[Federal Register Volume 64, Number 179 (Thursday, September 16, 1999)]
[Notices]
[Pages 50311-50313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24114]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 24005; 812-11720]
Vision Group of Funds, Inc. and Manufacturers and Traders Trust
Company; Notice of Application
September 9, 1999.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 17(b) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from section 17(a)
of the Act.
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SUMMARY OF APPLICATION: Applicants request an order to permit a series
of a registered open-end management investment company to acquire all
of the assets, subject to the liabilities, of two other series of the
investment company. Because of certain affiliations, applicants may not
rely on rule 17a-8 under the Act.
APPLICANTS: Vision Group of Funds, Inc. (``Vision Funds'') and
Manufacturers and Traders Trust Company (``M&T Bank'').
FILING DATES: The application was filed on July 29, 1999 and amended on
September 8, 1999.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing request should be received by the Commission by 5:30 p.m.
on October 4, 1999, and should be accompanied by proof of service on
applicants, in the form if 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 Commission's Secretary.
ADDRESSES: Secretary, Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549-0609; Applicants: c/o Matthew G. Maloney, Esq, Dickstein
Shapiro Morin & Oshinsky LLP, 2101 L Street, N.W., Washington, D.C.
20037.
[[Page 50312]]
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Senior Counsel, at (202) 942-0574 or George J. Zornada,
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
Commission's Public Reference Branch, 450 Fifth Street, N.W.,
Washington, D.C. 20549-0102 (telephone (202) 942-8090).
Applicant's Representations
1. Vision Funds, a Maryland corporation, is registered under the
Act as an open-end management investment company and is currently
comprised of ten series, including Vision Growth & Income Fund
(``Growth & Income Fund''), Vision Capital Appreciation Fund (``Capital
Appreciation Fund'' and together with the Growth & Income Fund, the
``Acquired Funds'') and Vision Mid Cap Stock Fund (the ``Acquiring
Fund'' and together with the Acquired Funds, the ``Funds''). The
Acquiring Fund is a newly-organized series of Vision Funds.
2. M&T Bank is the investment adviser to the Acquire Funds. M&T
Bank is exempt from registration under the Investment Advisers Act of
1940 (the ``Advisers Act'') pursuant to section 202(a)(11)(A) of the
Advisers Act. M&T Bank will also act as the investment adviser of the
Acquiring Fund. Currently, M&T Bank holds of record 35.13% and 43.81%
of the outstanding voting securities of the Growth & Income Fund and
the Capital Appreciation Fund, respectively, and thereby holds or
shares voting and/or investment discretion with respect to more than
25%of the outstanding voting securities of each of the Acquired Funds.
3. On June 21, 1999, the board of directors of Vision Funds (the
``Board''), none of whom are ``interested persons'' as defined in
section 2(a)(19) of the Act (``Disinterested Directors''), approved and
entered into an agreement and plan of reorganization between the
Acquired Funds and the Acquiring Fund (the ``Reorganization Agreement''
and the transaction, the ``Reorganization''). The Reorganization is
expected to occur on or after October 15, 1999. Under the
Reorganization Agreement, the Acquiring Fund would acquire all of the
assets, subject to the liabilities, of the Acquired Funds in exchange
for class A shares of the Acquiring Fund having an aggregate net asset
value equal to the aggregate net asset value of the corresponding
Acquired Fund's shares determined on the closing date of the
Reorganization. The value of the assets of the Funds will be determined
in the manner set forth in the Funds' then current prospectuses and
statements of additional information. The Acquiring Fund shares
received by the Acquired Funds will be distributed pro rata by each
Acquired Fund to its shareholders and each Acquired Fund will liquidate
and dissolve.
4. Applicants state that the investment objectives and policies of
the Funds are substantially similar. Each Acquired Fund offers a single
class of shares, class A. The Acquiring Fund will offer identical class
A shares.\1\ No sales load will be imposed in connection with the
Reorganization. The Funds will pay the Reorganization expenses.
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\1\ Class A shares of the Funds have a maximum front-end sales
load of 5.50% and are subject to a distribution fee under rule 12b-1
under the Act of .25% and shareholder services fees of .25%.
