(File Nos. 033-43845 and 811-03700)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement.
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)).
[ ] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material under Rule 14a-12.
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
---------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
Dreyfus Premier Limited Term Massachusetts Municipal Fund
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Shareholder:
The attached proxy materials seek your approval to reorganize
Dreyfus Premier Limited Term Massachusetts Municipal Fund ("Premier
Massachusetts Fund") from a separate series of The Dreyfus/Laurel Tax-Free
Municipal Funds ("Dreyfus Trust") into MPAM Massachusetts Intermediate Municipal
Bond Fund ("MPAM Massachusetts Bond Fund"), a newly organized separate series of
MPAM Funds Trust ("Proposal").
The Board of Trustees of the Dreyfus Trust (the "Dreyfus Trust
Trustees") has determined that it would be in the best interest of Premier
Massachusetts Fund and its shareholders if Premier Massachusetts Fund were to
reorganize into MPAM Massachusetts Bond Fund, which is advised by MPAM Advisers,
a division of The Dreyfus Corporation, and will have (1) a similar expense
ratio, (2) a similar investment objective and management policies, and (3) the
same portfolio manager.
Under the terms of the Proposal, MPAM Massachusetts Bond Fund would
acquire all of the assets and assume all of the liabilities of Premier
Massachusetts Fund and holders of Class A and Class C shares of Premier
Massachusetts Fund would receive Investor shares of MPAM Massachusetts Bond
Fund, holders of Class B shares of Premier Massachusetts Fund would receive
Dreyfus Premier shares of MPAM Massachusetts Bond Fund and holders of Class R
shares of Premier Massachusetts Fund would receive MPAM shares of MPAM
Massachusetts Bond Fund (collectively referred to as the "Reorganization"). Each
Premier Massachusetts Fund shareholder would receive MPAM Massachusetts Bond
Fund shares of the corresponding class with an aggregate net asset value equal
to the aggregate net asset value of the shareholder's investment in Premier
Massachusetts Fund at the time of the Reorganization. Premier Massachusetts Fund
would then be terminated. The Reorganization will not result directly in the
imposition of Federal income tax on you. Shareholders who do not wish to
participate in the Reorganization may redeem their shares prior to the
Reorganization without the imposition of a sales charge.
Further information about the Proposal is contained in the enclosed
materials, which you should review carefully.
Please take the time to consider the enclosed materials and then
vote by completing, dating and signing the enclosed proxy card. A
self-addressed, postage-paid envelope has been enclosed for your convenience.
THE DREYFUS TRUST TRUSTEES RECOMMEND THAT PREMIER MASSACHUSETTS
FUND'S SHAREHOLDERS VOTE IN FAVOR OF THE PROPOSAL.
If you have any questions after considering the enclosed materials,
please call 1-800-554-4611.
Sincerely,
Stephen E. Canter,
President
June __, 2002
2
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
Dreyfus Premier Limited Term Massachusetts Municipal Fund
__________________________
Notice of Special Meeting of Shareholders
___________________________
To the Shareholders:
A Special Meeting of Shareholders of Dreyfus Premier Limited Term
Massachusetts Municipal Fund ("Premier Massachusetts Fund"), a series of The
Dreyfus/Laurel Tax-Free Municipal Funds (the "Dreyfus Trust"), will be held at
the offices of The Dreyfus Corporation, 200 Park Avenue, 7th Floor, New York,
New York 10166, on Thursday, August 22, 2002, at 11:00 a.m. for the following
purposes:
1. To consider an Agreement and Plan of Reorganization
between the Dreyfus Trust, on behalf of Premier Massachusetts Fund, and
MPAM Funds Trust, on behalf of MPAM Massachusetts Intermediate Municipal
Bond Fund ("MPAM Massachusetts Bond Fund") (a newly organized separate
series of MPAM Funds Trust) providing for the transfer of all of the
assets of Premier Massachusetts Fund in exchange for shares in MPAM
Massachusetts Bond Fund and the assumption by MPAM Massachusetts Bond Fund
of Premier Massachusetts Fund's liabilities. Holders of Class A and Class
C shares of Premier Massachusetts Fund would receive Investor shares of
MPAM Massachusetts Bond Fund. Holders of Class B shares of Premier
Massachusetts Fund would receive Dreyfus Premier shares of MPAM
Massachusetts Bond Fund. Holders of Class R shares of Premier
Massachusetts Fund would receive MPAM shares of MPAM Massachusetts Bond
Fund. Thereafter, Premier Massachusetts Fund would be terminated as a
series of Dreyfus Trust; and
3
2. To transact such other business that may properly come
before the meeting, or any adjournment or adjournments thereof.
Shareholders of record at the close of business on May 30,
2002 will be entitled to receive notice of and to vote at the meeting.
By Order of the Board of Trustees
Steven F. Newman,
Secretary
New York, New York
June ___, 2002
================================================================================
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS
VITAL. BY LAW, THE MEETING OF SHAREHOLDERS OF PREMIER MASSACHUSETTS FUND
WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A
QUORUM OF ITS SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT,
PREMIER MASSACHUSETTS FUND WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT
TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE
PREMIER MASSACHUSETTS FUND TO HOLD THE MEETING AS SCHEDULED, SO PLEASE
RETURN YOUR PROXY CARD IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS WILL
BENEFIT FROM YOUR COOPERATION.
================================================================================
4
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
Dreyfus Premier Limited Term Massachusetts Municipal Fund
200 Park Avenue
New York, New York 10166
( 800 ) 554-4611
June __, 2002
__________________________
PROXY STATEMENT
Special Meeting of Shareholders
to be held on August 22, 2002
__________________________
This proxy statement ("Proxy Statement") is furnished in connection
with a solicitation of proxies by the Board of Trustees of The Dreyfus/Laurel
Tax-Free Municipal Funds (the "Dreyfus Trust") on behalf of its series, Dreyfus
Premier Limited Term Massachusetts Municipal Fund ("Premier Massachusetts
Fund"), to be used at the Special Meeting of Shareholders of Premier
Massachusetts Fund (the "Meeting") to be held on Thursday, August 22, 2002, at
11:00 a.m., at the offices of The Dreyfus Corporation ("Dreyfus"), 200 Park
Avenue, 7th Floor, New York, New York 10166, for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders.
As more fully described in this Proxy Statement, the purpose of the
Meeting is to vote on the proposed reorganization of Premier Massachusetts Fund
from a separate series of the Dreyfus Trust, a Massachusetts business trust,
into MPAM Massachusetts Intermediate Municipal Bond Fund ("MPAM Massachusetts
Bond Fund"), a newly organized separate series of MPAM Funds Trust (the "MPAM
Trust"), also a Massachusetts business trust (the "Reorganization").
Proxy materials will be mailed to shareholders of record on or about
June 12, 2002. The proxy materials will include the relevant MPAM Massachusetts
Bond Fund prospectus relating to the shares to be received by shareholders in
the Reorganization. Copies of Premier Massachusetts Fund's most recent (as of
the date of this Proxy Statement) Annual Report and Semi-Annual Report have been
mailed to shareholders and may be obtained free of charge by calling
1-800-554-4611 or writing to Premier Massachusetts Fund at its principal
executive offices located at 200 Park Avenue, New York, New York 10166.
Shareholders of record at the close of business on May 30, 2002 are
entitled to receive notice of and to vote at the Meeting. Shareholders are
entitled to one vote for each share of Premier Massachusetts Fund, each without
par value, and fractional votes for each fractional share, they hold. Shares
represented by executed and unrevoked proxies will be voted in accordance with
the specifications made thereon. If no voting instructions are given, shares
will be voted FOR the Proposal (as defined below). If the enclosed form of proxy
is executed and returned, it nevertheless may be revoked by giving another proxy
or by letter or telegram directed to Premier Massachusetts Fund, which must
indicate the shareholder's name and account number. To be effective, such
revocation must be received prior to the Meeting. In addition, any shareholder
who attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given. Premier Massachusetts Fund and MPAM
Massachusetts Bond Fund are referred to collectively as the "Funds." The
submission of the Reorganization to Premier Massachusetts Fund shareholders for
their approval at the Meeting is referred to as the "Proposal."
As of May 1, 2002, the following numbers of shares of beneficial
interest of Premier Massachusetts Fund were issued and outstanding:
2
---------------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares Class R Shares
---------------------------------------------------------------------------
1,055,377 97,334 81,014 12,249,284
---------------------------------------------------------------------------
Except as set forth in Appendix B, Dreyfus does not know of any person who
owns of record 5% or more of the shares of Premier Massachusetts Fund.
PROPOSAL 1. TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION (THE
"PLAN") PROVIDING FOR THE REORGANIZATION OF PREMIER MASSACHUSETTS
FUND FROM A SERIES OF DREYFUS TRUST INTO MPAM MASSACHUSETTS BOND
FUND, A NEWLY ORGANIZED SEPARATE SERIES OF MPAM TRUST
Premier Massachusetts Fund is currently organized as a series of
Dreyfus Trust. The Board of Trustees of the Dreyfus Trust (the "Dreyfus Trust
Trustees"), including those Trustees who are not "interested persons," as that
term is defined in the Investment Company Act of 1940, as amended (the "1940
Act"), of Dreyfus Trust, considered and approved the Plan, a copy of which is
attached to this Proxy Statement as Appendix A, at a meeting held on April 25,
2002. Under the Plan, Premier Massachusetts Fund will be reorganized into MPAM
Massachusetts Bond Fund, a newly organized separate series of MPAM Trust.
MPAM Massachusetts Bond Fund has yet to commence business
operations, and (a) was established solely for the purpose of effecting the
Reorganization, (b) will carry on the business of Premier Massachusetts Fund
following the Reorganization, (c) has an investment objective, policies and
restrictions substantially similar to those of Premier Massachusetts Fund, and
(d) will inherit Premier Massachusetts Fund's performance and financial records.
Reasons for the Proposed Reorganization
- ---------------------------------------
The Dreyfus Trust Trustees have determined that it would be in the
best interest of Premier Massachusetts Fund and its shareholders if Premier
Massachusetts Fund, which is advised by Dreyfus, were to reorganize into MPAM
3
Massachusetts Bond Fund, which is advised by MPAM Advisers, a division of
Dreyfus. Compared to Premier Massachusetts Fund, MPAM Massachusetts Bond Fund
will have (1) a similar expense ratio, (2) a similar investment objective and
management policies, and (3) the same portfolio manager. In addition, a majority
of Premier Massachusetts Fund's shares are held by Private Wealth Management
Clients (as defined below), and MPAM Massachusetts Bond Fund is designed to be
sold to Private Wealth Management Clients. Based on these similarities, the
Dreyfus Trust Trustees believe that the reorganization of Premier Massachusetts
Fund into MPAM Massachusetts Bond Fund could promote more effective shareholder
communications, marketing and servicing and help to avoid shareholder confusion.
In determining whether to recommend approval of the Reorganization,
the Dreyfus Trust Trustees considered the following factors, among others: (1)
the terms and conditions of the Reorganization and whether the Reorganization
would result in dilution of shareholder interests; (2) unlike Class A and Class
C shares of Premier Massachusetts Fund, purchases and redemptions of Investor
shares of MPAM Massachusetts Bond Fund are not subject to a sales charge; (3)
the tax consequences of the Reorganization; and (4) Mellon Bank, N.A. ("Mellon
Bank") or its affiliates would bear the direct expenses of the Reorganization.
The Board recommends that each Premier Massachusetts Fund
shareholder vote FOR approval of the Plan. A vote for the Plan encompasses
approval of both (1) reorganization of Premier Massachusetts Fund into MPAM
Massachusetts Bond Fund and (2) a temporary waiver of certain investment
restrictions of Premier Massachusetts Fund to permit the Reorganization (See
"Temporary Suspension of Certain Investment Restrictions" below).
4
INFORMATION ABOUT THE REORGANIZATION
Summary of the Plan
- -------------------
The following discussion summarizes the important terms of the Plan.
This summary is qualified in its entirety by reference to the Plan itself, which
is attached as Appendix A to this Proxy Statement.
Under the terms of the Plan, MPAM Massachusetts Bond Fund would
acquire all of the assets and assume all of the liabilities of Premier
Massachusetts Fund. Holders of Class A and Class C shares of Premier
Massachusetts Fund would receive Investor shares of MPAM Massachusetts Bond
Fund. Holders of Class B shares of Premier Massachusetts Fund would receive
Dreyfus Premier shares of MPAM Massachusetts Bond Fund. Holders of Class R
shares of Premier Massachusetts Fund would receive MPAM shares of MPAM
Massachusetts Bond Fund. Each Premier Massachusetts Fund shareholder would
receive MPAM shares, Investor shares or Dreyfus Premier shares (collectively,
"MPAM Massachusetts Bond Fund Shares") of the corresponding class with an
aggregate net asset value equal to the aggregate net asset value of the
shareholder's investment in Premier Massachusetts Fund at the time of the
Reorganization. Premier Massachusetts Fund would then be terminated. Premier
Massachusetts Fund's Class A, Class B, Class C and Class R shares are referred
to collectively as the "Premier Massachusetts Fund Shares."
