[Federal Register Volume 61, Number 77 (Friday, April 19, 1996)]
[Notices]
[Pages 17336-17338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9694]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21893/812-10002]
The Woodward Funds, et al.; Notice of Application
April 15, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
-----------------------------------------------------------------------
APPLICANTS: The Woodward Funds (``Woodward''), Prairie Institutional
Funds (``Prairie''), NBD Bank (``NBD''), and First Chicago Investment
Management Company (``FCIMCO'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) granting an
exemption from section 17(a).
[[Page 17337]]
SUMMARY OF APPLICATION: Applicants request an order to permit certain
series of The Woodward Funds to acquire all of the assets of certain
series of the Prairie Institutional Funds in exchange for shares of the
The Woodward Funds. Because of certain affiliations, the series
involved may not rely on rule 17a-8 under the Act.
FILING DATE: The application was filed on February 21, 1996 and amended
on April 12, 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
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on May 10, 1996,
and should be accompanied by proof of service on applicant, 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 notification by writing to the SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants, The Woodward Funds, c/o NBD Bank, Transfer Agent, P.O. Box
7058, Troy, Michigan 48007-7058; Prairie Institutional Funds, Three
First National Plaza, Chicago, Illinois 60670.
FOR FURTHER INFORMATION CONTACT: David W. Grim, Staff Attorney, at
(202) 942-0571, or David M. Goldenberg, 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 at the
SEC's Public Reference Branch.
Applicants' Representations
1. Woodward is an open-end management investment company organized
as a Massachusetts business trust. Woodward has created the following
series of shares for the purpose of effecting the proposed
reorganization described herein: Cash Management Fund, U.S. Government
Securities Cash Management Fund, and Treasury Prime Cash Management
Fund (collectively, the ``Acquiring Funds'').
2. Prairie is an open-end management investment company organized
as a Massachusetts business trust. The following series of Prairie
would be acquired in the proposed reorganization described herein: Cash
Management Fund, U.S. Government Securities Cash Management Fund, and
Treasury Prime Cash Management Fund (collectively, the ``Acquired
Funds'').
3. NBD serves as the co-investment adviser to the Acquiring Funds.
NBD is a wholly-owned subsidiary of First Chicago NBD Corporation
(``FC-NBD''). FCIMCO serves as the co-investment adviser to the
Acquiring Funds and the investment adviser to the Acquired Funds.
FCIMCO is a wholly-owned subsidiary of The First National Bank of
Chicago, which in turn is a wholly-owned subsidiary of FC-NBD.
4. As of January 31, 1996, FC-NBD and its affiliates held of record
or through nominees 100% of the outstanding shares of each Acquired
Fund, and they held or shared voting and/or investment discretion with
respect to a portion of these shares.
5. The investment objective and policies of each Acquiring Fund are
substantially similar to the investment objective and policies of its
corresponding Acquired Fund. The principal differences are that certain
fundamental policies of the Acquired Funds are non-fundamental policies
of the Acquiring Funds and the Acquiring Funds are permitted to invest
in other investment companies as permitted by the Act. These
differences will be described in the proxy statement/prospectus to be
delivered to shareholders of the Acquired Funds. The Acquiring Funds
and the Acquired Funds both offer two classes of shares: Service Shares
and Institutional Shares. Service Shares and Institutional Shares are
sold without a sales charge to institutional investors. Service Shares
are subject to a distribution fee, while Institutional Shares are not
subject to such a fee.
6. In the proposed reorganization, each Acquiring Fund would
acquire all of the assets and assume all of the liabilities of its
corresponding Acquired Fund in exchange for shares of the Acquiring
Fund. The aggregate net asset value of the full and fractional shares
of an Acquiring Fund to be issued to shareholders of the corresponding
Acquired Fund will equal the value of the aggregate net assets of such
Acquired Fund as of the close of business on the business day
immediately prior to the closing of the reorganization (the ``Valuation
Date''). At or as soon as practicable after the closing of the
reorganization, each Acquired Fund will be liquidated and distributed
pro rate to its shareholders of record as of the close of business on
the Valuation Date the full and fractional shares of its corresponding
Acquiring Fund received in the reorganization. After such distribution,
each of the Acquired Funds will be dissolved.
