[Federal Register Volume 61, Number 13 (Friday, January 19, 1996)]
[Notices]
[Pages 1424-1426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-511]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 21661; 812-9936]
Funds IV Trust, et al.; Notice of Application
January 5, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
-----------------------------------------------------------------------
APPLICANTS: Funds IV Trust (the ``Trust'') and Bank IV, National
Association (the ``Adviser'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) for an
exemption from section 15(a).
SUMMARY OF APPLICATION: Fourth Financial Corporation (``Fourth
Financial''), the parent of the Adviser to the Trust, will merge with
and into Acquisition Sub, Inc. (``ASI''), a wholly-owned subsidiary of
Boatmen's Bancshares, Inc. (``Boatmen's''). The merger will result in
the assignment, and thus the termination, of the existing investment
advisory contract between the Trust and the Adviser. The order would
permit the implementation, without shareholder approval, of a new
advisory contract for a period of up to 120 days following the date of
the merger (but in no event later than May 30, 1996) (``Interim
Period''). The order also would permit the Adviser to receive from the
Trust fees earned under the new investment advisory contract during the
Interim Period following approval by the Trust's shareholders.
FILING DATE: The application was filed on January 5, 1996.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on January 30,
1996, and should be accompanied by proof of service on applicants, in
the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request such notification by writing to
the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street NW., Washington, DC 20549.
Applicants, Funds IV Trust, c/o Furman Selz Incorporated, 237 Park
Avenue, Suite 910, New York, New York 10017, Attention John J. Pileggi;
Bank IV, 100 North Broadway, Wichita, Kansas 67202, Attention: Philip
Owings, Senior Vice President.
FOR FURTHER INFORMATION CONTACT: Sarah A. Buescher, Staff Attorney, at
(202) 942--0573, or Alison E. Baur, Branch Chief, at (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch.
Applicants' Representations
1. The Trust is a Delaware business trust and is registered under
the Act as an open-end management investment company. Each of the
following funds is a series of the Trust: U.S. Treasury Reserve Money
Market Fund, Short-Term Treasury Income Fund, Intermediate Bond Income
Fund, Bond Income Fund, Stock Appreciation Fund, Aggressive Stock
Appreciation Fund, Value Stock Appreciation Fund, and International
Equity Fund (collectively, the ``Funds'').
2. The Adviser is a wholly-owned subsidiary of Fourth Financial and
is a bank within the meaning of section 2(a)(5) of the Act. The Trust
has entered
[[Page 1425]]
into an investment advisory agreement (the ``Existing Agreement'') with
the Adviser, under which the Adviser provides investment advisory
services to the Trust.
3. Under an Agreement and Plan of Merger (the ``Merger Agreement'')
dated August 25, 1995 among Fourth Financial, Boatmen's, and ASI,
Fourth Financial agreed to merge with and into ASI.
4. On January 15, 1996, in accordance with section 15(c) of the
Act, the board is scheduled to vote on the new investment advisory
agreement between the Adviser and the Trust with respect to the Funds
(the ``New Agreement'').\1\ During the meeting, the board, a majority
of which is comprised of members who are not ``interested persons''
(``Independent Trustees'') will consider the New Agreement to be
entered into upon consummation of the Merger. The board will evaluate
the New Agreement after receiving such information as they deem
reasonably necessary to evaluate whether the terms of the New Agreement
are in the best interests of the Funds and their shareholders. The New
Agreement is identical to the Existing Agreement, except for its
effective date.
\1\ Section 15(c) provides, in relevant part, that it shall be
unlawful for any registered investment company to enter into an
investment advisory contract unless the terms of such contract have
been approved by the vote of a majority of directors, who are not
parties to such contract or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
---------------------------------------------------------------------------
5. The Adviser had planned to propose that the Trustees take action
in January, 1996 to approve the New Agreement and to call a meeting of
shareholders of each Fund to vote on the New Agreement in February or
March, 1996. Fourth Financial recently was advised that the necessary
bank regulatory approval for the Merger could occur more rapidly and
that the Merger date could be advanced to as early as January 31, 1996.
Although the Trust has prepared the required proxy materials and has
scheduled shareholder meetings for February 13, 1996 to approve the New
Agreement, there may not be an adequate solicitation period to obtain
approval of the New Agreement by shareholders of each Fund before the
Merger occurs.
6. Applicants propose to enter into an escrow arrangement with an
unaffiliated financial institution as escrow agent. The arrangement
would provide that: (a) the fees payable to the Adviser during the
Interim Period under the New Agreement would be paid into an interest-
bearing escrow account maintained by the escrow agent; (b) the amounts
in the escrow account with respect to each Fund (including interest
earned on such paid fees) would be paid to the Adviser only upon
approval by the Fund shareholders of the New Agreement, or in the
absence of such approval, to the respective Fund.
