[Federal Register Volume 60, Number 24 (Monday, February 6, 1995)]
[Notices]
[Pages 7088-7089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2818]



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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20870 / 812-9430]


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

January 30, 1995.
agency: Securities and Exchange Commission (``SEC'').

action: Notice of Application for Exemption under the Investment 
Company Act of 1949 (the ``Act'').

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applications: The Dreyfus/Laurel Funds, Inc. (``Dreyfus/Laurel Funds'') 
and The Dreyfus/Laurel Investment Series (``Dreyfus/Laurel Series'').

relevant act sections: Order requested under section 17(b) granting an 
exemption from section 17(a), and under section 17(d) and rule 17d-1 
permitting certain joint transactions.

summary of application: Applicants request an order to permit Dreyfus 
International Equity Allocation Fund (the ``Acquiring Fund''), a series 
of Dreyfus/Laurel Funds, to acquire all of the assets of Dreyfus/Laurel 
International Fund (the ``Acquired Fund''), a series of Dreyfus/Laurel 
Series. (The Acquiring Fund and the Acquired Fund are referred to 
individually as a ``Fund'' and collectively as the ``Fund.'') Because 
of certain affiliations, the two series may not rely on rule 17a-8 
under the Act.

filing date: The application was filed on January 11, 1995.

hearing or notification of hearing: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on February 24, 
1995, and should be accompanied by proof of service on applicant, in 
the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

addresses: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicant, 200 Park Avenue, New York, New York 10166.

for further information contact: Deepak T. Pai, Staff Attorney, at 
(202) 942-0574, or Robert A. Robertson, Branch Chief, at (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

supplementary information: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch.

Applicants' Representations

    1. The Acquiring Fund is one of nineteen series of Dreyfus/Laurel 
Funds, a Maryland corporation. Dreyfus/Laurel Funds is registered as an 
open-end management investment company and the shares of the Acquiring 
Fund are registered under the Securities Act of 1933. The Acquired Fund 
is one of three series of Dreyfus/Laurel Series, a Massachusetts 
business trust. Dreyfus/Laurel Series is registered as an open-end 
management investment company and the shares of the Acquired Fund are 
registered under the Securities Act.
    2. The Dreyfus Corporation (``Dreyfus'') serves as the investment 
manager to each Fund. Dreyfus is a wholly-owned subsidiary of Mellon 
Bank, N.A. (``Mellon''), which in turn is a wholly-owned subsidiary of 
Mellon Bank Corporation.
    3. Mellon holds with power to vote more than 50% of the outstanding 
shares of the Acquiring Fund and controls Dreyfus. The Acquiring Fund 
currently offers two classes of shares, Investor Class shares and Class 
R shares. Class R shares are sold primarily to bank trust departments 
and other financial service providers. The objective of the Acquiring 
Fund is to exceed the total return of the Morgan Stanley Capital 
International--Europe Australia Far East Index benchmark through active 
stock selection, country allocation and currency allocation. The 
Acquired Fund, currently offering only Investor Class shares, seeks 
long-term growth in capital by investing in common stocks and 
securities convertible into common stock of companies located outside 
the United States. Neither Fund imposes a sales charge in connection 
with the purchase or redemption of shares.
    4. The Acquiring Fund proposes to acquire all or substantially all 
of the assets of the Acquired Fund in exchange for Investor Class 
shares of the Acquiring Fund on or about May 1, 1995, the closing date. 
The number of full and fractional Investor Class shares of the 
Acquiring Fund to be issued to shareholders of the Acquired Fund will 
be determined on the basis of the relative net asset values of the 
Acquired Fund and the Acquiring Fund. After the closing date, the 
Acquired Fund will liquidate and distribute pro rata to its 
shareholders of record the Investor Class shares of the Acquiring Fund 
received by it in the reorganization. After such distribution and the 
winding up of its affairs, the Acquired Fund will be terminated.
    5. An agreement and plan of reorganization (the ``Reorganization 
Agreement'') was unanimously approved by the board of directors of 
Dreyfus/Laurel Funds, including the non-interested directors, and by 
the board of trustees of the Dreyfus/Laurel Series, including the 
independent trustees, on December 20, 1994. In the assessment of the 
reorganization and the terms of the Reorganization Agreement, the 
factors considered by the boards of Dreyfus/Laurel Funds and Dreyfus/
Laurel Series included: (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; (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.
    6. The Dreyfus/Laurel Series will submit the proposed 
reorganization plan to the shareholders of the Acquired Fund for their 
approval at a meeting expected to be held in April, 1995. Shareholders 
of the Acquired Fund will receive a notice of the special meeting of 
shareholders and a prospectus/proxy statement. A majority of the 
outstanding shareholders of the Acquired Fund must approve the 
reorganization. The expenses of the reorganization will be borne by 
Dreyfus. In addition to shareholder approval, the 
[[Page 7089]] consummation of the reorganization is conditioned upon 
receipt from the SEC of the order requested herein.

