As filed with the Securities and Exchange Commission on January 10, 1995
_____________________________________________________________________
1933 Act Registration No. 33-16338
_____________________________________________________________________
U.S. 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. __
THE DREYFUS/LAUREL FUNDS, INC.
------------------------------
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number 1-800-221-7930
200 Park Avenue
New York, New York 10166
---------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
John E. Pelletier, Secretary
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue
New York, New York 10166
________________________________________
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as
possible after the effective date of this Registration Statement.
__________________________________________________________________________
The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940; accordingly, no fee is payable herewith.
A Rule 24f-2 Notice for the Registrant's most recent fiscal year ended
October 31, 1994 was filed with the Commission on December 30, 1994.
It is proposed that this filing will become effective on
February 9, 1995 pursuant to Rule 488 of the Securities Act of 1933.
<PAGE>
THE DREYFUS/LAUREL FUNDS, INC.
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
Item of Part A of Form
N-14 Location in Prospectus/Proxy Statement
-------------------- --------------------------------------
1. Beginning of Registra- Cross Reference Sheet; Cover Page
tion Statement and
Outside Front Cover
Page of Prospectus
2. Beginning and Outside Table of Contents
Back Cover Page of
Prospectus
3. Synopsis and Risk Summary; Comparison of Investment
Factors Objectives and Policies
4. Information about the Summary; Reasons for the
Transaction Reorganization; Information about the
Reorganization; Comparative
Information on Shareholders' Rights
5. Information about the Summary; Comparison of Investment
Registrant Objectives and Policies; Comparative
Information on Shareholder's Rights;
Additional Information About the
Acquired Fund and the Acquiring Fund
6. Information about the Summary; Comparison of Investment
Company Being Acquired Objective and Policies; Comparative
Information on Shareholder's Rights;
Additional Information About the
Acquired Fund and the Acquiring Fund
7. Voting Information Summary; Information about the
Reorganization; Voting Information
8. Interest of Certain Financial Statements and Experts;
Persons and Experts Legal Matters
9. Additional Information Inapplicable
Required for Reoffer-
ing Inapplicable by
Persons Deemed to be
Underwriters
<PAGE>
Item of Part B of Form Location in Statements of Additional
N-14 Information
---------------------- ------------------------------------
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information Statement of Additional Information of
about the Registrant the Acquiring Fund dated January 5,
1995
13. Additional Information Statement of Additional Information of
about the Company the Acquired Fund dated December 30,
Being Acquired 1994
14. Financial Statements Incorporated by reference and
commencing on page 2
Item of Part C of Form
N-14
----------------------
15. Indemnification Incorporated by Reference to Part A
Caption "Comparative Information on
Shareholder's Rights - Liability and
Indemnification of Directors and
Trustees"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
200 PARK AVENUE
NEW YORK, NEW YORK 10166
February 9, 1995
Dear Shareholder:
The Board of Trustees of The Dreyfus/Laurel Investment Series
(formerly known as The Laurel Investment Series and also formerly known as
The Boston Company Investment Series) (the "Trust") has recently reviewed
and unanimously endorsed a proposal for the reorganization of the Trust's
Dreyfus/Laurel International Fund (the "Fund") which it judges to be in
the best interests of the shareholders of the Fund.
Under the terms of the proposal, Dreyfus International Equity
Allocation Fund of The Dreyfus/Laurel Funds, Inc. (the "Company") would
acquire all or substantially all of the assets and assume certain
liabilities of the Fund. The Board of Trustees of the Trust has
determined that the proposed reorganization should provide benefits to
shareholders due, in part, to enhanced operations.
After the transaction, the Fund would be terminated. As a
shareholder of the Fund, you would become a shareholder of the Dreyfus
International Equity Allocation Fund, having received in exchange shares
with an aggregate value equivalent to the aggregate net asset value of
your investment in the Fund at the time of the transaction. The
transaction would, in the opinion of counsel, be free from Federal income
tax to you and the Fund.
The Board of Trustees has called a Special Meeting of
Shareholders to be held April 19, 1995 to consider this transaction. WE
STRONGLY INVITE YOUR PARTICIPATION BY ASKING YOU TO REVIEW, COMPLETE AND
RETURN YOUR PROXY AS SOON AS POSSIBLE.
Detailed information about the proposed transaction is described
in the enclosed proxy statement. I thank you for your participation as a
shareholder and urge you to please exercise your right to vote by
completing, dating and signing 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 a Mutual Fund Specialist at 1-800-221-7930.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED AS
SOON AS POSSIBLE.
Sincerely,
Marie E. Connolly, President
The Dreyfus/Laurel Investment Series
<PAGE>
THE DREYFUS/LAUREL INVESTMENT SERIES
DREYFUS/LAUREL INTERNATIONAL FUND
200 PARK AVENUE
NEW YORK, NEW YORK 10166
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
To Be Held on April 19, 1995
Notice is hereby given that a Special Meeting of Shareholders
(the "Meeting") of Dreyfus/Laurel International Fund, a portfolio of The
Dreyfus/Laurel Investment Series (formerly known as The Laurel Investment
Series and also formerly known as The Boston Company Investment Series)
(the "Trust"), will be held at the office of the Trust, 200 Park Avenue,
New York, New York on April 19, 1995 at 10:00 a.m. for the following
purposes:
1. To consider and act upon the Agreement and Plan of Reorganization
(the "Plan") dated as of December 20, 1994 providing for the
acquisition of all or substantially all of the assets of the
Dreyfus/Laurel International Fund of the Trust (the "Acquired
Fund") by the Dreyfus International Equity Allocation Fund of The
Dreyfus/Laurel Funds, Inc. (the "Acquiring Fund") in exchange for
shares of the Acquiring Fund, and the assumption by the Acquiring
Fund of certain identified liabilities of the Acquired Fund, and
for distribution of such shares of the Acquiring Fund to
shareholders of the Acquired Fund in liquidation of the Acquired
Fund and the subsequent termination of the Acquired Fund.
2. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
The Trustees of the Trust have fixed the close of business on
February 3, 1995 as the record date for the determination of shareholders
of the Acquired Fund entitled to notice of and to vote at this Meeting or
any adjournment thereof.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED WITHOUT DELAY TO SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE, SO THAT THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR
PROMPT ATTENTION TO THE ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF
FURTHER SOLICITATION.
February 9, 1995 By order of the Board of Trustees
JOHN E. PELLETIER
Secretary
2
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and avoid the time and expense involved in validating
your vote if you fail to sign your proxy card(s) properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the proxy card(s).
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the
registration on the proxy card(s).
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the
proxy card(s) should be indicated unless it is reflected in the
form of registration. For example:
Registration Valid Signature
--------------------------- ---------------------
Corporate Accounts
------------------
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
--------------
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d/ 12/28/78 Jane B. Doe
Custodial or Estate Accounts
----------------------------
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr.,
Executor
3
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED FEBRUARY 9, 1995
Acquisition of the Assets of
DREYFUS/LAUREL INTERNATIONAL FUND
of
THE DREYFUS/LAUREL INVESTMENT SERIES
200 PARK AVENUE
NEW YORK, NEW YORK 10166
1-800-221-7930
By and in Exchange for Shares of
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
of
THE DREYFUS/LAUREL FUNDS, INC.
200 Park Avenue
New York, New York 10166
1-800-221-7930
This Prospectus/Proxy Statement is being furnished to
shareholders of Dreyfus/Laurel International Fund (the "Acquired Fund"), a
portfolio of The Dreyfus/Laurel Investment Series (formerly known as The
Laurel Investment Series and also previously known as The Boston Company
Investment Series) (the "Trust"), in connection with a proposed Agreement
and Plan of Reorganization (the "Plan"), to be submitted to shareholders
of the Acquired Fund for consideration at a Special Meeting of
Shareholders to be held on April 19, 1995 at 10:00 a.m. Eastern Daylight
Time, at the offices of the Trust, 200 Park Avenue, New York, New York,
and any adjournments thereof (the "Meeting"). The Plan provides for all
or substantially all of the assets of the Acquired Fund to be acquired by
the Dreyfus International Equity Allocation Fund (the "Acquiring Fund"), a
separate series of The Dreyfus/Laurel Funds, Inc. (the "Company") in
exchange for shares of the Acquiring Fund and the assumption by the
Acquiring Fund of certain liabilities of the Acquired Fund (hereinafter
referred to as the "Reorganization"). Following the Reorganization,
shares of the Acquiring Fund will be distributed to shareholders of the
Acquired Fund in liquidation of the Acquired Fund, and the Acquired Fund
will be terminated. As a result of the proposed Reorganization,
shareholders of the Acquired Fund will receive that number of shares of
the Acquiring Fund having an aggregate net asset value equal to the
aggregate net asset value of such shareholder's shares of the Acquired
Fund. Holders of shares in the Acquired Fund will receive Investor Shares
of the Acquiring Fund. The Reorganization is being structured as a tax-
free reorganization.
4
<PAGE>
The Company is an open-end, diversified management investment
company comprised of portfolios, one of which, the Acquiring Fund, is a
party to the Reorganization.
The Acquiring Fund's investment objective is to exceed the total
return of the Morgan Stanley Capital International - Europe Australia Far
East (MSCI EAFE) Index Benchmark (the "Benchmark") through active stock
selection, country allocation and currency allocation. The Acquiring Fund
is not an index fund and its investments are not representative of the
proportions or weightings of the Benchmark. In addition to investing in
securities in countries represented in the Benchmark, the Acquiring Fund
may invest up to 20% of its assets in securities in emerging market
countries. The Dreyfus Corporation ("Dreyfus"), a wholly owned subsidiary
of Mellon Bank, N.A. ("Mellon Bank"), serves as investment manager to both
the Acquiring Fund and the Acquired Fund.
This Prospectus/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 Reorganization or investing in the Acquiring Fund. Certain relevant
documents listed below, which have been filed with the Securities and
Exchange Commission ("SEC"), are incorporated in whole or in part by
reference. A Statement of Additional Information dated February 9, 1995,
relating to this Prospectus/Proxy Statement and the Reorganization,
incorporating by reference the financial statements of the Acquiring Fund
dated October 31, 1994, has been filed with the SEC and is incorporated by
reference in its entirety into this Prospectus/Proxy Statement. A copy of
such Statement of Additional Information 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-
221-7930.
1. The Prospectus of the Company describing the Acquiring
Fund dated January 5, 1995 is incorporated herein in its entirety by
reference and a copy is included for your information.
2. The Prospectus of the Trust describing the Acquired Fund
dated December 30, 1994 is incorporated herein in its entirety by
reference and a copy 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 1-800-221-7930.
The audited financial statements of the Acquired Fund dated
August 31, 1994, and the audited financial statements of the Acquiring
Fund dated October 31, 1994, are incorporated by reference into the
Statement of Additional Information dated February 9, 1995 relating to
this Prospectus/Proxy Statement.
Also accompanying this Prospectus/Proxy Statement as Exhibit A is
a copy of the Plan for the proposed transaction.
5
<PAGE>
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 OTHER OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR BY ANY OTHER
AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE ACQUIRING FUND IS SUBJECT ARE SUMMARIZED IN
THE "EXPENSE SUMMARY" SECTION OF THE ACQUIRING FUND'S PROSPECTUS. THE
ACQUIRING FUND PAYS MELLON BANK OR ITS AFFILIATES TO BE INVESTMENT
MANAGER. MELLON BANK OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER
SERVICES FOR THE FUND, SUCH AS CUSTODIAN, TRANSFER AGENT OR FUND
ACCOUNTANT SERVICES. THE ACQUIRING FUND IS DISTRIBUTED BY PREMIER MUTUAL
FUND SERVICES, INC.
6
<PAGE>
TABLE OF CONTENTS
Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reasons for the Reorganization . . . . . . . . . . . . . . . . . . . . .
Information About the Reorganization . . . . . . . . . . . . . . . . . .
Comparison of Investment Objectives and Policies . . . . . . . . . . . .
Comparative Information on Shareholders' Rights . . . . . . . . . . . . .
Additional Information About The Acquiring Fund and The Acquired Fund . .
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting Information . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Experts . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit A: Agreement and Plan of Reorganization . . . . . . . . . . . .
7
<PAGE>
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
ADDITIONAL INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY
STATEMENT, THE PROSPECTUS OF DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
DATED JANUARY 5, 1995, THE PROSPECTUS OF THE INTERNATIONAL FUND DATED
DECEMBER 30, 1994, AND THE PLAN, A COPY OF WHICH IS ATTACHED TO THIS
PROSPECTUS/PROXY STATEMENT AS EXHIBIT A.
PROPOSED REORGANIZATION. The Plan provides for the transfer of
all or substantially all of the assets of the Acquired Fund (The
Dreyfus/Laurel International Fund) in exchange for shares of the Acquiring
Fund (Dreyfus International Equity Allocation Fund) and the assumption by
the Acquiring Fund of certain liabilities of the Acquired Fund. The Plan
also calls for the distribution of shares of the Acquiring Fund to the
Acquired Fund shareholders in liquidation of the Acquired Fund. (The
transaction is referred to in this Prospectus/Proxy Statement as the
"Reorganization"). As a result of the Reorganization, each shareholder of
the Acquired Fund will become the owner of that number of full and
fractional shares of the Acquiring Fund having an aggregate net asset
value equal to the aggregate net asset value of the shareholder's shares
of the Acquired Fund as of the close of business on the date that the
Acquired Fund's assets are exchanged for shares of the Acquiring Fund.
Shareholders of the Acquired Fund will receive Investor Shares of the
Acquiring Fund. See "Information About the Reorganization."
For the reasons set forth below under "Reasons for the
Reorganization," the Board of Trustees of the Trust, including the
Trustees who are not "interested persons," as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), have
unanimously concluded that the Reorganization would be in the best
interests of the shareholders of the Acquired Fund and that the interests
of the Acquired Fund's existing shareholders would not be diluted as a
result of the transaction contemplated by the Reorganization, and
therefore has submitted the Plan for the approval of the Acquired Fund's
shareholders.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS APPROVAL OF THE
PLAN EFFECTING THE REORGANIZATION. THE BOARD OF DIRECTORS OF THE COMPANY
HAS ALSO APPROVED THE REORGANIZATION.
Approval of the Reorganization on the part of the Acquired Fund
will require the affirmative vote of the lesser of: (i) 67% of the voting
securities of the Acquired Fund present at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the Acquired Fund
are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Acquired Fund. See "Voting
Information."
If the shareholders of the Acquired Fund do not vote to approve
the Reorganization, the Trustees of the Trust will continue the management
8
<PAGE>
of the Acquired Fund and will consider other alternatives in the best
interests of the shareholders, including liquidation of the Acquired Fund.
TAX CONSEQUENCES. Prior to or at the completion of the
Reorganization, the Trust will have received from counsel an opinion that
no gain or loss will be recognized to the Acquired Fund or its
shareholders for Federal income tax purposes (except, possibly, with
respect to certain hedging instruments held by the Acquired Fund) pursuant
to the Reorganization. The holding period and aggregate tax basis of
shares of the Acquiring Fund that are received by each Acquired Fund
shareholder will be the same as the holding period and aggregate tax basis
of shares of the Acquired Fund previously held by such shareholder. In
addition, the holding period and tax basis of the assets of the Acquired
Fund (other than the hedging instruments mentioned above) in the Acquiring
Fund's hands as a result of the Reorganization will be the same as in the
Acquired Fund's hands immediately prior to the Reorganization.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Acquiring
Fund seeks to exceed the total return of the Benchmark through active
stock selection, country allocation and currency allocation. The
Acquiring Fund is not an index fund and its investments are not
representative of the proportions or weightings of the Benchmark. In
addition to investing in securities in countries represented in the
Benchmark, the Acquiring Fund may invest up to 20% of its assets in
securities in emerging market countries. The Acquired Fund is a
diversified equity fund seeking long-term growth in capital by investing
in companies located outside of the United States. Current income from
dividends, interest and other sources is a secondary objective. The
Acquired Fund seeks to achieve its investment objectives through
investments in common stocks and securities convertible into common stock
of companies located outside the United States.
Although the respective investment objectives and policies of the
Acquiring Fund and the Acquired Fund are similar in their concentration in
foreign equity securities, shareholders of the Acquired Fund should
consider certain differences in such objectives and policies. See
"Comparison of Investment Objectives and Policies."
MANAGEMENT AND OTHER SERVICE PROVIDERS. The business affairs of
the Trust are managed by its Board of Trustees, and the business affairs
of the Company are managed by its Board of Directors. The same individuals
comprise both the Board of Trustees of the Trust and the Board of
Directors of the Company.
The Dreyfus Corporation ("Dreyfus"), a subsidiary of Mellon Bank,
N.A. ("Mellon Bank") serves as the investment manager for both the
Acquiring Fund and the Acquired Fund. S.A.M. Finance, S.A. ("CCF SAM")
115 Avenue des Champs-Elysees, Paris, France 75008, serves as the
investment sub-adviser to the Acquiring Fund, pursuant to a Sub-Advisory
Agreement among the Company, CCF SAM and Mellon Bank, transferred to
Dreyfus effective as of October 17, 1994.
9
<PAGE>
Mellon Bank serves as the custodian and fund accountant for both
the Acquired Fund and the Acquiring Fund.
Premier Mutual Fund Services, Inc. ("Premier") acts as
distributor and serves as subadministrator for both the Acquired Fund and
the Acquiring Fund.
The Shareholder Services Group, Inc. is the transfer agent for
the Acquired Fund and the Acquiring Fund.
FEES AND EXPENSES. Each of the Acquiring Fund and the Acquired
Fund currently pays its investment manager a fee computed daily, and
payable monthly, at the annual rate of 1.50% of the value of its average
daily net assets less certain expenses. The investment manager will
provide, or arrange and pay for one or more third parties to provide,
administrative, custody, transfer agency, fund accounting, securities
registration, legal and audit services to the Acquiring Fund and the
Acquired Fund. Pursuant to the sub-advisory agreement, CCF SAM receives
0.25% of the Fund's average daily net assets. Payment of the fee is the
obligation of Dreyfus and not of the Acquiring Fund. In addition, the
Acquired Fund and the Investor Shares of the Acquiring Fund are both sold
subject to fees under their respective distribution plans adopted pursuant
to Rule 12b-1 under the 1940 Act at an annual rate of up to 0.25% of
average daily net assets. See "Purchase and Redemption Procedures."
Prior to April 4, 1994, the Acquired Fund operated pursuant to a
predecessor investment management agreement under which it paid a fee to
its investment manager at an annual rate of 0.95% of its average daily net
assets, and the Acquired Fund arranged and separately paid for
administrative, custody, transfer agency, fund accounting, securities
registration, legal and audit services. The expense ratios of the
Investor Shares of the Acquired Fund for the year ended August 31, 1994,
were 4.21% before voluntary waivers and reimbursements and 1.84% after
voluntary waivers and reimbursements. The annualized expense ratio for
the Investor Shares of the Acquiring Fund for the period ended October 31,
1994 was 1.75%, the Investor Shares of the Acquiring Fund having commenced
sales on August 12, 1994. As of the date of this Prospectus/Proxy
Statement, both the Acquiring Fund and the Acquired Fund operate under
investment management agreements in the form described in the preceding
paragraph and the anticipated annual expense ratios for both the shares of
the Acquired Fund and the Investor Shares of the Acquiring Fund will be
1.75%.
PURCHASE AND REDEMPTION PROCEDURES. Investor Shares of the
Acquiring Fund and the Acquired Fund are all sold primarily to retail
investors by Premier and by banks, securities brokers or dealers and other
financial institutions (including Mellon Bank and its affiliates)
("Agents") that have entered into a Shareholder Servicing and Sales
Support Agreement with Premier.
All shares of the Acquiring Fund and Acquired Fund are sold
without an initial sales charge. Shares of the Acquired Fund and Investor
10
<PAGE>
Shares of the Acquiring Fund are sold subject to their respective
distribution plans adopted pursuant to Rule 12b-1 under the 1940 Act. The
plans allow the Acquired Fund and the Acquiring Fund, respectively, to
spend annually up to 0.25% of the value of average daily net assets
attributable to the Acquired Fund (or to Investor Shares in the case of
the Acquiring Fund), to compensate Dreyfus Service Corporation, an
affiliate of Dreyfus, for shareholder servicing activities and Premier for
shareholder servicing activities and for activities or expenses primarily
intended to result in the sale of shares of the Acquired Fund (or Investor
Shares in the case of the Acquiring Fund).
EXCHANGE PRIVILEGES. Shareholders of both the Acquiring Fund and
the Acquired Fund may exchange shares for shares of the same class of
certain other funds that are advised by Dreyfus and that were previously
advised by Mellon Bank. As part of the Reorganization, each shareholder
of the Acquired Fund who becomes the owner of Investor Shares of the
Acquiring Fund will be entitled to the exchange privileges offered by that
class of shares. Any exchange entered into after the Reorganization will
be a taxable event for which a shareholder may have to recognize a gain or
loss under Federal income tax provisions. The shares being exchanged and
the shares of each fund being acquired must have a current value of at
least $100 and otherwise meet the minimum investment requirement of the
fund being acquired. The Acquiring Fund reserves the right to amend or
terminate the exchange privilege; shareholders will be provided 60 days'
notice of any material amendment to or the termination of the exchange
privilege. For further information see "How to Exchange Your Investment
From One Fund To Another" in the accompanying Prospectus of the Acquiring
Fund.
DIVIDENDS. The policies of each Fund with regard to dividends
and distributions are similar. The Acquired Fund's policy is to declare
and pay dividends from net investment income semi-annually and distribute
net long term gains, if any, once a year, normally at the end of the year
in which earned or at the beginning of the next year. The Acquiring
Fund's policy is to declare and pay the dividends from net investment
income, if any, annually and distribute any net long-term gains once a
year, normally at the end of the year in which earned or at the beginning
of the next year. Unless a shareholder instructs that dividends and
capital gain distributions be paid in cash and credited to the
shareholder's account at the transfer agent, dividends and capital gain
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
receiving dividends or other distributions in cash may elect at any time
to have their dividends and other distributions reinvested automatically
in additional shares of the Acquiring Fund by writing the Company. See
"Distributions" in the accompanying Prospectus of the Acquiring Fund.