The Plan may be amended at any time before the Reorganization. The
Dreyfus Trust will provide Premier Massachusetts Fund shareholders with
information describing any material amendment to the Plan prior to shareholder
consideration. The obligations of the Funds under the Plan are subject to
various conditions, including approval by Premier Massachusetts Fund
5
shareholders holding the requisite number of Premier Massachusetts Fund shares
and the continuing accuracy of various representations and warranties of the
Funds being confirmed by the respective parties.
If the Plan is not approved by Premier Massachusetts Fund's
shareholders, the Dreyfus Trust Trustees will consider appropriate courses of
action.
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 Securities and
Exchange Commission (the "Commission") with respect to certain restrictions
under the 1940 Act that could otherwise impede or inhibit consummation of the
Reorganization.
The Plan obligates MPAM Trust, on behalf of its MPAM Massachusetts
Bond Fund, to enter into or adopt, as applicable, (a) an investment advisory
agreement with MPAM Advisers (the "New Investment Advisory Agreement"), (b) an
administration agreement with Mellon Bank, (c) a distribution agreement with
Dreyfus Service Corporation (the "Distributor"), (d) a distribution plan
pursuant to Rule 12b-1 under the 1940 Act, (e) a shareholder services plan, (f)
a transfer agency agreement with Dreyfus Transfer Inc., and (g) other agreements
necessary for MPAM Massachusetts Bond Fund's operation as a series of an
open-end investment company.
MBC Investments Corporation, as the sole shareholder of MPAM
Massachusetts Bond Fund, and the Board of Trustees of the MPAM Trust (the "MPAM
Trust Trustees"), including, to the extent required by law, those Trustees who
are not "interested persons" (as defined in the 1940 Act) of MPAM Trust or MPAM
Advisers (the "Independent Trustees"), have approved the New Investment Advisory
Agreement. For more information please see the "The Investment Advisory
Agreement" herein.
6
Related Expenses
- ----------------
The total expenses of the Reorganization are expected to be
approximately $69,000, which will be borne by Mellon Bank or its affiliates.
Those expenses include professional fees and costs of soliciting proxies for the
meeting of Premier Massachusetts Fund's shareholders, consisting principally of
printing and mailing expenses, together with the cost of any supplementary
solicitation. Additionally, Dreyfus will bear some of the indirect costs of the
Reorganization by providing employee time and effort in its planning,
preparation and consummation. Premier Massachusetts Fund will not incur any
brokerage expenses or finders fees in connection with the transfer of its assets
into MPAM Massachusetts Bond Fund.
Goal/Approach
- -------------
The Funds' have similar investment goals. Premier Massachusetts Fund
seeks to maximize current income exempt from Federal and Massachusetts personal
income taxes consistent with what is believed to be the prudent risk of capital.
Under normal market conditions, Premier Massachusetts Fund attempts to invest
100%, and will invest a minimum of 80%, of its total assets in debt obligations
of the Commonwealth of Massachusetts, its political subdivisions, authorities
and corporations, and certain other specified securities, the interest of which
is exempt from Federal and Massachusetts state personal income taxes
("Massachusetts Municipal Obligations"). MPAM Massachusetts Bond Fund seeks as
high a level of income exempt from Federal and Massachusetts state income taxes
as is consistent with the preservation of capital. Under normal market
conditions, MPAM Massachusetts Bond Fund invests at least 80% of its net assets,
plus any borrowings for investment purposes, in Massachusetts Municipal
7
Obligations. Each Fund also may invest in municipal bonds that are exempt from
Federal income taxes, but not Massachusetts personal income taxes, and in
taxable bonds.
Each Fund's investments in municipal and taxable bonds (or other
debt obligations) must be of investment grade quality at the time of purchase
or, if unrated, deemed of comparable quality by its investment adviser.
Generally, MPAM Massachusetts Bond Fund's average effective portfolio maturity
will be between three and ten years and its average effective portfolio duration
will not exceed eight years. Premier Massachusetts Fund's dollar-weighted
average portfolio maturity is not expected to exceed ten years. Premier
Massachusetts Fund generally invests in municipal bonds with maturities ranging
between three and ten years. The Funds may invest in individual municipal and
taxable bonds of any maturity or duration. In calculating average effective
portfolio maturity and average effective portfolio duration, MPAM Massachusetts
Bond Fund may treat a security that can be repurchased by its issuer on an
earlier date (known as a "call date") as maturing on the call date rather than
on its stated maturity date.
Main Risks
- ----------
The principal risks associated with an investment in the Funds are
substantially similar. Prices of bonds tend to move inversely with changes in
interest rates. While a rise in rates may allow the Funds to invest for higher
yields, the most immediate effect is usually a drop in bond prices, and,
therefore, in the Funds' share price as well. As a result, the value of your
investment in the Funds could go up and down, which means that you could lose
money. To the extent each Fund maintains a longer maturity or duration than
short-term bond funds, its share price typically will react more strongly to
interest rate movements.
Other risk factors that could have an effect on each Fund's
performance include:
8
o if an issuer fails to make timely interest or principal payments,
or there is a decline in the credit quality of a bond, or
perception of a decline, the bond's value could fall, potentially
lowering a Fund's share price.
o Massachusetts' economy and revenues underlying municipal bonds
may decline, meaning that the ability of the issuer to make
timely principal and interest payments may be reduced.
o investing primarily in a single state may make a Fund's portfolio
securities more sensitive to risks specific to the state.
o if the municipal bond market become illiquid, typically when
there are many more sellers than buyers for municipal securities,
the value of such securities, particularly those purchased at a
discounted price, and each Fund's share price, may fall
dramatically.
o under certain market conditions, usually during periods of market
illiquidity or rising interest rates, prices of a Fund's
"callable" issues are subject to increased price fluctuation
because they can be expected to perform more like longer-term
securities than shorter-term securities.
The Funds are non-diversified, which means that a relatively high
percentage of the Funds' assets may be invested in a limited number of issuers.
Therefore, each Fund's performance may be more vulnerable to changes in the
market value of a single issuer or a group of issuers.
Each Fund, at times, may invest in certain derivatives, such as
futures and options and debt obligations having similar features. Derivatives
can be illiquid and highly sensitive to changes in their underlying security,
interest rate or index, and, as a result, can be highly volatile and can lower a
Fund's return. The value and interest rate of some derivatives, such as inverse
floaters, may be inversely related to the underlying security, interest rate of
index. A small investment in certain derivatives could have a potentially large
impact on the Funds' performance.
9
Although each Fund's objective is to generate income exempt from
Federal and Massachusetts state income taxes, interest from some of its holdings
may be subject to Federal income tax including the alternative minimum tax. In
addition, the Funds may invest in taxable bonds, taxable derivatives and/or
municipal bonds that are exempt only from federal income taxes. During such
periods, each Fund may not achieve its investment objective.
Although municipal and taxable debt securities must be of investment
grade quality when purchased by the Funds, they may subsequently be downgraded.
MPAM Massachusetts Bond Fund may lend its portfolio securities to
brokers, dealers and other financial institutions. In connection with such
loans, MPAM Massachusetts Bond Fund will receive collateral from the borrower
equal to at least 100% of the value of the loaned securities. Should the
borrower of the securities fail financially, MPAM Massachusetts Bond Fund may
experience delays in recovering the loaned securities or exercising its rights
in the collateral.
Portfolio Management
- --------------------
John F. Flahive, CFA, is the portfolio manager for each Fund.
Mr. Flahive has been a portfolio manager at Dreyfus since November 1994. Mr.
Flahive is also first vice president of Boston Safe, which he joined in
October 1994.
The Investment Advisory Agreement
- ---------------------------------
Dreyfus serves as the investment adviser for Premier Massachusetts
Fund, and MPAM Advisers, a division of Dreyfus, serves as the investment adviser
for MPAM Massachusetts Bond Fund. Founded in 1947, Dreyfus manages approximately
$192 billion in over 190 mutual fund portfolios and is the primary mutual fund
business of Mellon Financial Corporation ("Mellon"), a global financial services
company with approximately $2.8 trillion of assets under management,
administration or custody, including approximately $610 billion under
management. Mellon provides financial services for institutions, corporations
and individuals, offering institutional asset management, mutual funds, private
10
wealth management, asset servicing, human resources services and treasury
services. Mellon is headquartered in Pittsburgh, Pennsylvania.
Currently, Premier Massachusetts Fund operates under an investment
advisory agreement between Premier Massachusetts Fund and Mellon Bank dated
April 4, 1994, transferred from Mellon Bank to Dreyfus as of October 17, 1994
(the "Current Investment Advisory Agreement"). If the Plan is approved by
shareholders of Premier Massachusetts Fund, the Current Investment Advisory
Agreement will be terminated upon the consummation of the Reorganization. The
MPAM Trust Trustees, including a majority of the Independent Trustees, and MBC
Investments Corporation, as sole initial shareholder of MPAM Massachusetts Bond
Fund, each have approved the New Investment Advisory Agreement.
The New Investment Advisory Agreement will continue in effect until
June 1, 2003, and may be renewed from year-to-year after its initial term,
provided that any such renewals are specifically approved at least annually by
(i) the MPAM Trust Trustees, or by a vote of the majority of the outstanding
voting securities of MPAM Massachusetts Bond Fund, and (ii) a majority of
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval. The New Investment Advisory Agreement is terminable
without penalty, on 60 days' notice, by the MPAM Trust Trustees or by vote of
holders of a majority of MPAM Massachusetts Bond Fund's shares or, upon not less
than 90 days' notice, by MPAM Advisers. The New Investment Advisory Agreement
also will terminate automatically in the event of its assignment (as defined
under the 1940 Act).
11
Management Fees and Expenses
- ----------------------------
The management fee structures of the Funds differ. Premier
Massachusetts Fund pays Dreyfus a "unitary fee" at the annual rate of 0.50% of
the value of its average daily net assets. Under the unitary fee structure,
Dreyfus pays all Premier Massachusetts Fund's expenses except brokerage fees,
taxes, interest, fees and expenses of the independent trustees, Rule 12b-1 fees
and extraordinary expenses.
MPAM Massachusetts Bond Fund pays a separate management fee at an
annual rate of 0.35% of the value of its average daily net assets. MPAM
Massachusetts Bond Fund also pays other fund expenses, including Rule 12b-1
fees, shareholder service fees and an administration fee payable to Mellon Bank
for providing or arranging for fund accounting, transfer agency and certain
other fund administration services, and miscellaneous items such as custody and
professional services. The administration fee paid by MPAM Massachusetts Bond
Fund is calculated at the annual rate of the following percentages of MPAM
Massachusetts Bond Fund's average daily net assets and is based on the aggregate
net assets of the series in MPAM Trust as a whole:
-------------------------------------------------------------
Annual Administration Fee
-------------------------
Aggregate Assets of MPAM Trust (as a percentage of average
------------------------------ daily net assets)
-------------------------------------------------------------
$0 to $6 billion 0.15%
-------------------------------------------------------------
Greater than $6 billion to 0.12%
$12 billion
-------------------------------------------------------------
Greater than $12 billion 0.10%
-------------------------------------------------------------
As of February 28, 2002, based on certain assets of MPAM Trust in the aggregate,
the administration fee payable by MPAM Massachusetts Bond Fund would have been
0.145%.
Pursuant to a contractual arrangement with MPAM Massachusetts Bond
Fund, Mellon Bank has agreed to waive fees and/or reimburse MPAM Massachusetts
Bond Fund's expenses through September 30, 2007, so that the total annual fund
operating expenses of each class of MPAM Massachusetts Bond Fund Shares
12
(excluding interest, taxes, brokerage commissions, extraordinary expenses, Rule
12b-1 fees and shareholder services fees) are limited to 0.50%.
The tables below show the fees and expenses of each share class of
Premier Massachusetts Fund (fiscal year ended June 30, 2001). The tables also
show the "Pro Forma After Reorganization" expenses of the corresponding share
class of MPAM Massachusetts Bond Fund, which are based on net assets and
relevant expenses of Premier Massachusetts Fund and estimated projections for
MPAM Massachusetts Bond Fund as of February 28, 2002. Annual fund operating
expenses are paid out of each Fund's assets, so their effect is reflected in the
respective share price.
ANNUAL FUND OPERATING EXPENSES
(EXPENSES PAID FROM FUND ASSETS)
(percentage of average daily net assets):
Pro Forma After
Reorganization
into
Premier Premier MPAM Massachusetts
Massachusetts Fund Massachusetts Fund Bond Fund
Class A Shares Class C Shares Investor Shares
-------------- -------------- ---------------
Management fees 0.50% 0.50% 0.35%
Rule 12b-1 fee 0.25% 0.75% None
Shareholder
services fee None None 0.25%
Other expenses 0.00% 0.00% 0.20%*
Total Annual Fund
Operating
Expenses 0.75% 1.25% 0.80%
- ---------------
Less: Fee waiver
and/or expense
reimbursement None None (0.05%)**
Net Operating
Expenses 0.75% 1.25% 0.75%
- ---------------
____________________
* "Other expenses" for Investor shares are estimated for the current fiscal
year and include the administration fee and miscellaneous items such as custody
and professional service fees.
