[Federal Register Volume 66, Number 163 (Wednesday, August 22, 2001)]
[Notices]
[Pages 44185-44186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21159]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25113; File Nos. 812-12532 and 812-
12534]


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

August 16, 2001.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of applications for orders under section 17(b) of the 
Investment Company Act of 1940 (the ``Act'') for exemptions from 
section 17(a) of the Act.

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    Summary of Applications: Applicants request orders to permit the 
proposed reorganizations of (a) Dreyfus Disciplined Smallcap Stock Fund 
(``Smallcap Stock Fund''), a series of The Dreyfus/Laurel Funds, Inc. 
(``Dreyfus/Laurel''), with and into MPAM Small Cap Stock Fund (``Small 
Cap Stock Fund''), a series of MPAM Funds Trust (``MPAM'') [File No. 
812-12534], and (b) Dreyfus Disciplined Intermediate Bond Fund 
(``Intermediate Bond Fund''), a series of Dreyfus/Laurel, with and into 
MPAM Bond Fund (``Bond Fund''), a series of MPAM [File No. 812-12532]. 
Because of certain affiliations, Applicants may not rely on rule 17a-8 
of the Act.
    Applicants: Dreyfus/Laurel, MPAM and the Dreyfus Corporation 
(``Dreyfus'').
    Filing Dates: The applications were filed on May 25, 2001 and 
amended on August 6, 2001.
    Hearing or Notification of Hearing: Orders granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving Applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on September 10, 2001 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 may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 5th Street, NW, Washington, DC 
20549-0609. Applicants, c/o Clifford J. Alexander, Esq., Kirkpatrick & 
Lockhart LLP, 1800 Massachusetts Avenue, NW, 2d Floor, Washington, DC 
20036-1800.

FOR FURTHER INFORMATION CONTACT: Jaea Hahn, Senior Counsel, at (202) 
942-0614, or Janet Grossnickle, Branch Chief, at (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
applications. The complete applications may be obtained for a fee at 
the Commission's Public Reference Branch, 450 5th Street, NW, 
Washington, DC 20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. Dreyfus/Laurel, a Maryland corporation, is registered under the 
Act as an open-end management investment company and currently offers 
nineteen series, including Smallcap Stock Fund and Intermediate Bond 
Fund. MPAM, a Massachusetts business trust, is registered under the Act 
as an open-end management investment company and currently offers 
thirteen series, including Small Cap Stock Fund and Bond Fund. Smallcap 
Stock Fund, Intermediate Bond Fund, Small Cap Stock Fund and Bond Fund 
are each a ``Fund.'' Smallcap Stock Fund and Intermediate Bond Fund are 
the ``Acquired Funds,'' and Small Cap Stock Fund and Bond Fund are the 
``Acquiring Funds.''
    2. Dreyfus, an investment adviser registered under the Investment 
Advisers Act of 1940, serves as investment adviser for the Acquired 
Funds. MPAM Advisers, a division of Dreyfus, serves as investment 
adviser for the Acquiring Funds. Dreyfus is a wholly owned subsidiary 
of Mellon Bank, N.A. (``Mellon Bank''), which is a wholly owned 
subsidiary of Mellon Financial Corporation (``Mellon''). As of April 
10, 2001, Mellon, directly or through affiliates, owned, with power to 
vote in the aggregate, approximately 91% of the outstanding voting 
securities of Smallcap Stock Fund, 93% of the outstanding voting 
securities of Intermediate Bond Fund, 67% of the outstanding voting 
securities of Small Cap Stock Fund, and 69% of the outstanding voting 
securities of Bond Fund. No Mellon subsidiary owns an economic interest 
in any of the Funds that equals or exceeds five percent.
    3. On April 26, 2001 and May 9, 2001, the board of directors or 
trustees of each Fund (the ``Boards''), including the directors or 
trustees who are not ``interested persons'' of the Funds, as defined in 
section 2(a)(19) of the Act (``Independent Directors''), unanimously 
approved an Agreement and Plan of Reorganization (each a ``Plan,'' and 
together the ``Plans'') for their respective funds. Under the Plans, 
each Acquiring Fund will acquire all of the assets and certain stated 
liabilities of the corresponding Acquired Fund in exchange for shares 
of the Acquiring Fund (each, a ``Reorganization''). The shares of each 
Acquiring Fund exchanged will have an aggregate net asset value equal 
to the aggregate net asset value of the corresponding Acquired Fund's 
shares determined as of the close of regular trading on the New York 
Stock Exchange on the closing date of each Reorganization (each, a 
``Closing Date''). The value of the assets of each Fund will be 
determined according to the Fund's then-current prospectus and 
statement of additional information. As soon as practicable after each 
Closing Date, each Acquired Fund will make a pro rata distribution of 
shares of the corresponding Acquiring Fund to its shareholders and 
liquidate.
    4. Applicants state that the Acquiring Funds have investment 
objectives, policies and restrictions that are substantially similar to 
those of the Acquired Funds. Smallcap Stock Fund currently offers 
shares that are not subject to sales charges, but are subject to 
distribution fees. Shareholders of the Smallcap Stock Fund will receive 
shares of one of two classes of Small Cap Stock Fund,\1\ neither of 
which will have either

