a
large investment in the Japanese stock market may entail a higher degree of
risk than with more diversified international portfolios. During recent
periods, based on certain fundamental measures of corporate valuation, such as
its high price-earnings ratios and low dividend yields, the Japanese market
as a whole has appeared expensive relative to other world stock markets.
The Acquired Fund may also invest up to 20% of its total assets in
the securities of issuers in emerging markets. Investing in the equity and
debt markets of emerging markets involves exposure to economic structures
that are generally less diverse and less mature, and to political systems
that can be expected to have less stability, than those of developed
countries. The markets of emerging market countries historically have been
more volatile than the markets of the more mature economies of developed count
ries, but often have produced higher rates of return to investors.
BORROWING. The Acquiring Fund is permitted to borrow to the extent
permitted by the 1940 Act (currently up to 33-1/3% of its total assets). The
Acquiring Fund intends to borrow only for temporary or emergency purposes and
in an amount up to 15% of the value of its total assets. The Acquiring Fund
will not make additional investments when the Fund's borrowings exceed 5% of
its total assets.
The Acquired Fund may borrow money up to 33-1/3% of its total
assets. The Acquired Fund will borrow only for temporary administrative
purposes. Similar to the Acquiring Fund, the Acquired Fund will not make
additional investments when its borrowings exceed 5% of its total assets. The
Acquired Fund may enter into short settlement transactions. Short settling is
a process whereby a trader of securities, such as the Acquired Fund,
negotiates with the broker to execute and settle the securities transaction
on a next day basis instead of under the normal settlement process. The
commissions for such transaction may be somewhat higher to accommodate the
short settlement period and to compensate the broker adequately for the early
advancement of funds.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. Both the
Acquiring Fund and the Acquired Fund may invest in derivative instruments.
Derivatives are financial instruments that derive their performance, at least
in part, from the performance of an underlying asset, index or interest rate.
The Acquiring Fund may invest in derivatives in anticipation of taking a
market position when, in the opinion of Dreyfus, available cash balances do
not permit an economically efficient trade in the cash market or to maintain
liquidity while simulating full investment by the Acquiring Fund. The
derivatives that the Acquiring Fund may purchase and sell include stock index
futures and foreign currency contracts. The Acquiring Fund may not invest in
futures contracts if the amount of initial margin deposits with respect to
such contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Acquiring Fund's assets, after taking into account
unrealized profits and unrealized losses of such contracts.
The Acquired Fund may purchase and sell various derivative
instruments, such as financial futures contracts (such as interest rate,
index and foreign currency futures contracts), options (such as options on
securities, indices, foreign currencies and futures contracts), forward
currency contracts and interest rate, equity index and currency swaps, caps,
collars and floors. These derivative instruments may be used, for example, to
preserve a return or spread, to lock in unrealized market value gains or losse
s, to facilitate or substitute for the sale or purchase of securities, to
adjust the Acquired Fund's risk exposure relative to the EAFE Index, or to
alter the exposure of a particular investment or portion of the Acquired
Fund's portfolio to fluctuations in interest rates or currency rates. The
Acquired Fund may not purchase, put or call options that are traded on a
national stock exchange in an amount exceeding 5% of its net assets.
[Page 14]
While derivative instruments can be used effectively in furtherance
of a Fund's investment objective, under certain
market conditions they can increase the volatility of the Fund's net asset
value, decrease the liquidity of the Fund's portfolio, and make more
difficult the accurate pricing of the Fund's portfolio.
FOREIGN CURRENCY TRANSACTIONS. Both the Acquiring Fund and the
Acquired Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future exchange rates in connection with hedging
and other non-speculative strategies involving specific settlement
transactions. Foreign currency transactions may involve, for example, a
Fund's purchase of foreign currencies for U.S. dollars or the maintenance of
short positions in foreign currencies, which would involve the Fund agreeing
to exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. A Fund's success in these transactions will depend principally on
Dreyfus' ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar.
Currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and
other complex factors, as seen from an international perspective. Currency
exchange rates also can be affected unpredictably by intervention by U.S. or
foreign governments or central banks or the failure to intervene or by
currency controls or political developments in the United States or abroad.
OTHER INVESTMENT CONSIDERATIONS. Investment decisions for each Fund
are made independently from those of the other investment companies advised
by Dreyfus. However, if such other investment companies desire to invest in,
or to dispose of, the same securities as a Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by either Fund or the price paid or
received by either Fund. As noted under "Comparison of Investment Objectives
and Policies - Investment Objectives," the Acquiring Fund is a
non-diversified fund and the percentage of its assets that may be invested in
the securities of a single issuer is not limited by the 1940 Act.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
FORM OF ORGANIZATION. The Company and the Index Funds are open-end
management investment companies registered with the SEC under the 1940 Act,
and continuously offer to sell shares at their current net asset value per
share. The Company and the Index Funds are organized as Maryland corporations
and are governed by their respective Articles of Incorporation, By-Laws,
Boards of Directors and the Maryland General Corporation Law. Both the
Company and the Index Funds are also governed by applicable federal law.
Certain differences and similarities between the Company and the Index Funds
are summarized below.
CAPITALIZATION. The beneficial interest in both Funds is represented
by transferable shares of common stock, $.001 par value per share. The
Company's Articles of Incorporation authorize the issuance of twenty-five
billion shares of common stock with equal voting rights (with 26 million
shares allocated to the Acquired Fund's Investor Shares and 36 million shares
allocated to the Acquired Fund's Restricted Shares). The Index Funds'
Articles of Incorporation authorize the issuance of 600 million shares of
common stock (with 200 million shares allocated to the Acquiring Fund). The
Acquiring Fund issues a single class of shares while the Acquired Fund issues
two classes of shares, Investor Shares and Restricted Shares. Fractional
shares may be issued by both Funds. The Company and the Index Funds are both
"series funds" and a shareholder of one series is not deemed to be a
shareholder of any other series in the Company or the Index Funds, as the
case may be. For certain matters shareholders vote together as a group; as to
others they vote separately by series or, in the case of the Acquired Fund,
by class. Shareholders of the Funds are entitled to receive pro rata
dividends declared by the Board of Directors of the Company and the Index
Funds, as the case may be, and distributions upon liquidation.
SHAREHOLDER LIABILITY. Under Maryland law, shareholders of the Funds
have no personal liability as such for the acts or obligations of the Company
or the Index Funds, as the case may be.
[Page 15]
SHAREHOLDER MEETINGS AND VOTING RIGHTS. Neither the Company nor the
Index Funds is required to hold annual meetings of
its shareholders, but each is required to call a meeting of shareholders for
the purpose of voting upon the question of removal of a Director, when
requested in writing to do so by the holders of at least 10% of their
respective outstanding shares, and or for any other purpose when requested in
writing to do so by the holders of at least 10% of the outstanding shares of
the Company or at least 25% of the outstanding shares of the Index Funds. In
addition, each of the Company and the Index Funds is required to call a
meeting of shareholders for the purpose of electing Directors, if, at any
time, less than a majority of the Directors then holding office were elected
by shareholders. Neither the Company nor the Index Funds currently intends to
hold regular shareholder meetings. Neither the Company nor the Index Funds
permits cumulative voting. For the Company and the Index Funds, a quorum is
one-third of the shares or class outstanding and entitled to vote on a
matter. In either case, a majority of the shares voting is sufficient to act
on a matter (unless otherwise specifically required by the applicable
governing documents or other law, including the 1940 Act).
LIQUIDATION OR DISSOLUTION. In the event of the liquidation of the
Acquiring Fund or the Acquired Fund or a class thereof, the shareholders of
the Fund or class are entitled to receive, when, and as declared by the
Directors, the excess of the assets belonging to the Fund or attributable to
the class over the liabilities belonging to the Fund or attributable to the
class. In either case, the assets so distributable to shareholders of the
Fund will be distributed among the shareholders in proportion to the number
of shares of the Fund held by them and recorded on the books of that Fund.
LIABILITY AND INDEMNIFICATION OF DIRECTORS. The Articles of
Incorporation and By-Laws of the Company and Index Funds, as the case may be,
contain similar indemnification provisions for their respective Directors and
officers. The Articles of Incorporation provide that no Director, officer or
agent of the Company or Index Funds, as the case may be, shall be personally
liable to any person for any action or failure to act, except for his own bad
faith, willful misfeasance, gross negligence, or reckless disregard of his or
her duties. The Articles of Incorporation also provide that a Director or
officer is entitled to indemnification against liabilities and expenses with
respect to claims related to his position with the Company or Index Funds, as
the case may be, unless such Director or officer shall have been adjudicated
to have acted with bad faith, willful misfeasance, or gross negligence, or in
reckless disregard of his duties, or not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Company or
Index Funds, as the case may be, or, in the event of settlement, unless there
has been a determination that such director or officer has engaged in willful
misfeasance, bad faith, gross negligence, or reckless disregard of his or her
duties.
RIGHTS OF INSPECTION. Under Maryland law, persons who have been
shareholders of record for six months or more and who own at least 5% of the
shares of the Company or the Index Funds may inspect the books of account and
stock ledger of the Company or Index Funds, as the case may be, during
regular business hours, following a written demand stating a proper purpose
related to corporate business.
The foregoing is only a summary of certain characteristics of the
operations of the Acquired Fund, the Company, the Acquiring Fund, the Index
Funds, the Articles of Incorporation, By-Laws, and Maryland law. The
foregoing is not a complete description of the documents cited. Shareholders
should refer to the provisions of such respective Articles of Incorporation,
By-Laws, and Maryland law directly for a more thorough description.
ADDITIONAL INFORMATION ABOUT
THE ACQUIRING FUND AND THE ACQUIRED FUND
ACQUIRING FUND. Information about the Acquiring Fund is incorporated
herein by reference from its Prospectus dated January 15, 1998, and
Supplement to Prospectus dated March 12, 1998, a copy of each of which is
enclosed, and Statement of Additional Information dated January 15, 1998, as
revised March 12, 1998, a copy of which is available upon request and without
charge by writing to the Acquiring Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11566-0144, or by calling toll-free 1-800-645-6561.
ACQUIRED FUND. Information about the Acquired Fund is included in
its Prospectus and Statement of Additional Information dated March 1, 1998,
both of which have been filed with the SEC and are incorporated herein by
this reference,
[Page 16]
and copies of which are available upon request and without charge by writing
to the Acquired Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11566-0144, or by calling toll-free 1-800-645-6561.
Each of the Company and the Index Funds is subject to the
informational requirements of the Exchange Act and the 1940 Act and in
accordance therewith files reports and other information, including proxy
materials and charter documents with the SEC. These materials can be
inspected, and copies obtained at prescribed rates, at the Public Reference
Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, the Midwest Regional Office of the SEC, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60611, and the Northeast
Regional Office of the SEC, Seven World Trade Center, Suite 1300, New York,
New York 10048.
OTHER BUSINESS
The Directors of the Company do not intend to present any other
business at the Meeting. If, however, any other matters are properly brought
before the Meeting, the persons named in the accompanying form of proxy will
vote thereon in accordance with their judgment.
VOTING INFORMATION
This Proxy Statement is furnished in connection with a solicitation
of proxies by the Board of Directors of the Company to be used at the Meeting
to be held at 10:00 a.m., Eastern time, on June 9, 1998, at 200 Park Avenue,
New York, New York 10166, and at any adjournments thereof. This Proxy
Statement, along with a Notice of the Meeting and a proxy card, is first
being mailed to shareholders of the Acquired Fund on or about April 14, 1998.
Only shareholders of record as of the close of business on March 30, 1998
(the "Record Date") will be entitled to notice of, and to vote at, the
Meeting or any adjournment thereof. The holders of one-third of the shares of
the Acquired Fund outstanding at the close of business on the Record Date
present in person or represented by proxy will constitute a quorum for the
Meeting of the Acquired Fund. If the enclosed form of proxy is properly
executed and returned in time to be voted at the Meeting, the proxies named
therein will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Signed but unmarked proxies will be voted FOR
the Plan and FOR any other matters deemed appropriate.
Proxy cards that reflect abstentions and "broker non-votes" (i.e.,
shares held by brokers or nominees as to which (1) instructions have not been
received from the beneficial owners or the persons entitled to vote or (2)
the broker or nominee does not have discretionary voting power on a
particular matter) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum, but not as votes
cast. A proxy may be revoked at any time on or before the Meeting by written
notice to the Assistant Secretary of the Company, 200 Park Avenue, New York,
New York 10166. Unless revoked, all valid proxies will be voted in accordance
with the specifications thereon or, in the absence of such specifications,
for approval of the Plan and the Reorganization contemplated thereby.
Approval of the Plan will require the affirmative vote of two-thirds
of the votes of the Acquired Fund eligible to be cast at the Meeting. Each
full share outstanding is entitled to one vote, and each fractional share
outstanding is entitled to a proportionate share of one vote for such
purposes.
Holders of Investor Shares and Restricted Shares of the Acquired
Fund are requested to vote and will vote together on the Plan. As of March
13, 1998, the number of shares outstanding of the Acquired Fund and those
beneficially owned by Dreyfus and its affiliates were as follows:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
BY DREYFUS AND AFFILIATES
______________________
TOTAL % OF
SHARES NUMBER OF TOTAL
SHAREHOLDER OUTSTANDING SHARES SHARES
_________ ______________ ____
Dreyfus International Equity Allocation
<S> <C> <C> <C>
Fund (Investor and Restricted Shares) 1,542,796 1,201,066 78
</TABLE>
[Page 17]
It is anticipated that Mellon Bank, an affiliate of Dreyfus, will own
beneficially more than 5% of the Acquiring Fund's outstanding shares following
the Reorganization.