13
** Pursuant to a contractual arrangement with MPAM Massachusetts Bond Fund,
Mellon Bank has agreed to waive fees and/or reimburse MPAM Massachusetts Bond
Fund's expenses through September 30, 2007, so that the total annual fund
operating expenses of Investor shares (excluding interest, taxes, brokerage
commissions, extraordinary expenses, Rule 12b-1 fees and shareholder services
fees) are limited to 0.50%. The amount of the fee waiver/expense reimbursement
is estimated.
ANNUAL FUND OPERATING EXPENSES
(EXPENSES PAID FROM FUND ASSETS)
(percentage of average daily net assets):
Pro Forma After
Reorganization into
Premier MPAM Massachusetts
Massachusetts Fund Bond Fund
Class B Shares Dreyfus Premier Shares
-------------- ----------------------
Management fees 0.50% 0.35%
Rule 12b-1 fee 0.75% 0.50%
Shareholder
services fee None 0.25%
Other expenses 0.00% 0.20%*
Total Annual
Fund Operating 1.25% 1.30%
Expenses
- ----------------
Less: Fee waiver
and/or expense None (0.05%)**
reimbursement
Net Operating
Expenses 1.25% 1.25%
- ----------------
____________________
* "Other expenses" for Dreyfus Premier shares are estimated for the current
fiscal year and include the administration fee and miscellaneous items such as
custody and professional service fees.
** Pursuant to a contractual arrangement with MPAM Massachusetts Bond Fund,
Mellon Bank has agreed to waive fees and/or reimburse MPAM Massachusetts Bond
Fund's expenses through September 30, 2007, so that the total annual fund
operating expenses of Dreyfus Premier shares (excluding interest, taxes,
brokerage commissions, extraordinary expenses, Rule 12b-1 fees and shareholder
services fees) are limited to 0.50%. The amount of the fee waiver/expense
reimbursement is estimated.
14
Annual Fund Operating Expenses (expenses paid from fund assets) (percentage of
average daily net assets):
Pro Forma After
Reorganization into
Premier MPAM Massachusetts
Massachusetts Fund Bond Fund
Class R Shares MPAM Shares
-------------- -----------
Management fees 0.50% 0.35%
Rule 12b-1 fee None None
Shareholder
services fee None None
Other expenses 0.00% 0.20%*
Total Annual Fund
Operating
Expenses 0.50% 0.55%
- --------------
Less: Fee waiver
and/or expense
reimbursement None (0.05%)**
Net Operating
Expenses 0.50% 0.50%
- --------------
____________________
* "Other expenses" for MPAM shares are estimated for the current fiscal year
and include the administration fee and miscellaneous items such as custody and
professional service fees.
** Pursuant to a contractual arrangement with MPAM Massachusetts Bond Fund,
Mellon Bank has agreed to waive fees and/or reimburse MPAM Massachusetts Bond
Fund's expenses through September 30, 2007, so that the total annual fund
operating expenses of MPAM shares (excluding interest, taxes, brokerage
commissions, extraordinary expenses, Rule 12b-1 fees and shareholder services
fees) are limited to 0.50%. The amount of the fee waiver/expense reimbursement
is estimated.
Expense Example
- ---------------
This example shows what you could pay in expenses over time. It uses
the same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses.
Because actual return and expenses will be different, the example is for
comparison only. For MPAM Massachusetts Bond Fund, the one-year, three-year and
five-year examples and the first five years of the ten-year example are based on
15
net operating expenses (including estimated other expenses), which reflect the
expense waiver/reimbursement by Mellon Bank. The ten-year example is based on
total annual fund operating expenses for each year after year five.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Premier Massachusetts Fund
- --------------------------
Class A Shares $374 $532 $704 $1,202
Class B Shares
with redemption $427 $597 $786 $1,247*
without redemption $127 $397 $686 $1,247*
Class C Shares
with redemption $227 $397 $686 $1,511
without redemption $127 $397 $686 $1,511
Class R Shares $51 $160 $280 $628
MPAM Massachusetts Bond Fund
Pro Forma After Exchange
- ------------------------
Investor Shares $77 $250 $439 $985
Dreyfus Premier Shares
with redemption $427 $597 $786 $1,279**
without redemption $127 $397 $686 $1,279**
MPAM Shares $51 $171 $302 $684
* Assumes conversion of Class B to Class A at end of the sixth year following
the date of purchase.
** Assumes conversion of Dreyfus Premier shares to Investor shares at end of the
sixth year following the date of purchase.
Distribution and Shareholder Services Plan
- ------------------------------------------
Premier Massachusetts Fund's Class A, Class B and Class C shares are
subject to plans adopted pursuant to Rule 12b-1 under the 1940 Act (each, a
"Rule 12b-1 Plan"). Under Premier Massachusetts Fund's Rule 12b-1 Plans, Premier
Massachusetts Fund pays its distributor an annual fee at a rate of 0.25%, 0.75%
and 0.75% of the value of the average daily net assets attributable to the
fund's Class A, Class B and Class C shares, respectively, for distribution
expenses and shareholder services. There is no Rule 12b-1 Plan for Class R
16
shares of Premier Massachusetts Fund. MPAM Massachusetts Bond Fund's Dreyfus
Premier shares are subject to a Rule 12b-1 Plan under which MPAM Massachusetts
Bond Fund pays its distributor an annual fee at a rate of 0.50% of the value of
the average daily net assets attributable to Dreyfus Premier shares to finance
the sale and distribution of that class of shares. Because the fees under the
respective Rule 12b-1 Plans are paid out of each Fund's assets on an ongoing
basis, over time they will increase the cost of your investment and may cost you
more than paying other types of sales charges.
Investor shares and Dreyfus Premier shares of MPAM Massachusetts
Bond Fund are subject to a Shareholder Services Plan pursuant to which MPAM
Massachusetts Bond Fund pays its distributor an annual fee of 0.25% of the value
of the average daily net assets attributable to the respective class for
providing shareholder services to holders of shares of the class. Premier
Massachusetts Fund has not adopted a Shareholder Services Plan, but (as
described above) has a Rule 12b-1 Plan that provides for payments for
shareholder services.
Sales Class Charges
- -------------------
Premier Massachusetts Fund's Class A shares are subject to a maximum
front-end sales charge of 3.00%, and shares bought without an initial sales
charge as part of an investment of $1 million or more may be charged a
contingent deferred sales charge ("CDSC") of 1.00% if they are sold within one
year of purchase. Premier Massachusetts Fund's Class B shares and MPAM
Massachusetts Bond Fund's Dreyfus Premier shares are subject to a maximum CDSC
of 3.00%. Premier Massachusetts Fund's Class C shares are subject to a maximum
CDSC of 0.75%. Premier Massachusetts Fund's Class R shares and MPAM
Massachusetts Bond Fund's MPAM and Investor shares are not subject to any sales
charge. The CDSC applicable to Premier Massachusetts Fund's Class A, Class B and
Class C shares is being waived on all redemptions and exchanges, effective as of
17
April 26, 2002. Nonetheless, upon receiving Dreyfus Premier shares in the
Reorganization, Premier Massachusetts Fund Class B shareholders will become
subject to the CDSC applicable to Dreyfus Premier shares. No front-end sales
charge or CDSC will be imposed in connection with the Reorganization. Premier
Massachusetts Fund's Class B CDSC structure is identical to MPAM Massachusetts
Bond Fund's CDSC structure. For purposes of calculating future CDSCs and the
date Dreyfus Premier shares convert to Investor shares, Dreyfus Premier shares
issued pursuant to the Reorganization will be deemed to have been purchased by
MPAM Massachusetts Bond Fund's shareholders on the date such shareholders
purchased their Class B shares of Premier Massachusetts Fund. The following
tables describe each Fund's sales charges:
Premier Massachusetts Fund - Sales charges
- ------------------------------------------
CLASS A - CHARGED WHEN SHARES ARE BOUGHT
- --------------------------------------------------------------------------------
Your Investment Sales charge deducted as Sales charge as a % of
a % of offering price your net investment
- --------------------------------------------------------------------------------
Less than $100,000 3.00% 3.10%
- --------------------------------------------------------------------------------
$100,000 - $249,999 2.75% 2.80%
- --------------------------------------------------------------------------------
$250,000 - $499,999 2.25% 2.30%
- --------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 2.00%
- --------------------------------------------------------------------------------
$1 million or more* 0.00% 0.00%
- --------------------------------------------------------------------------------
Class A shares also carry an annual Rule 12b-1 fee of 0.25% of the class's
average daily net assets.
CLASS B - CHARGED WHEN SHARES ARE SOLD
- -------------------------------------------------------
Years since purchase was CDSC as a % of your
made initial investment or
your redemption
(whichever is less)*
- -------------------------------------------------------
Up to 2 years 3.00%
- -------------------------------------------------------
2 - 4 years 2.00%
- -------------------------------------------------------
4 - 5 years 1.00%
- -------------------------------------------------------
5 - 6 years 0.00%
- -------------------------------------------------------
More than 6 years Shares will automatically
convert to Class A
- -------------------------------------------------------
Class B shares also carry an annual Rule 12b-1 fee of 0.75% of the class's
average daily net assets.
18
CLASS C - CHARGED WHEN SHARES ARE SOLD*
A 0.75% CDSC is imposed on redemptions made within the first year of purchase.
Class C shares also carry an annual Rule 12b-1 fee of 0.75% of the class's
average daily net assets.
CLASS R - NO SALES LOAD OR RULE 12B-1 FEES
____________________
* A 1.00% CDSC may be charged on any Class A shares sold within one year of
purchase (except shares bought through dividend reinvestment). The CDSCs
applicable to Class A, Class B, and Class C shares of Premier Massachusetts Fund
are being waived on all redemptions and exchanges, effective as of April 26,
2002. Nonetheless, upon receiving Dreyfus Premier shares in the Reorganization,
Premier Massachusetts Fund Class B shareholders will become subject to the CDSC
applicable to Dreyfus Premier shares.
MPAM Massachusetts Bond Fund - Sales Charges
- --------------------------------------------
MPAM SHARES - NO SALES LOAD OR RULE 12B-1 FEES
INVESTOR SHARES - NO SALES LOAD OR RULE 12B-1 FEES
DREYFUS PREMIER SHARES
- -------------------------------------------------------
Years since purchase was CDSC as a % of your
made initial investment or
your redemption
(whichever is less)
- -------------------------------------------------------
Up to 2 years 3.00%
- -------------------------------------------------------
2 - 4 years 2.00%
- -------------------------------------------------------
4 - 5 years 1.00%
- -------------------------------------------------------
5 - 6 years 0.00%
- -------------------------------------------------------
More than 6 years Shares will automatically
convert to Investor
shares
- -------------------------------------------------------
Dreyfus Premier shares also carry an annual Rule 12b-1 fee of 0.50% of the
class's average daily net assets.
Account Policies
- ----------------
MPAM Massachusetts Bond Fund offers three classes of shares: MPAM
shares, Investor shares and Dreyfus Premier shares. MPAM shares of MPAM
Massachusetts Bond Fund generally are offered only to (1) clients of the Private
19
Wealth Management group of Mellon[1] that maintain qualified fiduciary, custody
or other accounts with Mellon Bank or Boston Safe, or their bank affiliates
("Private Wealth Management Clients"), and (2) persons or entities that have not
been Private Wealth Management Clients and who have held MPAM shares since July
10, 2001. MPAM shares owned by Private Wealth Management Clients are held in
omnibus accounts, or individual institutional accounts, with MPAM Massachusetts
Bond Fund's transfer agent.
Investor shares of MPAM Massachusetts Bond Fund generally are
offered only to (1) Private Wealth Management Clients who terminate their
relationship with Mellon Bank or Boston Safe, or their bank affiliates, and who
wish to continue to hold MPAM Massachusetts Bond Fund Shares, and (2)
individuals or entities that are not Private Wealth Management Clients and that
receive a transfer of MPAM Massachusetts Bond Fund Shares from an Private Wealth
Management Client, except that such individuals or entities that have held MPAM
shares since July 10, 2001 will continue to be eligible to purchase MPAM shares
of MPAM Massachusetts Bond Fund for their then-existing accounts ("Individual
Clients"). Investor shares owned by Individual Clients will be held in separate
accounts ("Individual Accounts").
Dreyfus Premier shares of MPAM Massachusetts Bond Fund generally are
offered only to shareholders of a fund that receive Dreyfus Premier shares upon
the reorganization of that fund into MPAM Massachusetts Bond Fund. Dreyfus
Premier shares will convert to Investor shares six years after their date of
purchase. For purposes of calculating future CDSCs and the date Dreyfus Premier
shares convert to Investor shares, Dreyfus Premier shares issued pursuant to the
Reorganization will be deemed to have been purchased by MPAM Massachusetts Bond
- --------------------------
[1] Mellon's Private Wealth Management group refers to its business of
providing wealth management and investment management services to the U.S. high
net worth market, which is operated through Mellon Bank, Boston Safe and other
bank and trust company subsidiaries of Mellon.