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5. The Board, which is composed entirely of Disinterested
Directors, found that the Reorganization is in the best interests of
each Acquired Fund, and that the interest of existing shareholders of
each Acquired Fund will not be diluted as a result of the
Reorganization. During its deliberations, the Board reviewed, among
other things: (a) the terms and conditions of the Reorganization
Agreement; (b) the investment advisory and other fees projected to be
paid by the Acquiring Fund, and the projected expense ratio of the
Acquiring Fund as compared to those of each Acquired Fund; (c) the
investment objectives, strategies, techniques, investment risks and
limitations of the Acquiring Fund and their compatibility with those of
each Acquired Fund; (d) that the Funds would pay the expenses of the
Reorganization; (e) the potential economics of scale to be gained from
combining the assets of the Acquired Funds into the Acquiring Fund; and
(f) the anticipated tax-free nature of the Reorganization.
6. The Reorganization is subject to a number of conditions
precedent, including: (a) the shareholders of each Acquired Fund will
have approved the Reorganization Agreement; (b) applicants will have
received exemptive relief from the Commission; (c) a registration
statement on Form N-14 relating to the Acquiring Fund and filed with
the Commission will have become effective; (d) the receipt of an
opinion of counsel with respect to the tax-free nature of the
Reorganization; and (e) that each Acquired Fund will have declared and
paid a dividend or dividends on its shares which, together with all
previous dividends, will have the effect of distributing to its
shareholders all of the Acquired Fund's investment company taxable
income, if any, its tax-exempt interest income, if any, and all of its
net capital gain realized. The Reorganization Agreement may be
terminated by the Board and the Reorganization abandoned any time prior
to the closing date of the Reorganization. Applicants agree not to make
any material changes to the Reorganization Agreement without prior
approval of the Commission.
7. The definitive prospectus/proxy statement will be filed with the
Commission on or about September 16, 1999 and will be mailed to
shareholders of the Acquired Funds at least 20 days before the date of
the shareholders meetings scheduled for October 14, 1999.
Applicants' Legal Analysis
1. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such a person, acting as principal, from selling any security to, or
purchasing any security from, the company. Section 2(a)(3) of the Act
defines an ``affiliated person'' of another person to include (a) any
person directly or indirectly owning, controlling, or holding with
power to vote 5% or more of the outstanding voting securities of the
other person; (b) any person 5% or more of whose securities are
directly or indirectly owned, controlled, or held with power to vote by
the other person; (c) any person directly or indirectly controlling,
controlled by, or under common control with the other person, and (d)
if the other person is an investment company, any investment adviser of
that company. Applicants state that the Funds may be deemed affiliated
persons and thus the Reorganization may be prohibited by section 17(a).
2. 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, or affiliated persons of an affiliated person,
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.
3. Applicants state that they may not rely on rule 17a-8 because
the Funds may be deemed to be affiliated for reasons other than those
set forth in the rule. By virtue of the direct or indirect ownership by
M&T Bank of more than 5% of the outstanding voting securities
[[Page 50313]]
of each of the Acquired Funds, each Acquired Fund may be deemed an
affiliated person of an affiliated person of the other Acquired Fund,
and the Acquiring Fund. Because of this ownership, each Acquired Fund
may be deemed an affiliated person of an affiliated person of the
Acquiring Fund for reasons other than having a common investment
adviser.
4. Section 17(b) of the Act provides that the Commission may exempt
a transaction from the provisions of section 17(a) if the evidence
establishes that the terms of the proposed transaction, 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 each registered investment
company concerned and with the general purposes of the Act.
5. Applicants request an order under section 17(b) of the Act
exempting them from section 17(a) of the Act to the extent necessary to
permit applicants to consummate the Reorganization. Applicants submit
that the Reorganization satisfies the standards of section 17(b) of the
Act. Applicants state that the Board has found that participation in
the Reorganization is in the best interests of each Fund, and that the
interests of the existing shareholders will not be diluted as a result
of the Reorganization. In addition, applicants state that the exchange
of Acquired Funds' shares for Acquiring Fund shares will take place on
the basis of net asset value.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-24114 Filed 9-15-99; 8:45 am]
BILLING CODE 8010-01-M