Because Dreyfus and its affiliates exercise voting discretion over
more than 25% of the shares of the Acquired Fund, they may be deemed to
control such securities. Dreyfus has advised the Company that shares owned by
Dreyfus or an affiliate of Dreyfus with respect to which Dreyfus or such
affiliate exercises voting discretion will be voted in proportion to the
vote of the remaining shares voted at the Meeting, provided such vote is
consistent with the fiduciary duties of Dreyfus and its affiliates.
To the best knowledge of the Directors of the Company, as of March
13, 1998, no other single shareholder or "group" (as the term is used in
Section 13(d) of the Exchange Act) owned beneficially or of record 5% or more
of the Acquired Fund's outstanding shares. It is not anticipated that any
single shareholder or group, other than Mellon Bank and its affiliates, will
own beneficially or of record 5% or more of the Acquiring Fund's outstanding
shares as a result of the Reorganization.
At March 13, 1998, the Directors and officers of the Company and the
Directors and officers of the Index Funds as a group beneficially owned less
than 1% of the Acquired Fund's shares in the aggregate.
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone or other electronic medium or
personal solicitations conducted by officers and employees of Dreyfus, its
affiliates or other representatives of the Company. The cost of the
solicitation, which are estimated to total approximately $7,000, will be
borne pro rata by the Funds.
In the event that sufficient votes to approve the Reorganization are
not received at the Meeting, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies.
In determining whether to adjourn the Meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for
the solicitation. Any such adjournment will require an affirmative vote by
the holders of a majority of the shares present in person or by proxy and
entitled to vote at the Meeting. The persons named as proxies will vote upon
such adjournment after consideration of all circumstances which may bear upon
a decision to adjourn the Meeting.
A shareholder of the Acquired Fund who objects to the proposed
transaction will not be entitled under either Maryland law or the Company's
Articles of Incorporation to demand payment for, or an appraisal of, his or
her shares. Shareholders should be aware that, if the Reorganization is
consummated, they will be free to redeem the Acquiring Fund Shares that they
receive in the Reorganization at their then-current net asset value. Shares
of the Acquired Fund may be redeemed at any time prior to the consummation of
the Reorganization.
The votes of the shareholders of the Acquiring Fund are not being
solicited by this Proxy Statement and are not required to carry out the
Reorganization.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR
NOMINEES. Please advise the Acquired Fund, 200 Park Avenue, New York, New
York 10166, whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of this Proxy
Statement needed to supply copies to the beneficial owners of the respective
shares.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of the Acquiring Fund, which
include the statement of assets and liabilities of the Acquiring Fund as of
October 31, 1997, and the statement of operations, the statement of changes
in net assets and financial highlights for the period ended October 31, 1997,
have been incorporated by reference into this Proxy Statement in reliance on
the authority of the report of Coopers & Lybrand L.L.P., the Index Funds'
independent accountants, as experts in accounting and auditing.
The audited financial statements of the Acquired Fund, which include
the statement of assets and liabilities of the Acquired Fund as of October
31, 1997, and the statement of operations, the statement of changes in net
assets and financial
[Page 18]
highlights for the year ended October 31, 1997, have been incorporated by
reference into this Proxy Statement in reliance on the report of KPMG Peat
Marwick LLP, independent auditors for the Company for each of the three years
ended October 31, 1995, 1996 and 1997; and upon the authority of said firm as
experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the
Acquiring Fund will be passed upon by Stroock & Stroock & Lavan LLP, 180
Maiden Lane, New York, New York 10038-4982.
THE BOARD OF DIRECTORS OF THE COMPANY, INCLUDING THOSE DIRECTORS WHO
ARE NOT CONSIDERED "INTERESTED PERSONS" OF THE COMPANY AS DEFINED IN THE 1940
ACT, UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN. ANY SIGNED AND UNMARKED
PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF
APPROVAL OF THE PLAN.
__________________________
April 8, 1998
[Page 19]
APPENDIX A TO PROXY STATEMENT
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
as of the 12th day of February, 1998, by and between THE DREYFUS/LAUREL
FUNDS, INC. (formerly The Laurel Funds, Inc.), a Maryland corporation, with a
principal place of business at 200 Park Avenue, New York, New York 10166 (the
"Company"), on behalf of DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND, a
series of the Company (the "Acquired Fund"), and DREYFUS INDEX FUNDS, INC.
(formerly Peoples Index Fund, Inc.), a Maryland corporation, with a principal
place of business at 200 Park Avenue, New York, New York 10166 (the "Index
Funds"), on behalf of DREYFUS INTERNATIONAL STOCK INDEX FUND, a series of the
Index Funds (the "Acquiring Fund"). (The Acquired Fund and the Acquiring Fund
are sometimes herein referred to individually as a "Fund" and collectively as
the "Funds.") All agreements, representations, actions and obligations
described herein that are made or to be taken or undertaken by the Acquired
Fund are made and shall be taken or undertaken by the Company on behalf of
the Acquired Fund. All agreements, representations, actions and obligations
described herein that are made or to be taken or undertaken by the Acquiring
Fund are made and shall be taken or undertaken by the Index Funds on behalf
of the Acquiring Fund.
WHEREAS, the Company and the Index Funds wish to effect a
reorganization, which will consist of the transfer of all of the assets of
the Acquired Fund to the Acquiring Fund in exchange solely for shares of
common stock, par value $.001 per share, of the Acquiring Fund (the
"Acquiring Fund Shares") and the assumption by the Acquiring Fund of the
liabilities of the Acquired Fund and the distribution of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in termination of the
Acquired Fund as provided herein (collectively, the "Reorganization"), all
upon the terms and conditions hereinafter set forth in this Agreement;
WHEREAS, the Company and the Index Funds intend this Agreement
to be a plan of a reorganization within the meaning of section 368(a)(1)(D)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Company and the Index Funds are registered,
open-end management investment companies and the Acquired Fund owns
securities that are assets of the character in which the Acquiring Fund is
permitted to invest;
WHEREAS, the Index Funds is authorized to issue shares of common
stock of the Acquiring Fund and the Company is authorized to issue two
classes of shares of common stock of the Acquired Fund, designated (and
referred to herein) as "Investor Shares" and "Restricted Shares" (referred to
herein together as "Acquired Fund Shares");
WHEREAS, the Board of Directors of the Company has determined
that the exchange of all of the assets of the Acquired Fund for Acquiring
Fund Shares and the assumption of the liabilities of the Acquired Fund by the
Acquiring Fund is in the best interests of the Acquired Fund and its
shareholders and that the interests of the existing shareholders of the
Acquired Fund would not be diluted as a result of the Reorganization; and
WHEREAS, the Board of Directors of the Index Funds has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of the liabilities of the Acquired
Fund by the Acquiring Fund is in the best interests of the Acquiring Fund and
its shareholders and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of the Reorganization:
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties agree as follows:
1.TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE
ACQUIRING FUND SHARES AND ASSUMPTION OF ACQUIRED FUND
LIABILITIES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1.Subject to the requisite approval of the shareholders of the
Acquired Fund and to the other terms and conditions
contained herein:
(a) The Acquired Fund agrees to assign, transfer and
convey to the Acquiring Fund at the Closing (as provided for in paragraph
3.1) all of the Assets of the Acquired Fund (as defined in paragraph 1.2).
[Page A-1]
(b) The Acquiring Fund agrees in exchange therefor at the
Closing (i) to issue and deliver to the Acquired
Fund the number of full and fractional Acquiring Fund Shares determined by
dividing the aggregate net asset value of the Acquired Fund (computed as set
forth in paragraph 2.1) by the net asset value (computed as set forth in
paragraph 2.2) of one share of the Acquiring Fund and (ii) to assume the
Liabilities of the Acquired Fund (as defined in paragraph 1.3). In lieu of
delivering certificates for the Acquiring Fund Shares, the Acquiring Fund
shall credit the Acquiring Fund Shares to the Acquired Fund's account on the
books of the Acquiring Fund and shall deliver a confirmation thereof to the
Acquired Fund.
1.2.(a) The assets of the Acquired Fund to be acquired by the
Acquiring Fund (the "Assets") shall consist of all
property, including without limitation, all cash, cash equivalents,
securities, commodities and futures interests, dividend and interest receivabl
es, claims and rights of action that are owned by the Acquired Fund, and any
deferred or prepaid expenses shown as assets on the books of the Acquired
Fund, on the Closing Date (as defined in paragraph 3.1), but shall not
include corporate books, records or minutes of the Acquired Fund. The Assets
shall be invested at all times through the Closing in a manner that ensures
compliance with paragraph 4.1(k).
(b) The Acquired Fund has provided the Acquiring Fund
with a list of all of its property, including all of the Assets, as of the
date of execution of this Agreement. The Acquired Fund reserves the right to
sell any of these assets. The Acquiring Fund will, within a reasonable time
prior to the Closing Date, furnish the Acquired Fund with a list of any
assets on such list that do not conform to the Acquiring Fund's investment
objective, policies and restrictions or that the Acquiring Fund otherwise does
not desire to hold. The Acquired Fund will dispose of such assets prior to
the Closing Date to the extent practicable and to the extent the Acquired
Fund would not be affected adversely by such a disposition. In addition, if
it is determined that the portfolios of the Funds, when aggregated, would
contain investments exceeding certain percentage limitations imposed upon the
Acquiring Fund with respect to such investments, the Acquired Fund, if
requested to do so by the Acquiring Fund, will dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Closing Date.
1.3.The Acquired Fund will endeavor to discharge all of its
known liabilities and obligations prior to the Closing
Date. At the Closing, the Acquiring Fund shall assume all liabilities, debts,
obligations, expenses, costs, charges and reserves of the Acquired Fund as of
the Valuation Time (as defined in paragraph 2.1) (collectively, the
"Liabilities"). Without limiting the generality of the foregoing, the
Liabilities shall include the obligation to indemnify the Directors and
officers of the Company with respect to the Acquired Fund to the extent
provided in the Company's Articles of Incorporation dated August 6, 1987, as
amended ("Articles of Incorporation"), and By-Laws.
1.4. The Acquired Fund shall deliver the Assets at the Closing to
Boston Safe Deposit and Trust Company, One Boston
Place, Boston, Massachusetts 02109, the Acquiring Fund's custodian (the
"Custodian"), for the account of the Acquiring Fund, with all securities not
in bearer form duly endorsed, or accompanied by duly executed separate
assignments or stock powers, in proper form for transfer, with signatures
guaranteed, and with all necessary stock transfer stamps, sufficient to
transfer good and marketable title thereto (including all accrued interest
and dividends and rights pertaining thereto) to the Custodian for the account
of the Acquiring Fund free and clear of all liens, encumbrances, rights,
restrictions and claims. All cash delivered shall be in the form of
immediately available funds payable to the order of the Custodian for the
account of the Acquiring Fund.
1.5. The Acquired Fund will pay or transfer or cause to be paid or
transferred to the Acquiring Fund any dividends,
interest, distributions, rights or other assets received by the Acquired Fund
on or after the Closing Date as distributions on or with respect to any of
the Assets. Any such dividends, interest, distributions, rights, or other
assets so paid or transferred, or received directly by the Acquired Fund,
shall be allocated by the Acquired Fund to the account of the Acquiring Fund,
and shall be deemed included in the Assets and shall not be separately
valued.
1.6. As soon after the Closing Date as is conveniently possible,
the Company will distribute PRO RATA to the Acquired
Fund's shareholders of record determined as of the Valuation Time (as defined
in paragraph 2.1) (the "Acquired Fund Shareholders"), the Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1. Such
distribution will be accomplished by transferring the Acquiring Fund Shares
then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on such books in the names of the Acquired
Fund Shareholders and representing the respective
[Page A-2]
PRO RATA number of full and fractional Acquiring Fund Shares to which
each such Acquired Fund Shareholder is entitled. For these purposes, an
Acquired Fund Shareholder shall be entitled to receive, with respect to each
Acquired Fund Share held (whether an Investor Share or a Restricted Share),
that number of full and fractional Acquiring Fund Shares equal to the net
asset value of that Acquired Fund Share as of the Valuation Time (determined
in accordance with paragraph 2.1) divided by the net asset value of one
Acquiring Fund Share as of the Valuation Time (determined in accordance with
paragraph 2.2). All issued and outstanding shares of the Acquired Fund will
be canceled on the books of the Acquired Fund simultaneously with the
distribution of Acquiring Fund Shares to former holders of Investor Shares
and Restricted Shares. Ownership of Acquiring Fund Shares will be shown on
the books of the Acquiring Fund's transfer agent.
1.7. Any transfer taxes payable upon issuance of the Acquiring
Fund Shares in a name other than the registered holder
of the Acquired Fund Shares on the books of the Acquired Fund shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.8. Any reporting responsibility of the Acquired Fund is and
shall remain the responsibility of the Acquired Fund up
to and including the Closing Date and such later date on which the Acquired
Fund is terminated.