20
Fund's shareholders on the date such shareholders purchased their Class B shares
of Premier Massachusetts Fund. Dreyfus Premier shares will be held in Individual
Accounts.
Premier Massachusetts Fund offers four classes of shares: Class A,
Class B, Class C and Class R shares. Premier Massachusetts Fund's shares are
designed primarily for people who are investing through a third party, such as a
bank, broker-dealer, financial adviser or other eligible institution.
Purchase and Redemption Procedures
- ----------------------------------
The purchase and redemption procedures of Premier Massachusetts Fund
and MPAM Massachusetts Bond Fund differ depending on the nature of the
shareholder. The purchase and redemption procedures of Class R shares of Premier
Massachusetts Fund and MPAM shares of MPAM Massachusetts Bond Fund are similar
for most holders since they are designed for persons who hold these shares by
virtue of their trust or investment account or relationship with a financial
service provider acting on their behalf. Thus, in most instances, purchases and
redemptions are effected through that financial service provider. In the case of
MPAM Massachusetts Bond Fund, MPAM shares owned by Private Wealth Management
Clients generally are held in omnibus accounts, or individual institutional
accounts, with MPAM Massachusetts Bond Fund's transfer agent ("MPAM Accounts").
Purchases and redemptions of MPAM shares for MPAM Accounts are effected through
the client relationship with Mellon's Private Wealth Management group. Purchases
and redemptions of MPAM shares through Individual Accounts may be made in the
same manner as Investor shares, described below.
Class A, Class B and Class C shares of Premier Massachusetts Fund
are designed primarily for people who are investing through a third party, such
as a bank, broker-dealer or financial adviser. Purchase and redemption of Class
21
A, Class B and Class C shares of Premier Massachusetts Fund, and Investor shares
and Dreyfus Premier shares of MPAM Massachusetts Bond Fund may be made by mail,
wire, electronic check or TeleTransfer, or automatically.
Shareholder Services and Privileges
- -----------------------------------
The following shareholder services and privileges are offered to
holders of Premier Massachusetts Fund Shares, as well as holders of Investor
shares, Dreyfus Premier shares, and MPAM shares of MPAM Massachusetts Bond Fund
who hold those shares in Individual Accounts: Automatic Asset Builder(R) - for
making automatic investments from a designated bank account; Payroll Savings
Plan - for making automatic investments through a payroll deduction; Government
Direct Deposit Privilege - for making automatic investments from your Federal
employment, Social Security or other regular Federal government check; Dividend
Sweep - for automatically reinvesting the dividends and other distributions from
one fund into another; Auto-Exchange Privilege - for making regular exchanges
from one fund into another; Automatic Withdrawal Plan - for making regular
withdrawals from most funds; exchange privileges into certain other funds;
TeleTransfer privilege - to transfer money between your account and your bank
account with a phone call; telephone redemption privileges; and 24-hour
automated account telephone access. Individual Account holders of MPAM
Massachusetts Bond Fund have checkwriting privileges.
Holders of MPAM shares of MPAM Massachusetts Bond Fund who are
Private Wealth Management Clients and do not have Individual Accounts must
contact their account officer for information concerning purchases, sales or
exchanges of MPAM shares in lieu of using the services listed above. Banks,
broker-dealers and other financial institutions may not make all of these
22
services and privileges available to shareholders of Premier Massachusetts Fund.
MPAM Trust Trustees and Officers
The MPAM Trust Trustees (also referred to as the "Board") consist of
individuals different from the Dreyfus Trust Trustees. MPAM Trust has a Board
composed of seven trustees. The following lists the MPAM Trust Trustees and
officers and their positions with MPAM Trust and their present and principal
occupations during the past five years. Each MPAM Trust Trustee who is an
"interested person" of MPAM Trust, as defined in the 1940 Act, is indicated by
an asterisk (*).
Name (Age) Principal Occupation During
Trustee Since Past 5 Years Other Board Memberships and Affiliations
------------- ------------ ----------------------------------------
*Ronald R. Davenport[2] Chairman of Sheridan Broadcasting American Urban Radio Networks, Co-Chairman
(66) June 2000 Corporation (since July 1972) Aramark Corporation, Board member
*Patrick J. O'Connor[3] Attorney, Cozen O'Connor, P.C. Board of Consultors for Villanova University
(59) since 1973, including Vice School of Law, Board Member
June 2000 Chairman since 1980 and Chief Temple University, Trustee
Also Chairman of the Executive Officer and President
Board 2000 (since 2001)
John L. Diederich (65) Chairman of Digital Site Systems, Continental Mills, a dry baking products company,
June 2000 Inc., a privately held software Board Member
company providing internet
service to the construction
materials industry (since July
1998)
Executive Vice President of
Aluminum Company of America (from
December 1960 to January 1997)
- ---------------------
[2] Mr. Davenport is considered an "interested person" of the MPAM Trust
because of a mortgage loan and a personal loan from Mellon Bank and one of its
affiliates for which he was a borrower during a portion of the time he has
served as a Trustee of the MPAM Trust. None of these loans is currently
outstanding.
[3] Mr. O'Connor is considered an "interested person" of the MPAM
Trust because the law firm of which he is a member, Cozen & O'Connor, P.C., has
represented Mellon Bank and its affiliates in certain matters.
23
Name (Age) Principal Occupation During
Trustee Since Past 5 Years Other Board Memberships and Affiliations
------------- ------------ ----------------------------------------
Maureen D. McFalls (56) Director of the Office of Maglev, Inc., a company seeking a partnership
June 2000 Government Relations at Carnegie between industry and government in Pennsylvania to
Mellon University (since January create a magnetically levitated high-speed
2000) transportation system,
Board Member representing Carnegie Mellon
Manager, Government University
Communications, of the Software Coro Center For Civic Leadership, Board Member
Engineering Institute at Carnegie
Mellon University (from
March 1994 to December 1999)
Kevin C. Phelan (57) Mortgage Banker, Greater Boston Chamber of Commerce, Director
June 2000 Meredith & Grew, Inc. Fiduciary Trust, Director
(since March 1978) including St. Elizabeth's Medical Center of Boston, Board
Executive Vice President and Member
Director (since March 1998) Providence College, Trustee
Boston Municipal Research Bureau, Board Member
Boys and Girls Club of Boston, Board Member
Patrick J. Purcell (54) Owner, President and Publisher of The American Ireland Fund, an organization that
June 2000 The Boston Herald (since February raises funds for philanthropic projects in
1994) Ireland, Vice Chairman
The Genesis Fund, an organization that raises
President and Founder, funds for the specialized care and treatment of
jobfind.com, an employment search New England area children born with birth defects,
site on the world wide web (since mental retardation and genetic diseases, Board
July 1996) member
United Way of Massachusetts Bay, Board member
John F. Kennedy Library Foundation, Board member
Greater Boston Chamber of Commerce, Board member
Thomas F. Ryan, Jr. (60) Retired (since April 1999) Boston College, Trustee
June 2000 Brigham & Women's Hospital, Trustee
President and Chief Operating New York State Independent System Operator, a
Officer of the American Stock non-profit organization which administers a
Exchange (from competitive wholesale market for electricity in
October 1995 to April 1999) New York State, Director
MPAM Trust Trustees are elected to serve for an indefinite term.
MPAM Trust has standing audit, nominating and compensation committees, each
comprised of its Trustees who are not "interested persons" of MPAM Trust, as
defined in the 1940 Act. The function of the audit committee is to oversee MPAM
Trust's financial and reporting policies and certain internal control matters.
The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of MPAM Trust for election to the
Board. The nominating committee does not normally consider nominees recommended
by shareholders. The function of the compensation committee is to establish the
24
appropriate compensation for serving on the Board. MPAM Trust also has a
standing pricing committee comprised of any one MPAM Trust Trustee. The function
of the pricing committee is to assist in valuing the funds' investments. The
audit and pricing committees met once and eight times, respectively, during the
fiscal year ended August 31, 2001. Neither the nominating committee nor the
compensation committee met during the fiscal year ended August 31, 2001.
The table below indicates the dollar range of each MPAM Trust
Trustee's ownership of shares of Funds in MPAM Trust as of December 31, 2001.
MPAM Large Cap MPAM Income MPAM Mid Cap
Name of Board Member Stock Fund Stock Fund Stock Fund
- ----------------------------------------------------------------------------
Ronald Davenport None None None
John Diederich None None None
Patrick O'Connor $10,001-$50,000 None $10,001-$50,000
Thomas Ryan None None None
Patrick Purcell $10,001-$50,000 $1-$10,000 $10,001-$50,000
Kevin Phelan $10,001-$50,000 None $50,001-$100,000
Maureen McFalls None None None
MPAM MPAM
Name of Board MPAM Small Cap International MPAM Emerging Bond
Member Stock Fund Fund Markets Fund Fund
- -----------------------------------------------------------------------------
Ronald Davenport None None None None
John Diederich None None None None
Patrick O'Connor $10,001-$50,000 None None None
Thomas Ryan None None None None
Patrick Purcell $10,001-$50,000 $1-$10,000 $1-$10,000 None
Kevin Phelan None $10,001-$50,000 $10,001-$50,000 None
Maureen McFalls None None None None
25
MPAM Short- MPAM MPAM
Term U.S. National National
MPAM Government Intermediate Short-Term
Name of Board Intermediate Securities Municipal Municipal
Member Bond Fund Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Ronald Davenport None None None None
John Diederich None None None None
Patrick O'Connor None None None None
Thomas Ryan None None None None
Patrick Purcell None None None None
Kevin Phelan None None None None
Maureen McFalls None None None None
Aggregate Holdings
MPAM Pennsylvania of Funds in the
Name of Board Intermediate MPAM Balanced MPAM Family of
Member Municipal Bond Fund Fund Funds
- --------------------------------------------------------------------------------
Ronald Davenport None None None
John Diederich $50,001-$100,000 None $50,001-$100,000
Patrick O'Connor None None $50,001-$100,000
Thomas Ryan None None None
Patrick Purcell None None $50,001-$100,000
Kevin Phelan None None over $100,000
Maureen McFalls None None None
None of the MPAM Trust Trustees or their immediate family members
owned securities of Dreyfus, the Distributor or any person (other than a
registered investment company) directly or indirectly controlling, controlled by
or under common control with Dreyfus or the Distributor, as of December 31,
2001.
MPAM Trust pays its Board members an annual retainer of $35,000 and
a per meeting fee of $3,000 ($500 per telephone meeting) and reimburses them for
their expenses incurred when attending Board meetings. The aggregate amount of
compensation paid to each Board member by MPAM Trust for the period from October
2, 2000 (commencement of operations) to the fiscal year ended August 31, 2001
26
(which consisted of all funds comprising MPAM Trust, other than MPAM
Massachusetts Bond Fund) was as follows:
Aggregate Compensation
Name of MPAM Trustee From MPAM Trust#
-------------------- ----------------
Ronald R. Davenport $41,027
John L. Diederich $41,027
Maureen D. McFalls $44,027
Patrick J. O'Connor $44,027
Kevin C. Phelan $44,027
Patrick J. Purcell $44,027
Thomas F. Ryan Jr. $44,027
___________________________
# Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $17,637 for MPAM Trust.
Officers of the MPAM Trust
- --------------------------
DAVID F. LAMERE, PRESIDENT SINCE JUNE 2000 . Vice Chairman of Mellon,
Executive Vice President of Boston Safe Deposit and Trust Company and a director
of Dreyfus. As President of Mellon's Private Wealth Management group, Mr. Lamere
oversees all investment management, fiduciary, administrative and charitable
planned giving services for the firm's family office, endowment, foundation and
high net worth clients. He is 41 years old and has been an employee of Mellon
since 1993.
Prior to his current position, Mr. Lamere held several management
positions within MPAM Private Asset Management, the predecessor to Mellon's
Private Wealth Management group, and The Boston Company. He is a member of
Mellon's Executive Management Group and a Director of the Boards of The Boston
Company, Boston Safe Deposit and Trust Company, Laurel Capital Advisors, LLP,
Mellon United National Bank, and Newton Management, Ltd., of London, England. In
addition, he is Chairman of the Board for Mellon Trust of New York, Mellon Trust
of California, and Mellon Trust of Florida, National Association. He is also a
member of Mellon's Committee for Public Responsibility.
H. VERNON WINTERS, VICE PRESIDENT SINCE JUNE 2000. As Chief Investment
Officer of Mellon's Private Wealth Management group, Mr. Winters is
responsible for investment strategy, policy and implementation for Mellon's
Private Wealth Management group. He serves as a Director of Boston Safe
Deposit and Trust Company and The Boston Company. He is also the Chairman
and CEO of Laurel Capital Advisors, LLP. He is 61 years old and has been an
employee of Mellon since August 1994.
