The Dreyfus/Laurel Funds, Inc., et al. Notice of Application

The following is a summary of the application. The complete application may be obtained for a fee from the SEC's Public Reference Branch, 450 Fifth

Street, N.W., Washington, D.C. 20549 (telephone (202) 942-8090).

Applicants' Representations

1. The Index Funds, a Maryland corporation, is registered under the Act as an open-end management investment company. The Dreyfus International Stock Index Fund (``Acquiring Fund'') is one of three series of Index Funds. The Company, a Maryland corporation, is registered under the Act as an open-end management investment company. The Dreyfus International Equity Allocation Fund (``Acquired Fund'') is one of eighteen series of the Company. 2. Dreyfus Corporation (``Dreyfus''), an investment adviser registered under the Investment Advisers Act of 1940, serves as investment adviser for both the Acquiring Fund and the Acquired Fund. Dreyfus is a wholly owned subsidiary of Mellon Bank, N.A. (``Mellon Bank''), which is a wholly owned subsidiary of Mellon Bank corporation. As of March 30, 1998, Mellon Bank directly or indirectly owned with power to vote approximately 71% of the outstanding shares of the Acquired Fund, 33% of which Mellon directly owned in a fiduciary capacity and 38% of which Mellon directly or indirectly owned (but not in a fiduciary capacity). Also, as of March 30, 1998, Mellon owned approximately 92% of the outstanding voting securities of the Acquiring Fund. 3. The Acquired Fund issues two classes of shares, Investor shares and Restricted shares, which are identical except with respect to services and expenses. Investor shares are subject to rule 12b-1 fees and are offered to any investor. Restricted shares are sold primarily to bank trust departments and other financial service providers acting on behalf of customers who have a qualified trust or investment account or relationship at the 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. The Acquiring Fund offers a single class of shares. These shares are sold to any investor and are subject to shareholder service fees and a redemption fee. Shares of the Acquiring Fund received by former shareholders of the Acquired Fund will not be subject to the redemption fee. Both Acquired Fund shares and Acquiring Fund shares are sold without a front-end or deferred sales charge. 4. On January 28, 1998, and February 11, 1998, respectively, the boards of directors of the Company and the Index Funds (``Boards''), including their disinterested directors, unanimously approved an Agreement and Plan of Reorganization (``Agreement'') pursuant to which the Acquiring Fund will acquire all of the assets and liabilities of the Acquired Fund in exchange for shares of the Acquiring Fund having an aggregate net asset value equal to the assets transferred minus the liabilities of the Acquired Fund (``Reorganization''). The Acquired Fund will endeavor to discharge all of its known liabilities and obligations prior to closing, presently expected to occur at the close of trading on the floor of the New York Stock Exchange on June 19, 1998 (``Closing Date''). 5. The Acquired Fund's shareholders will receive shares, without class designation, of the Acquiring Fund. The number of full or fractional shares of the Acquiring Fund to be issued to the Acquired Fund will be determined by dividing the aggregate net asset value attributable to the Investor and Restricted shares of the Acquired Fund by the net asset value of one Acquiring Fund share. As soon as practicable after the Closing Date, the Acquired Fund will distribute the Acquiring Fund shares pro rata to its shareholders of record, determined as of the close of business on the Closing Date. As a result of the Reorganization, each Acquired Fund shareholder will receive Acquiring Fund shares having an equal net asset value to the shares held in the Acquiring Fund. After the distribution of the Acquiring Fund shares and the winding up of its affairs, the Acquired Fund will be terminated. 6. Each Board found that participation in the Reorganization is in the best interests of the relevant Acquiring Fund and Acquired Fund (collectively, ``Funds'') and that the interests of existing shareholders will not be diluted as a result of the Reorganization. In assessing the Reorganization, the Boards considered: (a) the relative past growth in assets and investment performance of the Funds; (b) the future prospects of the Funds, both under circumstances where they are not reorganized and where they are reorganized; (c) the compatibility of the investment objectives, policies and restrictions of the Acquiring Fund and the Acquired Fund; (d) the effect of the Reorganization on the expense ratios of each Fund based on a comparison of the expense ratios of the Acquiring Fund with those of the Acquired Fund on a ``pro forma'' basis; (e) the costs of the Reorganization to the Funds; (f) whether any future cost savings could be achieved by combining the Funds; (g) the tax-free nature of the Reorganization; and (h) alternatives to the Reorganization. In considering the Reorganization, each Board noted that the investment objectives, policies and restrictions of the Acquiring Fund and the Acquired Fund are similar. 7. Prior to the Closing Date, the Acquired Fund will declare a dividend and/or other distributions so that all taxable income and realized net gain are distributed for the current taxable year through the Closing Date and prior taxable years. If the Reorganization is consummated, the Funds will bear the expenses of the Reorganization pro rata according to their respective net assets as of the Closing Date, or if the Reorganization is not consummated, as of the date the Reorganization is abandoned. 8. On March 4, 1998, a registration statement on Form N-14 containing a preliminary combined prospective/proxy statement, was filed with the SEC. A final prospective/proxy was mailed to shareholders of the Acquired Fund on or about April 14, 1998, for their approval at a meeting scheduled to be held on June 9, 1998. 9. The Reorganization is subject to the following conditions: (a) receipt of the affirmative vote of two-thirds of the votes of the shareholders of the Acquired Fund; (b) the Acquiring Fund's and the Acquired Fund's receipt of opinions of counsel to the effect that the Reorganization will constitute a ``reorganization'' within the meaning of section 368 of the Internal Revenue Code of 1986, as amended, and as a consequence, the Reorganization will not result in federal income taxes for the Acquired Fund or the Acquiring Fund or their shareholder; and (c) the applicants have received exemptive relief from the SEC which is the subject of the application. Applicants agree not to make any material changes to the Agreement without prior SEC approval.