2. VALUATION.
2.1. The value of the Assets and the amount of the Liabilities,
and the net asset value of an Investor Share and a
Restricted Share, shall each be computed as of the close of trading on the
floor of the New York Stock Exchange ("NYSE") (except that options and
futures contracts will be valued 15 minutes after such close of trading) on
the Closing Date (such time and date being hereinafter called the "Valuation
Time"), using the valuation procedures set forth in the Articles of
Incorporation and the Acquired Fund's then-current prospectus or statement of
additional information.
2.2. The net asset value of an Acquiring Fund Share shall be
computed as of the Valuation Time, using the valuation
procedures set forth in the Index Fund's Articles of Incorporation dated
October 6, 1989, as amended ("Charter"), and the Acquiring Fund's
then-current prospectus or statement of additional information.
2.3. All computations and calculations of value shall be made by
The Dreyfus Corporation, the investment manager of
the Acquiring Fund and the Acquired Fund (the "Manager"), in accordance with
its regular practices as fund accountant for the Acquired Fund and the
Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1. The Reorganization, together with all related acts necessary
to consummate the Reorganization (the "Closing"),
shall take place on the first day on which the NYSE is open for business that
occurs not less than seven calendar days after the approval of this Agreement
by the shareholders of the Acquired Fund, or such other date as the parties
may mutually agree ("Closing Date"). All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business on
the Closing Date, unless otherwise provided. The Closing shall be held at
4:30 p.m., New York time, at the offices of the Manager, 200 Park Avenue, New
York, New York, or at such other time on the Closing Date and/or place as the
parties may mutually agree.
3.2. The Company, on behalf of the Acquired Fund, shall deliver
to the Index Funds, on behalf of the Acquiring Fund,
at the Closing a statement of Assets and Liabilities, including a schedule of
the Assets setting forth for all portfolio securities thereon their adjusted
tax basis and holding period by lot, as of the Closing, certified by the
Company's Treasurer or Assistant Treasurer. The Custodian shall deliver at
the Closing a certificate of an authorized officer stating that the Assets
have been presented for examination to the Acquiring Fund prior to the
Closing Date and have been delivered in proper form to the Acquiring Fund.
3.3. If at the Valuation Time (a) the NYSE or another primary
trading market or markets for portfolio securities of
the Acquiring Fund or the Acquired Fund shall be closed to trading or trading
thereon shall be restricted, or (b) trading or the reporting of trading in
such market or markets shall be disrupted so that accurate appraisal of the
value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be postponed until the first business
day after the day when trading shall have been fully resumed and reporting
shall have been restored.
[Page A-3]
3.4. The Acquired Fund shall cause Dreyfus Transfer, Inc.,
as its transfer agent, to deliver at the Closing a
certificate of an authorized officer stating that its records contain the
names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of outstanding Acquired Fund Shares of each class owned
by each such shareholder immediately prior to the Closing. The Acquiring Fund
shall cause Dreyfus Transfer, Inc., as its transfer agent, to deliver to the
Secretary of the Company a confirmation, or other evidence satisfactory to
the Company, that the Acquiring Fund Shares to be credited on the Closing
Date have been credited to the Acquired Fund's account on the books of the
Acquiring Fund. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, receipts or other documents as such other
party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1. The Company, on behalf of the Acquired Fund, represents and
warrants to the Index Funds, on behalf of the
Acquiring Fund, as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
power to carry on its business as it is now being conducted and to carry out
this Agreement.
(b) The Company is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open end management
investment company, of which the Acquired Fund is a separate diversified
portfolio, and such registration has not been revoked or rescinded and is in
full force and effect.
(c) The Acquired Fund is a duly established and
designated series of the Company.
(d) The current prospectus and statement of additional
information of the Acquired Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Acquired Fund is not, and the execution,
delivery and performance of this Agreement will not result, in any material
violation of the Articles of Incorporation or the Company's By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking with
respect to the Acquired Fund to which the Company is a party or by which it
is bound.
(f) The Acquired Fund has no material contracts or other
commitments outstanding (other than this Agreement) that will be terminated
with liability to it on or prior to the Closing Date.
(g) Except as otherwise disclosed in writing to and
accepted by the Acquiring Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or to its knowledge threatened against the Company with respect to
the Acquired Fund or any of the properties or assets thereof that, if
adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Company knows of no facts that
might form the basis for the institution of such litigation, proceeding or
investigation, and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects the Acquired Fund's business or its ability to
consummate the transactions contemplated herein.
(h) The Statements of Assets and Liabilities of the
Acquired Fund for the period ended October 31, 1994 and for the fiscal years
ended October 31, 1995, 1996 and 1997 have been audited by KPMG Peat Marwick
LLP, independent auditors; such statements (copies of which have been
furnished to the Index Funds) are in accordance with generally accepted
accounting principles, consistently applied, and such statements fairly
reflect the financial condition of the Acquired Fund as of such dates; and
there are no known contingent liabilities of the Acquired Fund as of such
dates not disclosed therein.
(i) Since October 31, 1997, there has not been any
material adverse change in the Acquired Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary course
of business, or any incurrence by the Acquired Fund of indebtedness maturing
more than one year from the date such indebtedness was incurred, except as
disclosed on the statement of Assets and Liabilities referred to in Section
3.2; provided that, for the purposes of this subparagraph (i), a decline in
net asset value per share of either class of the Acquired Fund shall not
constitute a material adverse change.
[Page A-4]
(j) At the Closing Date, all federal and other tax
returns and reports of the Acquired Fund required by law
to have been filed by such date shall have been filed, and all federal and
other taxes shown as due on such returns and reports shall have been paid, or
provision shall have been made for the payment thereof; and to the best of
the Company's knowledge no such return is currently under audit and no
assessment has been asserted with respect to any such return.
(k) The Acquired Fund is a "fund" as defined in section
851(g)(2) of the Code; for each taxable year of its operation ended prior to
the Closing Date, the Acquired Fund met all the requirements of Subchapter M
of the Code ("Subchapter M") for qualification and treatment as a "regulated
investment company"; it will continue to meet all such requirements for its
taxable year that includes the Closing Date; and it has no earnings and
profits accumulated in any taxable year to which the provisions of Subchapter
M did not apply to it.
(l) The Liabilities were incurred by the Acquired Fund
in the ordinary course of its business.
(m) The Acquired Fund is not under the jurisdiction of a
court in a proceeding under Title 11 of the United States Code or similar
case within the meaning of section 368(a)(3)(A) of the Code.
(n) Not more than 25% of the value of the Acquired
Fund's total assets (excluding cash, cash items, and U.S. government
securities) is invested in the stock and securities of any one issuer, and
not more than 50% of the value of such assets is invested in the stock and
securities of five or fewer issuers.
(o) The Acquired Fund will be terminated as soon as
reasonably practicable after the Reorganization, but in all events within six
months after the Closing Date.
(p) All issued and outstanding Acquired Fund Shares are,
and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non assessable. All of the issued and outstanding Acquired
Fund Shares, at the time of Closing, will be held by the persons and in the
amounts set forth in the records of the transfer agent as provided in
paragraph 3.4. The Acquired Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of the Acquired
Fund Shares, nor is there outstanding any security convertible into any of
the Acquired Fund Shares, except as contemplated herein.
(q) On the Closing Date, the Acquired Fund will have
full right, power and authority to sell, assign, transfer and deliver the
Assets.
(r) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Company's Board of Directors; and,
subject to the approval of the Acquired Fund Shareholders and assuming due
authorization, execution and delivery hereof by the Index Funds on behalf of
the Acquiring Fund, this Agreement will constitute the valid and legally
binding obligation of the Company, on behalf of the Acquired Fund,
enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and to general principles of equity and
the discretion of the court (regardless of whether the enforceability is
considered in a proceeding in equity or at law).
(s) With respect to facts relating to the Acquired Fund,
the prospectus/proxy statement and statement of additional information (the
"Proxy Statement") included in the Registration Statement (as defined in
paragraph 5.5) and the information incorporated by reference into the
Registration Statement (in each case other than information that has been
furnished by the Index Funds) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of a mater
ial fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading.
4.2. The Index Funds, on behalf of the Acquiring Fund, represents
and warrants to the Company, on behalf of the
Acquired Fund, as follows:
(a) The Index Funds is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and has power to carry on its business as it is now being conducted and to
carry out this Agreement.
[Page A-5]
(b) The Index Funds is registered under the 1940 Act as
an open end management investment company, of which
the Acquiring Fund is a separate, non-diversified portfolio, and such
registration has not been revoked or rescinded and is in full force and
effect.
(c) The Acquiring Fund is a duly established and
designated series of the Index Funds.
(d) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the SEC thereunder and do not include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Acquiring Fund is not, and the execution,
delivery and performance of this Agreement will not result, in any material
violation of the Charter or the Index Fundsi By Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking with respect to
the Acquiring Fund to which the Index Funds is a party or by which it is
bound.
(f) Except as otherwise disclosed in writing to and
accepted by the Acquired Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or to its knowledge threatened against the Index Funds with respect
to the Acquiring Fund or any of the properties or assets thereof that, if
adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Index Funds knows of no facts
that might form the basis for the institution of such litigation, proceeding
or investigation, and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects the Acquiring Fund's business or its ability to
consummate the transactions contemplated herein.
(g) The Statement of Assets and Liabilities of the
Acquiring Fund for the fiscal period ended October 31, 1997 has been audited
by Coopers & Lybrand L.L.P., independent auditors; such statement (a copy of
which has been furnished to the Company) is in accordance with generally
accepted accounting principles, consistently applied, and such statement
fairly reflects the financial condition of the Acquiring Fund as of such
date; and there are no known contingent liabilities of the Acquiring Fund as
of such date not reflected therein.
(h) Since October 31, 1997, there has not been any
material adverse change in the Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary course
of business, or any incurrence by the Acquiring Fund of indebtedness maturing
more than one year from the date such indebtedness was incurred; provided
that, for the purposes of this subparagraph (h), a decline in net asset value
per share of the Acquiring Fund shall not constitute a material adverse
change.
(i) At the Closing Date, all federal and other tax
returns and reports of the Acquiring Fund required by law to have been filed
by such date shall have been filed, and all federal and other taxes shown as
due on said returns and reports shall have been paid or provision shall have
been made for the payment thereof; and to the best of the Index Funds'
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any such return.
(j) The Acquiring Fund is a "fund" as defined in section
851(g)(2) of the Code; for its taxable year ended October 31, 1997 (its first
taxable year), the Acquiring Fund met all the requirements of Subchapter M
for qualification and treatment as a regulated investment company; it will
continue to meet all such requirements for its taxable year that includes the
Closing Date; and it has no earnings and profits accumulated in any taxable
year to which the provisions of Subchapter M did not apply to it.
(k) No consideration other than the Acquiring Fund
Shares (and the Acquiring Fund's assumption of the Liabilities) will be
issued in exchange for the Assets in the Reorganization.
(l) The Acquiring Fund has no plan or intention to issue
additional Acquiring Fund Shares following the Reorganization except for
shares issued in the ordinary course of its business as a series of an
open-end investment company; nor does the Acquiring Fund have any plan or
intention to redeem or otherwise reacquire any Acquiring Fund Shares issued
to the Acquired Fund Shareholders pursuant to the Reorganization, other than
through redemptions arising in the ordinary course of that business.
[Page A-6]
(m) The Acquiring Fund (i) will, after the
Reorganization, continue the historic business that the Acquired
Fund conducted before the Reorganization, (ii) has no plan or intention to
sell or otherwise dispose of more than ten percent (10%) of the Assets by
value, except for dispositions made in the ordinary course of that business
and dispositions necessary to maintain its status as a regulated investment
company, and (iii) expects to use a significant portion of the Acquired
Fund's historic business assets in that business.
(n) There is no plan or intention for the Acquiring Fund
to be dissolved or merged into another corporation or business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the Code)
following the Reorganization.
(o) Immediately after the Reorganization, (i) not more
than 25% of the value of the Acquiring Fund's total assets (excluding cash,
cash items, and U.S. government securities) will be invested in the stock and
securities of any one issuer and (ii) not more than 50% of the value of such
assets will be invested in the stock and securities of five or fewer issuers.
(p) The Acquiring Fund does not own, directly or
indirectly, nor on the Closing Date will it own, directly or indirectly, nor
has it owned, directly or indirectly, at any time during the past five years,
any shares of the Acquired Fund.
(q) All issued and outstanding Acquiring Fund Shares
are, and (including the Acquiring Fund Shares issued in the Reorganization)
at the Closing will be, duly and validly issued and outstanding, fully paid
and non assessable. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of the Acquiring
Fund Shares, nor is there outstanding any security convertible into any
Acquiring Fund Shares, except as contemplated herein.
(r) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing Date by all
necessary action, if any, on the part of the Index Fundsi Board of Directors;
and, subject to the approval of the Acquired Fund Shareholders and assuming
due authorization, execution and delivery hereof by the Company on behalf of
the Acquired Fund, this Agreement will constitute the valid and legally
binding obligation of the Index Funds, on behalf of the Acquiring Fund, enforc
eable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto, and to general principles of equity and the
discretion of the court (regardless of whether the enforceability is
considered in a proceeding in equity or at law).
(s) The Registration Statement (as defined in paragraph
5.5) and the information incorporated by reference therein (only insofar as
it relates to the Acquiring Fund and is based on information furnished by the
Acquiring Fund) will, on the effective date of the Registration Statement and
on the Closing Date, not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements were made, not misleading.