CLASS R SHARES OF THE ACQUIRING FUND. In addition to Investor
Shares, the Acquiring Fund offers Class R Shares, which are sold primarily
11
<PAGE>
to bank trust departments and other financial service providers (including
Mellon Bank and its affiliates) acting on behalf of customers having a
qualified trust or investment account or relationship at such institution.
Class R Shares are not subject to plans adopted pursuant to Rule 12b-1
under the 1940 Act and their performance does not reflect payment of any
fee associated with such a plan. Shareholders of the Acquired Fund will
not receive Class R shares as part of the Reorganization. The annualized
expense ratio for Class R Shares of the Acquiring Fund for the period
ended October 31, 1994 was 1.50%. For further information with respect to
Class R shares of the Acquiring Fund, see the accompanying Prospectus of
the Acquiring Fund.
REASONS FOR THE REORGANIZATION
The Board of Trustees of the Trust has determined that it is
advantageous to combine the Acquired Fund with the Acquiring Fund. The
Funds proposed to be combined have substantially similar investment
objectives, restrictions and policies, and the same adviser,
administrator, custodian, and distributor.
The Board of Trustees of the Trust has determined that the
Reorganization should provide certain benefits to shareholders. In making
such determination, the Board of Trustees considered, among other things,
the benefit to the Acquired Fund of consolidations which 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 performance of
the Funds and the advantages of eliminating duplication inherent in
marketing Funds with similar investment objectives, hopefully leading to
increased growth of the combined Acquiring Fund following the
Reorganization.
The Board of Trustees of the Trust also believes that the access
of the Acquiring Fund to the international investment expertise of CCF SAM
as sub-adviser may prove beneficial in terms of improved operating results
for the combined Acquiring Fund following the Reorganization. A wholly
owned subsidiary of Credit Commercial de France ("CCF"), CCF SAM is a
French corporation organized in 1989, and has been a registered investment
adviser since February, 1993. CCF was founded nearly a century ago in
1894, and is one of Europe's largest commercial banks with 370 offices in
France as well as 40 others around the world of which 10 are located in
European countries. CCF's European investment management business dates
back to 1945 and it currently manages over $30 billion divided between 210
open-end mutual funds and over 100 commingled investment portfolios out of
offices in Paris, London, Geneva, Milan and Tokyo. CCF SAM specializes in
active quantitative asset management based on a structured investment
process. CCF SAM's offices are located in Paris, France and it currently
advises $2 billion in assets worldwide.
12
<PAGE>
In light of the foregoing, the Board of Trustees of the Trust,
including the non-interested Trustees, has decided that it is in the best
interests of the Acquired Fund and its shareholders to combine with the
Acquiring Fund. The Board of Trustees of the Trust has also determined
that a combination of the Acquired Fund and the Acquiring Fund would not
result in a dilution of the Acquired Funds' shareholder's interests.
INFORMATION ABOUT THE REORGANIZATION
PLAN OF REORGANIZATION. The following summary of the Plan is
qualified in its entirety by reference to the Plan (Exhibit A hereto).
The Plan provides that the Acquiring Fund will acquire all or
substantially all of the assets of the Acquired Fund in exchange for
shares of the Acquiring Fund and the assumption by the Acquiring Fund of
certain liabilities of the Acquired Fund on May 1, 1995 or such later date
as may be agreed upon by the parties (the "Closing Date"). Prior to the
Closing Date, the Acquired Fund will endeavor to discharge all of its
known liabilities and obligations. The Acquiring Fund will not assume any
liabilities or obligations of the Acquired Fund other than those reflected
in an unaudited statement of assets and liabilities of the Acquired Fund
prepared as of the close of regular trading on the New York Stock
Exchange, Inc. (the "NYSE"), currently 4:00 pm. Eastern Time (4:15 p.m. in
the case of index trading), on the business day immediately preceding the
Closing Date (the "Valuation Date"). The number of full and fractional
common shares of the Acquiring Fund to be issued to the Acquired Fund's
shareholders will be determined on the basis of the relative net asset
values per share of the Acquiring Fund's Investor Shares and the Acquired
Fund's shares, computed as of the close of regular trading on the NYSE on
the Valuation Date. The net asset value per share of each class will be
determined by dividing assets, less liabilities, by the total number of
outstanding shares.
Both the Acquired Fund and the Acquiring Fund will utilize Mellon
Bank as agent to determine the value of their respective portfolio
securities. The method of valuation employed will be consistent with the
requirements set forth in the Prospectus of each Fund, Rule 22c-1 under
the 1940 Act, and with the interpretation of such rule by the SEC's
Division of Investment Management.
At or prior to the Closing Date, the Acquired Fund shall have
declared a dividend and/or other distribution 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 (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).
As soon after the Closing Date as conveniently practicable, the
Acquired Fund will liquidate and distribute pro rata to shareholders of
record as of the close of business on the Closing Date the full and
13
<PAGE>
fractional shares of the Acquiring Fund received by the Acquired Fund.
Such liquidation and distribution will be accomplished by the
establishment of accounts in the names of the Acquired Fund's shareholders
on the share records of the Acquiring Fund's transfer agent. Each account
will represent the respective pro rata number of full and fractional
shares of the Acquiring Fund due to such Acquired Fund's shareholders.
After such distribution and the winding up of its affairs, the Acquired
Fund will be terminated.
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 the prohibitions of Section 17 under the 1940 Act.
Notwithstanding approval of the Acquired Fund's shareholders, the Plan may
be terminated at any time: (a) at or prior to the Valuation Date by either
party because its governing board reasonably determines that circumstances
have developed which make proceeding with the Reorganization undesirable;
or (b) at or prior to the Closing Date by either party (i) because of a
material breach by the other party of any representation, warranty, or
agreement contained therein, or (ii) because a condition to the obligation
of the terminating party cannot be met.
The expenses of the Reorganization (including the cost of any
proxy soliciting agents), will be borne by Dreyfus. No portion of such
expenses shall be paid by the Acquired Fund or the Acquiring Fund.
If the Reorganization is not approved by shareholders of the
Acquired Fund, the Board of Trustees of the Trust will consider other
possible courses of action, including liquidation of the Acquired Fund.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
DESCRIPTION OF SHARES OF THE ACQUIRING FUND AND THE ACQUIRED
FUND. Full and fractional Investor Shares of common stock of the
Acquiring Fund will be issued for the shares of the Acquired Fund in
accordance with the procedures detailed in the Plan. All issued and
outstanding shares of the Acquired Fund, including those represented by
certificates, will be canceled. Generally, the Acquiring Fund does not
issue share certificates to shareholders unless a specific request is
submitted to the Acquiring Fund's transfer agent. The shares of the
Acquiring Fund to be issued will have no pre-emptive or conversion rights.
FEDERAL INCOME TAX CONSEQUENCES. The exchange of the Acquired
Fund's assets for shares of the Acquiring Fund and the Acquiring Fund's
assumptin of certain liabilities of the Acquired Fund is intended to
qualify for Federal income tax purposes as a tax-free reorganization under
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"). As a condition to the closing of the Reorganization, the Trust on
behalf of the Acquired Fund will receive an opinion from Kirkpatrick &
Lockhart substantially to the effect that, on the basis of the existing
provisions of the Code, U.S. Treasury regulations issued thereunder,
14
<PAGE>
current administrative rules and pronouncements and court decisions, for
Federal income tax purposes:
(1) The transfer of all or substantially all of the Acquired
Fund's Assets solely in exchange for Investor Shares of the
Acquiring Fund and the assumption by the Acquiring Fund of
certain liabilities of the Acquired Fund, and the distribution of
such shares to the shareholders of the Acquired Fund, will
constitute a "reorganization" within the meaning of section
368(a)(1)(C) of the Code, and the Company and the Trust are each
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 (except,
possibly, with respect to certain options, futures and forward
contracts included in those assets ("Contracts")) solely in
exchange for Investor Shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the Acquired Fund's
liabilities or upon the distribution (whether actual or
constructive) of those shares to the Acquired Fund's shareholders
in exchange for their shares of the Acquired Fund;
(3) The tax basis of the transferred assets (with the
possible exception of the Contracts) will be the same to the
Acquiring Fund as the tax basis of those assets to the Acquired
Fund immediately prior to the Reorganization, and the holding
period of those assets (with the possible exception of the
Contracts) in the hands of the Acquiring Fund will include the
period during which the assets were held by the Acquired Fund;
(4) No gain or loss will be recognized to the Acquiring Fund
upon the receipt of the assets from the Acquired Fund solely in
exchange for the Investor Shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the Acquired Fund's
liabilities;
(5) No gain or loss will be recognized to the Acquired Fund's
shareholders upon the issuance to them of the Investor Shares of
the Acquiring Fund, provided they receive solely such Investor
Shares (including fractional shares) in exchange for their shares
of the Acquired Fund; and
(6) The aggregate tax basis of the Investor Shares of the
Acquiring Fund (including any fractional shares) received by each
of the Acquired Fund's shareholders pursuant to the
Reorganization will be the same as the aggregate tax basis of the
Acquired Fund's shares held by that shareholder immediately prior
to the Reorganization, and that shareholder's holding period for
those Investor Shares will include the period during which the
Acquired Fund's shares exchanged therefor were held by that
15
<PAGE>
shareholder (provided those shares were held as capital assets on
the date of the Reorganization).
Shareholders of the Acquired Fund should consult their tax
advisers regarding the effect, if any, of the proposed 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, 1994, and on a
pro forma basis as of that date, giving effect to the proposed acquisition
of assets at net asset value:
Investor Class
Acquired Acquiring Pro Forma
Fund Fund For
Investor Investor Reorganization
Class Class
Net Assets $5,493,683 $70,750 $5,564,433
Net Asset Value
per share $13.78 $10.06 $10.06
Shares
outstanding 398,655 7,035 553,127
Class R
Acquired Acquiring Pro Forma
Fund Fund For
Class R Class R Reorganization
Net Assets $0 $11,844,007 $11,844,007
Net Asset Value
per share $0 $10.06 $10.06
Shares
outstanding 0 1,177,712 1,177,712
As of February 3, 1995 (the "Record Date"), there were the
following number of outstanding shares of the Acquired Fund and the
following approximate percentages of those shares that were beneficially
owned by Mellon Bank and its affiliates:
[RESERVED]
As of the Record Date, the officers and Trustees of the Trust
beneficially owned as a group less than 1% of the outstanding shares of
the Acquired Fund. To the best knowledge of the Trustees of the Trust, as
of the Record Date, no other shareholder or "group" (as that term is used
16
<PAGE>
in Section 13(d) of the Exchange Act of 1934, the "Exchange Act")
beneficially owned more than 5% of the Acquired Fund.
As of January __, 1995, there were the following number of shares
of the Acquiring Fund then outstanding and the following approximate
percentages of the outstanding shares of the Acquiring Fund that were
beneficially owned by Mellon Bank and its affiliates:
[RESERVED]
As of January __, 1995, the officers and Directors of the Company
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
Company, as of January __, 1995, no other shareholder or "group" (as that
term is used in Section 13 of the Exchange Act) beneficially owned more
than 5% of the Acquiring Fund's outstanding shares except as shown on the
table below:
[RESERVED]
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion comparing investment objectives,
policies and restrictions of the Acquiring Fund and the Acquired Fund is
based upon and qualified in its entirety by the respective investment
objectives, policies and restrictions sections of the Prospectuses of the
Acquiring Fund and the Acquired Fund. For a full discussion of the
investment objectives, policies and restrictions of the Acquiring Fund,
refer to the Prospectus of the Dreyfus International Equity Allocation
Fund (which accompanies this Prospectus/Proxy Statement) under the caption
"Investment Objective and Policies." For a discussion of these issues as
they apply to the Acquired Fund, refer to the Prospectus of The
Dreyfus/Laurel International Fund under the caption "Investment Objective
and Policies."
INVESTMENT OBJECTIVE. The investment objective of the Acquiring
Fund of the Company is to exceed the total return of the Benchmark through
active stock selection, country allocation and currency allocation. The
Acquired Fund is a diversified equity fund seeking long-term growth in
capital by investing in companies located outside of the United States.
Current income from dividends, interest and other sources is a secondary
objective. The Acquired Fund seeks to achieve its investment objectives
through investments in common stocks and securities convertible into
common stock of companies located outside the United States. There can be
no assurance that either the Acquiring Fund or the Acquired Fund will meet
its investment objective.
Although the language used by the Acquiring Fund and the Acquired
Fund to define its respective investment objective is different, the
investment objectives of the Funds are similar in that their emphasis on
investment in foreign equity securities. The investment objectives of
17
<PAGE>
both the Acquiring Fund and the Acquired Fund are considered non-
fundamental policies and may be changed with approval by the Board of
Directors/Trustees. In addition, the policies described below in this
"Comparison of Investment Objectives and Policies" section can also be
changed without shareholder approval, except as described in a fundamental
policy.
PRIMARY INVESTMENTS. THE ACQUIRING FUND is not an index fund and
its investments are not representative of the proportions or weightings of
the Benchmark. In addition to investing in securities in countries
represented in the Benchmark, the Acquiring Fund may invest up to 20% of
its assets in securities in emerging market countries. Under normal
circumstances the Acquiring Fund will invest at least 65% of its assets in
equity securities of issuers in at least three countries outside of the
United States.
The Benchmark is a diversified, capitalization-weighted index of
equity securities of companies located in Australia and 13 countries of
Europe and 5 countries of the Far East. The countries represented in the
Benchmark are: Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Italy, Japan, the Netherlands, New Zealand, Norway,
Singapore/Malaysia, Spain, Sweden, Switzerland, and the United Kingdom.
The Acquiring Fund may also invest in securities of other countries added
to the Benchmark from time to time. Stocks in the Benchmark are selected
to represent proportionally each country and each major industrial sector
within each country. Each stock in the Benchmark is weighted according to
its market value as a percentage of the total market value of all stock in
the Benchmark.
The investment process utilized by the Acquiring Fund's advisors
in structuring the Fund has four basic components: (1) country
allocation, (2) stock selection; (3) currency allocation and (4) portfolio
construction and risk control.
Under normal circumstances, the Acquiring Fund expects to be
fully invested in securities of issuers in countries included in the
Benchmark, 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. These amounts may
be held as cash or temporarily invested in high quality short-term debt
instruments of the U.S. or foreign governments, their agencies and
instrumentalities and repurchase agreements. No more than 20% of the
total assets of the Acquiring Fund will be invested in the securities of
emerging market countries, including Argentina, Brazil, Chile, People's
Republic of China, Colombia, Czech Republic, Greece, Korea, Hungary,
India, Indonesia, Israel, Jordan, Mexico, Pakistan, Peru, Philippines,
Poland, Portugal, Sri Lanka, Taiwan, Thailand, Turkey, and Venezuela,
subject to the satisfaction of regulatory standards for the custody of
assets and securities clearance systems. The Acquiring Fund may also
invest in securities of other emerging markets added to the Benchmark from
time to time. Each emerging market country is analyzed from a
macroeconomic and financial perspective giving equal consideration to four
18
<PAGE>
factors: (1) the relative and historical market valuation, (2) the
currency risk, (3) the outlook for economic growth, and (4) the country
political risk.
The Acquiring 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 Benchmark and to its
investment in emerging countries.
THE ACQUIRED FUND places major emphasis on countries that are
considered to have above average potential for long-term economic growth.
In general, the Acquired Fund's investments are expected to be broadly
diversified over a number of countries including, but not limited to,
Australia, Canada, France, Germany, Hong Kong, Italy, Japan, the
Netherlands, Singapore/Malaysia, Spain, Sweden, Switzerland, and the
United Kingdom. Within countries, equity investments are expected to be
broadly diversified to spread risk and to provide representation of the
growth potential of the country. Selection of securities is designed to
include participation in economic and industrial sectors which are
important to the growth of the country. Within countries, the Acquired
Fund invests primarily in major established companies which are listed and
traded on principal exchanges. The Acquired Fund will not invest more
than 35% of its total assets in any one country.
The Acquired Fund may engage in currency exchange transactions in
order to protect against uncertainty in the level of future exchange rates
on securities denominated in foreign currencies.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
FORM OF ORGANIZATION. The Trust and the Company are open-end
management investment companies registered with the SEC under the 1940 Act
which continuously offer to sell shares at their current net asset value.
The Trust is organized as a Massachusetts business trust and is governed
by a Master Trust Agreement, By-Laws, Board of Trustees, and applicable
Massachusetts law. The Company is organized as a Maryland corporation and
is governed by its Articles of Incorporation, By-Laws, Board of Directors
and the Maryland General Corporation Law. Both the Trust and the Company
are also governed by applicable state and Federal law. Certain
differences and similarities between the Company and the Trust are
summarized below.
CAPITALIZATION. The beneficial interest in the Acquired Fund is
represented by transferable shares, $.001 par value per share. The Trust
permits the Trustees to issue an unlimited number of shares of beneficial
interest and to allocate such shares into an unlimited number of series
with rights determined by the Trustees, all without shareholder approval.
Fractional shares may be issued. The Acquired Fund's shares have equal
voting rights and represent equal proportionate interests in the assets
belonging to the Fund, and are entitled to receive dividends and other
amounts as determined by its Trustees.
19
<PAGE>
The Acquiring Fund has issued transferable common stock, par
value $.001 per share. The Company's Articles of Incorporation authorize
the issuance of 25 billion shares with equal voting rights, and permit the
Directors to create an unlimited number of investment portfolios, each of
which issues a separate series of shares. Fractional shares may be
issued. Shareholders of the Fund are entitled to receive pro rata
dividends declared by its Board of Directors and distributions upon
liquidation.
SHAREHOLDER LIABILITY. ACQUIRED FUND: Under Massachusetts law,
shareholders of a portfolio or series could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Master Trust Agreement of the Trust disclaims shareholder liability for
acts or obligations of the portfolio or series and require that notice of
such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the Trustees. The Master Trust
Agreement provides for indemnification out of the portfolio's or series'
property for all losses and expenses of any shareholder held personally
liable for the obligations of the portfolio or series. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is considered remote since it is limited to circumstances in which a
disclaimer is inoperative and the portfolio or series itself would be
unable to meet its obligations. A substantial number of mutual funds in
the United States are organized as Massachusetts business trusts.
ACQUIRING FUND: Under Maryland Law, shareholders have no
personal liability as such for a corporation's acts or obligations.
SHAREHOLDER MEETINGS AND VOTING RIGHTS. ACQUIRED FUND AND
ACQUIRING FUND: Neither the Trust nor the Company 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 Trustee or Director, as the case may be, when requested in
writing to do so by the holders of at least 10% of their respective
outstanding shares. In addition, each of the Trust and the Company is
required to call a meeting of shareholders for the purpose of electing
Trustees or Directors, if, at any time, less than a majority of the
Trustees or Directors then holding office were elected by shareholders.
Neither the Trust nor the Company currently intends to hold regular
shareholder meetings. Neither the Trust nor the Company permits cumulative
voting. The Company is generally required to call a special meeting of
shareholders for any proper purpose when requested to do so in writing by
the holders of no less than 25% of the shares entitled to vote on matters
at such meeting. In the case of the Trust, a majority of shares entitled
to vote on a matter constitutes a quorum for consideration of such matter;
in the case of the Company, a quorum is one-third of the shares 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. ACQUIRED FUND AND ACQUIRING FUND:
In the event of the liquidation of the Acquired Fund or Acquiring Fund or
20
<PAGE>
a class thereof, the shareholders of the Fund or class are entitled to
receive, when, and as declared by the Trustees/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 the Acquired Fund or
the Acquiring Fund.
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND TRUSTEES.
ACQUIRED FUND AND ACQUIRING FUND: The Master Trust Agreement provides
that no Trustee, officer or agent of the Trust 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
duties. The Master Trust Agreement provides that a Trustee or officer is
entitled to indemnification against liabilities and expenses with respect
to claims related to his position with the Trust, unless such Trustee 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 Trust, or, in the event of
settlement, unless there has been a determination that such trustee or
officer has engaged in willful misfeasance, bad faith, gross negligence,
or reckless disregard of his duties. The Articles of Incorporation and
By-Laws of the Company contain similar indemnification for its Directors
and officers.
RIGHTS OF INSPECTION. THE TRUST AND THE COMPANY: Shareholders of
the Trust have the same right to inspect in Massachusetts the governing
documents, records of meetings of shareholders, shareholder lists, share
transfer records, accounts and books of the Trust as are permitted
shareholders of a corporation under the Massachusetts corporation law.
The purpose of inspection must be for interests of shareholders relative
to the affairs of the Trust. 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 may inspect the books of account and stock
ledger of a Fund 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 Acquiring Fund, the Trust and the
Company, the Master Trust Agreement, Articles of Incorporation, By-Laws,
and Massachusetts and Maryland law. The foregoing is not a complete
description of the documents cited. Shareholders should refer to the
provisions of such respective Master Trust Agreement, Articles of
Incorporation, By-Laws, and Massachusetts and Maryland law directly for a
more thorough description.
RISK FACTORS. Due to the similarities of investment objectives
and policies of the Acquiring Fund and Acquired Fund, the investment risks
are also generally similar. Such risks, and certain differences in the
risks associated with investing in the Acquiring Fund or Acquired Fund,
21
<PAGE>
are discussed under the caption "Other Investment Policies and Risk
Factors" in the Prospectus of the Acquiring Fund enclosed with this
Prospectus/Proxy Statement and under the caption "Other Investment
Policies" in the prospectus of the Acquired Fund (available upon request).
