[Federal Register Volume 62, Number 61 (Monday, March 31, 1997)]
[Notices]
[Pages 15210-15212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8004]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22580; 812-10496]
Dreyfus/Laurel Funds Trust, et al.; Notice of Application
March 24, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Dreyfus/Laurel Funds Trust (the ``Trust'') and Dreyfus
Growth and Value Funds, Inc. (the ``Company'').
RELEVANT ACT SECTION: Order requested pursuant to section 17(b) of the
Act granting an exemption from section 17(a) of the Act.
SUMMARY OF APPLICATION: Applicants request an order under section 17(b)
granting an exemption from section 17(a) of the Act to permit a series
of the Company to acquire all of the assets and assume all of the
stated liabilities of a series of the Trust.
FILING DATES: The application was filed on January 14, 1997 and amended
on March 19, 1997. Applicants have agreed to file an amendment during
the notice period, the substance of which is included in this notice.
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
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on April 16, 1997,
and should be accompanied by proof of service on applicants, 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.
Applicants, 200 Park Avenue, New York, NY 10166.
FOR FURTHER INFORMATION CONTACT: Lisa McCrea, Staff Attorney (202) 942-
0562, or Mercer E. Bullard, Branch Chief, (202) 942-0564 (Office of
Investment Company Regulation, Division of Investment Management).
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 Company, a Maryland corporation, is registered under the Act
as an open-end management investment company. The Dreyfus Aggressive
Growth Fund (the ``Acquiring Fund'') is one of ten series of the
Company. The Trust, a Massachusetts business trust, is registered under
the Act as an open-end
[[Page 15211]]
management investment company. The Dreyfus Special Growth Fund (the
``Acquired Fund'') is one of three series of the Trust. Dreyfus acts as
investment adviser to both the Acquiring and Acquired Funds. Dreyfus is
a wholly-owned subsidiary of Mellon Bank, which is a wholly-owned
subsidiary of Mellon Bank Corporation (``Mellon'').
2. The Acquiring Fund shares are sold primarily to retail investors
by the distributor of the Fund, Premier Mutual Fund Services, Inc.
(``Premier''), and through securities dealers, banks or other financial
institutions that have entered into a selling agreement with Premier.
The Acquiring Fund imposes no front-end or deferred sales charges or
distribution fees. The Acquiring Fund's shares are sold subject to
shareholder services plan (the ``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 0.25 or 1%
of the value of the Acquiring Fund's average daily net assets.\1\
Shares of the Acquiring Fund acquired by purchase or exchange after
February 28, 1997 and redeemed or exchanged less than 15 days after
they are acquired will be subject to a redemption fee of 1.0% of the
net asset value of the shares redeemed or exchanged.
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\1\ The Shareholder Services Plan is not a plan adopted pursuant
to rule 12b-1 under the Act.
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3. The Acquired Fund issues two classes of shares, Investor shares
and Class R shares. Investor shares are sold primarily to retail
investors by banks, securities brokers or dealers, other financial
institutions, and Premier, the distributor of the Acquired Fund's
shares. Class R shares are sold primarily to bank trust departments and
other financial service providers acting on behalf of customers having
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 account or
relationship. Mellon owns with power to vote approximately 99% of the
outstanding Class R shares of the Acquired Fund, which constitute
approximately 7% of the shares of the Acquired Fund. The Acquired Fund
imposes no sales charges in connection with the purchase or redemption
of either class of its shares, but Investor shares are subject to a
distribution fee under a distribution plan adopted pursuant to rule
12b-1 under the Act.
4. The investment objective of the Acquiring Fund is capital
appreciation. The Acquiring Fund seeks to obtain this objective by
investing at least 65% of its assets in a portfolio of publicly-trade
equities of domestic and foreign issuers that are categorized as growth
companies by Dreyfus. The investment objective of the Acquired Fund is
to seek above-average capital growth without regard to income. The
Acquired Fund seeks to obtain this objective by focusing on companies,
small or large, with above-average growth opportunities. In obtaining
this objective, the Acquired Fund will invest in issuers with unique or
proprietary products or services leading to a rapidly growing market
share.
5. The Company, on behalf of the Acquiring Fund, and the Trust, on
behalf of the Acquired Fund, entered into an Agreement and Plan of
Reorganization dated as of December 31, 1996 (the ``Agreement''), to
effectuate a proposed reorganization (the ``Reorganization''). The
Acquiring Fund proposes to acquire all the assets of the Acquired Fund
in exchange for shares of the Acquiring Fund with an aggregate net
asset value equal to that of the assets transferred minus the
liabilities of the Acquired Fund that will be assumed by the Acquiring
Fund. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to a closing presently expected to
occur on or about April 18, 1997 (the ``Closing Date''). The Acquiring
Fund will assume all liabilities, debts, obligations, expenses, costs,
charges and reserves of the Acquired Fund reflected on the unaudited
statement of assets and liabilities of the Acquired Fund as of the
close of regular trading on the New York Stock Exchange (``NYSE'') as
of the Closing Date.