4.3. Each of the Company, on behalf of the Acquired Fund, and the
Index Funds, on behalf of the Acquiring Fund,
represents and warrants to the other as follows:
(a) The fair market value of the Acquiring Fund Shares,
when received by the Acquired Fund Shareholders, will be approximately equal
to the fair market value of their Acquired Fund Shares constructively
surrendered in exchange therefor.
(b) Its management (i) is unaware of any plan or
intention of Acquired Fund Shareholders to redeem or otherwise dispose of any
portion of the Acquiring Fund Shares to be received by them in the
Reorganization and (ii) does not anticipate dispositions of those Acquiring
Fund Shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of dispositions of shares of the Acquired Fund as a
series of an open-end investment company. Consequently, its management
expects that the percentage of Acquired Fund Shareholder interests, if any,
that will be disposed of as a result of or at the time of the Reorganization
will be DE MINIMIS. Nor does its management anticipate that there will be
extraordinary redemptions of Acquiring Fund Shares immediately following the
Reorganization.
(c) The Acquired Fund Shareholders will pay their own
expenses, if any, incurred in connection with the Reorganization.
[Page A-7]
(d) The fair market value on a going concern basis of the
Assets will equal or exceed the Liabilities to be
assumed by the Acquiring Fund and those to which the Assets are subject.
(e) There is no intercompany indebtedness between the
Acquired Fund and the Acquiring Fund that was issued or acquired, or will be
settled, at a discount.
(f) Pursuant to the Reorganization, the Acquired Fund
will transfer to the Acquiring Fund, and the Acquiring Fund will acquire, at
least 90% of the fair market value of the net assets, and at least 70% of the
fair market value of the gross assets, held by the Acquired Fund immediately
before the Reorganization. For the purposes of this representation, any
amounts used by the Acquired Fund to pay its Reorganization expenses and
redemptions and distributions made by it immediately before the
Reorganization (except for (i) distributions made to conform to its policy of
distributing all or substantially all of its income and gains to avoid the
obligation to pay federal income tax and/or the excise tax under section 4982
of the Code and (ii) redemptions not made as part of the Reorganization) will
be included as assets thereof held immediately before the Reorganization.
(g) None of the compensation received by any Acquired
Fund Shareholder who is an employee of the Acquired Fund will be separate
consideration for, or allocable to, any of the Acquired Fund Shares held by
such Acquired Fund Shareholder-employee; none of the Acquiring Fund Shares
received by any such Acquired Fund Shareholder-employee will be separate
consideration for, or allocable to, any employment agreement; and the
consideration paid to any such Acquired Fund Shareholder-employee will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
(h) Immediately after the Reorganization, the Acquired
Fund Shareholders will be in "control" of the Acquiring Fund within the
meaning of section 304(c) of the Code.
5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND.
5.1. The Acquired Fund and the Acquiring Fund each will
operate its respective business in the ordinary course
between the date hereof and the Closing Date, it being understood that such
ordinary course of business will include payment of customary dividends and
other distributions.
5.2. The Company will call a meeting of the Acquired Fund's
shareholders to consider and act upon this Agreement and
to take all other action necessary to obtain approval of the transactions
contemplated herein.
5.3. Subject to the provisions of this Agreement, the Acquired
Fund and the Acquiring Fund will each take, or cause
to be taken, all action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective the
transactions contemplated herein.
5.4. As promptly as practicable, but in any case within sixty
days after the Closing Date, the Company shall furnish
the Index Funds, in such form as is reasonably satisfactory to the Index
Funds, a statement, certified by the Company's President or a Vice President,
of the earnings and profits of the Acquired Fund for federal income tax
purposes that will be carried over to the Acquiring Fund as a result of
Section 381 of the Code.
5.5. The Company, on behalf of the Acquired Fund, and the Index
Funds, on behalf of the Acquiring Fund, shall
cooperate in the provision of all information reasonably necessary for the
preparation and filing of the registration statement of the Index Funds
relating to the Acquiring Fund Shares on Form N-14, in compliance with the
1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940 Act
and, if applicable, state Blue Sky laws (the "Registration Statement"),
including the Proxy Statement in connection with the meeting of the Acquired
Fund's shareholders to consider approval of this Agreement and the
transactions contemplated herein.
5.6. The Acquiring Fund and the Acquired Fund shall cooperate
in the preparation and filing as promptly as
practicable with the SEC of an application, in form and substance reasonably
satisfactory to their respective counsel, for exemptive relief from the
provisions of Section 17 of the 1940 Act, and from any other provision of the
1940 Act deemed necessary or advisable by such counsel, to permit
consummation of the Reorganization as contemplated herein (the "Exemptive
Application"). The Acquiring Fund and the Acquired Fund shall use all
reasonable efforts to obtain the relief requested by the Exemptive
Application.
[Page A-8]
5.7. The Acquiring Fund shall use all reasonable efforts to
obtain the approvals and authorizations required by the
1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as
it may deem appropriate in order to continue its operations after the Closing
Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to consummate the
transactions provided for herein shall be subject, at its
election, to the performance by the Acquired Fund of all the obligations to
be performed by it hereunder on or before the Closing Date and, in addition
thereto, the following conditions:
6.1. All representations and warranties of the Company, on
behalf of the Acquired Fund, contained in this Agreement
shall be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated herein, as of
the Closing Date with the same force and effect as if made on the Closing
Date and as of the Closing.
6.2. The Company, on behalf of the Acquired Fund, shall have
delivered to the Index Funds at the Closing a
certificate executed in its name by its President or a Vice President, in
form and substance reasonably satisfactory to the Index Funds, to the effect
that the Company's representations and warranties, on behalf of the Acquired
Fund, made in this Agreement are true and correct at and as of the Closing,
except as they may be affected by the transactions contemplated herein, and
as to such other matters as the Index Funds shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the
transactions provided for herein shall be subject, at its
election, to the performance by the Acquiring Fund of all the obligations to
be performed by it hereunder on or before the Closing Date and, in addition
thereto, the following conditions:
7.1. All representations and warranties of the Index Funds,
on behalf of the Acquiring Fund, contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
herein, as of the Closing Date with the same force and effect as if made on
the Closing Date and as of the Closing.
7.2. The Index Funds, on behalf of the Acquiring Fund, shall have
delivered to the Company at the Closing a
certificate executed in its name by its President or a Vice President, in
form and substance reasonably satisfactory to the Company, to the effect that
the Index Funds' representations and warranties, on behalf of the Acquiring
Fund, made in this Agreement are true and correct at and as of the Closing,
except as they may be affected by the transactions contemplated herein, and
as to such other matters as the Company shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
AND THE ACQUIRING FUND.
If any of the conditions set forth below does not exist on or
before the Closing Date with respect to the Acquired
Fund or the Acquiring Fund, the other party to this Agreement, at its option,
shall not be required to consummate the transactions contemplated herein.
8.1. This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the
holders of the outstanding Acquired Fund Shares in accordance with the
provisions of the Articles of Incorporation and the 1940 Act.
8.2. On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or
other relief in connection with, this Agreement or the transactions
contemplated herein.
8.3. All consents of other parties and all other consents,
orders and permits of federal, state and local regulatory
authorities (including those of the SEC and of state Blue Sky and securities
authorities) deemed necessary by the Acquired Fund or the Acquiring Fund to
permit consummation, in all material respects, of the transactions
contemplated hereby shall have
A-9
been obtained, except where failure to obtain any such consent, order or
permit would not involve a risk of a material adverse effect on the assets or
properties of the Acquired Fund or the Acquiring Fund.
8.4. The Registration Statement shall have become effective under
the 1933 Act, and no stop orders suspending the
effectiveness thereof shall have been issued, and, to the best knowledge of
the parties hereto, no investigation or proceeding for that purpose shall
have been instituted or be pending, threatened or contemplated under the 1933
Act.
8.5. The relief requested by the Exemptive Application shall have
been granted in form and substance reasonably
satisfactory to the respective counsel for the Acquiring Fund and the
Acquired Fund.
8.6.The Acquired Fund shall have declared a dividend and/or other
distributions that, together with all previous
dividends and other distributions, shall have the effect of distributing to
the Acquired Fund's shareholders all of the Acquired Fund's investment
company taxable income for all taxable years ended prior to the Closing Date
and for its current taxable year through the Closing Date (computed without
regard to any deduction for dividends paid) and all net capital gain realized
in all such taxable years (after reduction for any capital loss
carryforward).
8.7.The Company and the Index Funds shall have received an
opinion of Kirkpatrick & Lockhart LLP, counsel to the
Company, in a form reasonably satisfactory to the Manager, as to the federal
income tax consequences mentioned below ("Tax Opinion"). In rendering the Tax
Opinion, such counsel may rely as to factual matters, exclusively and without
independent verification, on the representations made in this Agreement (or
in separate letters addressed to such counsel) and the certificates delivered
pursuant to paragraphs 6.2 and 7.2. The Tax Opinion shall be substantially to
the effect that, based on the facts and assumptions stated therein and
conditioned on consummation of the Reorganization in accordance with this
Agreement, for federal income tax purposes:
(a) The Acquired Fund's transfer of the Assets to the
Acquiring Fund in exchange solely for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Liabilities, followed by the Acquired
Fund's distribution of those shares to the Acquired Fund Shareholders
constructively in exchange for their Acquired Fund Shares, will constitute a
"reorganization" within the meaning of section 368(a)(1)(D) of the Code, and
each of the Acquiring Fund and the Acquired Fund will be a "party to a
reorganization" within the meaning of section 368(b) of the Code;
(b) No gain or loss will be recognized to the Acquired
Fund on the transfer of the Assets to the Acquiring Fund in exchange solely
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Liabilities or on the subsequent distribution of those Acquiring Fund Shares
to the Acquired Fund Shareholders in constructive exchange for their Acquired
Fund Shares;
(c) No gain or loss will be recognized to the Acquiring
Fund on its receipt of the Assets in exchange solely for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of the Liabilities;
(d) The Acquiring Fund's basis for the Assets will be
the same as the Acquired Fund's basis therefor immediately before the
Reorganization, and the Acquiring Fund's holding period for the Assets will
include the period during which the Assets were held by the Acquired Fund;
(e) No gain or loss will be recognized to an Acquired
Fund Shareholder on distribution thereto of Acquiring Fund Shares
constructively in exchange for all of such shareholder's Acquired Fund
Shares; and
(f) An Acquired Fund Shareholder's basis for the
Acquiring Fund Shares to be received by such shareholder in the
Reorganization will be the same as the basis for such shareholder's Acquired
Fund Shares to be constructively surrendered in exchange for those Acquiring
Fund Shares; and such shareholder's holding period for those Acquiring Fund
Shares will include such shareholder's holding period for those Acquired Fund
Shares, provided they are held as capital assets by such shareholder on the
Closing Date.
Notwithstanding anything in this paragraph 8.7, the Tax Opinion may state
that no opinion is expressed as to the effect of the Reorganization on the
Acquired Fund, the Acquiring Fund or any Acquired Fund Shareholder with
respect to any asset as to which any unrealized gain or loss is required to
be recognized for federal income tax purposes at the end of a taxable year
(or on the termination or transfer thereof) under a mark-to-market system of
accounting.
[Page A-10]
9. TERMINATION OF AGREEMENT.
9.1. This Agreement and the transactions contemplated hereby may
be terminated and abandoned by resolution of the
Board of Directors of the Company or the Board of Directors of the Index
Funds at any time prior to the Closing (notwithstanding any vote of the
Acquired Fund's shareholders) if:
(a) circumstances should develop that, in the opinion of
either party's Board, make proceeding with this Agreement inadvisable;
(b) a material breach by the other party of any
representation, warranty or agreement contained herein has occurred; or
(c) a condition to the obligation of the terminating
party cannot reasonably be met.
9.2. If this Agreement is terminated and the Reorganization is
abandoned pursuant to the provisions of this Section
9, this Agreement shall become void and have no effect, without any liability
on the part of any party hereto or the Directors, officers or shareholders of
the Company or of the Acquired Fund, or of the Index Funds or the Acquiring
Fund, as the case may be, in respect of this Agreement, except that the
parties shall bear the aggregate expenses of the transaction contemplated
hereby in proportion to their respective net assets as of the date this
Agreement is terminated or the exchange contemplated hereby is abandoned.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing
conditions set forth in Sections 6, 7 and 8 may be
waived by the Board of Directors of the Company, on behalf of the Acquired
Fund, or the Board of Directors of the Index Funds, on behalf of the
Acquiring Fund, as the case may be, if, in the judgment of either, such
waiver will not have a material adverse effect on the benefits intended under
this Agreement to the shareholders of the Acquired Fund or of the Acquiring
Fund, as the case may be.
11. EXPENSES OF THE REORGANIZATION.
The Acquiring Fund and the Acquired Fund shall bear the
aggregate expenses incurred in connection with the
Reorganization PRO RATA in proportion to their respective net assets, as of
the Closing Date if the Reorganization is consummated
or, if the Reorganization is not consummated, as of the date this Agreement
is terminated or the Reorganization is abandoned; and, if the Reorganization
is consummated, such expenses will be charged against the assets of the
relevant Fund at or before the Valuation Time.
12. MISCELLANEOUS.
12.1. None of the representations and warranties
included or provided for herein shall survive consummation
of the Reorganization.