In particular, the Acquiring Fund may attempt to reduce the
overall level of investment risk of particular securities and attempt to
protect against adverse market movements by investing in futures and
options. This includes the purchase and writing of options on securities
(including index options) and options on foreign currencies and investing
in futures contracts for the purchase or sale of instruments based on
financial indices, including interest rate indices or indices of U.S. or
foreign governments, equity or fixed income securities ("futures
contracts"), options on futures contracts, and forward contracts.
The use of futures, option, and forward contracts exposes the
Acquiring Fund to additional investment risks and transaction costs. If
Dreyfus or CCF S.A.M. incorrectly analyzes market conditions or does not
employ the appropriate strategy with respect to these instruments, the
Acquiring Fund could be left in a less favorable position. Additional
risks inherent in the use of futures, options, and forward contracts
include: imperfect correlation between the price of futures, options and
forward contracts and movements in the prices of the securities or
currencies being hedged; the possible absence of a liquid secondary market
for any particular instrument at any time; and the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences.
The Acquiring Fund may not purchase put and call options that are traded
on a national stock exchange in an amount exceeding 5% of its net assets.
Further information on the use of futures and options and the associated
risks, is contained in the Statement of Additional Information of the
Acquiring Fund.
The Acquiring Fund may purchase and write call and put options on
foreign currencies for the purpose of hedging against changes in future
currency exchange rates. Call options convey the right to buy the
underlying currency at a predetermined price which may be lower than the
spot price of the currency at the time the option expires. Put options
convey the right to sell the underlying currency at a price which may be
higher than the spot price of the currency at the time the option expires.
Currency options traded on U.S. or other exchanges may be subject to
position limits which may limit the ability of the Fund to reduce foreign
currency risk using such options. Further, there may be an imperfect
correlation between the change in a spot price of a foreign currency and
the prices of futures and option contracts. Over-the-counter options
differ from exchange-traded options in that they are two-party contracts
with price and other terms negotiated between buyer and seller and
generally do not have as much market liquidity as exchange-traded options.
ADDITIONAL INFORMATION ABOUT
THE ACQUIRED FUND AND THE ACQUIRING FUND
22
<PAGE>
ACQUIRED FUND. Information about the Acquired Fund is included
in its current Prospectus dated December 30, 1994, and in the Statement of
Additional Information of the same date that has been filed with the SEC,
both of which are incorporated herein by reference. A copy of the
Prospectus and the statement of additional information is available upon
request and without charge by writing to the Acquired Fund at the address
listed on the cover page of this Prospectus/Proxy Statement or by calling
toll-free 1-800-221-7930.
ACQUIRING FUND. Information concerning the operation and
management of the Acquiring Fund is incorporated herein by reference from
the Prospectus dated January 5, 1995, a copy of which is enclosed, and
Statement of Additional Information dated January 5, 1995, a copy of which
is available upon request and without charge by writing the Acquiring
Fund, at the address listed on the cover page of this Prospectus/Proxy
Statement or by calling toll-free 1-800-221-7930.
Each of the Trust and the Company is subject to the informational
requirements of the Exchange Act and the 1940 Act, and in accordance
therewith file reports and other information including proxy material,
reports and charter documents with the SEC. These reports can be
inspected and copies obtained at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Northeast Regional Office of the SEC, Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, SEC, Washington, D.C. 20549 at prescribed rates.
OTHER BUSINESS
The Trustees of the Trust 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 Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Trustees of the Trust to be used
at the Special Meeting of Shareholders of the Acquired Fund of the Trust
to be held at 10:00 a.m. April 19, 1995, at 200 Park Avenue, New York, New
York 10166, and at any adjournments thereof. This Prospectus/Proxy
Statement, along with a Notice of the Meeting and a proxy card, is first
being mailed to shareholders of the Acquired Fund on or about February 9,
1995. Only shareholders of record as of the close of business on the
Record Date will be entitled to notice of, and to vote at, the Meeting or
any adjournment thereof. The holders of a majority 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
23
<PAGE>
with the instructions marked thereon. Unmarked proxies will be voted FOR
the proposed Reorganization and FOR any other matters deemed appropriate.
Proxies that reflect abstentions and "broker non-votes" (i.e., shares held
by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or the persons entitled to vote or (ii) 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. A proxy may be
revoked at any time on or before the Meeting by written notice to the
Secretary of the Trust, 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 with respect to the Acquired Fund will
require the affirmative vote of the lesser of: (i) 67% of the voting
securities of the Acquired Fund present at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the Acquired Fund
are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Acquired Fund. Each full share
outstanding is entitled to one vote and each fractional share outstanding
is entitled to a proportionate share of one vote.
Mellon Bank has advised the Trust that shares of the Acquired
Fund owned by it or affiliates with respect to which Mellon Bank or such
affiliate exercises voting discretion will be voted FOR the Reorganization
unless Mellon Bank or such affiliate has voting discretion over more than
25% of the Acquired Fund's shares in which case it will vote its shares in
proportion to the vote of the remaining shares provided such vote is
consistent with its fiduciary duty. Premier has advised the Trust that
shares owned by it will be voted FOR the Reorganization.
If the shareholders of the Acquired Fund do not vote to approve
the Reorganization, the Trustees of the Trust will continue the management
of the Acquired Fund and will consider other alternatives in the best
interests of the shareholders, including liquidation of the Acquired Fund.
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal
solicitations conducted by officers and employees of Dreyfus, its
affiliates or other representatives of the Trust. Proxies are solicited by
mail. The cost of solicitation will be borne by Dreyfus.
Dreyfus will be responsible for the respective expenses of the
Acquired Fund and the Acquiring Fund incurred in connection with entering
into and carrying out the Reorganization, whether or not the
Reorganization is consummated.
In the event that sufficient votes to approve the Reorganization
are not received by April 18, 1995, the persons named as proxies may
propose one or more adjournments of either or both of the Meetings to
permit further solicitation of proxies. In determining whether to adjourn
24
<PAGE>
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 Massachusetts law or the
Master Trust Agreement of the Trust to demand payment for, or an appraisal
of, his or her shares. However, shareholders should be aware that the
Reorganization as proposed is not expected to result in recognition of
gain or loss to shareholders for Federal income tax purposes and that, if
the Reorganization is consummated, shareholders will be free to redeem the
Investor Shares of the Acquiring Fund which they received in the
transaction 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 Trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for consideration for inclusion in a proxy
statement for a subsequent shareholder meeting should send their written
proposals to the Secretary of the Trust at the address set forth on the
cover of this Prospectus/Proxy Statement such that they will be received
by the Trust in a reasonable period of time prior to any such meeting.
The votes of the shareholders of the Acquiring Fund are not being
solicited by this Prospectus/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 Dreyfus/Laurel International
Fund, as of August 31, 1994 and the statement of operations, the statement
of changes in net assets and financial highlights for the year ended
August 31, 1994, have been incorporated by reference into this
Prospectus/Proxy Statement in reliance on the report of KPMG Peat Marwick
LLP, independent accountants for the Trust for the year ended August 31,
1994, given on the authority of the firm as experts in accounting and
auditing. Information for fiscal years (periods) prior to the year ended
August 31, 1994, was audited by other independent accountants.
25
<PAGE>
The audited financial statements of the Dreyfus International
Equity Allocation Fund, as of October 31, 1994 and the statement of
operations, the statement of changes in net assets and financial
highlights for the period ended October 31, 1994, have been incorporated
by reference into this Prospectus/Proxy Statement in reliance on the
report of KPMG Peat Marwick LLP, independent accountants for the Company,
given on the authority of the firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of The
Dreyfus/Laurel Funds, Inc. will be passed upon by Kirkpatrick & Lockhart,
1800 M Street, N.W., Washington, DC 20036.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE "NON-
INTERESTED" TRUSTEES, UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN, AND ANY
UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN
FAVOR OF APPROVAL OF THE PLAN.
__________________________
February 9, 1995
26
<PAGE>
EXHIBIT A TO PROSPECTUS/PROXY
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made as of the 20th day of December, 1994, by and between The
Dreyfus/Laurel Investment Series (formerly The Laurel Investment Series,
and prior thereto The Boston Company Investment Series), a Massachusetts
business trust, with its principal place of business at 200 Park Avenue,
New York, New York 10166 (the "Trust"), and The Dreyfus/Laurel Funds,
Inc., a Maryland corporation, with its principal place of business at 200
Park Avenue, New York, New York 10166 (the "Corporation").
The Corporation consists of a number of segregated portfolios of
assets ("portfolios"), of which Dreyfus International Equity Allocation
Fund is the subject of this Agreement and is designated the "Acquiring
Fund". The Trust consists of a number of segregated portfolios, of which
Dreyfus/Laurel International Fund is the subject of this Agreement and is
designated the "Acquired Fund".
This Agreement governs the proposed issuance of shares of the
Acquiring Fund in exchange for all or substantially all of the assets of,
and its assumption of certain liabilities of, the Acquired Fund on the
terms specified below (such transaction being referred to herein as the
"Reorganization").
This Agreement is intended to be, and is adopted as, a plan of a
reorganization within the meaning of section 368(a)(1)(C) of the United
States Internal Revenue Code of 1986, as amended (the "Code"). The
Reorganization will consist of the transfer of all or substantially all of
the assets of the Acquired Fund in exchange solely for Investor Shares of
voting common stock, $.001 par value per share, of the Acquiring Fund (the
"Acquiring Fund's Shares") and the assumption by the Acquiring Fund of
certain liabilities of the Acquired Fund and the distribution, after the
Closing Date hereinafter referred to, of the Acquiring Fund's Shares to
the shareholders of the Acquired Fund in termination of the Acquired Fund
as provided herein, all upon the terms and conditions hereinafter set
forth in this Agreement.
The shares of the Acquiring Fund are divided into two classes,
designated "Investor Shares" and "Class R Shares," respectively. The
outstanding shares of beneficial interest in the Acquired Fund (the
"Acquired Fund's Shares") consist of one class of shares, designated
"Investor Shares."
WHEREAS, the Corporation and the Trust are open-end, registered
investment companies of the management type, and the Acquired Fund owns
securities which generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Board of Directors of the Corporation has determined
that the exchange of all or substantially all of the assets of the
Acquired Fund for the Acquiring Fund's Shares and the assumption of
certain liabilities of the Acquired Fund is in the best interests of the
<PAGE>
Acquiring Fund's shareholders and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of
this transaction; and
WHEREAS, the Board of Trustees of the Trust has determined that
the exchange of all or substantially all of the assets of the Acquired
Fund for the Acquiring Fund's Shares and the assumption of certain
liabilities by the Acquiring Fund is in the best interests of the Acquired
Fund's shareholders and that the interests of the existing shareholders of
the Acquired Fund would not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties hereto
covenant and agree as follows:
1. TRANSFER OF ASSETS, ASSUMPTION OF LIABILITIES AND TERMINATION
1.1 Subject to the requisite approval of the shareholders of
the Acquired Fund and to the other terms and conditions herein set forth
and on the basis of the representations and warranties contained herein,
the Trust shall transfer to the Corporation, and the Corporation shall
acquire from the Trust, at the closing provided for in paragraph 3.1 (the
"Closing"), all or substantially all of the Assets (as defined in
paragraph 1.2(a)). The Corporation agrees in exchange therefor, at the
Closing --
(a) to issue and deliver to the Trust the number
of full and fractional Acquiring Fund's Shares determined
by dividing the net asset value of the Acquired Fund
(computed as set forth in paragraph 2.1) ("Acquired Fund
NAV") by the net asset value (computed as set forth in
paragraph 2.2) ("NAV") of one Investor Share of the
Acquiring Fund, and
(b) to assume the Liabilities (as defined in
paragraph 1.3).
The Trust will (i) pay or cause to be paid to the Corporation for
the benefit of the Acquiring Fund any interest received after the Closing
with respect to the Assets, (ii) transfer to the Corporation for the
benefit of the Acquiring Fund any distributions, rights, stock dividends
or other property received by the Trust after the Closing as distributions
on or with respect to the Assets, and (iii) transfer any remaining Assets
as soon as practicable after the Closing. Any such interest,
distributions, rights, stock dividends or other property and Assets so
paid or transferred, or received directly by the Corporation shall be
allocated by the Corporation to the account of the Acquiring 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
2
<PAGE>
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 an asset on the books of the Acquired Fund, on
the closing date provided in paragraph 3.1 (the "Closing Date"), 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(j).
(b) The Trust has provided the Corporation with a list of all
property of the Acquired Fund, including all assets described in paragraph
1.2(a), as of the date of execution of this Agreement (the "List"). The
Trust reserves the right to sell any of these assets. The Corporation
will, within a reasonable time prior to the Closing Date, furnish the
Trust with a list of any assets on the 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 Acquired Fund and the Acquiring Fund, 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. The
Acquiring Fund shall assume all liabilities, debts, obligations, expenses,
costs, charges and reserves reflected on an unaudited Statement of Assets
and Liabilities of the Acquired Fund prepared by or at the direction of
The Dreyfus Corporation, the manager of the Acquired Fund and the
Acquiring Fund (the "Manager"), as of the Valuation Date (as defined in
paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period
(collectively the "Liabilities"). The Acquiring Fund shall assume only
the Liabilities and shall not assume any other liabilities, whether
absolute or contingent, other than the obligation to indemnify the
trustees and officers of the Acquired Fund to the extent provided in the
Trust's Amended and Restated Master Trust Agreement ("Trust Agreement")
and By-Laws.
1.4 On or as soon as possible after the Closing Date, the
Acquired Fund shall distribute PRO RATA to its shareholders of record
determined as of the close of business on the Valuation Date (the
"Acquired Fund's Shareholders") the Acquiring Fund's Shares received by
the Acquired Fund pursuant to paragraph 1.1. Such distribution will be
accomplished by transferring the Acquiring Fund's Shares then credited to
the account of the Acquired Fund on the Acquiring Fund's stock transfer
records to open accounts on those records established in the names of the
Acquired Fund's Shareholders, with each such shareholder's account being
3
<PAGE>
credited with the respective PRO RATA number of full and fractional shares
(rounded to three decimal places) of the Acquiring Fund's Shares due such
shareholder. All issued and outstanding Acquired Fund's Shares, including
those represented by certificates, will simultaneously be canceled on the
Acquired Fund's share transfer records. The Corporation shall not issue
certificates representing the Acquiring Fund's Shares in connection with
the Reorganization.
1.5 As soon as is conveniently practicable after the
distribution of the Acquiring Fund's Shares described in paragraph 1.4,
the Trust will effect the termination of the Acquired Fund in the manner
provided in the Trust Agreement and in accordance with applicable law, and
from and after the Closing it shall not conduct any business on behalf of
the Acquired Fund except in connection with its termination.
1.6 Ownership of the Acquiring Fund's Shares will be shown on
the books of the Acquiring Fund's transfer agent. Subject only to the
terms of this Agreement, shares of the Acquiring Fund will be issued in
the manner described in the current prospectus and statement of additional
information of the Acquiring Fund.
1.7 Any transfer taxes payable upon issuance of the Acquiring
Fund's Shares in a name other than the registered holder of the Acquired
Fund's Shares on the books of the Acquired Fund as of that time shall, as
a condition of such issuance and transfer, be paid by the person to whom
the Acquiring Fund's Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and
shall remain the responsibility of the Trust from and after the Closing
Date until the Acquired Fund is terminated.
2. VALUATION
2.1 The value of the Assets and Liabilities shall be the
Acquired Fund NAV, computed as of the close of regular trading on the New
York Stock Exchange (the "Exchange") on April 28, 1995, or such other time
and date as the parties may agree in writing (such time and date being
referred to herein as the "Valuation Date"), using the valuation
procedures set forth in the Trust Agreement and the Acquired Fund's then-
current prospectus and statement of additional information.
2.2 The NAV of an Acquiring Fund's Share shall be computed as
of the Valuation Date, using the valuation procedures set forth in the
Corporation's Articles of Incorporation and the Acquiring Fund's then-
current prospectus and statement of additional information.
2.3 All computations of value shall be made by Mellon Bank,
N.A. in accordance with its regular practice as fund accountant for the
Corporation and the Trust.
4
<PAGE>
3. CLOSING AND CLOSING DATE
3.1 The Reorganization, together with all related acts
necessary to consummate the same (the "Closing"), shall take place on the
next full business day following the Valuation Date or such later date as
the parties may agree in writing ("Closing Date"). All acts taking place
at the Closing shall be deemed to take place simultaneously as of the
opening of business on the Closing Date, unless otherwise provided. The
Closing shall be held at the offices of the Manager in New York, New York,
or at such other time and/or place as the parties may agree.
3.2 The Trust shall deliver to the Corporation at the Closing
a statement of Assets and Liabilities, including a schedule of the Assets
setting forth for all portfolio securities included therein their adjusted
tax basis and holding period by lot, as of the Closing, certified by the
Trust's Treasurer or Assistant Treasurer. Mellon Bank, N.A., as custodian
for the Trust, shall deliver at the Closing a certificate of an authorized
officer stating that: (a) the Assets shall have been presented for
examination to the Acquiring Fund prior to the Closing Date and shall have
been delivered in proper form to the Acquiring Fund at the Closing and (b)
all necessary taxes shall have been paid, or provision for payment shall
have been made, in conjunction with the delivery thereof.
3.3 In the event that on the Valuation Date (a) the Exchange
or another primary trading market 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 on
the Exchange or elsewhere shall be disrupted so that accurate appraisal of
the value of the net assets of the Acquired Fund or shares of the
Acquiring Fund is impracticable, the Valuation 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 Trust shall cause The Shareholder Services Group,
Inc., as transfer agent for the Trust, to deliver at the Closing a
certificate of an authorized officer listing the names and addresses of
the Acquired Fund's Shareholders and the number of Acquired Fund's Shares
owned by each such shareholder immediately prior the Closing. The
Corporation shall cause its transfer agent (a) to issue and deliver at the
Closing a confirmation evidencing the Acquiring Fund's Shares to be
credited on the Closing Date to the Acquired Fund, or provide at the
Closing evidence satisfactory to the Trust that the Acquiring Fund's
Shares have been credited to the Acquired Fund's account on the books of
the Acquiring Fund and (b) deliver at the Closing a certificate as to the
opening on the Acquiring Fund's stock transfer books of accounts in the
names of the Acquired Fund's Shareholders. At the Closing each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or
its counsel may reasonably request.
3.5. The Corporation and the Trust each shall deliver to the
other at the Closing a certificate executed in its name by its President
5
<PAGE>
or a Vice President in form and substance satisfactory to the recipient
and dated the Closing Date, to the effect that its representations and
warranties made in this Agreement are true and correct at the Closing Date
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the recipient shall reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust, on behalf of the Acquired Fund, represents and
warrants to the Corporation, on behalf of the Acquiring Fund, as follows:
(a) The Trust is a trust with transferable shares of the type
commonly referred to as a Massachusetts business trust, duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts;
(b) The Trust is a duly registered investment company
classified as a management company of the open-end type, and its
registration with the Securities and Exchange Commission (the
"Commission") as an investment company under the 1940 Act is in
full force and effect; and the Acquired Fund is a duly
established and designated portfolio of the Trust established and
designated by resolution of its trustees;
(c) The current prospectus and statement of additional
information of the Acquired Fund conforms 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 Commission thereunder and does 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 materially misleading;
(d) The Trust is not, and the execution, delivery and
performance of this Agreement will not result, in material
violation of the Trust Agreement or its By-Laws, as each may have
been amended to the date hereof, or of any agreement, indenture,
instrument contract, lease or other undertaking with respect to
the Acquired Fund to which the Trust a party or by which it is
bound;
(e) The Trust has no material contracts or other commitments
with respect to the Acquired Fund (other than this Agreement)
which, if terminated prior to the Closing Date, would result in
an additional liability of the Acquired Fund;
(f) Except as otherwise disclosed in writing to and accepted
by the Corporation, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
6
<PAGE>
presently pending or to its knowledge threatened against the
Trust with respect to the Acquired Fund or any of its properties
or assets that, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its
business; the Trust knows of no facts which might form the basis
for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any
court or governmental body which materially or adversely affects
its business or its ability to consummate the transactions
contemplated hereby;
(g) The Statements of Assets and Liabilities of the Acquired
Fund for the fiscal years ended August 31, 1992 and 1993 have
been audited by Coopers & Lybrand L.L.P., certified public
accountants, and the Statement of Assets and Liabilities of the
Acquired Fund for the fiscal year ended August 31, 1994 has been
audited by KPMG Peat Marwick LLP, certified public accountants,
each such statement (copies of which have been furnished to the
Corporation) is in accordance with generally accepted accounting
principles consistently applied, and fairly and accurately
reflects the financial condition of the Acquired Fund as of such
date; and there are no known contingent liabilities of the
Acquired Fund as of such date not disclosed therein;
(h) Since August 31, 1994, there has not been any material
adverse change with respect to 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 that such indebtedness was incurred, except as
otherwise disclosed on the Statement of Assets and Liabilities
referred to in paragraph 1.3; provided that, for the purposes of
this subparagraph (h), a decline in net asset value per share of
the Acquired Fund shall not constitute a material adverse change;
(i) 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 shall have been paid so far as due, or provision
shall have been made for the payment thereof, and, to the best of
the Trust's knowledge, no such return shall be currently under
audit and no assessment shall have been asserted or threatened
with respect to any such return;
(j) For each of the last three taxable years of its operation
or its full period of operation, if shorter, the Acquired Fund
has been a "fund" as defined in section 851(h)(2) of the Code and
has met the requirements of Subchapter M of the Code ("Subchapter
M") for qualification and treatment as a regulated investment
company, and the Acquired Fund will meet such requirements for
its current taxable year; and the Acquired Fund has no earnings
7
<PAGE>
and profits accumulated in any taxable year to which the
provisions of Subchapter M did not apply to it;
(k) All issued and outstanding shares of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof (recognizing that,
under Massachusetts law, the Acquired Fund's Shareholders could,
under certain circumstances, be held personally liable for
obligations of the Acquired Fund); all of the issued and
outstanding shares of the Acquired Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in
the records of the Trust's transfer agent as provided in
paragraph 3.4; and the Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or
purchase any of the Acquired Fund's Shares, nor is there
outstanding any security convertible into any of the Acquired
Fund's Shares;
(l) At the Closing Date, the Trust, on behalf of the Acquired
Fund, will have good and marketable title to the Assets and full
right, power and authority to sell, assign, transfer and deliver
the Assets hereunder free of any liens or other encumbrances,
and, upon delivery and payment for the Assets, the Corporation,
on behalf of the Acquiring Fund, will acquire good and marketable
title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the
1933 Act, other than as disclosed to the Corporation;
(m) The execution, delivery and performance of this Agreement
has been duly authorized as of the date hereof by all necessary
action on the part of the Trust's Board of Trustees; and, subject
to receipt of any necessary exemptive relief or no-action
assurances requested from the Commission or its staff with
respect to sections 17(a) and 17(d) of the 1940 Act, this
Agreement will constitute a valid and binding obligation of the
Trust on behalf of the Acquired Fund, enforceable in accordance
with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights and to general principles of
equity;
(n) On the Closing Date, the performance of this Agreement
shall have been duly authorized by all necessary action by the
shareholders of the Acquired Fund;
(o) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), or the 1940 Act for the
execution of this Agreement on behalf of the Trust or the
performance of the Agreement on behalf of the Trust, except for:
(i) the filing with the Commission of the Registration Statement
8
<PAGE>
referenced in paragraph 5.6 (the "Registration Statement") and
the proxy statement of the Trust included therein (the "Proxy
Statement"), (ii) receipt of the exemptive relief referenced in
subparagraph 4.1(m), and (iii) such consents, approvals,
authorizations and filings as have been made or received, and
except for such consents, approvals, authorizations and filings
as may be required subsequent to the Closing Date;
(p) The information to be furnished by the Trust on behalf of
the Acquired Fund for use in no-action requests, applications for
orders, registration statements, proxy materials and other
documents that may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete
in all material respects and shall comply in all material
respects with federal securities and other laws and regulations
applicable thereto;
(q) The Proxy Statement (other than information therein that
relates to the Corporation and the Acquiring Fund) did, on the
effective date of the Registration Statement, and will, on the
Closing Date, (i) comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act, and the 1940
Act and the regulations thereunder, and (ii) 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 materially misleading;
(r) The Liabilities were incurred by the Acquired Fund in the
ordinary course of its business;
(s) 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;
(t) 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 or securities of any one
issuer, and not more than 50% of the value of such assets is
invested in the stock or securities of five or fewer issuers; and
(u) The Acquired Fund will be terminated as soon as
reasonably practicable after the Reorganization.