MARK N. JACOBS, VICE PRESIDENT SINCE JUNE 2000. Executive Vice President,
Secretary, and General Counsel of Dreyfus, and an officer of 94 investment
companies (comprised of 201 portfolios) managed by Dreyfus. He is 56 years old
and has been an employee of Dreyfus since June 1977.
27
JAMES WINDELS, TREASURER SINCE NOVEMBER 2001. Senior Accounting
Manager-Equity Funds of Dreyfus, and an officer of 94 investment companies
(comprised of 201 portfolios) managed by Dreyfus. He is 43 years old and has
been an employee of Dreyfus since April 1985.
JEFF PRUSNOFSKY, SECRETARY SINCE JUNE 2000. Associate General Counsel of
Dreyfus, and an officer of 11 investment companies (comprised of 64 portfolios)
managed by Dreyfus. He is 37 years old and has been an employee of Dreyfus since
January 1986.
STEVEN F. NEWMAN, ASSISTANT SECRETARY SINCE JUNE 2000. Assistant Secretary
and Associate General Counsel of Dreyfus, and an officer of 94 investment
companies (comprised of 201 portfolios) managed by Dreyfus. He is 52 years old
and has been an employee of Dreyfus since July 1980.
MICHAEL A. ROSENBERG, ASSISTANT SECRETARY SINCE JUNE 2000. Associate
General Counsel of Dreyfus, and an officer of 93 investment companies (comprised
of 199 portfolios) managed by Dreyfus. He is 42 years old and has been an
employee of Dreyfus since October 1991.
GREGORY S. GRUBER, ASSISTANT TREASURER SINCE JUNE 2000. Senior Accounting
Manager - Municipal Bond Funds of Dreyfus, and an officer of 29 investment
companies (comprised of 59 portfolios) managed by Dreyfus. He is 43 years old
and has been an employee of Dreyfus since August 1981.
WILLIAM MCDOWELL, ASSISTANT TREASURER SINCE JUNE 2000. Senior Accounting
Manager - Taxable Fixed Income Funds of Dreyfus, and an officer of 18 investment
companies (comprised of 75 portfolios) managed by Dreyfus. He is 43 years old
and has been an employee of Dreyfus since March 1981.
KENNETH J. SANDGREN, ASSISTANT TREASURER SINCE NOVEMBER 2001. Mutual Funds
Tax Director of Dreyfus, and an officer of 94 investment companies (comprised of
201 portfolios) managed by Dreyfus. He is 47 years old and has been an employee
of Dreyfus since June 1993.
The address of each Trustee and officer of the MPAM Trust is 200
Park Avenue, New York, New York 10166.
As of May 1, 2002, there were no outstanding shares of MPAM
Massachusetts Bond Fund.
28
Legal Form of Organization
- --------------------------
The Dreyfus Trust is organized as a business trust under the laws of
the Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust dated March 28, 1983, as amended and restated December 9, 1992. The MPAM
Trust is organized as a business trust under those laws pursuant to an Amended
and Restated Agreement and Declaration of Trust dated June 5, 2000. (Each of
these instruments is referred to below as a "Declaration of Trust.")
Under Massachusetts law, shareholders of each Fund could, under
certain circumstances, be held personally liable for its acts or obligations.
However, each Declaration of Trust disclaims shareholder liability for acts or
obligations of each Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Dreyfus
Trust and Dreyfus Trust Trustees or MPAM Trust and MPAM Trust Trustees,
respectively. Also, each Declaration of Trust provides for indemnification out
of the applicable Fund's property for all losses and expenses of any shareholder
held personally liable for the obligations of that Fund. 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 each Fund itself would be unable to meet its obligations. A
substantial number of mutual funds in the United States are organized as
Massachusetts business trusts.
Description of Differences Between the Fundamental and Non-fundamental
Investment Restrictions of the Funds
- ------------------------------------
The fundamental and non-fundamental investment restrictions of the
Funds are substantially similar. However, Premier Massachusetts Fund has adopted
the additional non-fundamental restrictions described below, which may be
29
changed without shareholder approval, in compliance with applicable law and
regulatory policy. These policies are derived from formerly applicable state
securities law and regulation, and these limitations are no longer required
since the adoption of the National Securities Markets Improvement Act of 1996,
which provided federal preemption of state substantive regulation of mutual
funds.
1. Premier Massachusetts Fund will not purchase or retain the securities
of any issuer if the officers, directors or Dreyfus Trust Trustees, its
advisers, or managers owning beneficially more than one half of one percent of
the securities of each issuer together own beneficially more than 5% of such
securities.
2. Premier Massachusetts Fund will not purchase securities of issuers
(other than securities issued or guaranteed by domestic or foreign governments
or political subdivisions thereof), including their predecessors, that have been
in operation for less than three years, if by reason thereof the value of
Premier Massachusetts Fund's investment in securities would exceed 5% of Premier
Massachusetts Fund's total assets. For purposes of this limitation, sponsors,
general partners, guarantors and originators of underlying assets may be treated
as the issuer of a security.
3. Premier Massachusetts Fund will not purchase puts, calls, straddles,
spreads and any combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5% of its total
assets, except that: (a) this restriction shall not apply to standby
commitments, and (b) this restriction shall not apply to Premier Massachusetts
Fund's transactions in futures contracts and related options.
4. Premier Massachusetts Fund will not purchase warrants if at the time of
such purchase: (a) more than 5% of the value of Premier Massachusetts Fund's
assets would be invested in warrants, or (b) more than 2% of the value of
Premier Massachusetts Fund's assets would be invested in warrants that are not
listed on the New York Stock Exchange ("NYSE") or American Stock Exchange (for
purposes of this undertaking, warrants acquired by Premier Massachusetts Fund in
units or attached to securities will be deemed to have no value).
5. Premier Massachusetts Fund will not purchase oil, gas or mineral leases
(Premier Massachusetts Fund may, however, purchase and sell the securities of
companies engaged in the exploration, development, production, refining,
transporting and marketing of oil, gas or minerals).
30
Temporary Suspension of Certain Investment Restrictions
- -------------------------------------------------------
Because certain of Premier Massachusetts Fund's existing investment
restrictions could preclude it from consummating the Reorganization in the
manner contemplated in the Plan, Premier Massachusetts Fund shareholders are
requested to authorize the temporary suspension of certain investment
restrictions that restrict its ability to invest more than 25% of the value of
its total assets in securities of one or more issuers conducting their principal
activities in the same industry, as set forth in its Statement of Additional
Information, as well as the temporary suspension of any other investment
restriction of Premier Massachusetts Fund to the extent necessary to permit the
consummation of the Reorganization. The temporary suspension of Premier
Massachusetts Fund's investment restrictions will not affect the investment
restrictions of MPAM Massachusetts Bond Fund. A vote in favor of the Proposal is
deemed to be a vote in favor of the temporary suspensions.
Federal Income Tax Consequences
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Dreyfus Trust and MPAM Trust will receive an opinion from their
counsel, Kirkpatrick & Lockhart LLP, that the Reorganization will constitute a
tax-free reorganization within the meaning of section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, with
respect to the Reorganization, Premier Massachusetts Fund and Premier
Massachusetts Fund's shareholders will recognize no gain or loss for Federal
income tax purposes on (1) the transfer of Premier Massachusetts Fund's assets
in exchange solely for MPAM Massachusetts Bond Fund Shares and the assumption by
MPAM Massachusetts Bond Fund of Premier Massachusetts Fund's liabilities or (2)
the distribution of the MPAM Massachusetts Bond Fund Shares to Premier
Massachusetts Fund's shareholders in liquidation of their Premier Massachusetts
Fund Shares. The opinion will further provide, among other things, that (a) a
31
Premier Massachusetts Fund's shareholder's aggregate tax basis for Federal
income tax purposes of the MPAM Massachusetts Bond Fund Shares to be received by
the shareholder in the Reorganization will be the same as the aggregate tax
basis of his or her Premier Massachusetts Fund Shares to be constructively
surrendered in exchange for those MPAM Massachusetts Bond Fund Shares and (b) a
Premier Massachusetts Fund shareholder's holding period for his or her MPAM
Massachusetts Bond Fund Shares will include the shareholder's holding period for
his or her Premier Massachusetts Fund Shares, provided that those Premier
Massachusetts Fund Shares were held as capital assets at the time of the
Reorganization.
Required Vote and Board's Recommendation
- ----------------------------------------
The Dreyfus Trust Trustees have approved the Plan and the
Reorganization and have determined that (1) participation in the Reorganization
is in the best interests of Premier Massachusetts Fund and its shareholders and
(2) the interests of existing shareholders of Premier Massachusetts Fund will
not be diluted as a result of the Reorganization. Pursuant to the Dreyfus
Trust's Declaration of Trust and By-Laws, an affirmative vote of at least a
majority of the outstanding voting shares of Premier Massachusetts Fund is
required to approve the Plan and the Reorganization. Under the 1940 Act, the
vote of a majority of the outstanding voting securities means the affirmative
vote of the lesser of (a) 67% or more of the voting securities present at the
Meeting or represented by proxy if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy or (b) more
than 50% of the outstanding voting securities.
THE DREYFUS TRUST TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND
THAT PREMIER MASSACHUSETTS FUND'S SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
PLAN AND THE REORGANIZATION.
32
ADDITIONAL INFORMATION ABOUT THE FUNDS
Dreyfus serves as Premier Massachusetts Fund's investment adviser.
MPAM Advisers, a division of Dreyfus, serves as MPAM Massachusetts Bond Fund's
investment adviser. The Distributor serves as each Fund's distributor. The
principal offices of Dreyfus and the Distributor are located at 200 Park Avenue,
New York, New York 10166.
The Funds are subject to the requirements of the 1940 Act and file
reports, proxy statements and other information with the Commission. Reports,
proxy statements and other information filed by either Fund may be inspected and
copied at the Commission's Public Reference Room at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549-0102, and at the Northeast regional office of the
Commission at Woolworth Building, 233 Broadway, New York, New York 10279. Copies
of such material also can be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
VOTING INFORMATION
In addition to the use of the mails, proxies may be solicited
personally by telephone, and Mellon Bank or its affiliates, may pay persons
holding Premier Massachusetts Fund Shares in their names or those of their
nominees for their expenses in sending soliciting materials to their principals.
Authorizations to execute proxies may be obtained by telephonic or
electronically transmitted instructions in accordance with procedures designed
to authenticate the shareholder's identity. In all cases where a telephonic
proxy is solicited, the shareholder will be asked to provide his or her address,
social security number (in the case of an individual) or taxpayer identification
number (in the case of a non-individual) and the number of shares owned and to
confirm that the shareholder has received Premier Massachusetts Fund's Proxy
Statement and proxy card in the mail. Within 72 hours of receiving a
33
shareholder's telephonic or electronically transmitted voting instructions, a
confirmation will be sent to the shareholder to ensure that the vote has been
taken in accordance with the shareholder's instructions and to provide a
telephone number to call immediately if the shareholder's instructions are not
correctly reflected in the confirmation. Any shareholder giving a proxy may
revoke it at any time before it is exercised by submitting to Premier
Massachusetts Fund a written notice of revocation or a subsequently executed
proxy or by attending the Meeting and voting in person.
If a proxy is properly executed and returned accompanied by
instructions to withhold authority to vote, represents a broker "non-vote" (that
is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
Premier Massachusetts Fund Shares on a particular matter with respect to which
the broker or nominee does not have discretionary power) or is marked with an
abstention (collectively, "abstentions"), Premier Massachusetts Fund Shares
represented thereby will be considered to be present at the Meeting for purposes
of determining the existence of a quorum for the transaction of business.
Abstentions will not constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. For this reason,
abstentions will have the effect of a "no" vote for the purpose of obtaining
requisite approval for the Proposal.
If a quorum is not present at the Meeting, or if a quorum is present
but sufficient votes to approve the Proposal are not received, the persons named
as proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Meeting, the
following factors may be considered: the nature of the Proposal, the percentage
of votes actually cast, the percentage of negative votes actually cast, the
34
nature of any further solicitation and the information to be provided to Premier
Massachusetts Fund shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a majority of
those shares affected by the adjournment that are represented at the Meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies that they are entitled to vote "FOR" the Proposal in favor of
such adjournment and will vote those proxies required to be voted "AGAINST" the
Proposal against any adjournment. A quorum is constituted with respect to the
Premier Massachusetts Fund by the presence in person or by proxy of a majority
of the outstanding Fund shares entitled to vote at the Meeting.
The votes of MPAM Massachusetts Bond Fund's shareholders are not
being solicited because their approval or consent is not necessary for the
Reorganization.
OTHER MATTERS
The Dreyfus Trust Trustees are not aware of any other matters that
may come before the Meeting. However, if any other matters properly come before
the Meeting, it is the intention of the persons named in the accompanying form
of proxy to vote the proxy in accordance with their judgment on such matters.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise the Dreyfus Trust, in care of Dreyfus Transfer, Inc.,
Attention: The Dreyfus/Laurel Tax-Free Municipal Funds -- Dreyfus Premier
Limited Term Massachusetts Municipal Fund, P.O. Box 9263, Boston, Massachusetts
02205-8501, whether other persons are the beneficial owners of Premier
Massachusetts Fund Shares for which proxies are being solicited from you and, if
so, the number of copies of the Proxy Statement and other soliciting material
you wish to receive in order to supply copies to those beneficial owners.