12.2. This Agreement constitutes the entire agreement
and understanding between the parties hereto with
respect to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of every kind and nature between
them relating to the subject matter hereof. Neither party shall be bound by
any condition, definition, warranty or representation, other than as set
forth or provided in this Agreement or as may be, on or subsequent to the
date hereof, set forth in a writing signed by the party to be bound thereby.
12.3. Copies of the Articles of Incorporation and of the Charter
are on file with the Secretary of State of
the State of Maryland. This Agreement is executed by the undersigned officers
on behalf of the Company (on behalf of the Acquired Fund) and on behalf of
the Index Funds (on behalf of the Acquiring Fund), respectively, and not on
behalf of such officers or Directors of either the Company or the Index Funds
as individuals. The respective obligations of the Company and the Index Funds
under this Agreement are not binding upon any of their respective Directors,
officers, shareholders or partners individually. The obligations of the Index
Funds hereunder are binding only upon the assets and property of the
Acquiring Fund, and the obligations of the Company hereunder are binding only
upon the assets and property of the Acquired Fund.
[Page A-11]
12.4. This Agreement shall be governed and construed in
accordance with the internal laws of the State of
New York, without giving effect to principles of conflict of laws; provided,
however, that the due authorization, execution and delivery of this Agreement
by the Company and the Index Funds shall be governed and construed in
accordance with the internal laws of the State of Maryland, without giving
effect to principles of conflict of laws; and provided further that, in the
case of any conflict between any such laws and the federal securities laws,
the latter shall govern.
12.5. This Agreement may be executed in counterparts,
each of which, when executed and delivered, shall be
deemed to be an original.
12.6. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective
successors and assigns, but no assignment or transfer hereof or of any rights
or obligations hereunder shall be made by either party without the written
consent of the other party. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give any person, firm or corporation,
other than the parties hereto and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the Company, on behalf of the Acquired Fund,
and the Index Funds, on behalf of the Acquiring Fund, have caused this
Agreement and Plan of Reorganization to be executed and attested on its
behalf by its duly authorized representatives as of the date first above
written.
THE DREYFUS/LAUREL FUNDS, INC.,
on behalf of
DREYFUS INTERNATIONAL EQUITY
ALLOCATION FUND
ATTEST: /S/DOUGLAS C. CONROY By: /S/ MARIE E. CONNOLLY
Assistant Secretary President
DREYFUS INDEX FUNDS, INC.,
on behalf of
DREYFUS INTERNATIONAL STOCK
INDEX FUND
ATTEST: /S/DOUGLAS C. CONROY By: /S/ MARIE E. CONNOLLY
Assistant Secretary President
[Page A-12]
THE DREYFUS/LAUREL FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS -- JUNE 9, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven F. Newman and Jeff S. Prusnofsky, and
each of them, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of common stock of the Dreyfus International
Equity Allocation Fund (the "Fund"), a series of The Dreyfus/Laurel Funds,
Inc., that the undersigned is entitled to vote at a Special Meeting of
Shareholders of the Fund to be held at the offices of The Dreyfus Corporation,
200 Park Avenue, 7th Floor West, New York, New York 10166,on June 9, 1998 at
10:00 a.m. and at any adjournment(s) thereof. The undersigned hereby
acknowledges receipt of the Notice of Special Meeting and Proxy Statement, and
hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the Meeting. The undersigned hereby
revokes any proxy previously given.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
Dated: ____________, 199___
NOTE: Please sign exactly as your name or names appear on this Proxy. If
joint owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or corporate officer, please give your full
title as such.
Signature(s), Title(s) if applicable.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION
TO BE TAKEN ON THE FOLLOWING PROPOSAL. IN THE ABSENCE OF ANY SPECIFICATION,
THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL.
To approve the Agreement and Plan of Reorganization
between The Dreyfus/Laurel Funds, Inc., on behalf of the Dreyfus International
Equity Allocation Fund (the "Fund"), and Dreyfus Index Funds, Inc., on behalf
of Dreyfus International Stock Index Fund (the "International Stock Index
Fund"), providing for (a) the acquisition of all the assets of the Fund by the
International Stock Index Fund in exchange solely for shares of the
International Stock Index Fund and the assumption by the International Stock
Index Fund of the liabilities of the Fund, (b) the distribution of those shares
of the International Stock Index Fund to the holders of the Investor and
Restricted Shares of the Fund, in each case in an amount equal in net asset
value to the Investor or Restricted Shares of the Fund held by such holders,
and (c) the subsequent termination of the Fund.
FOR AGAINST ABSTAINEE
In their discretion, the proxies are, and each of them is, authorized
to vote upon any other business that may properly come before the Meeting
or any adjournment(s) thereof, including any adjournments(s) necessary to
obtain the requisite quorums or "FOR" approvals.
PLEASE SIGN AND DATE THE REVERSE SIDE OF CARD.323,723
STATEMENT OF ADDITIONAL INFORMATION
OF
DREYFUS INTERNATIONAL STOCK INDEX FUND
a series of DREYFUS INDEX FUNDS, INC.
200 PARK AVENUE
NEW YORK, NEW YORK 10166
1-800-645-6561
DATED APRIL 8, 1998
This Statement of Additional Information, which is not a Prospectus,
relates to the acquisition of the Investor and Restricted Shares of Dreyfus
International Equity Allocation Fund (the "Acquired Fund"), a portfolio of
The Dreyfus/Laurel Funds, Inc. (formerly known as The Laurel Funds, Inc.),
by Dreyfus International Stock Index Fund (the "Acquiring Fund"), a
portfolio of Dreyfus Index Funds, Inc. and supplements and should be read in
conjunction with the Prospectus/Proxy Statement dated April 8, 1998 (the
"Proxy Statement"). To obtain a copy of the Proxy Statement, please write
to the Acquiring Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11566-0144, or call toll-free 1-800-645-6561.
This Statement of Additional Information incorporates by reference the
following documents, a copy of each of which accompanies this Statement of
Additional Information:
A. The Statement of Additional Information of the Acquiring Fund
dated January 15, 1998, previously filed on EDGAR, Accession
number 0000857114-98-000009.
B. The Acquiring Fund's audited financial statements for the
fiscal period ended October 31, 1997, previously filed on EDGAR,
Accession number 0000857114-98-000001.
C. The Statement of Additional Information of the Acquired Fund
dated March 1, 1998, previously filed on EDGAR, Accession number
0000819940-98-000032.
D. The Acquired Fund's audited financial statements for the
fiscal year ended October 31, 1997, previously filed on EDGAR,
Accession number 0000819940-98-000004.
The following are pro forma financial statements of the Acquiring Fund
and the Acquired Fund giving effect to the proposed Reorganization described
in the Proxy as of October 31, 1997:
<TABLE>
<CAPTION>
Pro Forma Statement of Investments
Dreyfus International Stock Index Fund
October 31, 1997 (Unaudited)
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International Intern ational
Stock Index Equity Allocation Stock Index Equity A llocation
Fund Fund Total Fund Fund Total
Common Stocks-78.8%
<S> <C> <C> <C> <C> <C> <C>
Australia-1.1% Amcor 1,500 3,000 4,500 $ 7,081 $ 14,111 $ 21,192
Boral 2,852 2,852 7,506 7,506
Broken Hill
Proprietary 2,000 2,529 4,529 19,846 25,004 44,850
CSR 2,400 2,400 8,345 8,345
Coca-Cola Amatil 1,309 1,027 2,336 9,857 7,705 17,562
Coles Myer 2,600 2,600 12,515 12,515
Foster's Brewing
Group 4,700 4,700 8,931 8,931
General Property
Trust (Units) 2,800 2,800 5,025 5,025
ICI Australia 700 1,000 1,700 5,271 7,503 12,774
Lend Lease 608 608 12,460 12,460
M.I.M. Holdings 3,900 3,900 3,431 3,431
News 4,813 4,813 23,066 23,066
North 1,734 1,734 4,549 4,549
Pacific Dunlop 2,500 5,912 8,412 5,343 12,590 17,933
Pioneer
International 2,100 2,100 5,557 5,557
Rio Tinto 800 800 9,740 9,740
Santos 1,400 1,400 6,443 6,443
Southcorp 1,400 1,400 4,700 4,700
WMC 2,700 2,700 9,596 9,596
Westfield Trust 2,900 2,900 5,531 5,531
Westpac Banking 4,200 3,200 7,400 24,474 18,579 43,053
___________ ___________ ___________
199,267 85,492 284,759
___________ ___________ ___________
Austria-.2% Bau Holding 150 150 9,320 9,320
Lenzing (a) 180 180 10,086 10,086
Oesterreichische
Elektrizitaetaets-
wirtschafts, Cl. A 300 300 23,836 23,836
Universale-Bau 290 290 10,060 10,060
___________ ___________ ___________
29,466 23,836 53,302
___________ ___________ ___________
Belgium-1.4% Barco 140 140 26,958 26,958
Cimenteries CBR
Cementbedrijven 50 50 4,357 4,357
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity A llocation
Fund Fund Total Fund Fund Total
Belgium (Continued)Electrabel 50 50 $ 11,203 $ 11,203
Fortis 50 102 152 9,473 19,326 $ 28,799
Glaverbel 250 250 36,192 36,192
PetroFina 478 478 175,696 175,696
Royale Belge 70 70 18,497 18,497
Solvay 500 500 30,080 30,080
Union Miniere (a) 100 100 7,309 7,309
___________ ___________ ___________
102,786 236,305 339,091
___________ ___________ ___________
Denmark-.9% Bang & Olufsen
Holding, Cl.B 100 100 6,096 6,096
Carlsberg, Cl. A 100 100 5,182 5,182
Carlsberg, Cl. B 100 100 5,258 5,258
Danisco 100 2,280 2,380 5,655 128,859 134,514
Den Danske Bank 100 100 11,278 11,278
J. Lauritzen
Holding(a) 100 100 9,145 9,145
Novo Nordisk, Cl. B 200 200 21,642 21,642
Tele Danmark, Cl. B 400 400 23,471 23,471
Unidanmark, Cl. A 200 200 13,504 13,504
___________ ___________ ___________
101,231 128,859 230,090
___________ ___________ ___________
Finland-.6% Kone B 400 400 47,880 47,880
Merita, Cl. A 2,000 2,000 9,764 9,764
Nokia, Cl. A 500 500 43,612 43,612
Nokia, Cl. K 250 200 450 21,951 17,569 39,520
UPM-Kymmene 750 750 16,528 16,528
___________ ___________ ___________
91,855 65,449 157,304
___________ ___________ ___________
France-5.6% Accor 104 104 19,341 19,341
Alcatel Alsthom 200 200 24,091 24,091
Axa-UAP 500 1,082 1,582 34,180 74,006 108,186
Banque Nationale