[[Page 44186]]

a sales charge or a distribution fee. The Small Cap Stock Fund shares 
designated ``Investor Shares'' will, however, be subject to a services 
plan compensating its distributor for shareholder servicing activities. 
Intermediate Bond Fund currently offers two classes of shares 
designated ``Restricted Class Shares'' and ``Investor Class Shares.'' 
Neither class of the Intermediate Bond Fund is subject to a sales 
charge, but the Investor Class Shares are subject to distribution fees. 
Bond Fund currently offers only one class of shares, but in connection 
with the Reorganization will offer two classes of shares designated 
``MIPAM Shares'' and ``Investor Shares.'' \2\ Neither of Bond Fund's 
class of shares will be subject to a sales charge or distribution fees, 
but the Investor Shares will be subject to a shareholder services plan. 
No sales charge will be imposed in connection with the Reorganizations. 
Each Fund will bear its pro rate share of the related Reorganization 
expenses.
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    \1\ Small Cap Stock Fund currently offers only one class of 
shares, which it proposes to designate as ``MPAM Shares.'' On May 9, 
2001, the Trust filed with the Commission a Post-Effective Amendment 
to its Registration Statement on Form N-1A to register Small Cap 
Stock Fund's ``Investor Shares.'' MPAM Shares will be for MPAM 
clients that maintain qualified fiduciary, custody or other accounts 
with Mellon Bank or Boston Safe Deposit and Trust Company, or their 
bank affiliates (``MPAM Clients''). Smallcap Stock Fund shareholders 
will receive MPAM Shares in the Reorganization if they are MPAM 
Clients, and Investor Shares if they are not MPAM Clients.
    \2\ Bond Fund currently offers only one class of shares, which 
it proposes to designate as ``MPAM Shares.'' On May 9, 2001, the 
Trust filed with the Commission a Post-Effective Amendment to its 
Registration Statement on Form N-1A to register Bond Fund's 
``Investor Shares.'' In the Reorganization, only shareholders of 
Intermediate Bond Fund's Restricted Class will receive MPAM Shares.
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    5. Each Board, including all of the Independent Directors, 
unanimously found that the participation of its Fund in the respective 
Reorganization was in the best interest of each of their respective 
Funds and their shareholders and that the interests of each Fund's 
existing shareholders will not be diluted as a result of its 
Reorganization. In approving the Reorganizations, the Board of each 
Acquired Fund considered various factors, including, among other 
things: (a) The compatibility of the investment objectives, management 
policies and investment restrictions of the Funds; (b) the terms and 
conditions of the Reorganizations; (c) the respective expense ratios of 
the Funds; (d) the tax-free nature of the Reorganizations; and (e) the 
estimated costs to the Funds as a result of the Reorganizations.
    6. The Reorganizations are subject to a number of conditions 
including: (1) Each Fund will have received an opinion of counsel 
stating, among other things, that the Reorganization will not result in 
federal income tax liability for the Fund or its shareholders; (b) the 
shareholders of each Acquired Fund will have approved their respective 
Reorganizations; and (c) the Funds will have received from the 
Commission an order exempting the Reorganization from the provisions of 
section 17(a) of the Act. An Acquired Fund or Acquiring Fund may 
terminate its Plan if the Fund's Board determines that circumstances 
have developed that make proceeding with the Reorganization 
inadvisable, or if there is a material breach by the other party of any 
representation, warranty or agreement contained in the Plan, or if a 
condition cannot be met. Applicants agree not to make any material 
changes to either Plan of Reorganization without prior approval of the 
Commission or its staff.
    7. A registration statement on Form N-14 with respect to each 
Reorganization, containing a proxy statement/prospectus, was filed with 
the Commission on June 22, 2001 and amended on August 3, 2001. A 
registration statement containing a combined prospectus/proxy statement 
will be mailed to each Acquired Fund's shareholders on or about August 
8, 2001. A meeting of shareholders of each Acquired Fund will take 
place on or about September 25, 2001.