35
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.
Dated: ____, 2002
36
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of April 30, 2002 (the
"Agreement"), between THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS, an
unincorporated Massachusetts business trust (the "Dreyfus Trust"), on behalf of
DREYFUS PREMIER LIMITED TERM MASSACHUSETTS MUNICIPAL FUND, a segregated
portfolio of assets ("series") thereof (the "Acquired Fund"), and MPAM FUNDS
TRUST, an unincorporated Massachusetts business trust (the "MPAM Trust"), on
behalf of MPAM MASSACHUSETTS INTERMEDIATE MUNICIPAL BOND FUND, a series thereof
(the "Acquiring Fund"). (The Acquired Fund and the Acquiring Fund are sometimes
referred to herein individually as a "Fund" and collectively as the "Funds.")
All agreements, representations, actions and obligations described herein made
or to be taken or undertaken by either Fund are made and shall be taken or
undertaken by the Dreyfus Trust on behalf of the Acquired Fund and by the MPAM
Trust on behalf of the Acquiring Fund.
The parties wish to change the Acquired Fund's identity and form by
converting it to the Acquiring Fund through a reorganization described in
Section 368(a)(1)(F) of the United States Internal Revenue Code of 1986, as
amended (the "Code"), and this Agreement is intended to be and is adopted as a
"plan of reorganization" within the meaning of the regulations under the Code
(the "Regulations"). The reorganization will consist of the transfer of all of
the assets of the Acquired Fund in exchange for shares of beneficial interest,
par value $0.001 per share, in the Acquiring Fund designated MPAM shares,
Investor shares and Dreyfus Premier shares (collectively, the "Acquiring Fund
Shares"), and the assumption by the Acquiring Fund of all of the liabilities of
the Acquired Fund and the distribution, after the Closing Date (as defined in
paragraph 2.1), of such Acquiring Fund Shares to the holders of the Acquired
Fund's Class A, Class B, Class C and Class R shares of beneficial interest, each
without par value (collectively, the "Acquired Fund Shares"), in liquidation of
the Acquired Fund as provided herein, all upon the terms and conditions
hereinafter set forth in this Agreement (all such transactions herein
collectively referred to as the "Reorganization"). In the Reorganization,
holders of Class A and Class C shares of the Acquired Fund would receive
Investor shares of the Acquiring Fund, holders of Class B shares of the Acquired
Fund would receive Dreyfus Premier shares of the Acquiring Fund, and holders of
Class R shares of the Acquired Fund would receive MPAM shares of the Acquiring
Fund. Each Acquired Fund Shareholder (as defined in paragraph 1.6) would receive
Acquiring Fund Shares of the corresponding class with an aggregate net asset
value equal to the aggregate net asset value of its investment in the Acquired
Fund at the time of the Reorganization.
WHEREAS, the Acquired Fund is a non-diversified series of the Dreyfus
Trust, a registered open-end management investment company, and the Acquiring
Fund is a non-diversified series of the MPAM Trust, a registered open-end
management investment company, and the Acquired Fund owns securities that are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquired Fund is authorized to issue Class A, Class B,
Class C and Class R shares of beneficial interest, and the Acquiring Fund is
authorized to issue MPAM shares, Investor shares and Dreyfus Premier shares of
beneficial interest;
WHEREAS, the MPAM Trust's Board of Trustees (the "MPAM Board") has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the Acquiring Fund's assumption of all of the
liabilities of the Acquired Fund is in the best interests of the Acquiring Fund
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and that the interests of the Acquiring Fund's existing shareholders would not
be diluted as a result of the Reorganization; and
WHEREAS, the Dreyfus Trust's Board of Trustees (the "Dreyfus Board")
has determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the Acquiring Fund's assumption of all of the
liabilities of the Acquired Fund is in the best interests of the Acquired Fund
and that the interests of the Acquired Fund's existing shareholders would not be
diluted as a result of the Reorganization.
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND THE ACQUIRING FUND'S ASSUMPTION OF ACQUIRED FUND
LIABILITIES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the requisite approval of the shareholders of the
Acquired Fund and to the other terms and conditions contained herein:
(a) The Acquired Fund shall assign, transfer and convey to
the Acquiring Fund at the Closing (as defined in paragraph 2.1) all of the
Assets of the Acquired Fund (as defined in paragraph 1.2).
(b) The Acquiring Fund agrees in exchange therefor at the
Closing --
(i) to issue and deliver to the Acquired Fund the
number of full and fractional (a) Investor shares of the Acquiring Fund equal to
the number of full and fractional Class A shares of the Acquired Fund then
outstanding, (b) Dreyfus Premier shares of the Acquiring Fund equal to the
number of full and fractional Class B shares of the Acquired Fund then
outstanding, (c) Investor shares of the Acquiring Fund determined as set forth
A-3
in paragraph 1.11 and (d) MPAM shares of the Acquiring Fund equal to the number
of full and fractional Class R shares of the Acquired Fund then outstanding, and
(ii) to assume the Liabilities of the Acquired Fund
(as defined in paragraph 1.3). In lieu of delivering certificates for the
Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund Shares
to the Acquired Fund's account on the books of the Acquiring Fund and shall
deliver a confirmation thereof to the Acquired 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 all cash,
cash equivalents, securities, commodities 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 assets on the books of the
Acquired Fund, on the Closing Date. The Assets shall be invested at all times
through the Closing in a manner that ensures compliance with paragraph 3.1(j).
(b)The Acquired Fund has provided the Acquiring Fund with a
list of all of its property as of the date of execution of this Agreement. The
Acquired Fund reserves the right to sell any of such property in the ordinary
course of its business.
1.3 The Acquired Fund may endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. At the Closing, the
Acquiring Fund shall assume all liabilities, debts, obligations, expenses,
costs, charges and reserves of the Acquired Fund as of the Closing Date
(collectively, the "Liabilities").
1.4 The Assets shall be delivered on the Closing Date to Mellon
Bank, N.A., the Acquiring Fund's custodian (the "Custodian"), for the account of
the Acquiring Fund, with all securities not in bearer or book-entry form duly
endorsed, or accompanied by duly executed separate assignments or stock powers,
A-4
in proper form for transfer, with signatures guaranteed, and with all necessary
stock transfer stamps, sufficient to transfer good and marketable title thereto
(including all accrued interest and dividends and rights pertaining thereto) to
the Custodian for the account of the Acquiring Fund free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall be in
the form of immediately available funds payable to the order of the Custodian
for the account of the Acquiring Fund.
1.5 The Acquired Fund will pay or cause to be paid to the
Acquiring Fund any interest received on or after the Closing Date with respect
to Assets transferred to the Acquiring Fund hereunder. The Acquired Fund will
transfer to the Acquiring Fund any distributions, rights or other assets
received by the Acquired Fund after the Closing Date as distributions on or with
respect to the Assets transferred. Such assets shall be deemed included in
Assets transferred to the Acquiring Fund on the Closing Date and shall not be
separately valued.
1.6 At the Closing, the Acquiring Fund will redeem the New
Acquiring Fund Shares issued pursuant to paragraph 6.3 for a total of $37.50. As
soon after the Closing Date as is conveniently practicable, the Acquired Fund
will liquidate and distribute pro rata in accordance with this paragraph to the
Acquired Fund's shareholders of record - some of which hold Acquired Fund Shares
in omnibus accounts (the "Nominee Shareholders") - determined as of the close of
business on the Closing Date (the "Acquired Fund Shareholders"), the Acquiring
Fund Shares of the corresponding class received by the Acquired Fund pursuant to
paragraph 1.1. For purposes of this Agreement, the MPAM shares of the Acquiring
Fund shall be the "corresponding class" to the Class R shares of the Acquired
Fund, the Investor shares of the Acquiring Fund shall be the "corresponding
class" to the Class A and Class C shares of the Acquired Fund and the Dreyfus
Premier shares of the Acquiring Fund shall be the "corresponding class" to the
A-5
Class B shares of the Acquired Fund. Such liquidation and distribution will be
accomplished by transferring the Acquiring Fund Shares of each class then
credited to the account of the Acquired Fund on the books of the Acquiring Fund
to open individual and omnibus accounts on such books for the benefit of (a) the
Acquired Fund Shareholders other than Nominee Shareholders and (b) the indirect
holders of Acquired Fund Shares through Nominee Shareholders of the
corresponding class (collectively, the "Beneficial Shareholders") and
representing the respective pro rata number of full and fractional Acquiring
Fund Shares of such class to which each such Beneficial Shareholder is entitled.
For these purposes, an Acquired Fund Shareholder shall be entitled to receive,
(i) with respect to each full and fractional Class A, Class B and Class R share
of the Acquired Fund held by such shareholder, a full and fractional Acquiring
Fund Share of the corresponding class, and (ii) with respect to each full and
fractional Class C share of the Acquired Fund held by such shareholder, that
number of full and fractional Investor shares of the Acquiring Fund equal to the
net asset value of such Class C share divided by the net asset value of a Class
A share of the Acquired Fund, both as determined in accordance with paragraph
1.10. All issued and outstanding shares of the Acquired Fund will be canceled on
the books of the Acquired Fund simultaneously with the distribution of Acquiring
Fund Shares to the Acquired Fund Shareholders.
1.7 Ownership of Acquiring Fund Shares will be shown on the
books of the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will
be issued in the manner described in the Acquiring Fund's current prospectuses
and statement of additional information.
1.8 Any transfer taxes payable upon issuance of the Acquiring
Fund Shares in a name other than the registered holder of the Acquiring Fund
Shares on the books of the Acquired Fund as of that time shall, as a condition
A-6
of such issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.9 Any reporting responsibility of the Acquired Fund is and
shall remain the responsibility of the Acquired Fund up to and including the
Closing Date and such later date on which the Acquired Fund's existence is
terminated.
1.10 The value of the Assets and the amount of the Liabilities,
the amount thereof attributable to the Class A and Class C shares of the
Acquired Fund, and the net asset value of a share of each such class all shall
be computed as of the close of trading on the floor of the New York Stock
Exchange ("NYSE") (usually, 4:00 p.m., Eastern time), except that certain
options and futures contracts may be valued 15 minutes after the close of
trading on the floor of the NYSE, on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Acquired Fund's then-current prospectus and statement of additional
information.
1.11 The number of Investor shares of the Acquiring Fund
(including fractional shares, if any) to be issued pursuant to paragraph
1.1(b)(i)(c) shall be determined by dividing the value of the Assets, less the
amount of the Liabilities, attributable to Class C shares of the Acquired Fund
by the net asset value of a Class A share of the Acquired Fund, using the
valuation procedures referred to in paragraph 1.10.
1.12 All computations and calculations of value shall be made by
The Dreyfus Corporation ("Dreyfus") in accordance with its regular practices as
fund accountant for each Fund.
2. CLOSING AND CLOSING DATE.
2.1 Consummation of the Reorganization and related acts (the
"Closing") shall occur on August 29, 2002 or such other date as to which the
parties may mutually agree (the "Closing Date"). All acts taking place at the
A-7
Closing shall be deemed to take place simultaneously as of the close of business
on the Closing Date unless otherwise provided. The Closing shall be held at 4:30
p.m., Eastern time, at the offices of Dreyfus, 200 Park Avenue, New York, New
York, or such other time and/or place as the parties may mutually agree.
2.2 The Acquired Fund shall deliver to the Acquiring Fund at the
Closing a statement of assets and liabilities, including a schedule of the
Assets setting forth for all portfolio securities thereon their adjusted tax
basis and holding period by lot, as of the Closing, certified by the Dreyfus
Trust's Treasurer or Assistant Treasurer. The Custodian shall deliver at the
Closing a certificate of an authorized officer stating that the Assets have been
presented for examination to the Acquiring Fund prior to the Closing Date and
have been delivered in proper form to the Acquiring Fund.
2.3 If on the Valuation Date (a) the NYSE or another primary
trading market for portfolio securities of the Acquired Fund is closed to
trading or trading thereon is restricted or (b) trading or the reporting of
trading on the NYSE or elsewhere is disrupted so that accurate appraisal of the
value of the net assets of the Acquired Fund or determination of the net asset
value of any class of its shares is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading has been fully
resumed and reporting has been restored.
2.4 The transfer agent for the Acquired Fund shall deliver at
the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders and the number
and percentage ownership of outstanding Acquired Fund shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited to
A-8
the Acquired Fund on the Closing Date to the Secretary of the Dreyfus Trust or
provide evidence satisfactory to the Acquired Fund that such Acquiring Fund
Shares have been credited to the Acquired Fund's account on the books of the
Acquiring Fund. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, receipts or other documents as such other party or
its counsel may reasonably request.