de Paris 936 936 41,329 41,329
CPR 200 200 15,497 15,497
Carrefour 133 133 69,320 69,320
Chargeurs 10 10 668 668
Compagnie de
Saint Gobain 200 384 584 28,660 55,056 83,716
Compagnie Financiere
de Paribas 655 655 47,511 47,511
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
France (continued)Compagnie Generale
des Etablissements
Michelin, Cl. B 250 250 $ 12,802 $ 12,802
Elf Aquitaine 400 1,003 1,403 49,428 $ 124,005 173,433
Eridania
Beghin-Say 189 189 27,163 27,163
Groupe Danone 150 150 22,897 22,897
L'Air Liquide 150 432 582 23,234 66,949 90,183
Lafarge 673 673 41,999 41,999
LOOREAL 100 209 309 35,375 73,972 109,347
Moet Hennessy
Louis Vuitton 100 100 16,960 16,960
Moulinex(a) 635 635 14,294 14,294
PSA Peugeot Citroen 200 200 22,614 22,614
Pathe 10 10 1,792 1,792
Pinault-Printemps
-Redoute 50 50 22,827 22,827
Promodes 50 95 145 16,251 30,893 47,144
Rhone-Poulenc,
Cl. A 700 1,336 2,036 30,468 58,182 88,650
SEFIMEG 100 100 6,061 6,061
SEITA 280 280 8,921 8,921
Sagem 50 50 23,359 23,359
Salomon 222 222 19,759 19,759
Sanofi 250 429 679 23,710 40,708 64,418
Schneider 300 300 15,991 15,991
Sidel 212 212 11,894 11,894
Suez Lyonnaise
des Eaux 428 428 44,393 44,393
Thomson CSF 869 869 23,188 23,188
Total, Cl. B 400 12 412 44,305 1,330 45,635
Unibail 85 85 8,036 8,036
Union Immobiliere
de France 150 150 10,831 10,831
Worms et
Compagnie 243 243 20,828 20,828
___________ ___________ ___________
401,179 1,003,899 1,405,078
___________ ___________ ___________
Germany-4.2% AGIV (a) 630 630 13,146 13,146
Allianz 400 300 700 89,085 66,775 155,860
Axa Colonia
Konzern 70 70 6,066 6,066
BASF 1,350 980 2,330 45,804 33,231 79,035
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Germany (continued)Bayer 1,600 1,000 2,600 $ 56,142 $ 35,068 $ 91,210
Bilfinger &
Berger Bau 220 220 7,894 7,894
Brau Und Brunnen(a) 50 50 4,260 4,260
Continental 600 600 14,294 14,294
Daimler-Benz 1,150 750 1,900 77,036 50,212 127,248
Deutsche Bank 800 800 52,337 52,337
Deutsche Telekom 4,000 4,000 74,933 74,933
Dresdner Bank 1,260 1,260 51,490 51,490
HERLITZ 100 100 7,087 7,087
Linde 40 40 24,113 24,113
Mannesmann 100 100 42,222 42,222
Muenchener
Rueckvesicherungs-
Gesellschafts 100 100 29,098 29,098
RWE
Aktiengesellschaft 1,180 1,180 15,162 51,162
SAP 50 50 14,340 14,340
Schering 210 210 20,340 20,340
Siemens 1,250 860 2,110 76,920 52,890 129,810
STRABAG (a) 100 100 7,192 7,192
VEBA 500 500 27,868 27,868
Volkswagen 50 50 29,550 29,550
___________ ___________ ___________
600,516 460,039 1,060,555
___________ ___________ ___________
Hong Kong-3.2% Cathay Pacific
Airways 8,000 8,000 8,433 8,433
Cheung Kong
Holdings 4,000 21,000 25,000 27,808 146,022 173,830
China Light & Power 8,740 8,740 46,018 46,018
HSBC Holdings 3,042 3,042 68,868 68,868
Hang Seng Bank 3,000 3,400 6,400 26,095 29,579 55,674
Hong Kong &
China Gas 49,944 49,944 94,331 94,331
Hong Kong
Telecommunications 8,000 23,218 51,218 53,599 44,454 98,053
Hutchison Whampoa 8,000 8,000 55,358 55,358
Hysan Development 2,000 2,000 4,178 4,178
New World
Development 5,000 5,000 17,590 17,590
Shangri-La Asia 5,000 42,000 47,000 3,719 31,242 34,961
Sino Land 6,000 6,000 3,880 3,880
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Hong Kong (continued)
South China Morning
Post (Holdings) 82,000 82,000 $ 71,074 $ 71,074
Sun Hung
Kai Properties 2,000 4,220 6,220 $ 14,745 31,118 45,863
Swire Pacific,Cl.A 4,000 4,000 21,367 21,367
Wharf Holdings 6,000 6,000 12,261 12,261
Wing Lung Bank 1,000 1,000 4,268 4,268
___________ ___________ ___________
253,301 562,706 816,007
___________ ___________ ___________
Ireland-.1% Crean (James)
(Units) 3,400 3,400 6,650 6,650
Fyffes 5,000 5,000 7,673 7,673
Jefferson Smurfit
Group (a) 2,000 2,000 5,928 5,928
Waterford Wedgwood
(Units) 5,000 5,000 5,793 5,793
Woodchester
Investments
(Units) 2,500 2,500 9,216 9,216
___________ ___________ ___________
35,260 35,260
___________ ___________ ___________
Italy-3.8% Assicurazioni
Generali 1,300 2,320 3,620 29,029 51,799 80,828
Banca Commerciale
Italiana 4,300 22,012 26,312 11,792 60,354 72,146
Credito Italiano 8,300 8,300 22,221 22,221
ENI 12,000 15,400 27,400 67,834 87,042 154,876
Fiat 7,700 22,000 29,700 24,431 69,795 94,226
Istituto Mobiliare
Italiano 1,400 1,400 12,674 12,674
Istituto Nazionale delle
Assicurazioni 9,700 9,700 15,770 15,770
Italgas 22,501 22,501 81,073 81,073
Mediaset 2,800 2,800 12,753 12,753
Mediobanca 2,900 10,000 12,900 19,712 67,962 87,674
Montedison 18,400 18,400 14,891 14,891
Pirelli 3,500 3,500 8,913 8,913
Riunione Adriatica
di Sicurta 800 800 6,891 6,891
Telecom Italia 7,775 5,930 13,705 48,640 37,093 85,733
Telecom Italia (RNC) 2,200 2,200 8,861 8,861
Telecom Italia Mobile 10,000 30,680 40,680 36,922 113,261 150,183
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Italy (continued)Telecom Italia
Mobile (RNC) 3,800 3,800 $ 7,767 $ 7,767
___________ ___________ ___________
349,101 $ 568,379 917,480
___________ ___________ ___________
Japan-26.3% Ajinomoto 20,800 20,800 188,415 188,415
Asahi Breweries 1,000 1,000 14,788 14,788
Asahi Chemical
Industry 3,000 49,900 52,900 13,658 227,251 240,909
Asahi Glass 3,000 800 3,800 20,188 5,385 25,573
Bank of
Tokyo-Mitsubishi 6,000 2,620 8,620 78,259 34,184 112,443
Bridgestone 2,000 400 2,400 43,200 8,643 51,843
Canon 1,000 2,100 3,100 24,258 50,960 75,218
Chudenko 200 200 4,870 4,870
Chugai
Pharmaceutical 400 400 3,214 3,214
Dai-Ichi Kango Bank 210 210 1,780 1,780
Dai Nippon Printing 2,000 800 2,800 39,877 15,956 55,833
Daido Steel 200 200 402 402
Daiichi
Pharmaceutical 1,000 1,000 14,206 14,206
Daikyo 2,000 2,000 3,822 3,822
Daishowa Paper
Manufacturing (a) 400 400 2,343 2,343
Daiwa House
Industry 8,400 8,400 80,977 80,977
Denki Kagaku
Kougyo 600 600 1,136 1,136
Denso 2,000 2,000 43,200 43,200
Ebara 1,000 1,000 12,046 12,046
Eisai 1,000 1,000 15,702 15,702
Fanuc 1,000 1,000 40,376 40,376
Fuji Bank 5,000 4,900 9,900 43,200 42,350 85,550
Fuji Photo Film 1,000 200 1,200 36,222 7,247 43,469
Fujita 5,000 5,000 3,947 3,947
Fujitsu 3,000 15,800 18,800 32,899 173,323 206,222
Furukawa Electric 9,000 9,000 46,372 46,372
Haseko (a) 12,000 12,000 12,466 12,466
Hitachi 5,000 13,900 18,900 38,423 106,852 145,275
Honda Motor 1,000 400 1,400 33,646 13,463 47,109
House Food
Industrial 220 220 3,785 3,785
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Japan (continued)Industrial Bank
of Japan 4,000 2,200 6,200 $ 39,545 $ 21,757 $ 61,302
Ito-Yokado 1,000 1,000 49,680 49,680
Itochu 1,500 1,500 5,148 5,148
JUSCO 1,000 1,000 22,348 22,348
Japan Airlines (a) 6,000 3,600 9,600 21,733 13,044 34,777
Japan Energy 600 600 897 897
Joyo Bank 462 462 2,119 2,119
Kajima 800 800 3,583 3,583
Kamigumi 400 400 1,812 1,812
Kandenko 105 105 711 711
Kansai Electric
Power 9,999 9,999 176,996 176,996
Kawasaki Steel 16,600 16,600 29,108 29,108
Kinki Nippon
Railway 995 995 5,648 5,648
Kirin Brewery 2,000 7,000 9,000 16,782 58,755 75,537
Komatsu 2,000 600 2,600 10,684 3,206 13,890
Konica 18,000 18,000 89,753 89,753
Kubota 3,000 3,000 11,664 11,664
Kumagai-Gumi 27,000 27,000 26,477 26,477
Kyocera 1,200 1,200 68,711 68,711
Kyushu Electric
Power 1 1 17 17
Maeda Road
Construction 200 200 1,198 1,198
Marubeni 40,000 40,000 124,990 124,990
Marudai Food (a) 200 200 522 522
Maruha 400 400 698 698
Marui 1,000 3,000 4,000 16,865 50,611 67,476
Matsushita Electric
Industrial 3,000 10,400 13,400 50,345 174,587 224,932
Mitsubishi 4,000 4,000 34,228 34,228
Mitsubishi Chemical 1,000 200 1,200 2,251 450 2,701
Mitsubishi Electric 5,000 5,000 16,657 16,657
Mitsubishi Estate 3,000 3,000 37,883 37,883
Mitsubishi Heavy
Industries 8,000 44,700 52,700 39,279 219,544 258,823
Mitsubishi
Paper Mills 2,000 2,000 5,300 5,300
Mitsubishi Trust
& Banking 1,000 200 1,200 12,295 2,460 14,755
Mitsui & Co 4,000 400 4,400 30,340 3,035 33,375
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Japan (continued)Mitsui Marine &
Fire Insurance 600 600 $ 3,530 $ 3,530
Mitsui Trust
& Banking 600 600 2,084 2,084
Murata
Manufacturing 1,000 1,000 $ 40,542 40,542
Mycal 1,000 1,000 9,554 9,554
NEC 3,000 800 3,800 32,898 8,776 41,674
NKK 8,000 8,000 11,099 11,099
Nikon 5,600 5,600 62,362 62,362
Nippon Express 2,000 8,000 10,000 10,767 43,082 53,849
Nippon Fire &
Marine Insurance 28,000 28,000 107,970 107,970
Nippon Light Metal 400 400 927 927
Nippon Oil 800 800 3,278 3,278
Nippon Steel 16,000 5,100 21,100 32,965 10,511 43,476
Nippon Telegraph
& Telephone 3 3 25,422 25,422
Nippon Yusen
Kaisha 10,800 10,800 39,402 39,402
Nissan Motor 6,000 6,000 31,951 31,951
Nomura Securities 5,000 4,000 9,000 58,154 46,539 104,693
Oji Paper 30,000 30,000 152,082 152,082
Orient 21,000 21,000 52,007 52,007
Orix 1,000 1,000 68,312 68,312
Osaka Gas 6,000 45,000 51,000 13,259 99,476 112,735
Sakura Bank 8,000 28,600 36,600 32,633 116,701 149,334
Sankyo 1,000 1,000 32,982 32,982
Sanwa Shutter 200 200 1,257 1,257
Sanyo Electric 2,000 2,000 6,646 6,646
Sekisui House 3,000 12,000 15,000 25,671 102,718 128,389
Seven-Eleven
Japan NPV 119 119 8,901 8,901
Sharp 2,000 8,000 10,000 15,535 62,162 77,697
Shiseido 1,000 1,000 13,625 13,625
Shizuoka Bank 400 400 4,056 4,056
Snow Brand
Milk Products 500 500 1,911 1,911
Sony 940 940 78,040 78,040
Sumitomo Bank 4,000 14,307 18,307 42,536 152,189 194,725
Sumitomo Chemical 4,000 4,000 14,256 14,256
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Japan (continued)Sumitomo
Electric Industries 2,000 800 2,800 $ 26,418 $ 10,571 $ 36,989
Sumitomo Metal
Industries 7,000 40,000 47,000 14,015 80,113 94,128
Sumitomo Trust
& Banking 850 850 6,478 6,478
Takara Standard 12,000 12,000 74,994 74,994
Takeda Chemical
Industries 2,000 1,000 3,000 54,499 27,258 81,757
Tohoku Electric
Power 1,000 1,000 16,283 16,283
Tokai Bank 5,000 6,800 11,800 29,160 39,671 68,831
Tokio Marine &
Fire Insurance 4,000 800 4,800 39,877 7,978 47,855
Tokyo 4,000 4,000 16,615 16,615
Tokyo Broadcasting
System 6,000 6,000 102,717 102,717
Tokyo Electric Power 3,000 1,272 4,272 57,323 24,313 81,636
Tokyo Gas 6,000 35,000 41,000 13,758 80,279 94,037
Tokyu 5,820 5,820 24,187 24,187
Toppan Printing 2,000 12,000 14,000 25,089 150,586 175,675
Toray Industries 3,000 21,000 24,000 16,698 116,928 133,626
Tostem 1,000 1,000 13,874 13,874
Toyo Engineering 5,000 5,000 12,590 12,590
Toyobo 1,200 1,200 2,154 2,154
Toyoda Automatic
Loom Works 1,000 1,000 19,606 19,606
Toyota Motor 4,000 18,014 22,014 111,323 501,514 612,837
Ube Industries 600 600 1,207 1,207
Yakult Honsha 200 200 1,660 1,660
Yamato Transport 400 400 5,086 5,086
Yamazaki Baking 1,000 1,000 13,791 13,791
Yasuda Trust
& Banking 23,000 23,000 61,356 61,356
Yokogawa Electric 2,900 2,900 18,437 18,437
___________ ___________ ___________
1,880,851 4,703,330 6,584,181