Applicants' Legal Analysis:
1. Applicants seek an exemption pursuant to section 6(c) from
section 15(a) of the Act to permit the implementation, without
shareholder approval, of the New Agreement during the Interim Period.
Applicants also request permission for the Adviser to receive from each
Fund all fees earned under the New Agreement implemented during the
Interim Period if and to the extent the New Agreement is approved by
the shareholders of such Fund. Applicants anticipate that the Merger
could occur as early as January 31, 1996. Accordingly, the exemption
would cover the period commencing on the date of the Merger and
continuing through the date the New Agreement is approved or
disapproved by the shareholders of the respective Funds, which period
shall be no longer than 120 days following the termination of the
Existing Agreement (but in no event later than May 30, 1996).
2. Section 15(a) prohibits an investment adviser from providing
investment advisory services to an investment company except under a
written contract that has been approved by a majority of the voting
securities of the investment company. Section 15(a) further requires
that the written contract provide for its automatic termination in the
event of an assignment. Section 2(a)(4) defines ``assignment'' to
include any direct or indirect transfer of a contract by the assignor
or of a controlling block of the assignor's outstanding voting
securities by a security holder of the assignor.
3. Upon completion of the Merger, Fourth Financial will merge into
ASI. Because Fourth Financial is the Adviser's parent, the Merger will
result in an ``assignment'' of the Existing Agreement within the
meaning of section 2(a)(4). Consistent with section 15(a), therefore,
the Existing Agreement will terminate according to its terms upon
completion of the Merger.
4. Rule 15a-4 provides, in relevant part, that if an investment
adviser's investment advisory contract with an investment company is
terminated by assignment, the adviser may continue to act as such for
120 days at the previous compensation rate if a new contract is
approved by the board of directors of the investment company and if
neither the investment adviser nor a controlling person thereof
directly or indirectly receives money or other benefit in connection
with the assignment. Because the Adviser will receive a benefit in
connection with the assignment of the Existing Agreement, applicants
may not rely on rule 15a-4.
5. Section 6(c) provides that the SEC may exempt any person,
security, or transaction from any provision of the Act, if and to the
extent that such exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Applicants believe that the requested relief meets this standard.
6. Applicants believe that the requested relief is necessary, as it
would permit continuity of investment management to each Fund during
the period following the Merger so that services to the Funds would not
be disrupted. Applicants believe that the Interim Period they request
will facilitate the orderly and reasonable consideration of the New
Agreements by the Funds' shareholders in a manner that is consistent
with the provisions of section 15 as well as the corporate governance
objectives of the Act.
7. Applicants believe that the best interests of Fund shareholders
would be served if the Adviser receives fees for services rendered
during the Interim Period. These fees are essential to maintaining the
Adviser's ability to provide services to the Funds. In addition, the
fees to be paid during the Interim Period are at the same rate as the
fees currently payable by the Funds under the Existing Agreement.
Applicants' Conditions
Applicants agree as conditions to the issuance of the exemptive
order requested by the application that:
1. The New Agreement will have the same terms and conditions as the
Existing Agreement, except for its effective date.
2. Fees earned by the Adviser in respect of the New Agreement
during the Interim Period will be maintained in an interest-bearing
escrow account, and amounts in the account (including interest earned
on such paid fees) will be paid (a) to the Adviser in accordance with
the New Agreement, after the requisite approvals are obtained, or (b)
to the respective Fund, in the absence of such approvals.
3. The Trust's board of trustees, including a majority of the
Independent Trustees, will have approved the New Agreement in
accordance with section 15(c) of the Act.
[[Page 1426]]
4. The Funds will hold meetings of shareholders to vote on approval
of the New Agreement on or before the 120th day following the
termination of the Existing Agreement (but in no event later than May
20, 1996).
5. The Adviser or Fourth Financial will bear the costs of preparing
and filing this application and the costs relating to the solicitation
of Fund shareholder approval necessitated by the Merger.
6. The Adviser will take all appropriate steps so that the scope
and quality of advisory and other services provided to the Funds during
the Interim Period will be at least equivalent, in the judgment of the
board, including a majority of the Independent Trustees, to the scope
and quality of services previously provided. If personnel providing
material services during the Interim Period change materially, the
Adviser will apprise and consult with the board to assure that they,
including a majority of the Independent Trustees, are satisfied that
the services provided will not be diminished in scope or quality.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-511 Filed 1-18-96; 8:45 am]
BILLING CODE 8010-01-M
