As filed with the Securities and Exchange Commission
on March 4, 1998
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
DREYFUS INDEX FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
200 Park Avenue - 55th Floor
New York, New York 10166
(Address of Principal Executive Offices)
(800) 225-5267
(Registrant's Area Code and Telephone Number)
Michael S. Petrucelli, Assistant Secretary
Dreyfus Index Funds, Inc.
200 Park Avenue - 55th Floor
New York, New York 10166
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: as soon as practicable after
this Registration Statement becomes effective.
The Registrant proposes that this Registration Statement become effective
on April 3, 1998 pursuant to Rule 488 under the Securities Act of 1933.
<PAGE>
DREYFUS INDEX FUNDS, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
DREYFUS INTERNATIONAL STOCK INDEX FUND
FORM N-14 CROSS REFERENCE SHEET
Part A Item No. Prospectus/Proxy
And Caption Statement Caption
----------- -----------------
1. Beginning of Registration Statement Cover Page
and Outside Front Cover Page of
Prospectus
2. Beginning and Outside Back Cover Table of Contents
Page of Prospectus
3. Synopsis Information and Risk Factors Summary; Comparison of Investment
Objectives and Policies; Risk
Factors
4. Information About the Transaction Summary; Reasons for the
Reorganization; Information about
the Reorganization; Comparative
Information on Shareholders'
Rights
5. Information About the Registrant Summary; Comparison of Investment
Objectives and Policies; Risk
Factors; Additional Information
About the Acquiring Fund and the
Acquired Fund; See also, the
Prospectus of Dreyfus International
Stock Index Fund, dated January 15,
1998, previously filed on EDGAR,
Accession No. 0000857114-97-000009.
6. Information About the Company Being Summary; Comparison of Investment
Acquired Objectives and Policies; Risk
Factors; Additional Information
About the Acquiring Fund and the
Acquired Fund; SEE ALSO, the
Prospectus of Dreyfus International
Equity Allocation Fund, dated March
1, 1998, previously filed on EDGAR,
Accession No. 0000819940-98-000032.
7. Voting Information Voting Information
8. Interest of Certain Persons and Summary; Information about the
Experts Reorganization
9. Additional Information Required for Not Applicable
Reoffering by Persons Deemed to be
Underwriters
<PAGE>
DREYFUS INTERNATIONAL STOCK INDEX FUND
FORM N-14 CROSS REFERENCE SHEET
(continued)
Part B Item No. Statement of Additional
And Caption Information Caption
----------- -------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About the Statement of Additional
Registrant Information of Dreyfus
International Stock Index Fund,
dated January 15, 1998,
previously filed on EDGAR,
Accession No.
0000857114-97-000009.
13. Additional Information About the Statement of Additional
Company Being Acquired Information of Dreyfus
International Equity Allocation
Fund, dated March 1, 1998,
previously filed on EDGAR,
Accession No. 0000819940-98-000032.
14. Financial Statements Annual Report of Dreyfus
International Stock Index Fund
for the Period Ended October 31,
1997, previously filed on EDGAR,
Accession No. 000085114-98-000001.
Annual Report of Dreyfus
International Equity Allocation
Fund, for Fiscal Year Ended
October 31, 1997, previously
filed on EDGAR, Accession No.
0000819940-98-000004.
Pro Forma Financial Statements as
of October 31, 1997 (unaudited)
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
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.
<PAGE>
PRELIMINARY COPY
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.
<PAGE>
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, 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
- ------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
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, 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.
The Prospectus of the Company describing the Acquired Fund dated March 1,
1998, and a Statement of Additional Information of the same date relating to
that Prospectus, are incorporated by reference herein in their entirety. Copies
of that Prospectus and Statement of Additional Information and the Annual Report
of the Acquired Fund for its fiscal year ended October 31, 1997, including its
audited financial statements, are also available from the Acquired Fund through
the toll-free number and at the address above.
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(R) ("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 Index(R) ("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
2
<PAGE>
(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.
3
<PAGE>
TABLE OF CONTENTS
PAGE
Summary......................................................................5
Reasons for the Reorganization..............................................11
Information About the Reorganization........................................11
Comparison of Investment Objectives and Policies............................15
Risk Factors................................................................19
Comparative Information on Shareholders' Rights.............................22
Additional Information About the Acquiring Fund and the Acquired Fund.......23
Other Business..............................................................24
Voting Information..........................................................24
Financial Statements and Experts............................................27
Legal Matters...............................................................27
Appendix A: Agreement and Plan of Reorganization..........................A-1
4
<PAGE>
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
5
<PAGE>
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 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. 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 January 31, 1998, Dreyfus managed or
administered approximately $96 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
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<PAGE>
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 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
7
<PAGE>
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 each of the
Acquired Fund's Investor 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).