___________ ___________ ___________
Malaysia-.9% AMMB Holdings 1,000 1,000 1,639 1,639
Amsteel 85,000 85,000 27,452 27,452
Commerce Asset
Holding 2,000 2,000 1,564 1,564
Edaran Otomobil
Nasional 1,000 1,000 3,157 3,157
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Malaysia (continued)Golden Plus
Holdings 3,000 3,000 $ 1,768 $ 1,768
Kemayan 5,000 3,000 8,000 1,910 $ 1,139 3,049
Magnum 5,000 5,000 3,924 3,924
Malayan Banking 2,000 7,000 9,000 7,758 27,004 34,762
Malaysia International
Shipping 3,000 3,000 5,052 5,052
Malaysian
Resources 2,667 2,667 1,588 1,588
Nestle 1,000 1,000 5,082 5,082
Perusahaan Otomobil
Nasional 9,000 9,000 21,531 21,531
Pilecon Engineering 4,000 4,000 1,648 1,648
RHB Capital 2,000 2,000 1,684 1,684
Rashid Hussain 1,000 1,000 1,729 1,729
Resorts World 3,000 23,000 26,000 5,368 40,924 46,292
Rothmans of
Pall Mall 1,000 1,000 8,044 8,044
Sime Darby 6,000 6,000 8,660 8,660
Technology Resources
Industries 1,000 1,000 969 969
Telekom Malaysia 5,000 6,000 11,000 13,006 15,521 28,527
Tenaga Nasional 5,000 1,000 6,000 10,825 2,153 12,978
United Engineers 2,000 2,000 4,751 4,751
YTL 4,000 4,000 4,450 4,450
YTL, Cl. A 2,000 2,000 2,153 2,153
YTL (Warrants) 400 400 --- ---
___________ ___________ ___________
95,760 136,693 232,453
___________ ___________ ___________
Netherlands-2.1%
ABN-Amro Holding 1,000 1,000 20,105 20,105
Akzo Nobel 200 200 35,181 35,181
Elsevier 1,600 1,600 25,092 25,092
Heineken 50 50 8,119 8,119
Hollandsche
Beton Groep 300 300 6,001 6,001
IHC Caland 200 200 12,279 12,279
ING Groep 1,010 1,010 42,326 42,326
KLM-Royal Dutch
AirLines 200 200 6,767 6,767
Koninklijke Ahold 1,212 1,212 30,973 30,973
Philips Electronics 500 500 39,078 39,078
Royal PTT Nederland 1,500 1,500 57,229 57,229
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Netherlands (continued)
Royal Dutch
Petroleum 3,600 3,600 $190,107 $190,107
Unilever 800 800 42,452 42,452
___________ ___________ ___________
515,709 515,709
___________ ___________ ___________
New Zealand-.4%
Brierley Investments 6,400 6,400 4,941 4,941
Carter Holt Harvey 4,200 4,200 7,322 7,322
Fisher & Paykel
Industries 18,750 18,750 $ 59,498 59,498
Telecom Corporation
of New Zealand 4,400 4,400 21,315 21,315
___________ ___________ ___________
33,578 59,498 93,076
___________ ___________ ___________
Norway-.4% Aker RGI ASA,
Series A 2,040 2,040 37,492 37,492
Aker RGI ASA,
Series B 408 408 6,685 6,685
Kvaerner 250 250 12,903 12,903
Norsk Hydro 500 500 27,559 27,559
Orkla, Cl. A 100 100 9,205 9,205
___________ ___________ ___________
49,667 44,177 93,844
___________ ___________ ___________
Singapore-1.1%
City Developments 2,000 2,000 8,386 8,386
DBS Land 2,000 2,000 3,405 3,405
Development Bank of
Singapore 2,000 2,000 18,696 18,696
Fraser & Neave 1,000 1,000 5,019 5,019
Keppel 2,000 12,500 14,500 6,328 39,587 45,915
Oversea-Chinese
Banking 2,000 4,800 6,800 11,118 26,709 37,827
Parkway Holdings 2,000 2,000 5,057 5,057
Singapore Airlines 2,000 9,000 11,000 14,994 67,536 82,530
Singapore Technologies
Industrial 2,000 2,000 2,745 2,745
Singapore
Telecommunications 13,000 13,000 20,648 20,648
United Overseas
Bank 2,000 5,000 7,000 11,055 27,663 38,718
___________ ___________ ___________
88,755 180,191 268,946
___________ ___________ ___________
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Spain-2.8% Autopistas
Concesionaria
Espanola 630 630 $ 8,129 $ 8,129
Banco Bilbao
Vizcaya 1,200 4,916 6,116 32,038 $ 131,188 163,226
Banco Central
Hispanoamericano 600 600 11,201 11,201
Corporacion Bancaria
de Espana 300 300 16,637 16,637
Endesa 1,600 5,600 7,200 30,089 105,262 135,351
Fomento de
Construcciones y
Contratas 1,300 1,300 47,712 47,712
Iberdrola 2,200 2,200 26,273 26,273
Repsol 700 1,100 1,800 29,307 46,031 75,338
Tabacalera, Cl. A 300 300 21,579 21,579
Telefonica de Espana 1,500 4,893 6,393 40,872 133,259 174,131
Union Electrica
Fenosa 2,100 2,100 20,034 20,034
___________ ___________ ___________
236,159 463,452 699,611
___________ ___________ ___________
Sweden-2.8% ABB AB,
Cl. A 1,600 11,142 12,742 18,671 128,402 147,073
Astra, Cl. A 1,900 1,333 3,233 30,661 21,488 52,149
Astra, Cl. B 5,333 5,333 82,418 82,418
Atlas Copco , Cl. A 300 300 8,802 8,802
Electrolux, Cl. B 200 200 16,538 16,538
Esselte, Cl. B 2,815 2,815 61,130 61,130
Hennes & Mauritz,
Cl. B 500 500 20,439 20,439
Securitas, Cl. B 180 180 4,801 4,801
Skandia Forsakrings 200 200 9,336 9,336
Skandinaviska Enskilda
Banken, Cl. A 900 1,700 2,600 9,722 18,345 28,067
Skanska, Cl. B 600 600 23,126 23,126
Stora Kopparbergs
Bergslags
Aktiebolag 1,000 1,000 13,789 13,789
Svenska Cellulosa,
Cl. B 500 500 11,203 11,203
Svenska
Handelsbanken,
Cl. A 300 600 900 9,482 18,945 28,427
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Sweden (continued)
Telefonaktiebolaget
LM Ericsson, Cl. B 1,300 2,600 3,900 $ 57,215 $114,309 $171,524
Volvo, Cl. B 600 600 15,684 15,684
___________ ___________ ___________
235,680 458,826 694,506
___________ ___________ ___________
Switzerland-11.4% ABB 20 63 83 5,169 82,166 87,335
Adecco 50 83 133 15,886 26,415 42,301
Alusuisse-Lonza
Holding (Bearer) 16 16 14,285 14,285
Alusuisse-Lonza
Holding
(Registered) 5 5 4,437 4,437
Credit Suisse Group 450 995 1,445 63,372 140,311 203,683
Danzas Holding 100 100 20,010 20,010
Georg Fischer
(Bearer) 5 5 6,661 6,661
Georg Fischer
(Registered) 20 20 5,169 5,169
Holderbank Financiere
Glarus (Bearer) 30 20 50 24,139 16,112 40,251
Holderbank Financiere
Glarus (Registered) 22 22 3,873 3,873
Jelmoli Holding
(Bearer) 20 2 22 17,421 1,760 19,181
Jelmoli Holding
(Registered) 50 50 8,710 8,710
Kuoni Reisen 1 1 3,791 3,791
Moevenpick Holding
(Bearer) 30 30 10,816 10,816
Nestle (Registered) 75 204 279 105,647 287,709 393,356
Novartis (Bearer) 50 50 78,896 78,896
Novartis (Registered) 100 326 426 156,570 511,040 667,610
Roche Holding 1 36 37 8,785 316,573 325,358
Roche Holding
(Bearer) 8 8 119,081 119,081
SGS Societe Generale
de Surveillance
Holding 2 2 3,978 3,978
SMH (Bearer) 20 92 112 11,152 12,093 23,245
SMH (Registered) 50 13 63 6,551 7,277 13,828
Sairgroup(a) 12 12 16,098 16,098
Schindler Holding 5 33 38 5,515 36,436 41,951
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
Switzerland (continued)
Schindler Holding
(Registered) 5 5 $ 6,069 $ 6,069
Schweizerische
Bankverein 100 403 503 26,880 $108,407 135,287
Schweizerische
Rueckuersicherungs-
Gesellschaft 30 90 120 45,172 135,646 180,818
Sika Finanz (Bearer) 50 50 14,707 14,707
Sulzer 13 13 9,508 9,508
Union Bank of
Switzerland
(Bearer) 50 121 171 57,545 139,393 196,938
Union Bank of
Switzerland
(Registered) 50 90 140 11,530 20,775 32,305
Valora Holding 30 9 39 6,426 1,932 8,358
Zurich Versicherungs-
Gesellschaft 100 228 328 41,267 94,200 135,467
___________ ___________ ___________
661,159 2,212,202 2,873,361
___________ ___________ ___________
United Kingdom-9.2%
Allied Irish Banks 11,624 11,624 97,653 97,653
Arjo Wiggins
Appleton 1933 1,933 5,823 5,823
B.A.T. Industries 6,400 5,000 11,400 55,988 43,637 99,625
BTR 7,000 1,740 8,740 23,632 5,860 29,492
Barclays 2,500 4,281 6,781 62,613 106,962 169,575
Bass 2,000 400 2,400 27,780 5,543 33,323
Boots 2,100 2,100 30,084 30,084
British Aerospace 200 653 853 5,308 17,288 22,596
British Airways 2,300 510 2,810 22,455 4,967 27,422
British Petroleum 7,000 2,059 9,059 102,864 30,185 133,049
British Sky
Broadcasting
Group 4,000 980 4,980 28,383 6,937 35,320
British Steel 3,763 3,763 9,950 9,950
British
Telecommunications 11,000 9,056 20,056 83,590 68,653 152,243
Cable & Wireless 5,100 550 5,650 40,723 4,381 45,104
Cadbury Schweppes 2,300 2,300 23,150 23,150
Dawson
International 6,075 6,075 7,320 7,320
Energy Group 1,333 1,333 13,552 13,552
General Electric 6,400 6,400 40,877 40,877
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
United Kingdom
(continued)
Glaxo Wellcome 4,043 3,335 7,378 $ 86,676 $ 71,327 $ 158,003
Granada Group 2,000 2,000 27,578 27,578
Grand Metropolitan 4,800 739 5,539 43,320 6,654 49,974
Guinness 4,500 4,500 40,235 40,235
HSBC Holdings 2,000 270 2,270 46,970 6,710 53,680
HSBC Holdings (75P) 950 950 23,665 23,665
HSBC Holdings
Group 800 800 18,743 18,743
Hanson 1,667 1,667 8,551 8,551
Harrisons & Crosfield 8,008 8,008 16,953 16,953
Imperial Chemical
Industries 1,700 2,142 3,842 25,095 31,545 56,640
Imperial Tobacco 1,333 1,333 8,053 8,053
J Sainsbury 4,200 4,200 35,051 35,051
Kwik Save 1,275 1,275 6,657 6,657
Legal & General 7,985 7,985 66,146 66,146
Lloyds TSB Group 6,000 1,560 7,560 74,984 19,449 94,433
LucasVarity 1,800 1,800 6,160 6,160
Marks & Spencer 6,500 1,000 7,500 65,968 10,125 76,093
Meyer International 2,343 2,343 14,684 14,684
National Westminster
Bank 2,932 2,932 42,050 42,050
Northern Foods 6,149 6,149 23,771 23,771
Rank 980 980 5,461 5,461
Redland 434 434 2,469 2,469
Reed International 2,600 2,600 25,711 25,711
Reuters Holdings 3,000 700 3,700 32,560 7,579 40,139
Rio Tinto 340 340 4,370 4,370
Royal & Sun Alliance
Insurance Group 3,600 3,600 34,513 34,513
Royal Bank of
Scotland 4,100 4,100 43,364 43,364
Sears 5,350 5,350 5,372 5,372
Sedgwick 4,166 4,166 8,715 8,715
SmithKline Beecham 4,000 6,284 10,284 37,912 59,417 97,329
Southern Electric 1,922 1,922 14,764 14,764
Tesco 5,000 116 5,116 40,029 926 40,955
Unigate 3,984 3,984 38,203 38,203
Unilever 5,200 5,200 38,730 38,730
Vodafone Group 7,100 1,120 8,220 38,708 6,092 44,800
Wilson Connelley
Holdings 2,180 2,180 6,111 6,111
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
United Kingdom
(continued)
Wolseley 375 375 $ 3,117 $ 3,117
Zeneca Group 2,000 2,000 $ 63,108 63,108
___________ ___________ _____________
1,328,260 992,249 2,320,509
___________ ___________ _____________
TOTAL COMMON STOCKS
(cost $20,940,813) $ 7,289,540 $12,385,582 $19,675,122
___________ ___________ _____________
___________ ___________ _____________
Preferred Stocks - .2%
Australia-.1% News 3,625 3,625 $ 16,098 $ 16,098
___________ ___________
Austria- 0% Bau Holding-Vorzug 180 180 8,914 8,914
___________ ___________
Germany-.1% Friedrich Grohe 40 40 $ 11,801 11,801
SAP-Vorzug 50 50 14,891 14,891
STRABAG (a) 100 100 6,844 6,844
___________ ___________ ___________
21,735 11,801 33,536
___________ ___________ ___________
TOTAL PREFERRED STOCKS
(cost $57,088) $ 46,747 $ 11,801 $ 58,548
___________ ___________ ___________
___________ ___________ ___________
Short-Term Investments-17.7%
Commercial Paper-6.3%
Ford Motor Credit Corp.,
5.66%, 11/3/1997 $ 1,577,000 $1,577,000 $1,577,000 $1,577,000
___________ ___________
Repurchase
Agreements-3.2%
UBS Securities Inc.,
Tri-Party Repurchase
Agreement, 5.66%
dated 10/31/1997
to be repurchased at
$800,377 on
11/3/1997
collateralized by
$845,000 U.S.