Applicants' Legal Analysis

    1. Section 17(a) of the Act, in pertinent part, prohibits an 
affiliated person of a registered investment company, or any affiliated 
person of such a person, acting as principal, from selling to or 
purchasing from such registered company, any security or other 
property. Section 17(b) provides that the SEC may exempt a transaction 
from section 17(a) if evidence establishes that 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 the registered investment company concerned and with the 
general purposes of the Act.
    2. Rule 17a-8 under the Act exempts from the prohibitions of 
section 17(a) mergers, consolidations, or purchases or sales of 
substantially all the assets involving registered investment companies 
that may be affiliated persons, or affiliated persons of an affiliated 
person, solely by reason of having a common investment adviser, common 
directors/trustees and/or common officers provided that certain 
conditions are satisfied.
    3. The proposed reorganization may not be exempt from the 
prohibitions of section 17(a) by reason of rule 17a-8 because the 
Acquiring Fund and the Acquired Fund may be affiliated for reasons 
other than those set forth in the rule. Mellon owns 100% of the 
outstanding voting securities of Dreyfus, the adviser to the Acquired 
Fund. In addition, Mellon holds with power to vote more than 50% of the 
outstanding voting securities of the Acquiring Fund. Therefore, the 
Acquiring Fund may be deemed an affiliated person of the Acquired Fund 
for reasons not based solely on their common adviser.
    4. Applicants believe that the terms of the reorganization satisfy 
the standards of section 17(b). Each Fund's board, including the 
disinterested trustees and directors, has reviewed the terms of the 
reorganization and have found that participation in the reorganization 
as contemplated by the Reorganization Agreement is in the best 
interests of Dreyfus/Laurel Funds, Dreyfus/Laurel Series, and each 
Fund, and that the interests of existing shareholders of each Fund will 
not be diluted as a result of the reorganization. Each board considered 
the compatibility of the investment objectives, policies and 
restrictions of the two Funds and found that they were similar in that 
both Funds emphasized investment in international equity securities.
    5. Section 17(d) prohibits any affiliated person of a registered 
investment company, acting as principal, from effecting any transaction 
in which such registered investment company is a joint participant with 
such person in contravention of SEC rules and regulations. Rule 17d-1 
provides that no joint transaction may be consummated unless the SEC 
first approves the transaction.
    6. The Funds may be affiliated persons of each other, and the 
proposed transaction might be deemed to be a joint enterprise or other 
joint arrangement. Applicants believe that the terms of the 
reorganization are consistent with the provisions, policies and 
purposes of the Act in that they are reasonable and fair to all 
parties, do not involve overreaching, and are consistent with the 
investment policies of each of the Funds. The participation in the 
reorganization by each Fund also is not on a basis different from or 
less advantageous than that of other participants.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2818 Filed 2-3-95; 8:45 am]
BILLING CODE 8010-01-M