8
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)*
Acquired Fund Acquiring Fund
(Fiscal Year (Fiscal Period
Ended 10/31/97) Ended 10/31/97) Combined Fund
--------------- --------------- -------------
Investor Restricted
Shares Shares
-------- ----------
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
- --------------------
* 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%.
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.
9
<PAGE>
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
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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.
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 consolidations 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
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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 number 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 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.
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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;
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(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:
Acquired Fund Acquiring Pro Forma
------------- Fund After
--------- Reorganization*
---------------
Investor Restricted
-------- ----------
Net Assets $1,374,793 $14,332,018 $9,246,146 $25,078,899
Net Asset $10.65 $10.65 $11.27 $11.27
Value Per
Share
Shares 129,141 1,345,908 820,153 2,225,011
Outstanding
- -----------------------------------
*Represents the net income effect of pro form adjustments.
As of March 9, 1998, there were ____________ shares of the Acquiring Fund
outstanding.
[RESERVED]
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As of March 9, 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 9, 1998, no other 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 will indicate ownership before and after Reorganization]
[RESERVED]
For information with respect to the beneficial ownership of the Acquired
Fund, see the section of this Proxy Statement entitled "Voting Information."
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 (which
accompanies this Proxy Statement) under the caption "Description of the Funds"
and Statement of Additional Information dated January 15, 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
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<PAGE>
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 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
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<PAGE>
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 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.
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<PAGE>
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).
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<PAGE>
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 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 countries, 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
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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 losses, 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.
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
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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 are 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
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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.
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 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
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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, a copy of which
is enclosed, and Statement of Additional Information dated January 15, 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, 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
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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 9, 1998, the
number of shares outstanding of the Acquired Fund and those beneficially owned
by Dreyfus and its affiliates were as follows:
SHARES BENEFICIALLY OWNED
BY DREYFUS AND AFFILIATES
-------------------------
TOTAL SHARES NUMBER OF % OF TOTAL
OUTSTANDING SHARES OUTSTANDING
Dreyfus International Equity Allocation ___ ___ ___
Fund (Investor and Restricted Shares)
It is anticipated that Mellon Bank, an affiliate of Dreyfus, will own
beneficially or of record 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 FOR the Plan described in this Proxy Statement,
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unless Dreyfus and its affiliates vote more than 25% of the outstanding shares
of the Acquired Fund entitled to vote, in which case all such shares 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 9,
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, except as shown in the table below:
Shares
of %
Record of
Shareholder Address Owned Total
----------- ------- ----- -----
Dreyfus International ___ ___ ___ ____
Equity Allocation Fund
(Investor and Restricted
Shares)
It is not anticipated that any of the 5% record or beneficial owners identified
above, 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 9, 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
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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 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
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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
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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:
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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).
(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 receivables, 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
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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
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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
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 that Acquired Fund Share as
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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
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("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.
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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.
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.
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(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,
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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.
(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
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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
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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
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.
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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.
(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 Funds' 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
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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.
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(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.
(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.
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(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 Funds' 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, enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
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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.
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(c) The Acquired Fund Shareholders will pay their own
expenses, if any, incurred in connection with the Reorganization.
(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.
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(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
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"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.
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
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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.
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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 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.
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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
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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 Acquired 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.
A-24
<PAGE>
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.
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.
A-25
<PAGE>
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.
A-26
<PAGE>
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.
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, respectively, in each case 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
A-27
<PAGE>
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
<PAGE>
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
A-28
<PAGE>
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
0000857114-97-000009.
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:
<PAGE>
Pro Forma Statement of Investments
Dreyfus International Stock Index Fund
October 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Shares/Principal Amount Value
---------------------------- ------------------------------------------
Dreyfus Dreyfus Dreyfus Dreyfus
Inter- Inter- Interna- Interna-
national national national national
Stock Equity Stock Equity
Index Allocation Index Allocation Total
Fund Fund Total Fund Fund
Common Stocks--78.8%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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
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
<PAGE>
Belgium (continued) 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
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
L'OREAL....................... 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
<PAGE>
France (continued) 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
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 51,162 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
<PAGE>
Germany (continued) 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......... 28,000 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
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
<PAGE>
Italy (continued) 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
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
<PAGE>
Japan (continued) 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
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
Mitsui Marine &
Fire Insurance............. 600 600 3,530 3,530
<PAGE>
Japan (continued) 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
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
<PAGE>
(Japan continued) 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
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
<PAGE>
Malaysia (continued) 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 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
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
<PAGE>
(Singapore (continued) 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
----------- ---------- ---------
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
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
----------- ---------- ---------
<PAGE>
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
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
----------- ---------- ---------
<PAGE>
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
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
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
=========== ============ ===========
<PAGE>
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
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
========== ========== =========== ===========
Notes to Statement of Investments:
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as collateral for
open futures positions.