7. An agreement and plan of reorganization (the ``Reorganization
Agreement'') has been approved by the Woodward and Prairie boards,
including the disinterested members thereof. In the assessment of the
reorganization and the terms of the Reorganization Agreement, the
factors considered by the Woodward and Prairie boards included: (a) The
compatibility of the investment objectives and policies of the
Acquiring Funds and their corresponding Acquired Funds; (b) the tax-
free nature of the proposed reorganization; (c) the costs associated
with the proposed reorganization; (d) the effect of the reorganization
on the investment advisory and rule 12b-1 fees charged to the former
shareholders of the Acquired Funds; and (e) compliance with section
15(f) of the Act. Upon consideration of these factors, the Woodward and
Prairie boards, including the disinterested members thereof, found that
participation in the reorganization was in the best interests of each
Acquiring Fund and each Acquired Fund, respectively, and that the
interests of existing shareholders of the Acquiring Funds and Acquired
Funds, respectively, would not be diluted as a result of the
reorganization.
8. A prospectus/proxy statement describing the reorganization and
the reasons therefor will be sent to shareholders of each Acquired Fund
on or about May 1, 1996. Consummation of the reorganization with
respect to each Acquired Fund is contingent upon receipt of the
affirmative vote of the holders of at least a majority of the
outstanding shares of such Acquired Fund entitled to vote on the
matter. In addition to shareholder approval, the consummation of the
reorganization is conditioned upon receipt from the SEC of the order
requested in the application. Applicants agree not to make any changes
to the Reorganization Agreement that would have a material adverse
effect on the rights of shareholders or this application without the
prior approval of the SEC staff.
9. The expenses incurred in connection with entering into and
carrying out the provisions of the Reorganization Agreement will be
paid by FC-NBD and/or certain of its direct or indirect subsidiaries.
Applicants' Legal Analysis
1. Section 2(a)(3) of the Act defines the term ``affiliated
person'' of another person to include, in pertinent part, (i)
[[Page 17338]]
Any person directly or indirectly owning, controlling, or holding with
power to vote, 5% or more of the outstanding voting securities of such
other person; (ii) any person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with
power to vote by such other person; (iii) any person directly or
indirectly controlling, controlled by, or under common control with,
such other person; and (iv) if such other person is an investment
company, any investment adviser thereof.
2. Section 17(a) of the Act, in pertinent 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, any security or other
property. Section 17(b) provides that the SEC may exempt a transaction
from section 17(a) if the evidence establishes that the terms of the
proposed transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and that the proposed transaction is
consistent with the policy of each registered investment company
concerned and with the general purposes of the Act.
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 involving registered investment
companies that are affiliated persons, or affiliated persons of such
affiliated persons, solely by reason of having a common investment
adviser, common directors/trustees, and/or common officers, provided
that certain conditions are satisfied.
4. The proposed reorganization may not be exempt from the
prohibitions of section 17(a) by reason of rule 17a-8 because the
Acquiring Funds and the Acquired Funds may be affiliated for reasons
other than those set forth in the rule. FC-NBD owns 100% of the
outstanding voting securities of NBD, the co-investment adviser to the
Acquiring Funds, and indirectly owns 100% of the outstanding voting
securities of FCIMCO, the co-investment adviser to the Acquiring Funds
and the investment adviser to the Acquired Funds. In addition, as of
January 31, 1996, FC-NBD and its affiliates held of record in their own
names or through nominees 100% of the outstanding shares of each
Acquired Fund. Therefore, each Acquiring Fund may be deemed an
affiliated person of an affiliated person of its corresponding Acquired
Fund, and vice versa, for reasons not based solely on their common
investment adviser.
5. Applicants believe that the terms of the reorganization satisfy
the standards of section 17(b). The Woodward and Prairie boards,
including the disinterested trustees thereof, have reviewed the terms
of the reorganization and have found that participation in the
reorganization as contemplated by the Reorganization Agreement is in
the best interests of each Acquiring Fund and each Acquired Fund,
respectively, and that the interests of existing shareholders of the
Acquiring Funds and the Acquired Funds, respectively, will not be
diluted as a result of the reorganization. Applicants state that the
reorganization is consistent with each Fund's investment objective and
policies because the investment objective and policies of each Acquired
Fund are identical to those of its corresponding Acquiring Fund.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-9694 Filed 4-18-96; 8:45 am]
BILLING CODE 8010-01-M