Applicants' Legal Analysis

1. Section 17(a) of the Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such a person, acting as principal, from selling any security to, or purchasing any security from the company. Section 2(a)(3) of the Act defines an ``affiliated person'' or another person to include (a) any person that owns 5% or more of the outstanding voting securities of such other person, (b) any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by such other person, (c) any person directly or indirectly controlling, controlled by or under common control with the other person, and (d) if such other person is an investment company, any investment adviser of that company.

Rule 17a-8 under the Act exempts from the prohibitions of section 17(a) mergers, consolidations, or purchases or sales of substantially all of the assets of registered investment companies that are affiliated persons solely by reason of having a common investment adviser, common directors/trustees, and/or common officers, provided that certain conditions set forth in the rule are satisfied. 3. Applicants believe that they may not rely on rule 17a-8 because the Funds may be affiliated for reasons other than those set forth in the rule. Dreyfus, a wholly owned subsidiary of Mellon Bank, serves as investment adviser to both Funds. Mellon Bank directly or indirectly owns with power to vote approximately 71% of the outstanding shares of the Acquired Fund and approximately 92% of the outstanding shares of the Acquiring Fund. Because of this ownership, the Acquiring Fund may be deemed an affiliated person of an affiliated person of the Acquired Fund and vice versa under sections 2(a)(3)(B) and 2(a)(3)(C) of the Act. 4. Section 17(b) of the Act provides that the SEC may exempt a transaction from the provisions of section 17(a) if the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair and do not involve overreaching on the part of any person concerned, and that the proposed transaction is consistent with the policy of each registered investment company concerned and with the general purposes of the Act. 5. Applicants submit that the terms of the Reorganization satisfy the standards set forth in section 17(b), Applicants note that the Boards, including the disinterested directors, found that participation in the Reorganization is in the best interests of each Fund and that the interests of the existing shareholders of each Fund will not be diluted as a result of the Reorganization. Applicants also note that the exchange of the Acquired Fund's shares for the Acquiring Fund's shares will be based on the Fund's relative net asset values and that the Reorganization will be effected on a tax-free basis.

For the Commission, by the Division of Investment Management, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary. [FR Dos. 98-14186 Filed 5-28-98; 8:45 am] BILLING CODE 8010-01-M