4.2 The Corporation, on behalf of the Acquiring Fund,
represents and warrants to the Trust, on behalf of the Acquired Fund, as
follows:
9
<PAGE>
(a) The Corporation is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Maryland;
(b) The Corporation is a duly registered investment company
classified as a management company of the open-end type, and its
registration with the Commission as an investment company under
the 1940 Act is in full force and effect; and the Acquiring Fund
is a duly established and designated portfolio of the Corporation
established and designated by resolution of its directors;
(c) The current prospectus and statement of additional
information of the Acquiring Fund conforms in all material
respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the Commission
thereunder and does 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
materially misleading;
(d) The Corporation is not, and the execution, delivery and
performance of this Agreement will not result, in a material
violation of its Articles of Incorporation or By-Laws, as each
may have been amended to the date hereof, or of any agreement,
indenture, instrument, contract, lease or other undertaking with
respect to the Acquiring Fund to which the Corporation is a party
or by which it is bound;
(e) Except as otherwise disclosed in writing to and accepted
by the Trust, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the
Corporation with respect to the Acquiring Fund or any of the
Acquiring Fund's properties or assets that, if adversely
determined, would materially and adversely affect its financial
condition or the conduct of its business; the Corporation knows
of no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions
contemplated hereby;
(f) The Statement of Assets and Liabilities of the Acquiring
Fund for the fiscal period ended October 31, 1994, has been
audited by KPMG Peat Marwick LLP, certified public accountants,
has been furnished to the Trust, is in accordance with generally
accepted accounting principles consistently applied, and fairly
and accurately reflects the financial condition of the Acquiring
Fund as of October 31, 1994; and there are no known contingent
10
<PAGE>
liabilities of the Acquiring Fund as of such date not disclosed
therein;
(g) Since October 31, 1994, there has not been any material
adverse change with respect to 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 that such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Trust; provided that,
for the purposes of this subparagraph (g), a decline in net asset
value per share of the Acquiring Fund shall not constitute a
material adverse change;
(h) 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 shall have been paid so far as due, or provision
shall have been made for the payment thereof, and, to the best of
the Corporation's knowledge, no such return shall be currently
under audit and no assessment shall have been asserted or
threatened with respect to any such return;
(i) For each of the last three taxable years of its operation
or its full period of operation, if shorter, the Acquiring Fund
has been a "fund" as defined in section 851(h)(2) of the Code and
has met the requirements of Subchapter M for qualification and
treatment as a regulated investment company, and the Acquiring
Fund will meet such requirements for its current taxable year;
and the Acquiring Fund has no earnings and profits accumulated in
any taxable year to which the provisions of Subchapter M did not
apply to it;
(j) All issued and outstanding shares of the Acquiring Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal
liability attaching to ownership thereof; and the Acquiring Fund
does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the Acquiring Fund's Shares,
nor is there outstanding any security convertible into any of the
Acquiring Fund's Shares;
(k) The execution, delivery and performance of this Agreement
has been duly authorized as of the date hereof by all necessary
action on the part of the Corporation's Board of Directors; and,
subject to receipt of any necessary exemptive relief or no-action
assurances requested from the Commission or its staff with
respect to sections 17(a) and 17(d) of the 1940 Act, this
Agreement will constitute a valid and binding obligation of the
Corporation on behalf of the Acquiring Fund, enforceable in
accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws
11
<PAGE>
relating to or affecting creditors' rights and to general
principles of equity;
(l) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the 1934 Act or the 1940
Act for the execution of this Agreement on behalf of the
Corporation or the performance of the Agreement on behalf of the
Corporation, except for: (i) the filing of the Registration
Statement with the Commission, (ii) receipt of the exemptive
relief referenced in subparagraph 4.2(k), and (iii) such
consents, approvals, authorizations and filings as have been made
or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the
Closing Date;
(m) The information to be furnished by the Corporation on
behalf of the Acquiring Fund for use in no-action requests,
application for orders, registration statements, proxy materials
and other documents that may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete
in all material respects and shall comply in all material
respects with federal securities and other laws and regulations
applicable thereto;
(n) The Proxy Statement (only insofar as it relates to the
Corporation and the Acquiring Fund and is based on information
provided by the Corporation) did, on the effective date of the
Registration Statement, and will, on the Closing Date, (i) comply
in all material respects with the applicable provisions of the
1933 Act, the 1934 Act, and the 1940 Act and the regulations
thereunder, and (ii) 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 materially misleading;
(o) No consideration other than the Acquiring Fund's Shares
(and the Acquiring Fund's assumption of the Liabilities) will be
issued in exchange for the Assets in the Reorganization;
(p) The Acquiring Fund has no plan or intention to issue
additional shares following the Reorganization except for shares
issued in the ordinary course of its business as a portfolio of
an open-end investment company; nor does the Acquiring Fund have
any plan or intention to redeem or otherwise reacquire any
Acquiring Fund's Shares issued to the Acquired Fund's
Shareholders pursuant to the Reorganization, other than through
redemptions arising in the ordinary course of such business;
(q) The Acquiring Fund (i) will actively continue the
Acquired Fund's business in the same manner that the Acquired
Fund conducted such business immediately before the
12
<PAGE>
Reorganization, (ii) has no plan or intention to sell or
otherwise dispose of any of the Assets, except for dispositions
made in the ordinary course of its business and dispositions
necessary to maintain its status as a regulated investment
company under Subchapter M, and (c) expects to retain
substantially all the Assets in the same form as it receives them
in the Reorganization, unless and until subsequent investment
circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status;
(r) There is no plan or intention for the Acquiring Fund to
be dissolved or merged with another corporation or business trust
or any "fund" thereof (within the meaning of section 851(h)(2) of
the Code) following the Reorganization; and
(s) 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 or securities of any one issuer and (ii) not more
than 50% of the value of such assets will be invested in the
stock or securities of five or fewer issuers.
4.3. The Trust, on behalf of the Acquired Fund, and the
Corporation, on behalf of the Acquiring Fund, each represents and warrants
to the other as follows:
(a) The fair market value of the Acquiring Fund's Shares,
when received by the Acquired Fund's Shareholders, will be
approximately equal to the fair market value of their Acquired
Fund's Shares constructively surrendered in exchange therefor;
(b) Its management (i) is unaware of any plan or intention of
Acquired Fund's Shareholders to redeem or otherwise dispose of
any portion of the Acquiring Fund's Shares to be received by them
in the Reorganization and (ii) does not anticipate dispositions
thereof at the time of or soon after the Reorganization to exceed
the usual rate and frequency of redemptions of shares of the
Acquired Fund as a series of an open-end investment company.
Consequently, its management expects that the percentage of the
Acquired Fund's Shareholder interests, if any, that will be
redeemed 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 sales of shares of the Acquiring Fund
immediately following the Reorganization;
(c) The Acquired Fund's Shareholders will pay their own
expenses, if any, incurred in connection with the Reorganization;
(d) Immediately following consummation of the Reorganization,
the Acquiring Fund will hold the same assets and be subject to
the same liabilities that the Acquired Fund held or was subject
13
<PAGE>
to immediately prior thereto, plus any liabilities and expenses
of the parties incurred in connection with the Reorganization;
(e) 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;
(f) 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; and
(g) 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 those occurring in the ordinary course of
its business) will be included as assets thereof held immediately
before the Reorganization.
5. COVENANTS OF THE CORPORATION AND THE TRUST
5.1 The Corporation and the Trust will operate the businesses
of the Acquiring Fund and the Acquired Fund, respectively, in the ordinary
course between the date hereof and the Closing Date, it being understood
that such ordinary course of business will include the declaration and
payment of customary dividends and other distributions.
5.2 The Trust 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
hereby.
5.3 The Trust covenants that the Acquiring Fund's Shares to
be delivered hereunder are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.4 The Trust will assist the Corporation in obtaining such
information as the Corporation reasonably requests concerning the
beneficial ownership of the Acquired Fund's Shares.
5.5 As promptly as practicable, but in any case within sixty
days after the Closing Date, the Trust shall furnish the Corporation, in
such form as is reasonably satisfactory to the Corporation, a statement 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
14
<PAGE>
section 381 of the Code, and such statement will be certified by the
Trust's President and its Treasurer.
5.6 The Trust has provided and, to the extent necessary, will
provide the Corporation with information reasonably necessary for the
preparation of a prospectus (the "Prospectus") including the Proxy
Statement, to be included in a registration statement on Form N-14 to be
filed with the Commission relating to the Acquiring Fund's Shares issuable
hereunder, and any supplement or amendment thereto (the "Registration
Statement"), in compliance with the 1933 Act, the 1934 Act and the 1940
Act, in connection with the meeting of the Acquired Fund's Shareholders to
consider approval of this Agreement and the transactions contemplated
hereby.
5.7 The Trust covenants that the Acquired Fund's books and
records, including all books and records required to be maintained under
the 1940 Act and the rules and regulations thereunder, shall be available
to the Corporation from and after the Closing for the purpose of examining
same and making copies thereof or extracts therefrom.
5.8 The Corporation and the Trust each will, from time to
time, as and when requested by the other party, execute and deliver or
cause to be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further action, as
the other party may deem necessary or desirable in order to vest in, and
confirm to, (a) the Acquiring Fund, title to and possession of all the
Assets, and (b) the Acquired Fund, title to and possession of the
Acquiring Fund's Shares to be delivered hereunder, and otherwise to carry
out the intent and purpose of this Agreement.
5.9 The Corporation, on behalf of the Acquiring Fund, agrees
to 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 consummate the
transactions contemplated hereby and to continue its operations after the
Closing Date.
5.10 Subject to the provisions of this Agreement, the
Corporation and the Trust each will 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 by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust to consummate the transactions
provided for herein shall be subject, at its election, to the performance
by the Corporation of all of the obligations to be performed by the
Corporation hereunder on or before the Closing Date and, in addition
thereto, the following further conditions:
15
<PAGE>
6.1 All representations and warranties of the Corporation
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 by this Agreement, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date; and
6.2 The Corporation shall have delivered to the Trust at the
Closing the certificate it is required to deliver pursuant to paragraph
3.5.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CORPORATION
The obligations of the Corporation to consummate the transactions
provided for herein shall be subject, at its election, to the performance
by the Trust of all the obligations to be performed by the Trust hereunder
on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Trust 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 by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date; and
7.2 The Trust shall have delivered to the Corporation the
statement described in paragraph 3.2 and the certificate it is required to
deliver pursuant to paragraph 3.5.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
CORPORATION AND THE TRUST
The obligations of each party to this Agreement to consummate the
transactions provided for herein shall be subject, at its election, to
satisfaction of all the following conditions on or before the Closing
Date:
8.1 The Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of the holders of the
outstanding shares of the Acquired Fund in accordance with the provisions
of the Trust Agreement and the 1940 Act, and certified copies of the
resolutions evidencing such approval shall have been delivered to the
Trust and the Corporation. Notwithstanding anything herein to the
contrary, neither the Corporation nor the Trust may waive the conditions
set forth in this paragraph 8.1;
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 hereby;
16
<PAGE>
8.3 All consents of other parties and all consents, orders
and permits of federal, state and local regulatory authorities (including
those of the Commission and of state Blue Sky and securities authorities,
including "no-action" positions of and exemptive orders (under sections
17(a) and 17(d) of the 1940 Act or otherwise) from such federal and state
authorities) deemed necessary by the Corporation or the Trust 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 Corporation or the Trust,
provided that either party hereto may for itself waive any of such
conditions;
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;
8.5 The Acquired Fund shall have declared as of, or on, the
Valuation Date, and shall have paid on or before the Closing Date, a
dividend and/or other distribution 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 ending on or prior to 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);
8.6 The Corporation and the Trust shall have received an
opinion from Kirkpatrick & Lockhart, dated the Closing Date, addressed to
them and in a form reasonably satisfactory to the General Counsel of the
Manager, substantially to the effect that for federal income tax purposes:
(a) The transfer of all or substantially all of the Assets
solely in exchange for the Acquiring Fund's Shares and the
assumption by the Acquiring Fund of the Liabilities, and the
distribution of such shares to the Acquired Fund's Shareholders,
will constitute a "reorganization" within the meaning of section
368(a)(1)(C) of the Code, and each 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 (except,
possibly, with respect to certain options, futures and forward
contracts included in the Assets (collectively the "Contracts"))
solely in exchange for the Acquiring Fund's Shares and the
assumption by the Acquiring Fund of the Liabilities or upon the
distribution (whether actual or constructive) of the Acquiring
Fund's Shares to the Acquired Fund's Shareholders in exchange for
their Acquired Fund's Shares;
17
<PAGE>
(c) The tax basis of the Assets (with the possible exception
of the Contracts) will be the same to the Acquiring Fund as the
tax basis of the Assets to the Acquired Fund immediately prior to
the Reorganization, and the holding period of the Assets (with
the possible exception of the Contracts) in the hands of the
Acquiring Fund will include the period during which the Assets
were held by the Acquired Fund;
(d) No gain or loss will be recognized to the Acquiring Fund
upon the receipt of the Assets solely in exchange for the
Acquiring Fund's Shares and the assumption by the Acquiring Fund
of the Liabilities;
(e) No gain or loss will be recognized to the Acquired Fund's
Shareholders upon the issuance of the Acquiring Fund's Shares to
them, provided they receive solely Acquiring Fund's Shares
(including fractional shares) in exchange for their Acquired
Fund's Shares; and
(f) The aggregate tax basis of the Acquiring Fund's Shares,
including any fractional shares, received by each of the Acquired
Fund's Shareholders pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund's Shares
held by such shareholder immediately prior to the Reorganization,
and the holding period of the Acquiring Fund's Shares, including
fractional shares, received by each such shareholder will include
the period during which the Acquired Fund's Shares exchanged
therefor were held by such shareholder (provided that the
Acquired Fund's Shares were held as a capital asset on the date
of the Reorganization).
Such opinion will be based on the representations of the
Corporation and the Trust set forth herein. Notwithstanding anything
herein to the contrary, neither the Corporation nor the Trust may waive
the condition set forth in this paragraph 8.6 unless the Corporation's
Board of Directors or the Trust's Board of Trustees, as the case may be
(including the Directors or the Trustees, as the case may be, who are not
"interested" persons thereof within the meaning of the 1940 Act), shall
have determined that the waiver thereof would not materially affect the
shareholders of the Acquiring Fund or the Acquired Fund, respectively; and
8.7 The Corporation and the Trust shall have received from KPMG
Peat Marwick LLP a letter addressed to each of them on behalf of the
Acquiring Fund and the Acquired Fund, respectively, dated the Closing
Date, setting forth the federal income tax implications relating to
capital loss carryforwards (if any) of the Acquired Fund and the related
impact, if any, on the shareholders of the Acquired Fund of the proposed
transfer of the Assets to the Acquiring Fund and the termination of the
Acquired Fund.
9. INDEMNIFICATION
18
<PAGE>
9.1 The Acquired Fund will indemnify and hold harmless the
Acquiring Fund, its Directors and its officers (for purposes of this
paragraph 9.1, the "Indemnified Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parities in
connection with, arising out of, or resulting from any claim, action, suit
or proceeding in which any one or more of the Indemnified Parities may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement
of a material fact relating to or provided by the Acquired Fund and
contained in the Registration Statement, the Prospectus or the Proxy
Statement or any amendment or supplement to any of the foregoing, or
arising out of or based upon the omission or alleged omission to state in
any of the foregoing a material fact relating to the Acquired Fund
required to be stated therein or necessary to make the statements relating
to the Acquired Fund therein not misleading, including, without
limitation, any amounts paid by any one or more of the Indemnified Parties
in a reasonable compromise or settlement of any such claim, action, suit
or proceeding, or threatened claim, action, suit or proceeding made with
the consent of the Acquired Fund. The Indemnified Parties will notify the
Acquired Fund in writing within ten days after the receipt by any one or
more of the Indemnified Parties of any notice of legal process or any suit
brought against or claim made against such Indemnified Parties as to any
matters covered by this paragraph 9.1. The Acquired Fund shall be entitled
to participate at its own expense in the defense of any claim, action,
suit or proceeding covered by this paragraph 9.1, or, if it so elects, to
assume at its expense, by counsel satisfactory to the Indemnified Parties,
the defense of any such claim, action, suit or proceeding, and if the
Acquired Fund elects to assume such defense, the Indemnified Parties shall
be entitled to participate in the defense of any such claim, action, suit
or proceeding at their expense. The Acquired Fund's obligation under this
paragraph 9.1 to indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the Acquired Fund will pay in
the first instance any expenses, losses, claims, damages and liabilities
required to be paid by it under this paragraph 9.1 without the necessity
of the Indemnified Parties' first paying the same.
9.2 The Acquiring Fund will indemnify and hold harmless the
Acquired Fund, its trustees and its officers (for purposes of this
paragraph 9.2, the "Indemnified Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties in
connection with, arising out of, or resulting from any claim, action, suit
or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parities may be
threatened by reason of any untrue statement or alleged untrue statement
of a material fact relating to the Acquiring Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any
amendment or supplement to any thereof, or arising out of, or based upon,
the omission or alleged omission to state in any of the foregoing a
material fact relating to the Acquiring Fund required to be stated therein
or necessary to make the statements relating to the Acquiring Fund therein
19
<PAGE>
not misleading, including without limitation any amounts paid by any one
or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding, or threatened
claim, action, suit or proceeding made with the consent of the Acquiring
Fund. The Indemnified Parties will notify the Acquiring Fund in writing
within ten days after the receipt by any one or more of the Indemnified
Parties of any notice of legal process or any suit brought against or
claim made against such Indemnified Party as to any matters covered by
this paragraph 9.2. The Acquiring Fund shall be entitled to participate at
its own expense in the defense of any claim, action, suit or proceeding
covered by this paragraph 9.2, or, if it so elects, to assume at its
expense, by counsel satisfactory to the Indemnified Parties, the defense
of any such claim, action, suit or proceeding, and, if the Acquiring Fund
elects to assume such defense, the Indemnified Parties shall be entitled
to participate in the defense of any such claim, action, suit or
proceeding at their own expense. The Acquiring Fund's obligation under
this paragraph 9.2 to indemnify and hold harmless the Indemnified Parties
shall constitute a guarantee of payment so that the Acquiring Fund will
pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this paragraph 9.2 without the
necessity of the Indemnified Parties' first paying the same.
10. BROKERAGE FEES AND EXPENSES.
10.1 The Corporation and the Trust each represents and
warrants to the other that there are no brokers or finders entitled to
receive any payments in connection with the transactions provided for
herein.
10.2 Except as otherwise provided herein, all expenses of the
transactions contemplated by this Agreement will be borne by the Manager,
whether or not the transactions contemplated hereby are consummated. Such
expenses include, without limitation: (a) expenses incurred in connection
with the entering into and the carrying out of the provisions of this
Agreement; (b) expenses associated with the preparation and filing of the
Registration Statement under the 1933 Act covering the Acquiring Fund's
Shares to be issued pursuant to the provisions of this Agreement;
(c) registration or qualification fees and expenses of preparing and
filing such forms as are necessary under applicable state securities laws
to qualify the Acquiring Fund's Shares to be issued in connection herewith
in each state in which the Acquired Fund's Shareholders are resident as of
the date of the mailing of the Proxy Statement to such shareholders; (d)
postage; (e) printing; (f) accounting fees; (g) legal fees; and (h)
solicitation costs of the transactions.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.
11.1 The Corporation and the Trust agree that neither party
has made any representation, warranty or covenant not set forth herein and
that this Agreement constitutes the entire agreement between the parties.