Treasury Bills, due
5/28/1998 800,000 800,000 800,000 800,000
___________ ________ ___________ ___________
Shares/Principal Amount Value
________________________________________________ ________________________________________________
Dreyfus Dreyfus Dreyfus Dreyfus
International International International International
Stock Index Equity Allocation Stock Index Equity Allocation
Fund Fund Total Fund Fund Total
U.S. Treasury Bills-8.2%
4.95%, 12/11/97(b) $ 300,000 $ 300,000 $ 298,374 $ 298,374
4.92%, 12/18/97(b) $ 1,571,000 1,571,000 $ 1,560,946 1,560,946
4.92%, 12/26/97 203,000 203,000 201,449 201,449
___________ ___________ ___________
1,762,395 298,374 2,060,769
___________ ___________ ___________
TOTAL SHORT-TERM
INVESTMENTS
(cost $4,437,805) $ 1,762,395 $ 2,675,374 $ 4,437,769
___________ ___________ ___________
___________ ___________ ___________
TOTAL INVESTMENTS (cost $25,435,706) 96.4% $ 9,098,682 $ 15,072,757 $ 24,171,439
___________ ___________ ___________
___________ ___________ ___________
CASH AND RECEIVABLES (NET) 3.1% $ 147,464 $ 634,054 $ 781,518
___________ ___________ ___________
___________ ___________ ___________
ADJUSTMENTS .5% - - $ 125,942
___________ ___________ ___________
___________ ___________ ___________
NET ASSETS 100.0% $ 9,246,146 $ 15,706,811 $ 25,078,899
___________ ___________ ___________
___________ ___________ ___________
</TABLE>
Notes to Statement of Investments:
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as
collateral for open futures positions.
See notes to pro forma financial statements.
<TABLE>
<CAPTION>
Dreyfus International Stock Index Fund
Statement of Financial Futures
October 31, 1997 (Unaudited)
Unrealized
Market Value Covered (Depreciation)
Contracts by Contracts Expiration at 10/31/97
__________________________ __________________________ __________________________ ____________________________
Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus
International International International International International International International International
Stock Index Equity Stock Index Equity Stock Index Equity Stock Index Equity
Fund Allocation Fund Fund Allocation Fund Fund Allocation Fund Fund Allocation Fund
__________________________ __________________________ __________________________ ____________________________
Financial Futures Long:
<S> <C> <C> <C> <C> <C> <C> <C>
Australian All Ordinaries 1 3 $ 44,620 $ 132,633 December '97 $ (6,187) $(11,745)
CAC 40 3 1 276,156 91,940 December '97 (29,279) (10,372)
Deutsche Aktienindex 1 4 213,481 859,091 December '97 (12,467) (34,692)
Financial Times 100 3 7 583,183 1,359,359 December '97 (15,805) (66,459)
Nikkei 300 36 38 746,165 822,144 December '97 (95,639) (133,100)
_________ _________
$(159,377) $(256,368)
_________ _________
_________ _________
</TABLE>
See notes to pro forma financial statements.
<TABLE>
<CAPTION>
Pro Forma Statement of Assets and Liabilities
October 31, 1997 (Unaudited)
Dreyfus Dreyfus
International International Pro Forma
Stock Index Equity Combined
Fund Allocation Fund Adjustments (Note 1)
_____________ ______________ ____________ ____________
ASSETS: Investments in securities-
<S> <C> <C> <C> <C> <C>
See Statement of Investments $ 9,098,682 $15,072,757 $ ---- $24,171,439
Cash 58,006 21,544 ---- 79,550
Cash denominated in
foreign currencies 31,115 48,964 ---- 80,079
Receivable for investment securities sold ---- 661,750 ---- 661,750
Dividends and interest receivable 17,460 45,906 ---- 63,366
Receivable for futures variation margin 10,775 26,574 ---- 37,349
Net unrealized appreciation on forward
currency exchange contracts 35,106 17,497 ---- 52,603
Receivable for shares of
Common Stock subscribed ---- 500 ---- 500
Due from The Dreyfus Corporation ---- ---- 147,247 147,247
____________ ____________ ____________ ____________
9,251,144 15,895,492 147,247 25,293,883
____________ ____________ ____________ ____________
LIABILITIES:
Due to The Dreyfus Corporation
and affiliates 2,916 19,104 (22,020) ----
Due to Distributor 2,082 11 43,325 45,418
Payable for investment securities purchased ---- 169,566 ---- 169,566
____________ ____________ ____________ ____________
4,998 188,681 21,305 214,984
____________ ____________ ____________ ____________
NET ASSETS $ 9,246,146 $15,706,811 $ 125,942 $25,078,899
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
REPRESENTED BY: Paid-in capital $ 10,252,997 $14,387,112 $ ---- $24,640,109
Accumulated undistributed investment
income-net 61,291 436,844 125,942* 624,077
Accumulated net realized gain (loss) on
investments, foreign currency transactions
and forward currency exchange contracts (90,075) 1,532,115 ---- 1,442,040
Accumulated net unrealized appreciation
(depreciation) on investments, foreign
currency transactions and forward currency
exchange contracts [including ($415,745),
net unrealized (depreciation) on
financial futures] (978,067) (649,260) ---- (1,627,327)
____________ ____________ ____________ ____________
NET ASSETS $ 9,246,146 $15,706,811 $ 125,942 $25,078,899
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Pro Forma Statement of Assets and Liabilities
October 31, 1997 (Unaudited)
Dreyfus Dreyfus
International International Pro Forma
Stock Index Equity Combined
Fund Allocation Fund Adjustments (Note 1)
_____________ ______________ ____________ ____________
Shares of Common Stock outstanding:
Dreyfus International Stock Index Fund 820,153 1,404,858** 2,225,011
____________
____________
NET ASSET VALUE per share:
Dreyfus International Stock Index Fund
($9,246,146/820,153 shares) $11.27
_______
_______
Dreyfus International Equity Allocation Fund
Investor Shares
($1,374,793/129,141 shares) $10.65
_______
_______
Restricted Shares
($14,332,018/1,345,908 shares) $10.65
_______
_______
Pro forma Combined Portfolio
($25,078,899/2,225,011 shares) $11.27
_______
_______
* Represents the net income effect of pro forma adjustments due to the change in the fee structures for management, shareholder
servicing costs and distribution fees.
** Assumes the issuance of 1,404,858 shares applicable to common stockholders of the Dreyfus International Equity Allocation
Fund.
See notes to pro forma financial statements.
Pro Forma Statement of Operations
for the year ended October 31, 1997 (Unaudited)
Dreyfus Dreyfus
International International Pro Forma
Stock Index Equity Combined
Fund Allocation Fund Adjustments (Note 1)
_____________ ______________ ____________ ____________
INVESTMENT INCOME:
INCOME: Cash dividends (net of $6,292 and $38,403,
respectively, foreign taxes withheld at source) $ 38,603 $ 242,272 $ ---- 280,875
Interest 42,876 152,513 ---- 195,389
____________ ____________ ____________ ___________
Total Income 81,479 394,785 ---- 476,264
____________ ____________ ____________ ___________
EXPENSES: Management fee $ 1,776 $ 235,093 $(169,267)(a) $ 77,602
Shareholder servicing costs 8,412 ---- 47,019(b) 55,431
Distribution fees (Investor shares) ---- 3,694 (3,694)(c) ----
Loan commitment fees ---- 216 ---- 216
____________ ____________ ____________ ___________
Total Expenses 20,188 239,003 (125,942) 133,249
____________ ____________ ____________ ___________
INVESTMENT INCOME-NET 61,291 155,782 125,942 343,015
____________ ____________ ____________ ___________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments and
foreign currency transactions $ 20,928 $1,045,481 $ ---- $1,066,409
Net realized gain (loss) on forward currency
exchange contracts (109,643) 265,252 ---- 155,609
Net realized gain (loss) on financial futures (1,360) 687,220 ---- 685,860
____________ ____________ ____________ ____________
Net Realized Gain (Loss) (90,075) 1,997,953 ---- 1,907,878
Net unrealized appreciation (depreciation)
on investments, foreign currency transactions
and forward currency exchange contracts
[including ($159,377) and ($315,971),
respectively, net unrealized (depreciation)
on financial futures] (978,067) (1,612,261) ---- (2,590,328)
____________ ____________ ____________ ____________
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (1,068,142) 385,692 ---- (682,450)
____________ ____________ ____________ ____________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (1,006,851) $ 541,474 $ 125,942 $ (339,435)
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
</TABLE>
* From June 30, 1997 (commencement of operations) to October 31, 1997.
(a) Total combined average net assets for the period ended October 31, 1997
multiplied by the management fee of .35%.
(b) Total combined average net assets for the period ended October 31, 1997
multiplied by the shareholder servicing fees of .25%.
(c) Represents the elimination of distribution fees.
See notes to pro forma financial statements.
Dreyfus International Stock Index Fund
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)
NOTE 1-Basis of Combination:
On January 28, 1997, the Boards of Dreyfus Index Funds, Inc. and The
Dreyfus/Laurel Funds, Inc. approved an Agreement and Plan of Reorganization (the
"Plan") whereby, subject to approval by the shareholders of Dreyfus
International Equity Allocation Fund, Dreyfus International Stock Index Fund, a
series of Dreyfus Index Funds, Inc., will acquire all the assets of the Dreyfus
International Equity Allocation Fund, a series of The Dreyfus/Laurel Funds,
Inc., subject to the liabilities of such series, in exchange for a number of
shares equal to the pro rata net assets of shares of the Dreyfus International
Stock Index Fund (the "Merger").
The Merger will be accounted for as a tax free merger of investment companies.
The pro forma combined financial statements are presented for the information of
the reader and may not necessarily be representative of what the actual combined
financial statements would have been had the reorganization occurred at October
31, 1997. The unaudited pro forma statement of investments and statement of
assets and liabilities reflect the financial position of Dreyfus International
Stock Index Fund and Dreyfus International Equity Allocation Fund at October 31,
1997. The unaudited pro forma statement of operations reflects the results of
operations of Dreyfus International Stock Index Fund for the period from June
30, 1997 (commencement of operations) to October 31, 1997 and Dreyfus
International Equity Allocation Fund for the year ended October 31, 1997. These
statements have been derived from the Funds' respective books and records
utilized in calculating daily net asset value at the dates indicated above for
Dreyfus International Stock Index Fund and Dreyfus International Equity
Allocation Fund under generally accepted accounting principles. The historical
cost of investment securities will be carried forward to the surviving entity
and results of operations of Dreyfus International Stock Index Fund for pre-
combination periods will not be restated.
The pro forma statements of investments, assets and liabilities and operations
should be read in conjunction with the historical financial statements of the
Funds included or incorporated by reference in the respective Statements of
Additional Information.
NOTE 2-Portfolio Valuation:
Investments in securities (including options and financial futures) are
valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid
price is used when no asked price is available. Investments denominated in
foreign currencies are translated to U.S. dollars at the prevailing rates of
exchange. Forward currency exchange contracts are valued at the forward rate.
If an event were to occur after the value of a portfolio instrument was so
established but before the fund's net asset value is determined which is likely
to materially change the net asset value, then the portfolio instrument would be
valued using fair value considerations established by the Board of Directors.
NOTE 3-Foreign Currency Transactions:
Neither of the Funds isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Funds' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
NOTE 4-Capital Shares:
The pro forma net asset value per share assumes 1,404,858 additional shares
of Common Stock of Dreyfus International Stock Index Fund were issued in
connection with the proposed acquisition of Dreyfus International Equity
Allocation Fund by Dreyfus International Stock Index Fund as of October 31,
1997. The number of additional shares issued was calculated by dividing the
net assets of Dreyfus International Equity Allocation Fund at October 31, 1997
by the net asset value per share of Dreyfus International Stock Index Fund at
October 31, 1997 of $11.27 for Common Shares. The pro forma combined number of
shares outstanding of 2,225,011 consists of the 1,404,858 shares issuable to
Dreyfus International Equity Allocation Fund the merger and 820,153 shares of
Dreyfus International Stock Index Fund outstanding at October 31, 1997.
NOTE 5-Pro Forma Operating Expenses:
The accompanying pro forma financial statements reflect changes in fund
shares as if the merger had taken place on October 31, 1997. Dreyfus
International Equity Allocation Fund expenses were adjusted assuming Dreyfus
International Stock Index Fund's fee structure was in effect for the year ended
October 31, 1997.
NOTE 6-Merger Costs:
Merger costs are estimated at approximately $67,500 and are not included
in the pro forma statement of operations since these costs are nonrecurring.
These costs represent the estimated expense of both Funds carrying out their
obligations under the Plan and consist of management's estimate of legal fees,
accounting fees, printing costs and mailing charges related to the proposed
merger.
NOTE 7-Federal Income Taxes:
Each Fund has elected to be taxed as a "regulated investment company"
under the Internal Revenue Code. After the merger, Dreyfus International
Stock Index Fund intends to continue to qualify as a regulated investment
company, if such qualification is in the best interests of its shareholders, by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve it from all, or
substantially all, Federal income taxes.
The identified cost of investments for the Funds is substantially the
same for both financial accounting and Federal income tax purposes. The
tax cost of investments will remain unchanged for the combined entity.
The Dreyfus International Equity Allocation Fund will distribute substantially
all of its investment income and any realized gains prior to the merger date.
