[Federal Register Volume 62, Number 62 (Tuesday, April 1, 1997)]
[Notices]
[Pages 15549-15550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8233]
[[Page 15549]]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 22582; 812-10532]
INTRUST Kansas Tax Exempt Bond Fund, et al.; Notice of
Application
March 25, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for an Order under the Investment Company
Act of 1940 (the ``Act'').
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APPLICANTS: INTRUST Kansas Tax Exempt Bond Fund (the ``Acquiring
Fund''), a series of INTRUST Funds Trust (``INTRUST Funds''), SEI
Kansas Tax Free Income Portfolio (the ``Reorganizing Portfolio''), a
series of the SEI Tax Exempt Trust (``SEI Trust''), INTRUST Bank, N.A.
(``INTRUST''), and SEI Fund Management (``SEI'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) granting and
exemption from section 17(a).
SUMMARY OF APPLICATION: Applicants request an order to permit the
Acquiring Fund to acquire all of the assets and assume all of the
stated liabilities of the Reorganizing Portfolio. Because of certain
affiliations, applicants may not rely on rule 17a-8 under the Act.
FILING DATES: The application was filed on February 25, 1997.
Applicants have agreed to file an amendment during the notice period,
the substance of which is included in this notice.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on April 21, 1997,
and should be accompanied by proof of service on applicants, in the
form of an affidavit, or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants: INTRUST Funds Trust, 3435 Stelzer Road, Columbus,
Ohio 43219; SEI Tax Exempt Trust, Oaks, Pennsylvania 19456; INTRUST
Bank, N.A., 105 North Main Street, Box One, Wichita, Kansas 67201; SEI
Fund Management, Oaks, Pennsylvania 19456.
FOR FURTHER INFORMATION CONTACT: John K. Forst, Staff Attorney, at
(202) 942-0569, or Mary Kay Frech, 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 INTRUST Funds, organized as a Delaware business trust, and
SEI Trust, organized as a Massachusetts business trust, are registered
under the Act as open-end management investment companies. INTRUST is
the investment adviser to the Acquiring Fund and the Reorganizing
Portfolio. SEI is the administrator of the Reorganizing Portfolio.
2. INTRUST and its affiliates provide a variety of trust,
fiduciary, custodial, investment management, and other services to,
among others, individuals, corporations, pension plans, and profit
sharing plans. As of February 18, 1997, INTRUST and its affiliates
collectively held of record 99.10% of the outstanding shares of the
Reorganizing Portfolio. Except with respect to certain defined benefit
plans sponsored by INTRUST and its affiliates, (a) neither INTRUST nor
its affiliates has any economic interest in any such shares, and (b)
all such shares being held of record by INTRUST and its affiliates are
held by it for the benefit of others in trust, agency, or other
fiduciary or representative capacity. In certain instances, INTRUST and
its affiliates may hold or share voting discretion, investment
discretion or both with respect to the shares held of record.
3. The Acquiring Fund and Reorganizing Portfolio have the same
investment objectives and policies. The Reorganizing Portfolio offers
two classes of shares, Class A and Class B. Class A shares are offered
primarily to persons purchasing through a trust investment manager or
an account managed or administered by a financial institution. All
issued and outstanding Class B shares currently are held by SEI and
will be redeemed by the Reorganizing Portfolio as part of the
reorganization. The Acquiring Fund offers two classes of shares,
Institutional Service Class (``Service Class'') and Institutional
Premium Class. Shareholders of the Reorganizing Portfolio's Class A
shares will receive Service Class shares of the Acquiring Fund. Service
Class shares are sold without a sales charge, but are subject to a rule
12b-1 plan which provides for a payment of up to .25% of average daily
net assets. The Service Class will not incur 12b-1 plan expenses during
its first year of operation. Service Class shares may be subject to
service organization fees.
4. The Acquiring Fund will acquire all of the assets and assume all
of the stated liabilities of the Reorganizing Portfolio in exchange for
Service Class shares of the Acquiring Fund. Immediately after the
reorganization, Service Class shares of the Acquiring Fund will be
distributed to shareholders of the Reorganizing Portfolio. The number
of shares of the Acquiring Fund to be issued to shareholders of the
Reorganizing Portfolio will be determined on the basis of the relative
net asset values per share and the aggregate net assets of the
Acquiring Fund computed as of the date of the closing and at the time
at which the Acquiring Fund ordinarily determines its net asset value.