3. REPRESENTATIONS AND WARRANTIES.
3.1 The Dreyfus Trust, on behalf of the Acquired Fund,
represents and warrants to the MPAM Trust as follows:
(a) The Acquired Fund is a duly established and designated
series of the Dreyfus Trust, an unincorporated business trust duly organized and
validly existing under the laws of the Commonwealth of Massachusetts, and has
power to carry on its business as it is now being conducted and to carry out
this Agreement.
(b) The Dreyfus Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect.
(c) The current prospectus and statement of additional
information of the Acquired Fund and any supplements thereto conform 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 Securities and Exchange Commission (the "Commission") thereunder and do 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.
A-9
(d) The Acquired Fund is not, and the execution, delivery
and performance of this Agreement will not result, in material violation of the
Dreyfus Trust's Agreement and Declaration of Trust dated March 28, 1983, as
amended and restated December 9, 1992 (the "Trust Instrument"), or its By-Laws
or of any agreement, indenture, instrument, contract, lease or other undertaking
to which the Acquired Fund is a party or by which it is bound.
(e) The Acquired Fund has no material contracts or other
commitments outstanding (other than this Agreement) which will be terminated
with liability to it on or prior to the Closing Date.
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is currently pending
or to its knowledge threatened against the Acquired Fund or any of its
properties that, if adversely determined, would materially and adversely affect
its financial condition or the conduct of its business. The Acquired Fund knows
of no facts that 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 that materially and adversely affects
its business or its ability to consummate the transactions herein contemplated.
(g) The Statements of Assets and Liabilities of the Acquired
Fund at June 30, 2001, June 30, 2000 and June 30, 1999 have been audited by KPMG
LLP, independent auditors, and are in accordance with generally accepted
accounting principles, consistently applied, and such statements (copies of
which have been furnished to the MPAM Trust) fairly reflect the financial
condition of the Acquired Fund as of such dates, and there are no known
contingent liabilities of the Acquired Fund as of such dates not disclosed
therein.
A-10
(h) Since June 30, 2001 there has not been any material
adverse change in 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 such indebtedness was incurred.
(i) At the Closing Date, all Federal and other tax returns
and reports of the Acquired Fund required by law then to have been filed 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 Dreyfus Trust's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns.
(j) The Acquired Fund is a "fund" as defined in section
851(g)(2) of the Code; for each taxable year of its operation, the Acquired Fund
met all the requirements of Subchapter M of the Code ("Subchapter M") for
qualification and treatment as a "regulated investment company"; it will
continue to meet all such requirements for its taxable year that includes the
Closing Date; and it has no earnings and profits accumulated in any taxable year
in which the provisions of Subchapter M did not apply to it.
(k) The Liabilities were incurred by the Acquired Fund in
the ordinary course of its business.
(l) The Acquired Fund is not under the jurisdiction of a
court in a "title 11 or similar case" (within the meaning of section
368(a)(3)(A) of the Code).
(m) 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 and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five or
fewer issuers.
A-11
(n) The Acquired Fund will be terminated as soon as
reasonably practicable after the Reorganization, but in all events within six
months after the Closing Date.
(o) 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 upon receipt of full payment in accordance with the terms
contemplated by the Acquired Fund's then-current prospectus and statement of
additional information, and non-assessable by the Acquired Fund. All of the
issued and outstanding shares of the Acquired Fund will, on the Closing Date, be
held by the persons and in the amounts set forth in the records of the transfer
agent, as certified in paragraph 2.4. The Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Acquired Fund Shares, nor is there outstanding any security convertible into
any Acquired Fund Shares.
(p) On the Closing Date, the Acquired Fund will have full
right, power and authority to sell, assign, transfer and deliver the Assets.
(q) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Dreyfus Board, and, subject to the approval
of the Acquired Fund's shareholders, this Agreement will constitute the valid
and legally binding obligation of the Acquired Fund, enforceable in accordance
with its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and to general principles of equity and the discretion of the court (regardless
of whether the enforceability is considered in a proceeding in equity or at
law).
A-12
(r) The proxy statement of the Acquired Fund (the "Proxy
Statement") (other than information therein that has been furnished by the
Acquiring Fund) will, on the effective date of the Proxy Statement and on the
Closing Date, 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.
3.2 The MPAM Trust, on behalf of the Acquiring Fund, represents
and warrants to the Dreyfus Trust as follows:
(a) Before the Closing Date, the Acquiring Fund will be a
duly established and designated series of the MPAM Trust, an unincorporated
business trust duly organized and validly existing under the laws of the
Commonwealth of Massachusetts, and will have power to carry on its business as
it is now being conducted and to carry out this Agreement.
(b) The Acquiring Fund has not commenced operations and will
not do so until after the Closing.
(c) The MPAM Trust is registered under the 1940 Act as an
open-end management investment company, and such registration has not been
revoked or rescinded and is in full force and effect.
(d) The prospectuses and statement of additional information
of the Acquiring Fund and any supplements thereto effective as of the Closing
Date will conform 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 will 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
A-13
the statements therein, in light of the circumstances under which they were
made, not materially misleading.
(e) The Acquiring Fund is not, and the execution, delivery
and performance of this Agreement will not result, in material violation of the
MPAM Trust's Amended and Restated Agreement and Declaration of Trust dated June
5, 2000 (the "Declaration of Trust") or its Bylaws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquiring Fund is a party or by which it is bound.
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is currently pending
or to its knowledge threatened against the Acquiring Fund or any of its
properties that, if adversely determined, would materially and adversely affect
its financial condition or the conduct of its business. The Acquiring Fund knows
of no facts that 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 that materially and adversely affects
its business or its ability to consummate the transactions contemplated hereby.
(g) The Acquiring Fund will be a "fund" as defined in
section 851(g)(2) of the Code and will meet all the requirements of Subchapter M
for qualification and treatment as a regulated investment company for its
taxable year that includes the Closing Date.
(h) No consideration other than the Acquiring Fund Shares
(and the Acquiring Fund's assumption of the Liabilities) will be issued in
exchange for the Assets in the Reorganization.
(i) The Acquiring Fund has no plan or intention to issue
additional Acquiring Fund Shares following the Reorganization except for shares
issued in the ordinary course of its business as a series of an open-end
A-14
investment company; nor does the Acquiring Fund, or any person "related" (within
the meaning of section 1.368-1(e)(3) of the Regulations) to the Acquiring Fund,
have any plan or intention to redeem or otherwise reacquire -- during the
five-year period beginning at the Closing Date, either directly or through any
transaction, agreement or arrangement with any other person -- with
consideration other than Acquiring Fund Shares, any Acquiring Fund Shares issued
to the Acquired Fund Shareholders pursuant to the Reorganization, other than
through redemptions arising in the ordinary course of that business as required
by section 22(e) of the 1940 Act.
(j) The Acquiring Fund will, after the Reorganization, (i)
continue the "historic business" (within the meaning of section 1.368-1(d)(2) of
the Regulations) that the Acquired Fund conducted before the Reorganization and
(ii) use a significant portion of the Acquired Fund's "historic business assets"
(within the meaning of section 1.368-1(d)(3) of the Regulations) in that
business.
(k) There is no plan or intention for the Acquiring Fund to
be dissolved or merged into another business trust or corporation or any "fund"
thereof (within the meaning of section 851(g)(2) of the Code) following the
Reorganization.
(l) 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 and
securities of any one issuer and (ii) not more than 50% of the value of such
assets will be invested in the stock and securities of five or fewer issuers.
(m) The Acquiring Fund does not directly or indirectly own,
nor on the Closing Date will it directly or indirectly own, any shares of the
Acquired Fund.
A-15
(n) All Acquiring Fund Shares, when issued pursuant to the
Reorganization, will be duly and validly issued and outstanding, fully paid and
non-assessable by the Acquiring Fund. Before the Closing Date, (i) there will be
no issued and outstanding shares in the Acquiring Fund or any other securities
issued by the Acquiring Fund, except as provided in paragraph 6.3, and (ii) the
Acquiring Fund will not have outstanding any options, warrants or other rights
to subscribe for or purchase any Acquiring Fund Shares, nor will there be
outstanding any security convertible into any Acquiring Fund Shares.
(o) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing Date by all
necessary action on the part of the MPAM Board, and this Agreement will
constitute the valid and legally binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto, and to general principles of equity and the discretion of
the court (regardless of whether the enforceability is considered in a
proceeding in equity or at law).
(p) The Proxy Statement (only insofar as it relates to the
Acquiring Fund and is based on information furnished by the Acquiring Fund)
will, on the effective date of the Proxy Statement and on the Closing Date, 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.
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4. COVENANTS OF THE FUNDS.
4.1 The Acquired Fund will operate its business in the ordinary
course between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include payment of customary dividends and
other distributions.
4.2 The Dreyfus 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.
4.3 Subject to the provisions of this Agreement, each Fund 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.
4.4 As promptly as practicable, but in any case within sixty
days after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund,
in form reasonably satisfactory to the Acquiring Fund, 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 under Section 381 of the Code, which
statement shall be certified by the Dreyfus Trust's President or its Vice
President and Treasurer.
4.5 The Dreyfus Trust shall prepare the Proxy Statement relating
to the Acquiring Fund Shares issuable hereunder, to be filed in compliance with
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and the 1940 Act and the rules thereunder.
4.6 The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1934 Act,
the 1940 Act and such of the state Blue Sky or securities laws as it may deem
appropriate in order to continue its operations after the Closing Date.
A-17
4.7 The Funds shall cooperate in the preparation and filing as
promptly as practicable with the Commission of an application, in form and
substance reasonably satisfactory to their counsel, for exemptive relief from
the provisions of Section 17 of the 1940 Act, and from any other provision of
the 1940 Act deemed necessary or advisable by such counsel, to permit
consummation of the Reorganization as contemplated hereby (the "Exemptive
Application"). The Funds shall use all reasonable efforts to obtain the relief
requested by the Exemptive Application.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
5.1 All representations and warranties of the Dreyfus Trust on
behalf of the Acquired Fund 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.
5.2 The Acquired Fund shall have delivered to the Acquiring Fund
the schedule of Assets referred to in paragraph 2.2.
5.3 The Dreyfus Trust shall have delivered to the MPAM Trust on
the Closing Date a certificate executed in its name by the Dreyfus Trust's
President or Vice President and its Treasurer, in form and substance reasonably
satisfactory to the MPAM Trust, to the effect that the representations and
warranties of the Dreyfus Trust made in this Agreement on behalf of the Acquired
Fund are true and correct at and as of the Closing Date, except as they may be
A-18
affected by the transactions contemplated by this Agreement, and as to such
other matters as the MPAM Trust reasonably requests.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the MPAM Trust on
behalf of the Acquiring Fund 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.
6.2 The MPAM Trust shall have delivered to the Dreyfus Trust on
the Closing Date a certificate executed in its name by the MPAM Trust's
President or Vice President and its Treasurer, in form and substance reasonably
satisfactory to the Dreyfus Trust, to the effect that the representations and
warranties of the MPAM Trust made in this Agreement on behalf of the Acquiring
Fund are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the Dreyfus Trust reasonably requests.
6.3 Before the Closing, the MPAM Board shall have authorized the
issuance of, and the Acquiring Fund shall have issued, one MPAM share, one
Investor share and one Dreyfus Premier share (the "New Acquiring Fund Shares")
to MBC Investments Corporation in consideration of the payment of $12.50 per
A-19
share for the purpose of enabling MBC Investments Corporation to vote on the
investment advisory agreement referred to in paragraph 6.4.
6.4 The MPAM Trust (on behalf of and with respect to the
Acquiring Fund) shall have entered into or adopted an investment advisory
agreement with MPAM Advisers, a division of Dreyfus, an Administration Agreement
with Mellon Bank, N.A., a distribution agreement with Dreyfus Service
Corporation, a distribution plan pursuant to Rule 12b-1 under the 1940 Act, a
shareholder services plan, a transfer agency agreement with Dreyfus Transfer,
Inc., and other agreements necessary for the Acquiring Fund's operation as a
series of an open-end investment company. MBC Investments Corporation, as the
sole shareholder of the Acquiring Fund, shall have approved such investment
advisory agreement, and each such agreement and plan shall have been approved by
the MPAM Board, including, to the extent required by law, those trustees who are
not "interested persons" (as defined in the 1940 Act) of the MPAM Trust or MPAM
Advisers and who do not have a material interest in such agreement or plan or
any related agreement.
7. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUNDS.
If any of the conditions set forth below does not exist on or before
the Closing Date with respect to either Fund, the other Fund shall, at its
option, not be required to consummate the transactions contemplated by this
Agreement.
7.1 This 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
Instrument.
7.2 On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is sought
A-20
to restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated hereby.
7.3 All consents of other parties and all other consents, orders
and permits of Federal, state and local regulatory authorities (including those
of the Commission and of state Blue Sky and securities authorities) deemed
necessary by either Fund 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 either Fund, provided
that either party hereto may for itself waive any of such conditions.
7.4 The Proxy Statement shall have become effective, 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.
7.5 The relief requested by the Exemptive Application shall have
been granted in form and substance reasonably satisfactory to the counsel for
each Fund.