20
<PAGE>
11.2 The representations, warranties and covenants contained
in this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder.
12. TERMINATION.
12.1 Prior to the Valuation Date, this Agreement may be
terminated by the Corporation or the Trust if its respective governing
board shall reasonably determine that circumstances have developed that
make proceeding with the Reorganization undesirable. In addition, either
the Corporation or the Trust may at its option terminate this Agreement at
or prior to the Closing Date because:
(a) of a material breach by the other of any representation,
warranty or agreement contained herein to be performed at or
prior to the Closing Date; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met by the
Closing Date.
12.2 In the event of any such termination, there shall be no
liability for damages on the part of either the Corporation or the Trust
or their respective Directors, Trustees or officers, to the other party.
13. AMENDMENTS.
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of the Trust and the Corporation; provided, however, that
following the meeting of the Acquired Fund's Shareholders called by the
Trust pursuant to paragraph 5.2 of this Agreement, no amendment may have
the effect of changing the provisions for determining the number of the
Acquiring Fund's Shares to be issued to the Acquired Fund's Shareholders
under this Agreement to the detriment of such shareholders without their
further approval.
14. NOTICES.
Any notice, report, statement or demand required or permitted by
any provisions of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy or certified mail addressed to the Corporation
or the Trust at 200 Park Avenue, New York, New York 10166.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
21
<PAGE>
15.1 The Article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without
giving effect to the conflicts of laws provisions thereof, provided that
matters relating to the due authorization, execution and delivery of this
Agreement by the Corporation shall be governed by and construed in
accordance with the laws of the State of Maryland without giving effect to
the conflicts of laws provisions thereof.
15.4 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 any 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 respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
15.5 (a) It is expressly agreed that the obligations of the
Acquired Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust
personally, but bind only the trust property of the Trust and the Acquired
Fund, as provided in the Trust Agreement. The execution and delivery of
this Agreement have been authorized by the Trustees of the Trust and
executed by authorized officers of the Trust on behalf of the Acquired
Fund, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officers shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Acquired Fund as
provided in the Trust Agreement.
(b) It is expressly agreed that the obligations of the
Acquiring Fund hereunder shall not be binding upon any of the Directors,
shareholders, nominees, officers, agents or employees of the Corporation
personally, but bind only the trust property of the Corporation and the
Acquiring Fund, as provided in the Articles of Incorporation of the
Corporation. The execution and delivery of this Agreement have been
authorized by the Directors of the Corporation and executed by authorized
officers of the Corporation on behalf of the Acquiring Fund, acting as
such, and neither such authorization by such Directors nor such execution
and delivery by such officers shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally,
but shall bind only the property of the Acquiring Fund as provided in the
Articles of Incorporation of the Corporation.
22
<PAGE>
(c) It is expressly agreed that the obligations of the
Acquiring Fund and of the Acquired Fund hereunder are obligations of each
such fund individually, and shall not be binding upon any other
individual, partnership, corporation, trust, joint venture, joint stock
company, association, unincorporated organization, government agency or
political subdivision thereof or other entity (each, a "Person"), whether
or not such Person is a party hereto. All liabilities of the Acquiring
Fund and of the Acquired Fund arising from the Reorganization shall be
payable solely from the assets and revenues of such Acquiring Fund or
Acquired Fund, as the case may be, and no Person shall have recourse
therefor to other assets or revenues of any party.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its Chairman of the Board, President or Vice
President, or other authorized officer, and its seal to be affixed hereto
and attested by its Secretary or Assistant Secretary or other authorized
officer.
Attest: The Dreyfus/Laurel Funds, Inc.
________________________ By:_________________________
Secretary Name: ______________________
Title: _____________________
Attest: The Dreyfus/Laurel Investment Series
________________________ By:________________________
Secretary Name: _____________________
Title: ____________________
23
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 9, 1995
Acquisition of the Assets of
DREYFUS/LAUREL INTERNATIONAL FUND
of The Dreyfus/Laurel Investment Series
200 Park Avenue
New York, New York 10166
1-800-221-7930
By and in Exchange for Shares of
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
of The Dreyfus/Laurel Funds, Inc.
200 Park Avenue
New York, New York 10166
1-800-221-7930
This Statement of Additional Information, relating specifically
to the proposed transfer of the assets of Dreyfus/Laurel International
Fund, a separate portfolio of The Dreyfus/Laurel Investment Series
(formerly known as The Laurel Investment Series and prior thereto as The
Boston Company Investment Series) in exchange for Investor Shares of
Dreyfus International Equity Allocation Fund, a separate series of The
Dreyfus/Laurel Funds, Inc. (formerly known as The Laurel Funds, Inc.) (the
"Company") and the assumption by Dreyfus International Equity Allocation
Fund of certain identified liabilities of Dreyfus/Laurel International
Fund, is not a prospectus. A Prospectus/Proxy Statement dated February 9,
1995 relating to the above-referenced matter may be obtained from The
Dreyfus/Laurel Funds, Inc., One Exchange Place, Boston, Massachusetts
02109. This Statement of Additional Information relates to and should be
read in conjunction with such Prospectus/Proxy Statement. The date of
this Statement of Additional Information is February 9, 1995.
This Statement of Additional Information incorporates by
reference the following documents, a copy of each of which accompanies
this Statement of Additional Information:
1. The Prospectus of the Dreyfus International Equity
Allocation Fund dated January 5, 1995.
2. The Statement of Additional Information of Dreyfus
International Equity Allocation Fund dated January 5,
1995.
3. The Annual Report of Dreyfus International Equity
Allocation Fund dated October 31, 1994.
DC-174430.2
<PAGE>
4. The Prospectus of Dreyfus/Laurel International Fund dated
December 30, 1994.
5. Statement of Additional Information of Dreyfus/Laurel
International Fund dated December 30, 1994.
6. The Annual Report of Dreyfus/Laurel International Fund
dated August 31, 1994.
The following pro forma financial information relates to Dreyfus
International Equity Allocation Fund and Dreyfus/Laurel International
Fund:
- 2 -
<PAGE>
<TABLE>
THE DREYFUS/LAUREL FUNDS, INC.
Pro Forma Combining Portfolio of Investments
Dreyfus International Equity Allocation Fund
October 31, 1994
<CAPTION>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 96.9%
Japan - 20.9%
2,000 0 2,000 Advantest 70,175 0 70,175
7,000 800 7,800 Ajinomoto Company 96,079 10,984 107,063
0 900 900 Asahi Chemical Industry 0 7,284 7,284
0 800 800 Asahi Glass Company 0 10,324 10,324
0 400 400 Bridgestone Company 0 6,607 6,607
0 500 500 Canon, Inc. 0 9,291 9,291
0 400 400 Chugai Pharmaceutl 0 4,336 4,336
4,000 700 4,700 Dai-Ichi Kango Bank 73,065 12,791 85,856
0 800 800 Dai-Nippon Printing Company 0 14,866 14,866
0 200 200 Daido Steel Company 0 1,210 1,210
0 2,100 2,100 Daikyo Kanko 0 17,084 17,084
0 400 400 Daishowa Paper Manufacturing 0 3,489 3,489
0 400 400 Daiwa House Industry Company 0 5,533 5,533
0 600 600 Denki Kagaku Kogyo 0 2,682 2,682
4,000 1,300 5,300 Fuji Bank Ltd. 88,751 28,855 117,606
7,000 200 7,200 Fuji Photo Film Ltd. 166,873 4,770 171,643
0 800 800 Fujitsu Ltd. 0 9,167 9,167
13,000 0 13,000 Furukawa Electric 89,752 0 89,752
1,000 0 1,000 Hirose Electronics 59,340 0 59,340
0 900 900 Hitachi Ltd. 0 9,384 9,384
0 400 400 Honda Motor Company 0 6,979 6,979
3,000 220 3,220 House Food Industrial Company 63,467 4,656 68,123
2,000 200 2,200 Industrial Bank of Japan 61,920 6,194 68,114
0 1,700 1,700 Itochu Corporation 0 13,233 13,233
0 500 500 Ito-Yokado Company 0 27,306 27,306
0 600 600 Japan Airlines 0 4,646 4,646
0 600 600 Japan Energy 0 2,651 2,651
0 420 420 Joyo Bank 0 3,686 3,686
0 1,300 1,300 Kajima Corporation 0 12,347 12,347
0 400 400 Kamigumi Company 0 4,377 4,377
5,000 600 5,600 Kansai Electric Power 125,903 15,114 141,017
- 3 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
0 330 330 Kandenko Company 0 6,030 6,030
0 2,200 2,200 Kawasaki Steel Company 0 10,311 10,311
0 1,800 1,800 Kinki Nippon Railway Company 0 15,572 15,572
0 1,000 1,000 Kirin Brewery Company 0 11,975 11,975
13,000 600 13,600 Komatsu Ltd. 123,426 5,699 129,125
45,000 0 45,000 Konica Corporation 349,226 0 349,226
22,000 0 22,000 Kubota Corporation 168,916 0 168,916
0 200 200 Kyocera Corporation 0 15,238 15,238
0 100 100 Kyushu Electric Power Company 0 2,519 2,519
0 200 200 Maeda Raod Construction 0 3,861 3,861
0 200 200 Marudai Food Company 0 1,540 1,540
3,000 0 3,000 Marui Company 54,799 0 54,799
0 400 400 Matsushita Electric Industrial 0 6,648 6,648
0 1,100 1,100 Mitsubishi Bank 0 27,595 27,595
0 200 200 Mitsubishi Trust & Banking 0 3,097 3,097
0 900 900 Mitsubishi Kasei Company 0 5,315 5,315
16,000 2,700 18,700 Mitsubishi Heavy Industries 130,279 21,993 152,272
0 400 400 Mitsui & Company 0 3,593 3,593
0 600 600 Mitsui Trust & Banking 0 6,937 6,937
0 600 600 Mitsui Marine & Fire 0 4,553 4,553
0 50 50 Nintendo Company 0 2,793 2,793
0 800 800 Nec Corporation 0 10,241 10,241
0 400 400 Nippon Light Metal Company 0 2,932 2,932
0 800 800 Nippon Oil Company 0 5,781 5,781
0 600 600 Nikon 0 6,119 6,119
0 5,100 5,100 Nippon Steel 0 21,060 21,060
0 800 800 Nippon Yusen 0 5,434 5,434
10,000 0 10,000 Nomura Securities Company 209,494 0 209,494
0 600 600 Oji Paper 0 6,690 6,690
7,000 1,600 8,600 Sakura Bank 96,078 21,969 118,047
0 200 200 Sanwa Shutter Company 0 1,912 1,912
2,000 0 2,000 Sega Enterprises 103,818 0 103,818
0 220 220 Seven Eleven Japan 0 18,033 18,033
4,000 0 4,000 Shimachu Company 136,223 0 136,223
0 400 400 Shizuoka Bank 0 5,451 5,451
0 500 500 Snow Brand Milk Products Company 0 4,026 4,026
0 100 100 Suny Corporation 0 6,101 6,101
3,000 400 3,400 Sumitomo Bank Ltd. 56,347 7,516 63,863
0 800 800 Sumitomo Electric Industry 0 11,975 11,975
6,000 0 6,000 Sumitomo Marine & Fire 54,303 0 54,303
0 1,100 1,100 Sumitomo Trust & Bank 0 16,012 16,012
- 4 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
3,000 0 3,000 Taisho Pharmaceutical Company 55,108 0 55,108
0 400 400 Taiyo Fishery Company 0 1,759 1,759
0 1,000 1,000 Takeda Chemical Industries 0 12,388 12,388
6,000 800 6,800 Tokai Bank 74,303 9,911 84,214
0 800 800 Tokio Marine & Fire Insurance 0 9,498 9,498
1,000 300 1,300 Tokyo Electric Power Company 29,309 8,796 38,105
0 1,300 1,300 Tokyu Corporation 0 9,126 9,126
5,000 0 5,000 Toto 78,431 0 78,431
20,000 0 20,000 Toyo Kanetsu 123,426 0 123,426
0 1,200 1,200 Toyobo Company 0 5,290 5,290
6,000 500 6,500 Toyota Motor Company 132,508 11,046 143,554
0 600 600 Ube Industries Ltd. 0 2,571 2,571
0 200 200 Yakult Honsha 0 3,262 3,262
0 500 500 Yamanouchi Pharmaceutical Company 0 9,859 9,859
5,000 1,000 6,000 Yasuda Trust and Banking Company 44,530 8,910 53,440
0 2,900 2,900 Yokogawa Electric Corporation 0 32,335 32,335
_________ _______ _________
2,915,849 691,118 3,606,967
--------- ------- ---------
Germany - 19.5%
650 0 650 Agiv AG 227,119 0 227,119
450 0 450 Allianz Worldwide AG 690,282 0 690,282
0 100 100 Basf AG 0 21,166 21,166
0 100 100 Bayer AG 0 23,400 23,400
50 0 50 Bilfinger & Berger Bau AG 28,226 0 28,226
50 0 50 Brau und Brunnen 12,461 0 12,461
100 0 100 Colonia Konzern AG 84,777 0 84,777
100 0 100 Continental AG 14,708 0 14,708
0 200 200 Daimler Benz 0 102,803 102,803
0 500 500 Deutsche Bank AG 0 246,368 246,368
0 500 500 Dresdner Bank AG 0 133,823 133,823
200 0 200 Dyckerhoff AG 91,093 0 91,093
100 0 100 Heidelberg Zement AG 83,646 0 83,646
100 0 100 Herlitz AG 21,477 0 21,477
200 0 200 Hochtief AG 122,610 0 122,610
900 0 900 Industrie-Werlke Karl Augsburg 201,669 0 201,669
100 0 100 Karstadt AG 41,291 0 41,291
350 0 350 Kaufhof AG 118,687 0 118,687
700 0 700 Linde AG 418,664 0 418,664
0 70 70 Mannesmann AG 0 18,712 18,712
150 0 150 Munchener Ruckversicherungs 276,272 0 276,272
- 5 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
0 300 300 Rwe Aktiengesellschaft 0 91,964 91,964
50 0 50 Sap AG 32,215 0 32,215
100 0 100 Schering AG 66,791 0 66,791
0 200 200 Siemens AG 0 83,585 83,585
0 50 50 Viag AG 0 15,726 15,726
110 0 110 Wella AG 79,723 0 79,723
_________ _______ _________
2,611,711 737,547 3,349,258
--------- ------- ---------
France - 16.1%
650 650 Accor 77,124 0 77,124
0 200 200 Air Liquide (L') 0 28,197 28,197
1,100 500 1,600 Alcatel Alsthom Cie Generale
d'Electricite 100,825 45,830 146,655
2,500 3,500 6,000 AXA Company 115,885 162,239 278,124
1,500 400 1,900 Banque Nationale de Paris 74,250 19,800 94,050
0 200 Casino Guichard Perrachon Et Cic 0 6,521 6,521
0 200 200 Carnaudmetalbox SA 0 7,135 7,135
0 100 Chargeurs 0 24,954 24,954
800 800 Cie Bancaire SA 77,988 0 77,988
3,600 3,600 Cie De Suez 172,188 0 172,188
0 200 Cie Financiale (Paribas) 0 13,302 13,302
0 100 Compagnie Bancaire SA 0 9,749 9,749
600 200 800 Compagnie de Saint Gobain 76,085 25,362 101,447
1,300 500 1,800 Compagnie Financiere de Suez 86,465 23,915 110,380
0 100 Crecie Par Reesco NV 0 6,214 6,214
400 400 Credit Foncier de France 60,744 0 60,744
3,000 3,000 C.S.F. 81,387 0 81,387
0 200 200 Danone 0 28,158 28,158
0 400 400 Eaux (Cie Generale Des) 0 36,625 36,625
400 400 Eiffage 67,968 0 67,968
0 100 Euro Disney SCA 0 138 138
0 100 Finextel 0 1,942 1,942
0 100 Havas 0 8,329 8,329
0 200 Lafarge Coppee SA 0 15,858 15,858
400 200 600 L'Oreal Group 86,843 43,422 130,265
500 200 700 LVHM Moet Hennessey 80,590 32,236 112,826
0 100 Lyonausse Des Eaus Dunez 0 9,088 9,088
0 200 Michelin (Cie Gle Des Establ.) 0 8,370 8,370
800 100 900 Pechiney International 60,977 3,095 64,072
0 100 Pernod Ricard 0 5,777 5,777
- 6 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
900 100 1,000 Peugeot SA 134,751 14,972 149,723
800 800 Pinault-Printemps Redoute 144,325 0 144,325
3,900 700 4,600 Rhone-Poulenc SA 96,184 17,264 113,448
200 200 Sagem 99,311 0 99,311
400 400 Saint Louis - Bouchon 112,632 0 112,632
0 100 Schneider SA 0 7,515 7,515
0 100 Sefimeg 0 7,016 7,016
0 100 Simco-Union Pout L'Habitation 0 7,913 7,913
0 200 Societe Generale 0 22,565 22,565
1,800 900 2,700 Societe National Elf Aquitain 133,003 66,502 199,505
0 100 Sommer-Allibert 0 37285 37,285
0 300 300 Thompson 0 8,139 8,139
0 800 Total Cie Francaise Des Petrolos,
Total 'B' 0 51,873 51,873
0 200 Unibail 0 17,089 17,089
0 150 Union Immobiliere De France 0 11,797 11,797
_________ _______ _________
1,939,525 836,186 2,775,711
--------- ------- ---------
Great Britian - 13.4%
25,000 0 25,000 Allied Irish Banks 102,203 0 102,203
14,000 0 14,000 Barclays Bank 133,927 0 133,927
0 11,000 11,000 Boots Company 0 95,335 95,335
18,000 0 18,000 British Petroleum Company 128,335 0 128,335
21,000 0 21,000 British Telecommunications 134,957 0 134,957
24,000 15,000 39,000 BTR 120,289 75,181 195,470
20,000 0 20,000 Caradon 86,341 0 86,341
3,700 0 3,700 Glaxo Holdings 36,182 0 36,182
20,000 0 20,000 Grand Metropolitan 135,726 0 135,726
33,000 0 33,000 Hanson Trust Plc 124,385 0 124,385
22,000 0 22,000 Marks & Spencer 148,579 0 148,579
0 12,000 12,000 National Westminster Bank 0 98,508 98,508
0 19,000 19,000 Powerscreen International 0 92,277 92,277
9,000 0 9,000 Reed International 110,674 0 110,674
0 28,000 28,000 Scapa Group 0 93,406 93,406
0 11,000 11,000 Severn Trent 0 102,890 102,890
20,000 0 20,000 Smithkline Beecham Group,
Series A 133,600 0 133,600
0 26,000 26,000 Tesco 0 99,914 99,914
0 11,000 11,000 United Newspapers 0 91,377 91,377
- 7 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
16,000 0 16,000 Williams Holdings 90,528 0 90,528
6,000 0 6,000 Wolseley 76,137 0 76,137
--------- -------- ---------
1,561,863 748,888 2,310,751
--------- ------- ---------
Switzerland - 4.7%
0 11 11 Adia 0 1,946 1,946
0 3 3 Alusuisse-Lonza Holding AG (Br) 0 1,489 1,489
7 7 Alusuisse-Lonza Holding AG (Rcg) 0 3,492 3,492
200 13 213 Brown Boveri & Cie AG, Series A 171,800 11,167 182,967
0 9 9 Brown Boveri & Cie AG, Series 0 1,477 1,477
0 6 6 Ciba - Geigy AG (Br) 0 3,543 3,543
100 45 145 Ciba - Geigy AG (Reg) 59,046 26,248 85,294
0 37 37 Credit Suisse Holdings (Br) 0 16,186 16,186
200 75 275 CS Holdings (Reg) 87,494 6,365 93,859
0 37 37 CS Holdings Warrants (Br) 0 310 310
0 75 75 CS Holdings Warrants (Reg) 0 111 111
0 10 10 Forbo Holdings AG (Br) 0 17,770 17,770
0 3 3 Grand Magasin Jelmoli 0 383 383
3 3 Grand Magasin Jelmoli Warrants 0 5 5
0 18 18 Holderbank Financiere Glarus 0 2,711 2,711
0 6 6 Holderbank Financiere Glarus AG 0 4,633 4,633
0 48 48 Holderbank Financiere Glarus Warrants 0 67 67
0 6 6 Merkur Holdings 0 1,573 1,573
90 68 158 Nestle SA 84,195 63,614 147,809
0 2 2 Roche Holdings AG 0 18,009 18,009
0 12 12 Roche Holdings AG Genuscheine NPV 0 3,405 53,405
50 55 105 Sandoz Group AG 26,097 27,435 53,532
0 27 27 SMH AG Neuenburg (Reg) 0 3,550 3,550
0 6 6 SMH AG Nuenberg (Br) 0 3,347 3,347
0 1 1 Schindler Holdings AG 0 1,179 1,179
0 40 40 Schweizerischer Bankverein (Br) 0 11,538 11,538
0 36 36 Schweizerische Bankgesellschaft (Br) 0 33,764 33,764
0 46 46 Schweizercher Bankverein (Reg) 0 6,360 6,360
0 1 1 Schweiz Ruckversic (Br) 0 608 608
0 22 22 Schweiz Ruckversicherungs 0 13,059 13,059
0 8 8 Sika Finanz (Reg) 0 411 411
0 3 3 Sika Finanz AG (Br) 0 861 861
0 2 2 Societe Generale De Surv (Br) 0 2,901 2,901
0 3 3 Sulzer AG 0 2,117 2,117
0 1 1 Sulzer AG (PTG) 0 689 689
- 8 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
0 3 3 Swissair AG 0 2,042 2,042
0 38 38 Union Bank of Switzerland 0 8,084 8,084