<PAGE>
See notes to pro forma financial statements.
<PAGE>
Dreyfus International Stock Index Fund
Statement of Financial Futures
October 31, 997 (Unaudited)
<TABLE>
<CAPTION>
Unrealized
Market Value Covered (Depreciation)
Contracts by Contracts Expiration at 10/31/97
___________________________ _________________________ _________________________ ______________________
Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus Dreyfus
Inter- Inter- Inter- Inter- Inter- Inter- Inter- Inter-
national national national national national national national national
Stock Index Equity Allo- Stock Equity Allo- Stock Equity Allo- Stock Index Equity
Fund cation Fund Index Fund cation Fund Index Fund cation Fund Fund Allocation
Fund
___________________________ _________________________ _________________________ _______________________
<S> <C> <C> <C> <C> <C> <C> <C>
Financial Futures Long:
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)
========== ==========
See notes to pro forma financial statements.
</TABLE>
<PAGE>
<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)
- -------------------------------------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
ASSETS: Investments in securities--
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
============ ============= ========== ===========
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
=======
</TABLE>
--------------------------------------------------------------------------
* Represents the net income effect of pro forma adjustments.
** Assumes the issuance of 1,404,858 shares applicable to common stockholders
of the Dreyfus International Equity Allocation Fund.
See notes for pro forma financial statements.
<PAGE>
<TABLE>
<CAPTION>
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)
_____________ ______________ ____________ ___________
<S> <C> <C> <C> <C>
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.................................. $ 11,776 $ 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
DREYFUS INDEX FUNDS, INC.
PART C
Item 15. Indemnification.
Reference is made to Article SEVENTH of the Registrant's Articles of
Incorporation filed as Exhibit 1 and to Section 2-418 of the Maryland General
Corporation Law. The application of these provisions is limited by Article VIII
of the Registrant's By-Laws filed as Exhibit 2 and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any such action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act
and will be governed by the final adjudication of such issue
The Statement as to the general effect of any contract, arrangements or
statute under which a director, officer, underwriter or affiliated person of the
Registrant is insured or indemnified is incorporated herein by reference to Item
27 of Part C of Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A, filed on February 8, 1994 ("Post Effective Amendment No.
6").
Reference is also made to the Distribution Agreement, which is
incorporated by reference to Exhibit 6 of Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form N-1A, filed on June 12, 1997
("Post-Effective Amendment No. 11").
Item 16. Exhibits
1(a) Registrant's Articles of Incorporation are incorporated herein by
reference to Exhibit 1(a) of Post-Effective Amendment No. 6.
1(b) Registrant's Articles of Amendment are incorporated herein by
reference to Exhibit 1(b) of Post-Effective Amendment No. 6
2 Registrant's By-Laws are incorporated herein by reference to
Exhibit 2 of Post-Effective Amendment No. 6.
<PAGE>
3 Not Applicable.
4 The Agreement and Plan of Reorganization is filed herewith as
Appendix A to Part A of this Registration Statement.
5 Not Applicable.
6 Registrant's Management Agreement is incorporated herein by
reference to Exhibit 5 of Post-Effective Amendment No. 11.
7(a) Registrant's Distribution Agreement is incorporated herein by
reference to Exhibit 6 of Post-Effective Amendment No. 11.
7(b) Registrant's Shareholder Services Plan Agreements are incorporated
by reference to Exhibit 9 of Post-Effective Amendment No. 11.
8 Not Applicable.
9 Registrant's Amended and Restated Custody Agreement is incorporated
herein by reference to Exhibit 8 of Post-Effective Amendment No. 9
to the Registrant's Registration Statement filed on December 26,
1996 ("Post-Effective Amendment No 9")
10 Not Applicable.
11(a) Opinion of Stroock & Stroock & Lavan, Counsel to Registrant, as to
the legality of the securities being registered is incorporated
herein by reference to Exhibit 10 of Post-Effective Amendment No. 6.
11(b) Consent of Stroock & Stroock & Lavan, Counsel to Registrant. Filed
herewith.
12 Tax opinion and consent of Kirkpatrick & Lockhart LLP. To be filed
by amendment.
13 Registrant's Shareholder Services Plan is incorporated herein by
reference to Exhibit 9 of Post-Effective Amendment No. 11.