7.6 The parties shall have received an opinion ("Tax Opinion")
of Kirkpatrick & Lockhart LLP ("Counsel") substantially to the effect that,
based on the facts and assumptions stated therein and conditioned on
consummation of the Reorganization in accordance with this Agreement, for
Federal income tax purposes:
(a) The Acquiring Fund's acquisition of the Assets in
exchange solely for Acquiring Fund Shares and the assumption by the Acquiring
Fund of the Liabilities, followed by the Acquired Fund's distribution of those
shares PRO RATA to the Acquired Fund Shareholders constructively in exchange for
their Acquired Fund Shares, will qualify as a "reorganization" within the
A-21
meaning of section 368(a)(1)(F) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
(b) The Acquired Fund will recognize no gain or loss on the
transfer of the Assets to the Acquiring Fund in exchange solely for Acquiring
Fund Shares and the Acquiring Fund's assumption of the Liabilities or on the
subsequent distribution (whether actual or constructive) of those shares to the
Acquired Fund Shareholders in exchange for their Acquired Fund Shares;
(c) The Acquiring Fund will recognize no gain or loss on its
receipt of the Assets in exchange solely for Acquiring Fund Shares and its
assumption of the Liabilities;
(d) The Acquiring Fund's tax basis in the Assets will be the
same as the Acquired Fund's tax basis therein immediately before the
Reorganization, and the Acquiring Fund's holding period for the Assets will
include the Acquired Fund's holding period therefor;
(e) A Beneficial Shareholder will recognize no gain or loss
on the actual or constructive exchange of all its Acquired Fund Shares solely
for Acquiring Fund Shares pursuant to the Reorganization;
(f) A Beneficial Shareholder's aggregate tax basis in the
Acquiring Fund Shares it receives pursuant to the Reorganization will be the
same as the aggregate tax basis in its Acquired Fund Shares it surrenders in
exchange for those Acquiring Fund Shares, and its holding period for those
Acquiring Fund Shares will include its holding period for those Acquired Fund
Shares (provided the shareholder held them as capital assets on the Closing
Date); and
(g) For purposes of section 381 of the Code, the Acquiring
Fund will be treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of the Acquired Fund's taxable
year, the Acquired Fund's tax attributes enumerated in section 381(c) of the
A-22
Code will be taken into account by the Acquiring Fund as if there had been no
Reorganization, and the part of the Acquired Fund's taxable year before the
Reorganization will be included in the Acquiring Fund's taxable year after the
Reorganization.
In rendering the Tax Opinion, Counsel may rely as to factual
matters, exclusively and without independent verification, on the
representations and warranties made in this Agreement, which Counsel may treat
as representations and warranties made to it, and in separate letters addressed
to Counsel and the certificates delivered pursuant to paragraphs 5.3 and 6.2.
Notwithstanding the foregoing, the Tax Opinion will state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
Beneficial Shareholder with respect to any Asset as to which any unrealized gain
or loss is required to be recognized for Federal income tax purposes on the
termination or transfer thereof under a mark-to-market system of accounting.
8. TERMINATION OF AGREEMENT; EXPENSES.
8.1 This Agreement and the transactions contemplated hereby may
be terminated and abandoned by resolution of the Dreyfus Board or of the MPAM
Board, as the case may be, at any time prior to the Closing Date (and
notwithstanding any vote of the Acquired Fund's shareholders) if circumstances
develop that, in the opinion of either such Board, make proceeding with the
Reorganization inadvisable.
8.2 If this Agreement is terminated and the transactions
contemplated hereby are abandoned pursuant to the provisions of paragraph 8.1,
this Agreement shall become void and have no effect, without any liability in
respect of this Agreement on the part of either party hereto or their respective
Trustees, officers or shareholders.
A-23
8.3 The expenses of the Reorganization shall be borne by Mellon
Bank, N.A. or its affiliates.
9. WAIVER.
At any time prior to the Closing Date, any of the conditions
described in Sections 5, 6 and 7 may be waived by the MPAM Board or the Dreyfus
Board if, in the judgment of either, such waiver will not have a material
adverse effect on the benefits intended under this Agreement to the shareholders
of the Acquiring Fund or of the Acquired Fund, as the case may be.
10. MISCELLANEOUS.
10.1 None of the representations and warranties included or
provided for herein shall survive consummation of the transactions contemplated
hereby.
10.2 This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature between them relating to the subject
matter hereof. Neither party shall be bound by any condition, definition,
warranty or representation, other than as set forth or provided in this
Agreement or as may be, on or subsequent to the date hereof, set forth in a
writing signed by the party to be bound thereby.
10.3 This Agreement shall be governed and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflict of laws; provided, however, that the due authorization,
execution and delivery of this Agreement by either Fund shall be governed and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts, in each case without giving effect to principles of conflict of
A-24
laws; provided that, in the case of any conflict between such laws and the
Federal securities laws, the latter shall govern.
10.4 This Agreement may be executed in counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
10.5 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.
10.6 (a) References herein to the "MPAM Funds Trust" (or the
"MPAM Trust") or its Trustees refer to them, respectively, not individually or
personally, but as acting from time to time under the Declaration of Trust, a
copy of which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and at the principal office of the MPAM Trust. The obligations of
the MPAM Trust entered into in the name or on behalf of the Acquiring Fund, its
representatives or agents, are made not individually, but in such capacities,
and are not binding upon any of the other series of the MPAM Trust or on the
shareholders or representatives of the Acquiring Fund personally, but bind only
the Acquiring Fund's property; and all persons dealing with the Acquiring Fund
must look solely to the Acquiring Fund's property for the enforcement of any
claims against the Acquiring Fund.
(b) References herein to the "The Dreyfus/Laurel Tax-Free Municipal
Funds" (or the "Dreyfus Trust") or its Trustees refer to them, respectively, not
individually or personally, but as acting from time to time under the Trust
A-25
Instrument, a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal office of the Dreyfus Trust.
The obligations of the Dreyfus Trust entered into in the name or on behalf of
the Acquired Fund, its representatives or agents, are made not individually, but
in such capacities, and are not binding upon any of the other series of the
Dreyfus Trust or on the shareholders or representatives of the Acquired Fund
personally, but bind only the Acquired Fund's property; and all persons dealing
with the Acquired Fund must look solely to the Acquired Fund's property for the
enforcement of any claims against the Acquired Fund.
10.7 Any references in this Agreement to actions taken,
deliveries by or to, representations and warranties made by or to, or
obligations of, the Acquired Fund shall be deemed references to actions taken,
deliveries by or to, representations and warranties made by or to, or
obligations of, the Dreyfus Trust on behalf of the Acquired Fund.
10.8 Any references in this Agreement to actions taken,
deliveries by or to, representations and warranties made by or to, or
obligations of, the Acquiring Fund shall be deemed references to actions taken,
deliveries by or to, representations and warranties made by or to, or
obligations of, the MPAM Trust on behalf of the Acquiring Fund.
IN WITNESS WHEREOF, the MPAM Trust and the Dreyfus Trust have caused
this Agreement to be executed and attested on its behalf by its duly authorized
representatives as of the date first above written.
THE DREYFUS / LAUREL TAX-FREE MUNICIPAL FUNDS,
on behalf of Dreyfus Premier Limited Term Massachusetts Municipal Fund
By: ___________________________________
Stephen E. Canter,
President
ATTEST: _______________________
Steven F. Newman,
Secretary
A-26
MPAM FUNDS TRUST,
on behalf of MPAM Massachusetts Intermediate Municipal Bond Fund
By: ___________________________________
David F. Lamere,
President
ATTEST: ____________________
Jeff S. Prusnofsky,
Secretary
A-27
APPENDIX B
PRINCIPAL SHAREHOLDERS
As of May 1, 2002, the following were known by Premier
Massachusetts Fund to own of record 5% or more of the indicated class of
Premier Massachusetts Fund's outstanding voting shares:
Class A Shares
- --------------
Name and Address Percentage Outstanding
- ---------------- ----------------------
Before Reorganization After Reorganization
--------------------- --------------------
Duncan M. McFarland 6.9160% 6.9160%
299 Clapboardtree Street
Westwood, MA 02090-2907
Patricia Ostrander 5.9107% 5.9107%
393 Walnut Street
Brookline, MA 02445-7523
Class B Shares
Name and Address Percentage Outstanding
- ---------------- ----------------------
Before Reorganization After Reorganization
--------------------- --------------------
PaineWebber For The Benefit Of 19.8944% 19.8944%
David B. Richardson TTEE
Elise E. Boardman Trust
U/A DTD 1/14/93
P.O. Box 1
Hanover, MA 02339-0001
U.S. Clearing Corporation 18.6817% 18.6817%
26 Broadway
New York, NY 10004-1703
Wexford Clearing Services 9.9990% 9.9990%
Corporation
For Benefit Of
Ms. Kathryn S. Grosberg
614 Queen Anne Road
Harwich, MA 02645-1961
Wexford Clearing Services 9.9712% 9.9712%
Corporation
For Benefit Of
Mrs. Judith A. Thompson
Dunstable, MA 01827-0005
Anne S. Nash TTEE 5.9704% 5.9704%
Anne S. Nash Revocable Trust
U/A 06/04/98
For Benefit Of Anne S. Nash
123 Park Street
Newton, MA 02458
Class C Shares
- --------------
Name and Address Percentage Outstanding
- ---------------- ----------------------
Before Reorganization After Reorganization
--------------------- --------------------
Merrill Lynch, Pierce, Fenner 29.8044% 29.8044%
& Smith
For The Sole Benefit Of Its
Customers
Attn: Fund Administration
4800 Deer Lake Drive E Floor 3
Jacksonville, FL 32246-6484
U.S. Clearing Corporation 13.8245% 13.8245%
For Benefit Of 210-00946-10
26 Broadway
New York, NY 10004-1703
U.S. Clearing Corporation 9.0128% 9.0128%
For Benefit Of 210-91524-19
26 Broadway
New York, NY 10004-1703
U.S. Clearing Corporation 7.7284% 7.7284%
For Benefit Of 210-00904-10
26 Broadway
New York, NY 10004-1703
John Carroll 7.3980% 7.3980%
Mary Carroll
914 6th Avenue North #101
Seattle, WA 98109-6113
PaineWebber For Benefit Of 6.8577% 6.8577%
Saul Touster
180 Beacon Street
Boston, MA 02116-1408
U.S. Clearing Corporation 5.4077% 5.4077%
For Benefit Of 210-01302-16
26 Broadway
New York, NY 10004-1703
DREYFUS PREMIER LIMITED TERM MASSACHUSETTS MUNICIPAL FUND
The undersigned shareholder of Dreyfus Premier Limited Term Massachusetts
Municipal Fund (the "Premier Massachusetts Fund"), a series of The
Dreyfus/Laurel Tax-Free Municipal Funds (the "Dreyfus Trust"), hereby appoints
Steven F. Newman and Jeff Prusnofsky, and each of them, the attorneys and
proxies of the undersigned, with full power of substitution, to vote, as
indicated herein, all of the shares of beneficial interest of Premier
Massachusetts Fund standing in the name of the undersigned at the close of
business on May 30, 2002, at a Special Meeting of Shareholders to be held at the
offices of The Dreyfus Corporation, 200 Park Avenue, 7th Floor, New York, New
York 10166, at 11:00 a.m. on Thursday, August 22, 2002, and at any and all
adjournments thereof, with all of the powers the undersigned would possess if
then and there personally present and especially (but without limiting the
general authorization and power hereby given) to vote as indicated on the
proposal, as more fully described in the Proxy Statement for the meeting.
THIS PROXY IS SOLICITED BY THE DREYFUS TRUST'S BOARD OF TRUSTEES AND WILL
BE VOTED FOR THE PROPOSAL BELOW UNLESS OTHERWISE INDICATED.
Please fill in box(es) as shown using black or blue ink or number 2
pencil. PLEASE DO NOT USE FINE POINT PENS.
1. To consider an Agreement and Plan of Reorganization between Dreyfus
Trust, on behalf of Premier Massachusetts Fund, and MPAM Funds Trust, on behalf
of MPAM Massachusetts Intermediate Municipal Bond Fund (the "MPAM Massachusetts
Bond Fund"), providing for the transfer of all of the assets of Premier
Massachusetts Fund in exchange for shares in MPAM Massachusetts Bond Fund
designated MPAM shares, Investor shares and Dreyfus Premier shares and MPAM
Massachusetts Bond Fund's assumption of Premier Massachusetts Fund's
liabilities, and the pro rata distribution of those shares to Premier
Massachusetts Fund's shareholders and the subsequent termination of Premier
Massachusetts Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote on other
business that properly comes before the meeting or any adjournment(s) thereof.
By signing this proxy card, receipt of the accompanying Notice of Special
Meeting of Shareholders and Proxy Statement is hereby acknowledged.
Dated: , 2002
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope
----------------------------------------
| |
| |
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Signature(s)
Signature(s) should be exactly as name or names appearing on this proxy. If
shares are held jointly, each holder should sign. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title.