0 15 15 Zurich Vericherungs (Reg) 0 13,745 13,745
0 10 10 Zurich Vericherungs (Br) 0 9,108 9,108
---- ------- -------
428,632 375,302 803,934
------- ------- --------
Belgium - 3.2%
0 135 135 Acec Union Miniere NPV 0 11,969 11,969
0 20 20 Bekaert SA 0 15,503 15,503
0 20 20 CBR (Cimenteries) 0 7,687 7,687
0 25 25 CBR 0 9,407 9,407
0 279 279 Delhaize 0 11,264 11,264
0 50 50 Electrabell - Pr Reunies 0 8,979 8,979
0 314 314 Electrabell 0 55,780 55,780
0 500 500 Fortis 0 40,131 40,131
0 23 23 Gevaert Photo Prod 0 6,686 6,686
0 28 28 Glaverbal 0 4,070 4,070
0 109 109 Generale De Banque Ordinary 0 26,475 26,475
0 144 144 Group Brussels Lambert SA 0 17,674 17,674
0 20 20 Kredietbank AFV 0 4,037 4,037
0 75 75 Kredietbank 0 14,922 14,922
600 195 795 Petrofina SA NPV 184,103 59,833 243,936
0 85 85 Royale Belge 0 12,711 12,711
0 25 25 Royale Belge VPV 0 3,650 3,650
0 50 50 Solvay Et Cie 'A' 0 24,749 24,749
0 25 25 Tractebel 0 7,824 7,824
0 60 60 Tractobel Cap 0 18,721 18,721
------- ------- -------
184,103 362,072 546,175
------- ------- -------
Italy - 3.0%
0 500 500 Aedes SpA di Risp 0 1,980 1,980
0 300 300 Aedes SpA Lig Lomb 0 2,204 2,204
0 900 900 Alitalia Linee Priv 0 556 556
0 500 500 Alitalia-Linee Aeree Italiane 0 254 254
0 2,200 2,200 Assicurazioni Generali 0 55,077 55,077
20,000 0 20,000 Fiat SpA 81,643 0 81,643
0 700 700 Bancoo Ambrosiano Veneto 0 2,390 2,390
0 300 300 Bancoo Ambrosiano Veneto di Risp 0 455 455
0 1,000 1,000 Banco Commerciale Italiana SpA 0 2,315 2,315
- 9 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
0 750 750 Banco Nazionale Del Agricoltra 0 654 654
0 450 450 Banco Nazionale Del Agricoltra 0 878 878
0 450 450 Banco Nazionale Del Agricoltra 0 222 222
0 200 200 Benetton 0 2,614 2,614
0 100 100 Cartiere Burgo 0 620 620
0 300 300 Cementir SpA 0 261 261
0 500 500 Cogefar-Impresit Construzioni 0 533 533
0 1,600 1,600 Credito Italiano SpA 0 1,699 1,699
0 1,700 1,700 Dalmine SpA 0 389 389
0 800 800 Edison 0 3,423 3,423
0 100 100 Falck Acc Ferr Lamb 0 261 261
0 9,300 9,300 Fiat SpA 0 37,978 37,978
0 900 900 Fiat SpA Priv 0 2,177 2,177
0 700 700 Fiat SpA di Risp 0 1,593 1,593
0 500 500 Fidis 0 1,265 1,265
0 700 700 Finanziara Cirio Bertolli De Rica SpA 0 493 493
0 600 600 Finanziaria Italgel SpA 0 609 609
0 300 300 Gildini 0 761 761
0 700 700 Instituto Banca San Paolo di Torino 0 4,156 4,156
0 100 100 Italcementi 0 664 664
0 100 100 Italcementi di Risp 0 333 333
0 600 600 Italgas 0 1,834 1,834
0 100 100 La Previdente 0 962 962
17,000 5,200 22,200 Mediobanca SpA 141,225 43,214 184,439
0 4,800 4,800 Montedison SpA 0 3,936 3,936
0 900 900 Montedison SpA di Risp 0 641 641
0 1,200 1,200 Olivetti & Group SpA 0 1,436 1,436
0 200 200 Olivetti & Group SpA di Risp 0 189 189
0 1,100 1,100 Parmalat Finanziaria SpA 0 1,122 1,122
0 1,400 1,400 Pirelli SpA 0 2,076 2,076
0 200 200 Pirelli SpA di Risp 0 242 242
0 300 300 RAS 0 3,746 3,746
0 300 300 RAS di Risp 0 2,038 2,038
0 200 200 Rinascente 0 1,072 1,072
0 1,000 1,000 Rinascente di Risp 0 2,718 2,718
0 700 700 Risanamento Napo 0 11,175 11,175
0 200 200 Saffa SpA, Class A 0 596 596
0 400 400 Saipem 0 855 855
0 100 100 Sasib 0 516 516
0 200 200 S.A.I. di Risp 0 1,355 1,355
0 100 100 S.A.I. (Societa Assicuratrice
- 10 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Industriale) 0 1,304 1,304
0 1,540 1,540 S.I.P. di Risp 0 3,410 3,410
0 200 200 Sirti SpA 0 1,346 1,346
0 500 500 S.M.E. (Meridionale Finanziara) 0 1,273 1,273
0 600 600 S.M.I. (Societa Metal Italia) 0 304 304
0 500 500 Snia Bpd 0 628 628
0 500 500 Snia Bpd di Risp 0 361 361
0 400 400 Snia Bpd Risp 0 481 481
0 30,680 30,680 Telecom Italia SpA 0 84,190 84,190
------- ------- -------
222,868 299,834 522,702
------- ------- -------
Spain - 2.8%
0 500 500 Autopista Cessa 0 4,156 4,156
0 1,800 1,800 Banco Bilboa Vizcaya 0 47,332 47,332
0 1,300 1,300 Banco Central Hispano Americano 0 31,171 31,171
0 800 800 Banco De Santander 0 32,546 32,546
0 300 300 Banco Espanol De Credito 0 2,062 2,062
0 50 50 Gas Natural S.D.G. 0 4,236 4,236
3,000 900 3,900 Empresa Nacional De Elec 37,633 41,290 178,923
0 3,300 3,300 Iberdrola SA 0 21,760 21,760
0 1,110 1,110 Repsol SA 0 35,212 35,212
6,000 3,600 9,600 Telefonica Nacional d'Espana 81,285 48,772 130,057
------ ------- --------
218,918 268,537 487,455
------- ------- -------
Austria - 2.2%
0 100 100 Bwt Benchiser Wassertechnik AG 0 15,734 15,734
0 100 100 Constantia Industry Holdings 0 8,060 8,060
0 500 500 Credit Anstalt Bank 0 30,143 30,143
0 300 300 Credit Anstalt Bank Preferred 0 17,944 17,944
0 100 100 Ea Generali AG 0 24,568 24,568
0 100 100 Lenzing AG 0 10,158 10,158
0 200 200 Oesterreichische 0 11,433 11,433
0 600 600 Oesterreichische El Wirtsch 0 37,702 37,702
300 0 300 Oesterreichische Landerbank 46,656 0 46,656
0 500 500 Omev AG 0 45,734 45,734
0 200 200 Radex Heraklith 0 7,597 7,597
0 200 200 Steyer-Daimler Puch AG 0 3,723 3,723
0 100 100 Universale-Bau AG 0 6,690 6,690
0 200 200 Veitscher 0 6,312 6,312
- 11 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
0 100 100 Wienerberger Baust 0 35,434 35,434
0 900 900 Z-Laenderbank Bank Austria 0 66,332 66,332
0 100 100 Z-Landerbank 0 5,036 5,036
0 100 100 Z-Landerbank Austria 0 3,609 3,609
------ ------- ------
46,656 336,209 382,865
------ ------- -------
Hong Kong - 2.1%
37,000 200 37,200 Cheung Kong (Holdings) 178,117 963 179,080
0 240 240 China Light & Power 0 1,249 1,249
0 1,100 1,100 Hang Seng Bank 0 7,972 7,972
48,000 0 48,000 Hong Kong & China Gas 91,000 0 91,000
0 700 700 Hong Kong Telecomm 0 1,499 1,499
0 2,100 2,100 HSBC Holdings 0 24,866 24,866
0 200 200 Hutchison Whampoa 0 923 923
90,000 0 90,000 South China Morning Post
Holdings 56,196 0 56,196
0 220 220 Sun Hung Kai Properties 0 1,679 1,679
------- ------ -------
325,313 39,151 364,464
------- ------ -------
Malaysia - 1.9%
7,000 0 7,000 Malayan Banking Berhad 47,671 0 47,671
23,000 0 23,000 Resorts World Berhad 145,832 0 145,832
16,000 0 16,000 Telekom Malaysia Berhad 129,628 0 129,628
------- ------ -------
323,131 0 323,131
------- ------ -------
Netherlands - 1.8%
0 100 100 Abn Amro Holdings 0 3,554 3,554
20,000 0 20,000 Elsevier NV 204,057 0 204,057
1,000 0 1,000 Internationale Nedanden
Group NV 46,803 0 46,803
1,000 0 1,000 Oce-Van Der Grinten NV 44,430 0 44,430
0 100 100 Royal Dutch Petroleum 0 11,642 11,642
------- ------ -------
295,290 15,196 310,486
------- ------ -------
Australia - 1.6%
9,000 0 9,000 Ampolex Limited 27,268 0 27,268
9,000 0 9,000 Amcor Limited 59,883 0 59,883
- 12 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
2,700 0 2,700 Broken Hill Properties 41,424 0 41,424
30,000 0 30,000 Pacific Dunlop Ltd. 91,117 0 91,117
17,000 0 17,000 Westpac Banking Corporation 57,188 0 57,188
------- ------ -------
276,880 0 276,880
------- ------ -------
Finland - 1.2%
0 100 100 Amer Group, Series A 0 2,409 2,409
0 100 100 Cultor 0 3,038 3,038
0 2,800 2,800 Kansallis Osake Pankki 0 5,219 5,219
0 500 500 Kesko 0 6,108 6,108
0 50 50 Kone Corp. Free, Series B 0 5,945 5,945
0 400 400 Kymmene 0 10,936 10,936
0 100 100 Metra AB, Series A 0 3,385 3,385
0 100 100 Metra AB, Series B 0 3,385 3,385
0 200 200 Nokia AB 0 30,075 30,075
0 100 100 Nokia 0 15,081 15,081
0 600 600 Outokumpu 0 12,694 12,694
0 100 100 Pohjola Insurance Co., Series A 0 1,606 1,606
4,000 100 4,100 Pohjola Insurance Co., Series B 58,931 1,476 60,407
0 800 800 Repola 0 16,751 16,751
0 100 100 Sampo, Series A 0 5,208 5,208
0 2,600 2,600 Unitas, Series A 0 7,898 7,898
0 175 175 Stockmann AB 0 9,151 9,151
------- ------- -------
58,931 140,365 199,296
------- ------- -------
Denmark - 0.8%
4,000 0 4,000 Danisco 142,044 0 142,044
------- ------ -------
Singapore - 0.7%
14,000 0 14,000 Keppel Corporation 128,703 0 128,703
Norway - 0.6%
8,500 0 8,500 Aker AS 99,457 0 99,457
New Zealand - 0.4%
23,000 0 23,000 Fisher & Paykel 60,873 0 60,873
-------- --------- ----------
TOTAL COMMON STOCKS
(Cost $11,802,968) 11,840,747 4,850,405 16,691,152
---------- --------- ----------
WARRANTS - 0.0%
- 13 -
<PAGE>
Shares Value
--------------------------------- ------------------------------
Int'l Equity Pro Forma Int'l Equity Pro Forma
Allocation Int'l Combined SECURITY Allocation Int'l Combined
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
0 100 100 Euro Disney, expire 7/11/04 0 11 11
RIGHTS - 0.0%
0 200 200 Air Liquide, expire 11/04/94 0 2,765 2,765
0 1,600 1,600 Credito Italiano di Risp 0 5 5
0 1,600 1,600 Credito Italiano di Risp,
expire 11/04/94 0 119 119
0 500 500 Fidis, expire 11/15/94 0 219 219
------- ------ -------
0 3,108 3,108
------- ------ -------
Principal Amount COMMERCIAL PAPER - 3.1%
0 535,000 535,000 Ford Motor Credit Corporation, 4.72%,
due 11/01/94 0 535,000 535,000
------- ------ -------
TOTAL INVESTMENTS (Cost $17,115,313) 11,840,747 5,388,524 17,229,271
---------- --------- -----------
</TABLE>
- 14 -
<PAGE>
<TABLE>
THE DREYFUS/LAUREL FUNDS, INC.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
October 31, 1994
<CAPTION>
Dreyfus Dreyfus/ Pro
International Laurel Forma
Equity International Combined
Allocation Fund (Note 1)
Fund
<S> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $11,802,968,
$5,312,345 and
$17,115,313 respec-
tively) (Note 2) See
accompanying schedule.....
Cash and foreign currency
(Cost $109,195, $41,745 $11,840,747 $5,386,517 $17,229,264
and $150,940, respectively) 109,546 44,541 154,087
Dividends and interest 23,308
receivable 52,904 76,212
Receivable from investment
adviser 130 81,412 81,542
Total Assets........... $11,973,731 $5,567,374 $17,541,105
LIABILITIES:
Payable for investment
securities purchased 29,205 0 29,205
Investment management fee
payable 29,370 73,691 103,061
Distribution fee payable... 3 0 3
Accrued Directors' fees and
expenses 396 0 396
Total Liabilities.......... 58,974 73,691 132,665
NET ASSETS.................. $11,914,757 $5,493,683 $17,408,440
NET ASSET VALUE:
INVESTOR SHARES
- 15 -
<PAGE>
Dreyfus Dreyfus/ Pro
International Laurel Forma
Equity International Combined
Allocation Fund (Note 1)
Fund
Net asset value, offering
and redemption price per
share ($70,750 divided by
7,035, $5,493,683 divided
by 398,655, and $5,564,433
divided by 553,127 shares
of beneficial interest
outstanding) $10.06 $13.78 $10.06
CLASS R SHARES
Net asset value, offering
and redemption price per
share ($11,844,007 divided
by 1,177,712 shares of
beneficial interest
outstanding) $10.06 n/a $10.06
See Notes to Pro Forma Financial Statements
</TABLE>
<TABLE>
THE DREYFUS/LAUREL FUNDS, INC.
DREYFUS INTERNATIONAL EQUITY ALLOCATION FUND
PRO FORMA COMBINING STATEMENT OF NET INVESTMENT INCOME (Unaudited)
For the Year Ended October 31, 1994
<CAPTION>
Dreyfus Dreyfus/ Pro
International Laurel Forma
Equity International Combined
Allocation Fund (Note 1)
Fund
<S> <C> <C> <C>
INCOME:
Dividends (net of foreign
withholding taxes of
$4,994, $647, and $5,641,
respectively).............. $38,636 $13,731 $52,367
Interest................... 35,101 6,138 41,239
TOTAL INCOME................ 73,737 19,869 93,606
EXPENSES:
Investment management fee... 29,370 15,087 44,457
Directors' fees and expenses 396 0 396
Distribution fees........... 11 0 11
- 16 -
<PAGE>
Dreyfus Dreyfus/ Pro
International Laurel Forma
Equity International Combined
Allocation Fund (Note 1)
Fund
TOTAL EXPENSES.............. 29,777 15,087 44,864
NET INVESTMENT INCOME (LOSS) 43,960 4,782 48,742
See Notes to Pro Forma Financial Statements
</TABLE>
- 17 -
<PAGE>
The Dreyfus/Laurel Funds, Inc.
Dreyfus International Equity Allocation Fund
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)
1. Basis of Combination
The unaudited Pro Forma Combining Portfolio of Investments and
Pro Forma Statement of Assets and Liabilities reflect the accounts of
Dreyfus International Equity Allocation ("Equity Allocation") and
Dreyfus/Laurel International Fund ("International") at October 31, 1994.
The Pro Forma Combining Statement of Net Investment Income reflects the
accounts of Equity Allocation for the period from August 12, 1994 to
October 31, 1994 and the accounts of International for the period from
September 1, 1994 to October 31, 1994. These statements have been derived
from the annual report of Equity Allocation dated October 31, 1994 and
from International's books and records utilized in calculating daily net
asset value at October 31, 1994.
The pro forma statements give effect to the proposed transfer of
the assets and stated liabilities of International to Equity Allocation in
exchange for shares of Equity Allocation under generally accepted
accounting principles. The historical cost of investment securities will
be carried forward to the surviving entity and the results of operations
of Equity Allocation for pre-combination periods will not be restated.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the Agreement and Plan of
Reorganization.
The Pro Forma Combining Portfolio of Investments, the Pro Forma
Combining Statement of Assets and Liabilities and the Pro Forma Combining
Statement of Net Investment Income should be read in conjunction with the
historical financial statements of the funds included or incorporated by
reference in the Statement of Additional Information.
2. Portfolio Valuation
Securities of both Equity Allocation and International are valued
at market value, or in the absence of a market value with respect to any
portfolio securities, at fair value as determined by or under the
direction of the funds' Board of Directors. Portfolio securities that are
primarily traded on an exchange are valued at the last sale price on that
exchange or, if there were no sales during the day, at the current quoted
bid price. Short-term investments that mature in 60 days or less are
valued at amortized cost.
- 18 -
<PAGE>
3. Capital Shares
The pro forma net asset value per share assumes the issuance of
additional shares of Equity Allocation which would have been issued at
October 31, 1994 in connection with the proposed reorganization. The pro
forma number of Investor Shares outstanding of 553,670 consists of 546,635
additional shares assumed issued in the reorganization plus 7,035 shares
of Equity Allocation outstanding at October 31, 1994. The pro forma
number of Class R Shares outstanding of 1,177,712 consists of Class R
shares of Equity Allocation outstanding of at October 31, 1994.
- 19 -
<PAGE>
THE DREYFUS/LAUREL FUNDS, INC.
PART C
OTHER INFORMATION
Item 15. Indemnification
The response to this item is incorporated by reference to
"Liability and Indemnification of Directors and Trustees"
under the caption "Comparative Information on
Shareholders' Rights" in Part A of this Registration
Statement.
Item 16. Description of Exhibit:
1(a) Articles of Incorporation. Incorporated by
reference to Post-Effective Amendment No. 29 to
the Registrant's Registration Statement on Form
N-1A filed May 19, 1994 -- Registration No. 33-
16338 ("Registration Statement").
1(b) Articles Supplementary increasing number of
shares registered. Incorporated by reference to
Post-Effective Amendment No. 29 to the
Registrant's Registration Statement on Form N-1A
filed on May 19, 1994.
1(c) Articles of Amendment. Incorporated by reference
to Post-Effective Amendment No. 31 to the
Registrant's Registration Statement on Form N-1A
filed on December 13, 1994.
1(d) Articles Supplementary designating classes.
Incorporated by reference to Post-Effective
Amendment No. 32 to the Registrant's Registration
Statement on Form N-1A filed on December 19,
1994.
2 Bylaws. Incorporated by reference to the
Registration Statement on Form N-1A.
3 Voting Trust Agreement. Not applicable.
4 Agreement and Plan or Reorganization. Exhibit A
to Prospectus contained in Part A of this
Registration Statement.
5 Not applicable.
<PAGE>
6(a) Investment Sub-Advisory Agreement among Mellon
Bank, N.A., S.A.M. Finance S.A. and the
Registrant for the European Fund. Incorporated
by reference to Post-Effective Amendment No. 22
to the Registrant's Registration Statement on
Form N-1A filed on September 3, 1993.
6(b) Investment Management Agreement between Mellon
Bank, N.A. and the Registrant. Incorporated by
reference to Post-Effective Amendment No. 29 to
the Registrant's Registration Statement on Form
N-1A filed on May 19, 1994.
6(c) Investment Sub-Advisory Agreement among Mellon
Bank, N.A., S.A.M. Finance S.A. and the
Registrant for Dreyfus International Equity
Allocation Fund. Incorporated by reference to
Post-Effective Amendment No. 31 to the
Registrant's Registration Statement on Form N-1A
filed on December 13, 1994.
6(d) Assignment and Assumption Agreement among Mellon
Bank, N.A., The Dreyfus Corporation and the
Registrant (relating to Investment Management
Agreement). Incorporated by reference to Post-
Effective Amendment No. 31 to the Registrant's
Registration Statement on Form N-1A filed on
December 13, 1994.
6(e) Assignment Agreement among Mellon Bank, N.A., The
Dreyfus Corporation, S.A.M. Finance S.A. and the
Registrant (relating to Investment Sub-Advisory
Agreement for the European Fund). To be filed by
amendment.
6(f) Assignment Agreement among Mellon Bank, N.A., The
Dreyfus Corporation, S.A.M. Finance S.A. and the
Registrant (relating to Investment Sub-Advisory
Agreement for the International Equity Allocation
Fund). To be filed by amendment.
7 Distribution Agreement between Premier Mutual
Fund Services, Inc. and the Registrant.
Incorporated by reference to Post-Effective
Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A filed on December 13,
1994.
8 Not applicable.
9(a) Custody Agreement with Boston Safe Deposit and
Trust Company with respect to the European Fund.
Incorporated by reference to Post-Effective
Amendment No. 23 to the Registrant's Registration
<PAGE>
Statement on Form N-1A filed on December 30,
1993.
9(b) Custody and Fund Accounting Agreement between the
Registrant and Mellon Bank, N.A. Incorporated by
reference to Post-Effective Amendment No. 29 to
the Registrant's Registration Statement on Form
N-1A filed on May 19, 1994.
9(c) Supplement to Custody Agreement with Boston Safe
Deposit and Trust Company with respect to the
European Fund. Incorporated by reference to
Post-Effective Amendment No. 29 to the
Registrant's Registration Statement on Form N-1A
filed on May 19, 1994.
10(a) Restated Distribution Plan (relating to Investor
Shares and Class A Shares). Incorporated by
reference to Post-Effective Amendment No. 31 to
the Registrant's Registration Statement on Form
N-1A filed on December 13, 1994.
10(b) Form of Distribution and Service Plans (relating
to Class B Shares and Class C Shares).
Incorporated by reference to Post-Effective
Amendment No. 32 to the Registrant's Registration
Statement on Form N-1A filed on December 19,
1994.