Applicants' Legal Analysis

    1. Section 17(a) of the Act, in relevant part, prohibits an 
affiliated person of a registered investment company, or an affiliated 
person of such 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'' of another person to include: (a) 
Any person directly or indirectly owning, controlling, or holding with 
power to vote 5% or more of the outstanding voting securities of the 
other person; (b) any person 5% or more of whose securities are 
directly or indirectly owned, controlled, or held with power to vote by 
the other person; (c) any person directly or indirectly controlling, 
controlled by or under common control with the other person; and (d) if 
the other person is an investment company, any investment adviser of 
that company.
    2. Rule 17a-8 under the Act exempts from the prohibitions of 
section 17(a) certain mergers, consolidations, and sales of 
substantially all of the assets of registered investment companies that 
are affiliated persons, or affiliated persons of an affiliated person, 
solely by reason of having a common investment adviser, common 
directors, and/or common officers, provided that certain conditions are 
satisfied.
    3. Applicants state that Mellon, directly or through affiliates, 
owns as nominee with power to vote in the aggregate more than 5% (and 
even more than 25%) of the total outstanding voting securities of each 
of the Funds. Because of this nominee ownership, each Acquiring Fund 
and each Acquired Fund may be deemed to be an affiliated person for 
reasons other than those set forth in rule 17a-8 and, therefore, may be 
unable to rely on the rule.
    4. Section 17(b) of the Act provides, in relevant part, that the 
Commission may exempt a transaction from the provisions of section 
17(a) if evidence establishes that 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, 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 request orders under section 17(b) of the Act 
exempting them from section 17(a) to the extent necessary to complete 
the Reorganizations. Applicants submit that the Reorganizations satisfy 
the standards of section 17(b) of the Act. Applicants state that the 
terms of the Reorganizations are reasonable and fair and do not involve 
overreaching. Applicants state that the investment objectives, policies 
and restrictions of the Acquired Funds are substantially similar to 
those of the corresponding Acquiring Funds. Applicants also state that 
the Boards, including all of the Independent Directors, unanimously 
found that the participation of the Acquired and the Acquiring Funds in 
the Reorganizations are in the best interests of each Fund and its 
shareholders and that such participation will not dilute the interests 
of the existing shareholders of each Fund. In addition, Applicants 
state that the Reorganizations will be on the basis of the Funds' 
relative net asset values.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-21159 Filed 8-21-01; 8:45 am]
BILLING CODE 8010-01-M