5. The Boards of Trustees of SEI Trust and INTRUST Funds approved
the Agreement and Plan of Reorganization (``Reorganization Agreement'')
on November 25, 1996, and September 16, 1996, respectively. Each Board
of Trustees, including a majority of trustees who are not ``interested
persons'' as defined in section 2(a)(19) of the Act, found that
participation in the reorganization was in the best interest of the
Reorganizing Portfolio and the Acquiring Fund, respectively, and that
the interests of existing shareholders of the funds would not be
diluted as a result of the reorganization. In reaching their
determinations, each Board of Trustees considered a number of factors,
including: (a) the reorganization will be effected at net asset value;
(b) all costs of the Reorganizing Portfolio and Acquiring Fund
associated with the reorganization will be paid by INTRUST; (c)
shareholders of the Reorganizing Portfolio must approve the
Reorganization Agreement; (d) each reorganization is expected to be
tax-free to the parties thereto and their shareholders; (e)
shareholders of the Reorganizing Portfolio will have a broader array of
INTRUST-advised investment options; and (f) the investment objectives
and policies of the Acquiring Fund and the Reorganizing Portfolio are
the same.
6. INTRUST voluntarily has agreed to limit through May 1, 1998 the
actual total operating expense ratio of the Acquiring Fund to the
actual total operating expense ratio of the Reorganizing Portfolio as
of December 31, 1996. The expenses incurred in connection with entering
into and carrying out the provisions of the Reorganization Agreement,
whether or
[[Page 15550]]
not consummated, will be paid by INTRUST.
7. The INTRUST Funds or SEI Trust may terminate the Reorganization
Agreement without liability on the part of the terminating party (a) on
or prior to January 1, 1998, with the consent of the other or (b) after
that date by either party on written notice at any time prior to the
consummation of the reorganization, if the conditions to that party's
obligation to perform have not been satisfied. The INTRUST Funds and
SEI Trust agree not to make any changes to the Reorganization Agreement
that would have a material adverse effect on the application without
prior SEC approval.
Applicants' Legal Analysis
1. Section 17(a) of the Act, in relevant part, prohibits an
affiliated person of a registered investment company, or any affiliated
person of such a person, acting as principal, from selling to or
purchasing from such registered company, or any company controlled by
such registered company, any security or other property.
2. Section 2(a)(3) of the Act defines the term ``affiliated
person'' of another person to include any person directly or indirectly
owning, controlling, or holding with power to vote, five percent or
more of the outstanding voting securities of such other person.
3. Rule 17a-8 under the Act exempts from the prohibitions of
section 17(a) mergers, consolidations, or purchases or sales of
substantially all of the assets of registered investment companies that
are affiliated persons solely by reason of having a common investment
adviser, common directors, and/or common officers, provided that
certain conditions set forth in the rule are satisfied.
4. Applicants may not rely on rule 17a-8 in connection with the
reorganization because the Acquiring Funds and the Reorganizing
Portfolio may be deemed to be affiliated for reasons other than those
set forth in the rule. As noted above, INTRUST and its affiliates hold
of record more than 5% of the outstanding shares of the Reorganizing
Portfolio.
5. Section 17(b) of the Act provides that the SEC may exempt a
transaction from the provisions of section 17(a) if evidence
establishes that the terms of the proposed transactions, including the
consideration to be paid, are reasonable and fair and do not involve
overreaching on the part of any person concerned, and that the proposed
transaction is consistent with the policy of the registered investment
company concerned and with the general purposes of the Act.
6. Applicants submit that the reorganization meets the standard for
relief under section 17(b), in that the terms of the reorganization are
reasonable and fair and do not involve overreaching on the part of any
person concerned; and the reorganization is consistent with the general
purposes of the Act and with the policies of the Acquiring Fund and the
Reorganizing Portfolio.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-8233 Filed 3-31-97; 8:45 am]
BILLING CODE 8010-01-M