11 Opinion and consent of Kirkpatrick & Lockhart.
12 Tax opinion and consent of Kirkpatrick &
Lockhart.
13 Not applicable.
14(a) Consent of KPMG Peat Marwick LLP, independent
accountants, as to the use of their report dated
October 21, 1994 concerning the financial
statements of the Dreyfus/Laurel International
Fund for the fiscal year ended August 31, 1994,
and their report dated December 9, 1994
concerning the financial statements of the
Registrant for the fiscal year ended October 31,
1994. Filed herewith.
14(b) Consent of Coopers & Lybrand, L.L.P., independent
accountants, as to the use of their report dated
October 8, 1993 covering the financial statements
of the International Fund of The Boston Company
Investment Series for the fiscal year ended
August 31, 1993. Filed herewith.
15 Not applicable.
<PAGE>
16 Not applicable.
17 Form of Proxy Card. Filed herewith.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to
any public reoffering of the securities
registered through the use of a prospectus which
is a 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 reofferings 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, this registration statement has
been signed on behalf of the Registrant, in the City of Boston and
Commnwealth of Massachusetts, on the 9th day of January, 1995.
THE DREYFUS/LAUREL FUNDS, INC.
/s/ Marie E. Connolly
By: ________________________________
Marie E. Connolly
President
As required by the Securities Act of 1933, this 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 1/9/95
Marie E. Connolly
/s/ Francis P. Brennan
_________________________ Director 1/9/95
Francis P. Brennan Chairman of the Board
/s/ Ruth Marie Adams
_________________________ Director 1/9/95
Ruth Marie Adams
/s/ James M. Fitzgibbons
_________________________ Director 1/9/95
James M. Fitzgibbons
/s/ Kenneth A. Himmel
_________________________ Director 1/9/95
Kenneth A. Himmel
/s/ Stephen J. Lockwood
_________________________ Director 1/9/95
Stephen J. Lockwood
<PAGE>
/s/ Roslyn M. Watson
__________________________ Director 1/9/95
Roslyn M. Watson
/s/ J. Tomlinson Fort
__________________________ Director 1/9/95
J. Tomlinson Fort
/s/ Arthur L. Goeschel
__________________________ Director 1/9/95
Arthur L. Goeschel
/s/ Arch S. Jeffery
__________________________ Director 1/9/95
Arch S. Jeffery
<PAGE>
/s/ Robert D. McBride
__________________________ Director 1/9/95
Robert D. McBride
/s/ John L. Propst
__________________________ Director 1/9/95
John L. Propst
/s/ John J. Sciullo
__________________________ Director 1/9/95
John J. Sciullo
<PAGE>
THE DREYFUS/LAUREL FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-14
EXHIBITS
<PAGE>
January 9, 1995
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue -- 55th Floor
New York, New York 10166
Ladies and Gentlemen:
We have been requested by The Dreyfus/Laurel Funds, Inc.,
("Company"), a corporation organized under the laws of the State of
Maryland, for our opinion with respect to certain matters relating to the
Dreyfus/Laurel International Equity Allocation Fund ("Acquiring Fund"), a
series of the Company. We understand that the Company is about to file a
Registration Statement on Form N-14 for the purpose of registering shares
of the Acquiring Fund under the Securities Act of 1933, as amended ("1933
Act"), in connection with the proposed acquisition by the Acquiring Fund
of the assets of the Dreyfus/Laurel International Fund ("Acquired Fund"),
a series of the Dreyfus/Laurel Investment Series (a business trust
organized under the laws of the Commonwealth of Massachusetts), in
exchange solely for shares of the Acquiring Fund and the assumption by the
Acquiring Fund of certain liabilities of the Acquired Fund pursuant to an
Agreement and Plan of Reorganization dated as of December 20, 1994 (the
"Plan").
We have, as counsel, participated in various business and other
proceedings relating to the Company. We have examined copies either
certified or otherwise proved to be genuine to our satisfaction, of the
Company's Articles of Incorporation and By-Laws, and other documents
relating to its organization, operation, and proposed operation, including
the proposed Plan. Based upon the foregoing, and assuming the approval by
shareholders of the Acquired Fund of certain matters scheduled for their
consideration at a meeting presently anticipated to be held on April 19,
1995, and the availability of an appropriate exemptive order from the
Securities and Exchange Commission relating to Sectino 17(a) of the
Investment Company Act of 1940 ("1940 Act"), it is our opinion that the
shares of the Acquiring Fund currently being registered, when issued in
accordance with the Plan and the Company's Articles of Incorporation and
By-Laws, will be legally issued, fully paid and non-assessable, subject to
compliance with the 1933 Act, the 1940 Act and applicable state laws
regulating the offer and sale of securities.
<PAGE>
The Dreyfus/Laurel Funds, Inc.
January 9, 1995
Page 2
We hereby consent to this opinion accompanying the Registration
Statement on Form N-14 which the Company is about to file with the
Securities and Exchange Commission and to the reference to our firm under
the caption "Legal Matters" in the proxy statement/prospectus filed as
part of the Form N-14.
Sincerely,
/s/ Kirkpatrick & Lockhart
<PAGE>
An opinion substantially in the form of the following
will be delivered at the closing of the transaction
described therein
_______ __, 1995
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
200 Park Avenue
New York, New York 10166
Ladies and Gentlemen:
The Dreyfus/Laurel Investment Series ("Trust"), on behalf of
Dreyfus/Laurel International Fund, a segregated portfolio of assets ("se-
ries") of Trust ("Target"), and The Dreyfus/Laurel Funds, Inc.
("Corporation"), on behalf of Dreyfus/Laurel International Equity
Allocation Fund, a series of Corporation ("Acquiring Fund"),1/ have
requested our opinion as to certain federal income tax consequences of the
proposed acquisition of Target by Acquiring Fund, pursuant to the
Agreement and Plan of Reorganization dated as of December 20, 1994
("Plan"), attached as an exhibit to the prospectus/proxy statement to be
furnished in connection with the solicitation of proxies by Trust's board
of trustees for use at a special meeting of Target shareholders to be held
on April 19, 1995 ("Proxy"), included in the registration statement on
Form N-14 to be filed with the Securities and Exchange Commission ("SEC")
on the date hereof ("Registration Statement"). Specifically, each
Investment Company has requested our opinion:
(1) that the acquisition by Acquiring Fund of all
or substantially all of Target's assets in exchange
solely for shares of common stock in Acquiring Fund and
the assumption by Acquiring Fund of Target's liabilities,
followed by the distribution of those shares by Target
PRO RATA to its shareholders of record as of the close of
business on the Closing Date (as hereinafter defined)
("Target Shareholders") constructively in exchange for
their shares of beneficial interest in Target ("Target
Shares") (such transaction sometimes being referred to
herein as the "Reorganization"), will constitute a
"reorganization" within the meaning of section
1/ Target and Acquiring Fund are referred to herein individually either
by such names or as a "Fund" and collectively as the "Funds," and Trust
and Corporation are referred to herein individually either by such names
or as an "Investment Company" and collectively as the "Investment
Companies."
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 2
368(a)(1)(C)2/ and that each Fund will be a "party to a
reorganization" within the meaning of section 368(b),
(2) that Target, the Target Shareholders, and
Acquiring Fund will recognize no gain or loss upon the
Reorganization, and
(3) regarding the basis and holding period after
the Reorganization of the transferred assets and the
shares of Acquiring Fund issued pursuant thereto.
In rendering this opinion, we have examined (1) the currently
effective prospectus and statement of additional information of Target,
both dated December 30, 1994, and of Acquiring Fund, both dated January 5,
1995, (2) the Proxy, (3) the Plan, and (4) such other documents as we have
deemed necessary or appropriate for the purposes hereof. As to various
matters of fact material to this opinion, we have relied on statements of
responsible officers of each Investment Company and on the Representations
described below.
FACTS
-----
Trust (formerly known as "The Laurel Investment Series" and,
before that, "The Boston Company Investment Series") was organized as an
unincorporated voluntary association formed as a business trust under the
laws of the Commonwealth of Massachusetts (commonly referred to as a
"Massachusetts business trust") pursuant to a Master Trust Agreement dated
May 26, 1988, as amended and restated December 9, 1992 ("Trust
Agreement"); Corporation was incorporated in Maryland on August 6, 1987.
Each of them is registered with the SEC as an open-end management
investment company under the Investment Company Act of 1940 ("1940 Act").
Target commenced operations as a diversified series of Trust on October
12, 1988, and Acquiring Fund commenced operations as a diversified series
of Corporation on August 12, 1994.
The Dreyfus Corporation ("Dreyfus"), a wholly owned subsidiary of
Mellon Bank, N.A. ("Mellon Bank"), serves as investment manager to each
Fund. S.A.M. Finance, S.A. ("CCF SAM") serves as the investment sub-
adviser to the Acquiring Fund. Mellon Bank serves as each Fund's
custodian and fund accountant, Premier Mutual Fund Services, Inc. acts as
their distributor and subadministrator, and The Shareholder Services
Group, Inc. is each Fund's transfer agent.
2/ All section references are to the Internal Revenue Code of 1986, as
amended ("Code"), and all "Treas. Reg. section" references are to the
regulations under the Code ("Regulations").
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 3
The outstanding Target Shares are designated as "Investor
Shares." Acquiring Fund's outstanding shares are divided into two
classes, designated "Investor Shares" and "Class R Shares." Only the
former class of shares, which are similar to the Target Shares, will be
issued in the Reorganization ("Acquiring Fund Shares").
Target is a diversified equity fund seeking long-term growth in
capital by investing in companies located outside of the United States.
Current income from dividends, interest, and other sources is a secondary
objective. Target seeks to achieve its investment objectives through
investments in common stocks and securities convertible into common stock
of companies located outside the United States.
Acquiring Fund's investment objective is to exceed the total
return of the Morgan Stanley Capital International - Europe Australia Far
East (MSCI EAFE) Index Benchmark (the "Benchmark") through active stock
selection, country allocation, and currency allocation. Acquiring Fund is
not an index fund, and its investments are not representative of the
proportions or weightings of the Benchmark. In addition to investing in
securities of issuers in countries represented in the Benchmark, Acquiring
Fund may invest up to 20% of its assets in securities of issuers in
emerging market countries.
Not only are the Funds' investment objectives and policies
similar in their concentration on foreign equity securities, they even
focus on much the same foreign countries -- the countries that Target
emphasizes for its investments are, with one exception, included in the
countries represented in the Benchmark. In addition, each Fund may write
covered put and call options on securities, purchase and write put and
call options on stock indices, engage in currency exchange transactions
(either on a spot, i.e., cash, basis or through forward foreign currency
contracts), purchase and sell (write) futures contracts and options
thereon, though Acquired Fund's authority regarding the foregoing is
somewhat broader than Target's. Furthermore, both Funds may lend
portfolio securities, enter into repurchase agreements, and invest up to
15% of its net assets in illiquid securities, and they have similar
borrowing authority and limitations.
On or before the closing date of the Reorganization, currently
scheduled for May 1, 1995 (or such later date on which the parties may
agree) ("Closing Date"), Target will declare and pay to its shareholders a
dividend and/or other distribution that, together with all previous
dividends and other distributions, shall have the effect of distributing
to its shareholders all of its investment company taxable income for all
taxable years ending on or prior to 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).
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 4
The board of trustees of the Trust ("Board") determined that it
is advantageous to combine the Funds, which have substantially similar
investment objectives, restrictions, and policies and the same adviser,
administrator, custodian, and distributor. The Board further determined
that the Reorganization should provide certain benefits to Target's
shareholders. In making that determination, the Board considered, among
other things, the benefit to Target of consolidations that would promote
more efficient operations through the elimination of duplication of
services, 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 performance of
the Funds, and the advantages of eliminating duplication inherent in
marketing funds with similar investment objectives, hopefully leading to
increased growth of the combined Fund following the Reorganization.
The Board also believes that the access of the Acquiring Fund to
the international investment expertise of CCF SAM as sub-adviser may prove
beneficial in terms of improved operating results for the combined Fund
following the Reorganization. A wholly owned subsidiary of Credit
Commercial de France ("CCF"), one of Europe's largest commercial banks,
CCF SAM is a French corporation organized in 1989 and has been a
registered investment adviser since February, 1993. CCF's European
investment management business dates back to 1945, and it currently
manages over $30 billion divided between 210 open-end mutual funds and
over 100 commingled investment portfolios. CCF SAM specializes in active
quantitative asset management based on a structured investment process.
CCF SAM's offices are located in Paris, France, and it currently advises
$2 billion in assets worldwide.
In light of the foregoing, the Board, including the members
thereof who are not "interested persons" (as that term is defined in the
1940 Act) of the Trust, unanimously concluded that participation in the
Reorganization is in the best interests of Target and that Target's
shareholders' interests will not be diluted as a result of the
Reorganization. Similarly, Corporation's board of directors, including
those who are not "interested persons" (as so defined) of Corporation,
unanimously concluded that the Reorganization is in the best interests of
Acquiring Fund and that the interests of Acquiring Fund's shareholders
will not be diluted as a result of the Reorganization.
Pursuant to all the foregoing, the Board and the Corporation's
board of directors each approved the Plan, subject to approval of Target's
shareholders. The Plan, which specifies that it is intended to be, and is
adopted as, a plan of a reorganization described in section 368(a)(1)(C),
provides in relevant part for the following:
(1) The acquisition by Acquiring Fund of all or
substantially all of the Assets (as defined below) in
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 5
exchange solely for (a) the number of full and fractional
Acquiring Fund Shares determined by dividing Target's net
asset value ("NAV") by the NAV of an Acquiring Fund
Share, and (b) Acquiring Fund's assumption of the
Liabilities (as defined below),
(2) The constructive distribution of such
Acquiring Fund Shares to the Target Shareholders, and
(3) The subsequent termination of Target.
The distribution described in (2) will be accomplished by
transferring the Acquiring Fund Shares then credited to Target's account
on Acquiring Fund's stock transfer records to open accounts on those
records established in the Target Shareholders' names, with each such
shareholder's account being credited with the respective PRO RATA number
of full and fractional (rounded to three decimal places) Acquiring Fund
Shares due such shareholder. All issued and outstanding Target Shares,
including those represented by certificates, will simultaneously be
canceled on Target's share transfer records.
The Target assets to be acquired by Acquiring Fund consist of all
property, including all cash, cash equivalents, securities, commodities,
and futures interests, dividend and interest receivables, claims, and
rights of action, that are owned by Target, and any deferred or prepaid
expenses shown as an asset on Target's books, on the Closing Date, but
will not include Target's corporate books, records, or minutes
(collectively "Assets").
Target will endeavor to discharge all of its known liabilities
and obligations prior to the Closing Date. Acquiring Fund will assume all
liabilities, debts, obligations, expenses, costs, charges, and reserves
reflected on an unaudited Statement of Assets and Liabilities of Target
prepared by or at the direction of Dreyfus as of the business day
immediately preceding the Closing Date, in accordance with generally
accepted accounting principles consistently applied from the prior audited
period (collectively "Liabilities"). Acquiring Fund will assume only the
Liabilities and will not assume any other liabilities, whether absolute or
contingent, other than the obligation to indemnify Target's trustees and
officers to the extent provided in the Trust's Trust Agreement and by-
laws.
REPRESENTATIONS
---------------
The representations enumerated below ("Representations") have
been made to us by appropriate officers of each Investment Company.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 6
Each of Trust, on behalf of Target, and Corporation, on behalf of
Acquiring Fund, has represented and warranted as follows:
1. The fair market value of the Acquiring Fund Shares,
when received by the Target Shareholders, will be approximately
equal to the fair market value of their Target Shares
constructively surrendered in exchange therefor;
2. Its management (a) is unaware of any plan or inten-
tion of Target Shareholders to redeem or otherwise dispose of any
portion of the Acquiring Fund Shares to be received by them in
the Reorganization and (b) does not anticipate dispositions
thereof at the time of or soon after the Reorganization to exceed
the usual rate and frequency of redemptions of shares of Target
as a series of an open-end investment company. Consequently, its
management expects that the percentage of Target Shareholder
interests, if any, that will be redeemed 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 sales of
Acquiring Fund shares immediately following the Reorganization;
3. The Target Shareholders will pay their own expenses,
if any, incurred in connection with the Reorganization;
4. Immediately following consummation of the Reorganiza-
tion, Acquiring Fund will hold the same assets and be subject to
the same liabilities that Target held or was subject to immedi-
ately prior thereto, plus any liabilities and expenses of the
Funds incurred in connection with the Reorganization;
5. The fair market value on a going concern basis of the
Assets will equal or exceed the Liabilities to be assumed by
Acquiring Fund and those to which the Assets are subject;
6. There is no intercompany indebtedness between the
Funds that was issued or acquired, or will be settled, at a
discount; and
7. Pursuant to the Reorganization, Target will transfer
to Acquiring Fund, and 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 Target
immediately before the Reorganization. For the purposes of this
representation, any amounts used by Target to pay its
Reorganization expenses and redemptions and distributions made by
it immediately before the Reorganization (except those occurring
in the ordinary course of its business) will be included as
assets thereof held immediately before the Reorganization.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 7
Trust also has represented and warranted on behalf of Target as
follows:
1. The Liabilities were incurred by Target in the ordi-
nary course of its business;
2. For each of the last three taxable years of its oper-
ation or its full period of operation, if shorter, Target has
been a "fund" as defined in section 851(h)(2) and has met the
requirements of Subchapter M of the Code ("Subchapter M") for
qualification and treatment as a regulated investment company
("RIC"), and it will meet such requirements for its current
taxable year; and Target has no earnings and profits accumulated
in any taxable year to which the provisions of Subchapter M did
not apply to it;
3. Target 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);
4. Not more than 25% of the value of Target's total
assets (excluding cash, cash items, and U.S. government secu-
rities) is invested in the stock or securities of any one issuer,
and not more than 50% of the value of such assets is invested in
the stock or securities of five or fewer issuers; and
5. Target will be terminated as soon as reasonably prac-
ticable after the Reorganization.
Corporation also has represented and warranted on behalf of
Acquiring Fund as follows:
1. For each of the last three taxable years of its oper-
ation or its full period of operation, if shorter, Acquiring Fund
has been a "fund" as defined in section 851(h)(2) and has met the
requirements of Subchapter M for qualification and treatment as a
RIC, and it will meet such requirements for its current taxable
year; and Acquiring Fund has no earnings and profits accumulated
in any taxable year to which the provisions of Subchapter M did
not apply to it;
2. Acquiring Fund has no plan or intention to issue
additional 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 Acquiring Fund have any
plan or intention to redeem or otherwise reacquire any Acquiring
Fund Shares issued to Target Shareholders pursuant to the
Reorganization, other than through redemptions in the ordinary
course of that business;
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 8
3. Acquiring Fund (a) will actively continue Target's
business in the same manner that Target conducted such business
immediately before the Reorganization, (b) has no plan or
intention to sell or otherwise dispose of any of the Assets,
except for dispositions made in the ordinary course of its
business and dispositions necessary to maintain its status as a
RIC under Subchapter M, and (c) expects to retain substantially
all the Assets in the same form as it receives them in the
Reorganization, unless and until subsequent investment
circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status;
4. There is no plan or intention for Acquiring Fund to
be dissolved or merged with another corporation or business trust
or any "fund" thereof (within the meaning of section 851(h)(2))
following the Reorganization; and
5. Immediately after the Reorganization, (a) not more
than 25% of the value of Acquiring Fund's total assets (excluding
cash, cash items, and U.S. government securities) will be
invested in the stock or securities of any one issuer and (b) not
more than 50% of the value of such assets will be invested in the
stock or securities of five or fewer issuers.
OPINION
-------
Based solely on the facts set forth above, and conditioned on
(1) the Representations being true at the time of Closing and (2) the
Reorganization being consummated in accordance with the Plan, our opinion
(as explained more fully in the next section of this letter) is as
follows:
1. Acquiring Fund's acquisition of the Assets solely in
exchange for the Acquiring Fund Shares and Acquiring Fund's
assumption of the Liabilities, followed by Target's distribution
of those shares PRO RATA to the Target Shareholders
constructively in exchange for their Target Shares, will
constitute a reorganization within the meaning of section
368(a)(1)(C), and each Fund will be "a party to a reorganization"
within the meaning of section 368(b);
2. No gain or loss will be recognized to Target on the
transfer of the Assets (except, possibly, with respect to certain
options, futures, and forward contracts included in the Assets
(collectively "Contracts")) to Acquiring Fund solely in exchange
for the Acquiring Fund Shares and Acquiring Fund's assumption of
the Liabilities or upon the subsequent distribution of those
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 9
shares to the Target Shareholders in constructive exchange for
their Target Shares (section 361);
3. No gain or loss will be recognized to Acquiring Fund
on its receipt of the Assets solely in exchange for the Acquiring
Fund Shares and its assumption of the Liabilities (section
1032(a));
4. Acquiring Fund's basis for the Assets (with the pos-
sible exception of the Contracts) will be the same as the basis
thereof in Target's hands immediately before the Reorganization
(section 362(b)), and Acquiring Fund's holding period for the
Assets (with the possible exception of the Contracts) will
include Target's holding period therefor (section 1223(2));
5. A Target Shareholder will recognize no gain or loss
on the constructive exchange of all its Target Shares solely for
Acquiring Fund Shares pursuant to the Reorganization (section
354(a)); and
6. A Target Shareholder's basis for the Acquiring Fund
Shares to be received by it in the Reorganization will be the
same as the basis for its Target Shares to be constructively
surrendered in exchange for those Acquiring Fund Shares (section
358(a)), and its holding period for those Acquiring Fund Shares
will include its holding period for those Target Shares, provided
they are held as capital assets by the Target Shareholder on the
Closing Date (section 1223(1)).