14(a) Consent of Coopers & Lybrand L.L.P., Independent Accountants to
Registrant, as to the use of their report dated December 18, 1997,
concerning the financial statements of Dreyfus International Stock
Index Fund dated October 31, 1997. Filed herewith.
14(b) Consent of KPMG Peat Marwick LLP, Independent Auditors to The
Dreyfus/Laurel Funds, Inc., as to the use of their report dated
December 17, 1997 concerning the financial statements of Dreyfus
International Equity Allocation Fund dated October 31, 1997. Filed
herewith.
14(c) Consent of Stroock & Stroock & Lavan, Counsel to Registrant, as to
the use of its opinion as to the legality of the securities being
registered and as to the use of its name as Counsel to such Fund.
SEE Exhibit 11(b).
<PAGE>
14(d) Consent of Kirkpatrick & Lockhart LLP as to the use of its tax
opinion. SEE Exhibit 12.
15 Not Applicable.
16(a) Powers of Attorney of certain Directors and Officers. Filed
herewith.
16(b) Powers of Attorney of certain Directors and Officers are
incorporated by reference herein to Other Exhibits of Post-Effective
Amendment No. 9.
16(c) Certificate of Secretary is incorporated by reference herein to
Other Exhibits of Post-Effective Amendment No. 9.
17(a) Form of Proxy Card.
Item 17. Undertakings.
1 The undersigned Registrant agrees that prior to any public offering
of the securities registered through the use of a prospectus which
is part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the
information called for by the applicable registration form for
offerings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable
form.
2 The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used until
the amendment is effective, and that, in determining any liability
under the Securities Act of 1933, each post-effective amendment
shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of
them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Registrant certifies that this
registration statement has been signed on behalf of the Registrant by the
undersigned, in the City of New York and the State of New York, on the 3rd day
of March, 1998.
DREYFUS INDEX FUNDS, INC.
By: /S/ Marie E. Connolly
---------------------------------------
Marie E. Connolly
President
As required by the Securities Act of 1933, this amendment to the Registrant's
registration statement has been signed by the following persons in the
capacities and on the dates indicated. This instrument may be executed in one or
more counterparts, all of which shall together constitute a single instrument.
Signatures Title Date
- ---------- ---------- ----------
/s/ Marie E. Connolly President, Treasurer 3/3/98
- ------------------------ (Principal Executive, Finan-
Marie E. Connolly cial and Accounting Officer)
/s/ Joseph S. DiMartino*
- ------------------------ Director, Chairman of the 3/3/98
Joseph S. DiMartino Board
/s/ David P. Feldman*
- ------------------------- Director 3/3/98
David P. Feldman
/s/ John M. Fraser, Jr.*
- ------------------------- Director 3/3/98
John M. Fraser, Jr.
<PAGE>
/s/ Ehud Houminer*
- ------------------------- Director 3/3/98
Ehud Houminer
/s/ David J. Mahoney*
- -------------------------- Director 3/3/98
David J. Mahoney
/s/ Gloria Messinger*
- -------------------------- Director 3/3/98
Gloria Messinger
/s/ Jack R. Meyer*
- -------------------------- Director 3/3/98
Jack R. Meyer
/s/ John Szarkowski*
- -------------------------- Director 3/3/98
John Szarkowski
/s/ Anne Wexler*
- -------------------------- Director 3/3/98
Anne Wexler
*By: /s/ Marie E. Conolly
----------------------
Marie E. Conolly
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
EXHIBITS:
11(b) Consent of Stroock & Stroock & Lavan, Counsel to Registrant.
14(a) Consent of Coopers & Lybrand L.L.P., Independent Accountants to
Registrant, as to the use of their report dated December 18, 1997
concerning the financial statements of Dreyfus International Stock
Index Fund dated October 31, 1997.
14(b) Consent of KPMG Peat Marwick LLP, Independent Auditors to The
Dreyfus/Laurel Funds, Inc., as to the use of their report dated
December 17, 1997, concerning the financial statements of Dreyfus
International Equity Allocation Fund dated October 31, 1997.
16(a) Powers of Attorney for certain Directors and Officers.
17(a) Form of Proxy Card.
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
We hereby consent to the use of our legal opinion regarding the legality of
issuance of shares and other matters filed as Exhibit (10) of Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form N-1A filed on
January 3, 1990, which opinion is incorporated by reference as an exhibit to
this Registration Statement on Form N-14, and to the reference to our firm under
the caption "Legal Matters" in the Prospectus/Proxy Statement forming a part of
this Registration Statement on Form N-14. In giving such permission, we do not
admit hereby that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulation of the Securities and Exchange Commission thereunder.