6. The number of full and fractional 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
computed as of the close of regular trading on the NYSE on the Closing
Date (the ``Valuation Time''). As soon after the Closing Date as
conveniently practicable, the Acquired Fund will distribute in kind pro
rata to its shareholders of record determined as of the Valuation Time,
in liquidation of the Acquired Fund, the shares of the Acquiring Fund
received by it pursuant to the Reorganization. Such distribution will
be accomplished by the establishment of an account in the name of each
shareholder of the Acquired Fund on the share records of the Acquiring
Fund's transfer agent and transferring to each such account a number of
shares of the Acquiring Fund representing the respective pro rata
number of full and fractional shares of the Acquiring Fund due to such
shareholder of the Acquired Fund. After such distribution and the
winding up of its affairs, the Acquired Fund will be terminated. Shares
of the Acquiring Fund received by shareholders of the Acquired Fund
pursuant to the Reorganization will not be subject to the Acquiring
Fund's redemption fee.
7. On or before the Closing Date, the Acquired Fund will 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 taxable income for
all taxable years ending on or 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).
8. On November 6, 1996, the board of directors of the Company, and
on October 24, 1996 and December 11, 1996, the board of trustees of the
Trust (collectively, the ``Boards''), including members of the Boards
who are not interested persons, unanimously approved the Agreement. The
Boards considered the advisability of the Reorganization and found that
it was in the best interests of the relevant Fund and that the
interests of the existing shareholders of each relevant Fund would not
be diluted as a result of the Reorganization.
9. In assessing the Reorganization and the terms of the Agreement,
the factors considered by the Boards 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 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.
10. The Funds will bear the expenses of the Reorganization pro rata
according to the aggregate net assets in each Fund on the Closing Date.
Each Board considered the fact that the Funds will bear all of the
direct expenses of the Reorganization, whether or not the
Reorganization is consummated, when
[[Page 15212]]
approving the Reorganization and the Agreement. These expenses include
professional fees and the cost of soliciting proxies for the meeting of
the Acquired Fund's shareholders, consisting principally of printing
and mailing expenses, together with the cost of any supplementary
solicitation.
11. On January 13, 1997, the Acquiring Fund filed with the SEC its
registration statement on Form N-14, containing a preliminary combined
prospectus/proxy statement. Applicants sent the prospectus/proxy
statement to shareholders of the Acquired Fund on or about March 5,
1997 for their approval at a special meeting of shareholders scheduled
for April 7, 1997.
12. Notwithstanding approval of the Reorganization Agreement by the
shareholders of the Acquired Fund, the Closing Date of the
Reorganization may be postponed and the Agreement may be terminated
prior to the Closing Date 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 be met. (p. 15) 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, in relevant part, prohibits an
affiliated person of a registered investment company, or any affiliated
person of such a person, acting as principal, from knowingly selling
any such security or other property to such registered company, or
purchasing from such registered company any security or other property.
2. Section 2(a)(3) of the Act defines the term ``affiliated person
of another person'' to include, in pertinent part, any person directly
or indirectly owning, controlling, or holding with power to vote, 5% or
more of the outstanding voting securities of such other person, and any
person directly or indirectly controlling, controlled by, or under
common control with such other person, and if such other person is an
investment company, any investment adviser thereof.
3. 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 are satisfied.
4. Applicants believe that they may not rely on rule 17a-8 in
connection with the Reorganization 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 and approximately 99% of the outstanding Class R shares of the
Acquired Fund, which constitute approximately 7% of the outstanding
shares of the Acquired Fund. Because of this ownership, applicants
believe that the Acquiring Fund may be deemed an affiliated person of
an affiliated person of the Acquired Fund, and vice versa, for reasons
not based solely on their common adviser.
5. 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 or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned; the proposed transaction is
consistent with the policy of each registered investment company
concerned; and the proposed transaction is consistent with the general
purposes of the Act.
6. Applicants submit that the terms of the Reorganization satisfy
the standards set forth in section 17(b), in that the terms are fair
and reasonable and do not involve overreaching on the part of any
person concerned. Applicants note that each Board, including the non-
interested Trustees and Directors, reviewed the terms of the
Reorganization as set forth in the Agreement, including the
consideration to be paid or received, and found that participation in
the Reorganization as contemplated by the Agreement is in the best
interests of the Company, the Trust, and each Fund, and that the
interests of 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 assets and liabilities for the shares of the
Acquiring Fund will be based on the Funds' relative net asset values.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-8004 Filed 3-28-97; 8:45 am]
BILLING CODE 8010-01-M