The foregoing opinion (1) is based on, and is conditioned on the
continued applicability of, the provisions of the Code and the
Regulations, judicial decisions, and rulings and other pronouncements of
the Internal Revenue Service ("Service") in existence on the date hereof
and (2) is applicable only to the extent each Fund is solvent. We express
no opinion about the tax treatment of the transactions described herein if
either Fund is insolvent.
ANALYSIS
--------
I. The Reorganization Will Be a Reorganization under Section
368(a)(1)(C), and Each Fund Will Be a Party to a Reorganization.
----------------------------------------------------------------
A. Each Fund Is a Separate Corporation.
------------------------------------
A reorganization under section 368(a)(1)(C) (a "C reorganiza-
tion") involves the acquisition by one corporation, in exchange solely for
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 10
all or a part of its voting stock, of substantially all of the properties
of another corporation. For the transaction to qualify under that
section, therefore, both entities involved therein must be corporations
(or associations taxable as corporations). Trust, however, is a
Massachusetts business trust, not a corporation, and each Fund is a sepa-
rate series of an Investment Company.
Treasury Regulation section 301.7701-4(b) provides that certain
arrangements known as trusts (because legal title is conveyed to trustees
for the benefit of beneficiaries) will not be classified as trusts for
purposes of the Code because they are not simply arrangements to protect
or conserve the property for the beneficiaries. These "business or
commercial trusts" are created simply as devices to carry on profit-making
businesses that normally would have been carried on through corporations
or partnerships. Treasury Regulation section 301.7701-4(c) further
provides that an "`investment' trust will not be classified as a trust if
there is a power under the trust agreement to vary the investment of the
certificate holders." See Commissioner v. North American Bond Trust, 122
F.2d 545 (2d Cir. 1941), cert. denied, 314 U.S. 701 (1942).
Based on these criteria, Trust does not qualify as a trust for
federal income tax purposes. While Trust is an "investment trust," it
does not have a fixed pool of assets -- Target has been a managed
portfolio of securities, and Dreyfus, as Target's investment adviser, has
had the authority to buy and sell securities for it. Trust is not simply
an arrangement to protect or conserve property for the beneficiaries, but
is designed to carry on a profit-making business. In addition, the word
"association" has long been held to include "Massachusetts business
trusts," such as Trust. See Hecht v. Malley, 265 U.S. 144 (1924).
Accordingly, we believe that Trust will be treated as a corporation for
federal income tax purposes.
The Investment Companies as such, however, are not participating
in the Reorganization, but rather a series of each of them are the
participants. Ordinarily, a transaction involving two segregated pools of
assets (such as the Funds) could not qualify as a reorganization, because
the pools would not be corporations. Under section 851(h), however, each
Fund is treated as a separate corporation for all purposes of the Code
save the definitional requirement of section 851(a) (which is satisfied by
the Investment Company of which it is a part). Thus, we believe that each
Fund will be a separate corporation, and the Acquiring Fund Shares and the
Target Shares will be treated as shares of corporate stock, for purposes
of section 368(a)(1)(C).
B. Non-applicability of Section 368(a)(2)(F).
------------------------------------------
Under section 368(a)(2)(F), if two or more parties to a trans-
action are "investment companies," the transaction will not be considered
a C reorganization with respect to any such investment company or its
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 11
shareholders unless, among other things, the investment company is a RIC
or --
(1) not more than 25% of the value of its
total assets is invested in the stock or
securities of any one issuer and
(2) not more than 50% of the value of its
total assets is invested in the stock or
securities of five or fewer issuers.
Each Fund will meet the requirements for qualification and treatment as a
RIC for its respective current taxable year, and the foregoing percentage
tests will be satisfied by each Fund. Accordingly, we believe that
section 368(a)(2)(F) will not cause the Reorganization to fail to qualify
as a C reorganization with respect to either Fund.
C. Transfer of "Substantially All" of the Properties.
--------------------------------------------------
For an acquisition to qualify as a C reorganization, the ac-
quiring corporation must acquire "substantially all of the properties" of
the transferor corporation solely in exchange for all or part of the
acquiring corporation's stock. For purposes of issuing private letter
rulings, the Service considers the transfer of at least 70% of the
transferor's gross assets, and at least 90% of its net assets, held
immediately before the reorganization to satisfy the "substantially all"
requirement. Rev. Proc. 77-37, 1977-2 C.B. 568. The Reorganization will
involve such a transfer. Accordingly, we believe that the Reorganization
will involve the transfer to Acquiring Fund of substantially all of
Target's properties.
D. Qualifying Consideration.
-------------------------
For an acquisition to qualify as a C reorganization, the
acquiring corporation must acquire at least 80% (by fair market value) of
the transferor's property solely in exchange for voting stock. Section
368(a)(2)(B)(iii). The assumption of liabilities by the acquiring
corporation or its acquisition of property subject to liabilities normally
are disregarded (section 368(a)(1)(C)), but the amount of any such
liabilities will be treated as money paid for the transferor's property if
the acquiring corporation exchanges any money or property (other than its
voting stock) therefor. Section 368(a)(2)(B). Because Acquiring Fund
will exchange only the Acquiring Fund Shares, and no money or other
property, for the Assets, we believe that the Reorganization will satisfy
the solely-for-voting-stock requirement to qualify as a C reorganization.
E. Requirements of Continuity.
---------------------------
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 12
Treasury Regulation section 1.368-1(b) sets forth two prerequi-
sites to a valid reorganization: (1) a continuity of the business enter-
prise under the modified corporate form ("continuity of business") and (2)
a continuity of interest therein on the part of those persons who,
directly or indirectly, were the owners of the enterprise prior to the
reorganization ("continuity of interest").
1. Continuity of Business.
-----------------------
The continuity of business enterprise test as set forth in Treas.
Reg. section 1.368-1(d)(2) requires that the acquiring corporation must
either (i) continue the acquired corporation's historic business
("business continuity") or (ii) use a significant portion of the acquired
corporation's historic business assets in a business ("asset continuity").
While there is no authority that deals directly with the re-
quirement of continuity of business in the context of a transaction such
as the Reorganization, Rev. Rul. 87-76, 1987-2 C.B. 84, deals with a
somewhat similar situation. In that ruling, P was a RIC that invested
exclusively in municipal securities. P acquired the assets of T in
exchange for P common stock in a transaction that was intended to qualify
as a C reorganization. Prior to the exchange, T sold its entire portfolio
of corporate securities and purchased a portfolio of municipal bonds. The
Service held that this transaction did not qualify as a reorganization for
the following reasons: (1) because T had sold its historic assets prior
to the exchange, there was no asset continuity; and (2) the failure of P
to engage in the business of investing in corporate securities after the
exchange caused the transaction to lack business continuity as well.
Acquiring Fund's investment objective is similar to Target's pri-
mary investment objective. Furthermore, Acquiring Fund will actively con-
tinue Target's business in the same manner that Target conducted it
immediately before the Reorganization. Accordingly, there will be busi-
ness continuity.
Acquiring Fund not only will continue Target's historic business,
but Acquiring Fund also (1) has no plan or intention to sell or otherwise
dispose of any of the Assets, except for dispositions made in the ordinary
course of its business and dispositions necessary to maintain its status
as a RIC, and (2) expects to retain substantially all the Assets in the
same form as it receives them in the Reorganization, unless and until
subsequent investment circumstances suggest the desirability of change or
it becomes necessary to make dispositions thereof to maintain such status.
Accordingly, there will be asset continuity as well.
For all the foregoing reasons, we believe that the Reorganization
will meet the continuity of business requirement.
2. Continuity of Interest.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 13
-----------------------
For purposes of issuing private letter rulings, the Service
considers the continuity of interest requirement of Treas. Reg.
section 1.368-1(b) satisfied if ownership in an acquiring corporation on
the part of a transferor corporation's former shareholders is equal in
value to at least 50% of the value of all the formerly outstanding shares
of the transferor corporation. Rev. Proc. 77-37, supra; but see Rev. Rul.
56-345, 1956-2 C.B. 206 (continuity of interest was held to exist in a
reorganization of two RICs where immediately after the reorganization 26%
of the shares were redeemed in order to allow investment in a third RIC);
also see Reef Corp. v. Commissioner, 368 F.2d 125 (5th Cir. 1966), cert.
denied, 386 U.S. 1018 (1967) (a redemption of 48% of a transferor corpora-
tion's stock was not a sufficient shift in proprietary interest to
disqualify a transaction as a reorganization under section 368(a)(2)(F)
("F Reorganization"), even though only 52% of the transferor's
shareholders would hold all the transferee's stock); Aetna Casualty and
Surety Co. v. U.S., 568 F.2d 811, 822-23 (2d Cir. 1976) (redemption of a
38.39% minority interest did not prevent a transaction from qualifying as
an F Reorganization); Rev. Rul. 61-156, 1961-2 C.B. 62 (a transaction
qualified as an F Reorganization even though the transferor's shareholders
acquired only 45% of the transferee's stock, while the remaining 55% of
that stock was issued to new shareholders in a public underwriting
immediately after the transfer).
No minimum holding period for shares of an acquiring corporation
is imposed under the Code on the acquired corporation's shareholders.
Rev. Rul. 66-23, 1966-1 C.B. 67, provides generally that "unrestricted
rights of ownership for a period of time sufficient to warrant the
conclusion that such ownership is definite and substantial" will suffice
and that "ordinarily, the Service will treat five years of unrestricted
. . . ownership as a sufficient period" for continuity of interest
purposes.
A preconceived plan or arrangement by or among an acquired
corporation's shareholders to dispose of more than 50% of an acquiring
corporation's shares could be problematic. Shareholders with no such
preconceived plan or arrangement, however, are basically free to sell any
part of the shares received by them in the reorganization without fear of
breaking continuity of interest, because the subsequent sale will be
treated as an independent transaction from the reorganization.
Neither Fund (1) is aware of any plan or intention of Target
Shareholders to dispose of any portion of the Acquiring Fund Shares to be
received by them in the Reorganization or (2) anticipates dispositions
thereof at the time of or soon after the Reorganization to exceed the
usual rate and frequency of redemptions of shares of Target as a series of
an open-end investment company. Consequently, each Fund expects that the
percentage of Target Shareholder interests, if any, that will be redeemed
as a result of or at the time of the Reorganization will be de minimis.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 14
Accordingly, we believe that the Reorganization will meet the continuity
of interest requirement of Treas. Reg. section 1.368-1(b).
F. Distribution by Target.
-----------------------
Section 368(a)(2)(G)(i) provides that a transaction will not
qualify as a C reorganization unless the corporation whose properties are
acquired distributes the stock it receives and its other property in
pursuance of the plan of reorganization. Under the Plan -- which we
believe constitutes a "plan of reorganization" within the meaning of
Treas. Reg. section 1.368-2(g) -- Target will distribute all the Acquiring
Fund Shares to its shareholders in constructive exchange for their Target
Shares; as soon as is reasonably practicable thereafter, Target will be
terminated. Accordingly, we believe that the requirements of section
368(a)(2)(G)(i) will be satisfied.
G. Business Purpose.
-----------------
All reorganizations must meet the judicially imposed requirements
of the "business purpose doctrine," which was established in Gregory v.
Helvering, 293 U.S. 465 (1935), and is now set forth in Treas. Reg.
sections 1.368-1(b), -1(c), and -2(g) (the last of which provides that, to
qualify as a reorganization, a transaction must be "undertaken for reasons
germane to the continuance of the business of a corporation a party to the
reorganization"). Under that doctrine, a transaction must have a bona
fide business purpose (and not a purpose to avoid federal income tax) to
constitute a valid reorganization.
The purpose of the Reorganization is to achieve the expected
benefit to the Funds of (1) consolidations that would promote more effi-
cient operations through the elimination of duplication of services,
(2) 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), (3) the advantages of eliminating duplication inherent in
marketing funds with similar investment objectives, hopefully leading to
increased growth of the combined Fund following the Reorganization, and
(4) the access to CCF SAM'S international investment expertise (which may
prove beneficial in terms of improved operating results for the combined
Fund following the Reorganization). Accordingly, we believe that the
Reorganization is being undertaken for bona fide business purposes (and
not a purpose to avoid federal income tax) and therefore meets the re-
quirements of the business purpose doctrine.
For all the foregoing reasons, we believe that the Reorganization
will constitute a reorganization within the meaning of section
368(a)(1)(C).
H. Both Funds are Parties to the Reorganization.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 15
---------------------------------------------
Section 368(b)(2) and Treas. Reg. section 1.368-1(f) provide that
if one corporation transfers substantially all of its properties to a
second corporation in exchange for all or a part of the voting stock of
the second corporation, then both corporations are parties to a reorgan-
ization. Target is transferring substantially all of its properties to
Acquiring Fund in exchange for Acquiring Fund Shares. Accordingly, we
believe that each Fund will be "a party to a reorganization."
II. No Gain or Loss Will Be Recognized to Target.
---------------------------------------------
Under sections 361(a) and (c), no gain or loss will be recognized
to a corporation that is a party to a reorganization (1) on the exchange
of property, pursuant to the plan of reorganization, solely for stock or
securities in another corporate party to the reorganization or (2) on the
distribution to its shareholders, pursuant to that plan, of stock in such
other corporation that was received by the distributing corporation in the
exchange. (Such a distribution is required by section 368(a)(2)(G)(i) for
a reorganization to qualify as a C reorganization.) Section 361(c)(4)
provides that specified provisions requiring recognition of gain on
certain distributions shall not apply to a distribution described in (2)
above.
Section 357(a) provides in pertinent part that, except as pro-
vided in section 357(b), if a taxpayer receives property that would be
permitted to be received under section 361 without recognition of gain if
it were the sole consideration and, as part of the consideration, another
party to the exchange assumes a liability of the taxpayer or acquires from
the taxpayer property subject to a liability, then that assumption or
acquisition shall not be treated as money or other property and shall not
prevent the exchange from being within section 361. Section 357(b)
applies where the principal purpose of the assumption or acquisition was a
tax avoidance purpose or not a bona fide business purpose.
As noted above, the Reorganization will constitute a C reorgan-
ization, each Fund will be a party to a reorganization, and the Plan
constitutes a plan of reorganization. Target will exchange the Assets
solely for the Acquiring Fund Shares and Acquiring Fund's assumption of
the Liabilities and then will terminate pursuant to the Plan, distributing
those shares to its shareholders in constructive exchange for their Target
Shares. As also noted above, we believe that the Reorganization is being
undertaken for bona fide business purposes (and not a purpose to avoid
federal income tax); we also do not believe that the principal purpose of
Acquiring Fund's assumption of the Liabilities is avoidance of federal
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 16
income tax on the proposed transaction. Accordingly, we believe that no
gain or loss will be recognized to Target on the Reorganization.3/
III. No Gain or Loss Will Be Recognized to Acquiring Fund.
----------------------------------------------------
Section 1032(a) provides that no gain or loss will be recognized
to a corporation on the receipt by it of money or other property in
exchange for its shares. Acquiring Fund will issue the Acquiring Fund
Shares to Target in exchange for the Assets, which consist of money and
securities. Accordingly, we believe that no gain or loss will be
recognized to Acquiring Fund on the Reorganization.
IV. Acquiring Fund's Basis for the Assets Will Be a Carryover Basis,
and Its Holding Period Will Include Target's Holding Period.
----------------------------------------------------------------
Section 362(b) provides that property acquired by a corporation
in connection with a reorganization will have the same basis in that
corporation's hands as the basis of the property in the transferor
corporation's hands immediately before the exchange, increased by any gain
recognized to the transferor on the transfer. As noted above, the Reor-
ganization will constitute a C reorganization and Target will recognize no
gain on the Reorganization under section 361(a) (except, possibly, with
respect to the Contracts). Accordingly, we believe that Acquiring Fund's
basis for the Assets (except, possibly, the Contracts) will be the same as
the basis thereof in Target's hands immediately before the Reorganization.
Section 1223(2) provides that where property acquired in an
exchange has a carryover basis, the property will have a holding period in
the hands of the acquiror that includes the holding period of the property
in the transferor's hands. As stated above, Acquiring Fund's basis for
the Assets (except, possibly, the Contracts) will be a carryover basis.
Accordingly, we believe that Acquiring Fund's holding period for the
Assets (except, possibly, the Contracts) will include Target's holding
period therefor.
V. No Gain or Loss Will Be Recognized to a Target Shareholder.
-----------------------------------------------------------
3/ We express no opinion as to whether Target will recognize gain or loss
under section 1256 on the transfer of the Contracts to Acquiring Fund in
the Reorganization or as to Acquiring Fund's basis or holding period for
the Contracts.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 17
Under section 354(a), no gain or loss is recognized to a share-
holder who exchanges shares for other shares pursuant to a plan of reor-
ganization, where the shares exchanged, as well as the shares
received, are those of a corporation that is a party to the reorgan-
ization. As stated above, the Reorganization will constitute a C reorgan-
ization, the Plan constitutes a plan of reorganization, and each Fund will
be a party to a reorganization. Accordingly, we believe that under
section 354 a Target Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring Fund
Shares pursuant to the Reorganization.
VI. A Target Shareholder's Basis for Acquiring Fund Shares Will Be a
Substituted Basis, and its Holding Period therefor Will Include
its Holding Period for its Target Shares.
----------------------------------------------------------------
Section 358(a)(1) provides, in part, that in the case of an ex-
change to which section 354 applies, the basis of any shares received in
the transaction without the recognition of gain is the same as the basis
of the property transferred in exchange therefor, decreased by, among
other things, the fair market value of any other property and the amount
of any money received in the transaction and increased by the amount of
any gain recognized on the exchange by the shareholder.
As noted above, the Reorganization will constitute a C reorgan-
ization and under section 354 no gain or loss will be recognized to a
Target Shareholder on the constructive exchange of its Target Shares for
Acquiring Fund Shares in the Reorganization. No property will be
distributed to the Target Shareholders other than the Acquiring Fund
Shares, and no money will be distributed to them pursuant to the Reorgan-
ization. Accordingly, we believe that a Target Shareholder's basis for
the Acquiring Fund Shares to be received by it in the Reorganization will
be the same as the basis for its Target Shares to be constructively
surrendered in exchange for those Acquiring Fund Shares.
Under section 1223(1), the holding period of property received in
an exchange includes the holding period of the property exchanged therefor
if the acquired property has, for the purpose of determining gain or loss,
the same basis in the holder's hands as the property exchanged therefor
("substituted basis") and such property was a capital asset. As noted
above, a Target Shareholder will have a substituted basis for the
Acquiring Fund Shares it receives in the Reorganization; accordingly,
provided that the Target Shareholder held its Target Shares as capital
assets on the Closing Date, we believe its holding period for those
Acquiring Fund Shares will include its holding period for those Target
Shares.
<PAGE>
The Dreyfus/Laurel Investment Series
The Dreyfus/Laurel Funds, Inc.
_______ __, 1995
Page 18
We hereby consent to a form of this opinion accompanying the
Registration Statement and to the reference to our firm under the caption
"Information About the Reorganization -- Federal Income Tax Consequences"
in the Proxy.
Very truly yours,
KIRKPATRICK & LOCKHART
By: _________________________
Theodore L. Press
<PAGE>
To the Board of Trustees of The
Dreyfus/Laurel Investment Series:
We consent to the incorporation by reference in the Registration Statement
of The Dreyfus/Laurel Funds, Inc. of our report dated October 8, 1993 on
our audit of the financial statements and financial statement highlights
of the International Fund of The Dreyfus/Laurel Investment Series
(formerly The Laurel Investment Series and previously The Boston Company
Investment Series), which report is included in the Annual Report to
Shareholders for the year ended August 31, 1993 which is incorporated by
reference in the Registration Statement.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 9, 1995
<PAGE>
Consent of Independent Auditors
The Board of Directors and Shareholders of
The Dreyfus/Laurel Funds, Inc.:
We consent to the use of our reports dated October 21, 1994 on The
Dreyfus/Laurel International Fund (formerly The Laurel Investment Series
International Fund) and December 9, 1994 on the Dreyfus International
Equity Allocation Fund, incorporated herein by reference, to the reference
to our firm under the heading "Financial Statements and Experts" in the
Registration Statement on Form N-14 and to the references to our firm
under the headings "Financial Highlights" and "Other Information" in the
prospectuses and statements of additional information filed with the
Securities and Exchange Commission, incorporated herein by reference, in
this Registration Statement on Form N-14.
/s/ KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
January 9, 1995
<PAGE>
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 INVESTMENT SERIES
SPECIAL MEETING OF SHAREHOLDERS -- APRIL 19, 1995
The undersigned hereby appoints Marie E. Connolly, John E. Pelletier, and
Eric B. Fischman, 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 The
Dreyfus/Laurel International Fund of The Dreyfus/Laurel Investment Series
(the "Fund"), which the undersigned is entitled to vote at a Meeting of
Shareholders of the Fund to be held at 200 Park Avenue, New York, New York
10166 on April 19, 1995, at 10:00 a.m. and any adjournments thereof (the
"Meeting"). The undersigned hereby acknowledges receipt of the Notice of
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. A majority of the proxies present and acting at
the Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the powers and
authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
NOTE: Please sign exactly as your name appears 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.
DATE: ___________, 1995 ________________________
________________________
Signature(s)
_________________________
Title(s), if applicable
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DC-168129.2
<PAGE>
PLEASE INDICATE YOUR VOTE BY AN "X" IN THE APPROPRIATE BOX BELOW. THIS
PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION,
THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
1. To approve the proposed Agreement and Plan of
Reorganization with Dreyfus International Equity Fund, a
series of The Dreyfus/Laurel Funds, Inc.
__ __ __
/__/ YES /__/ NO /__/ ABSTAIN
2. To consider and vote upon such other matters as may
properly come before said meetings or any adjournments
thereof.
__ __ __
/__/ YES /__/ NO /__/ ABSTAIN
These items are discussed in greater detail in the attached Proxy
Statement. The Boards of Directors of the Funds have fixed the close of
business on February 3, 1995, as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE
INSIDE COVER.
John E. Pelletier
Secretary
February 9, 1995
In their discretion, the Proxies, and each of them, are
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.
<PAGE>