/s/ STROOCK & STROOCK & LAVAN LLP
STROOCK & STROOCK & LAVAN LLP
March 3, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------------------------
We consent to the incorporation by reference in the Registration Statement on
Form N-14 of the Dreyfus Index Funds, Inc. of our report dated December 18,
1997, on our audit of the financial statements and financial highlights of
Dreyfus International Stock Index Fund.
We also consent to the reference to our Firm under the heading "Financial
Statements and Experts".
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
New York, New York
March 2, 1998
Independent Auditors' Consent
To the Shareholders and Board of Directors
The Dreyfus/Laurel Funds, Inc.
We consent to the use of our report dated December 17, 1997 on the financial
statements and financial highlights included in the Annual Report of Dreyfus
International Equity Allocation Fund (one of the funds comprising the
Dreyfus/Laurel Funds, Inc.), incorporated by reference in the Registration
Statement on Form N-14 of Dreyfus Index Funds, Inc., on behalf of Dreyfus
International Stock Index Fund. In addition, we consent to the reference to our
Firm, under the headings "Financial Statements and Experts" and "Agreement and
Plan of Reorganization" in such Registration Statement.
/s/ KPMG Peat Marwick LLP
KMPG Peat Marwick LLP
New York, New York
February 26, 1998
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Marie E. Connolly, Richard W.
Ingram, Christopher J. Kelley, Kathleen K. Morrisey, Michael S. Petrucelli and
Elba Vasquez, and each of them, with full power to act without the other, his or
her true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him or her, and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all amendments
to the Registration Statement of each Fund enumerated on Exhibit A hereto
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Joseph S. Dimartino February 11, 1998
- --------------------------------
Joseph S. DiMartino
/s/ John M. Fraser, Jr. February 11, 1998
- --------------------------------
John M. Fraser, Jr.
/S/ David P. Feldman February 11, 1998
- -------------------------------
David P. Feldman
February 11, 1998
- --------------------------------
Ehud Houminer
/s/ Gloria Messinger February 11, 1998
- --------------------------------
Gloria Messinger
/s/ Jack R. Meyer February 11, 1998
- -------------------------------
Jack R. Meyer
/s/ John Szarkowski February 11, 1998
- -------------------------------
John Szarkowski
/s/ Anne Wexler February 11, 1998
- ------------------------------
Anne Wexler
<PAGE>
EXHIBIT A
DREYFUS INDEX FUNDS, INC.:
Dreyfus S&P Index Fund
Dreyfus Small Cap Stock Index Fund
Dreyfus International Stock Index Fund
DREYFUS STOCK INDEX FUND
DREYFUS MIDCAP INDEX FUND
DREYFUS GROWTH AND VALUE FUNDS, INC.:
Dreyfus International Value Fund
Dreyfus Small Company Value Fund
Dreyfus Midcap Value Fund
Dreyfus Large Company Growth Fund
Dreyfus Aggressive Growth Fund
Dreyfus Large Company Value Fund
Dreyfus Emerging Leaders Fund
Dreyfus Technology Growth Fund
EXHIBIT 17(A)
FORM OF PROXY CARD
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
................................................................................
THE DREYFUS/LAUREL FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS - JUNE 9, 1998
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 beneficial interest in 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. (Eastern
time) 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 SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
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.
DATE: , 1998
--------------------- -----------------------------
------------------------
Signature(s)
-------------------------
Title(s), if applicable
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES PLEASE INDICATE YOUR
VOTE BY MARKING AN "X" IN THE APPROPRIATE BOX BELOW, USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK.
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.
Investor and Restricted shareholders of the Fund are requested to vote on the
following Proposal:
To approve the proposed Agreement and Plan of Reorganization between The
Dreyfus/Laurel Funds Inc., on behalf of Dreyfus International Equity Allocation
Fund (the "Acquired Fund"), and Dreyfus Index Funds, Inc., on behalf of Dreyfus
International Stock Index Fund (the "Acquiring Fund"), whereby (a) the Acquired
Fund will transfer all of its assets to the Acquiring Fund in exchange solely
for shares of the Acquiring Fund and the assumption by the Acquiring Fund of
liabilities of the Acquired Fund, (b) the distribution of those shares of the
Acquiring Fund to the holders of Investor and Restricted shares of the Acquired
Fund, in each case in an amount equal in net asset value to the holders of
Investor and Restricted shares of the Acquired Fund, and (c) the subsequent
termination of the Acquired Fund.
-- -- --
/__/ YES /__/ NO /__/ ABSTAIN
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 adjournment(s) necessary to obtain the
requisite quorums and for approvals.
