[Federal Register Volume 60, Number 47 (Friday, March 10, 1995)]
[Notices]
[Pages 13194-13196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5965]



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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20940/812-9396]


Norwest Funds, et al.; Notice of Application

March 6, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under the Investment 
Company Act of 1940 (the ``Act'').

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Applicants: Norwest Funds, Norwest Select Funds, Core Trust (Delaware), 
Forum Funds, Inc. (collectively, the ``Funds''), Norwest Bank 
Minnesota, N.A. (``Norwest''), Forum Advisors, Inc. (``FAI''), and H.M. 
Payson & Co., Inc. (``Payson'') (collectively, the ``Advisers'').

Relevant Act Sections: Order requested under sections 6(c) and 17(b) to 
exempt applicants from section 17(a), and under rule 17d-1 to permit 
certain transactions in accordance with section 17(d) and rule 17d-1.

Summary of Application: Applicants request an order that would permit 
certain money market funds to sell their shares to affiliated 
investment companies.

Filing Date: The application was filed on December 21, 1994 and amended 
on February 24, 1995.

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 March 31, 1995, 
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, Norwest Funds, Norwest Select Funds, 61 Broadway, New York, 
New York 10006; Core Trust, Forum Funds, Inc., Forum Advisors, Inc., 
Two Portland Square, Portland, Maine 04101; H.M. Payson & Co., Inc., 
One Portland Square; Portland, Maine 04101.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Staff Attorney, at 
(202) 942-0574, or Robert A. Robertson, 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. Each Fund is registered under the Act as an open-end management 
investment company and is comprised of multiple series. Norwest Funds 
and Forum Funds offer both non-money market series and money market 
series. Norwest Select Funds and Core Trust offer only non-money market 
series. All existing and future non-money market series of the Funds 
relying on the relief granted are hereinafter referred to as ``Non-
Money Market Series.'' The existing and future money market series of 
the Funds relying on the relief granted are hereinafter referred to as 
``Money Market Series.'' Applicants request relief on behalf of any 
future series or registered investment company advised by the Advisers 
or any investment adviser controlling, controlled by or under common 
control with the Advisers.
    2. Norwest is the investment adviser for each series of Norwest 
Funds and Norwest Select Funds, and for two series of Core Trust. FAI 
serves as investment adviser for each of the Forum Funds series, except 
for the Payson Balanced Fund and Payson Value Fund, which are advised 
by Payson. Each of the Advisers is [[Page 13195]] registered under the 
Investment Advisers Act of 1940. Applicants request relief on behalf of 
any investment adviser controlling, controlled by, or under common 
control with the Advisers. Forum Financial Services, Inc. is the 
principal underwriter and manager for each series of Norwest Funds, the 
Norwest Select Funds, and Forum Funds.
    3. Each Non-Money Market Series will hold a portion of its net 
assets in cash or short-term investments (``Uninvested Cash'') pending 
investment in portfolio securities, or for meeting expected redemptions 
or other purposes. Applicants propose that: (a) each Non-Money Market 
Series advised by Norwest would be permitted to invest its Uninvested 
Cash in shares of one or more Money Market Series advised by Norwest; 
and (b) Non-Money Market Series advised by FAI or Payson would be 
permitted to invest in shares of one or more Money Market Series 
advised by FAI or Payson. Where a Non-Money Market Series would have 
more than one Money Market Series available for investment, the 
decision as to which Money Market Series in which it would invest (if 
any) will be made by the investment adviser of the Non-Money Market 
Series solely on the basis of the investment adviser's view as to the 
suitability and investment merits of the respective Money Market Series 
as compared to all available, competitive short-term instruments. Where 
a Money Market Series offers more than one class of securities, each 
Non-Money Market Series would invest only in the class with the lowest 
expense ratio at the time of investment.

Applicants' Legal Analysis

    1. Applicants request an order under sections 6(c) and 17(b) of the 
Act granting an exemption from section 17(a) of the Act and under rule 
17d-1 thereunder permitting certain joint transactions in accordance 
with section 17(d) of the Act and rule 17d-1. The order would permit: 
(a) the Non-Money Market Series to purchase, utilizing Uninvested Cash, 
and to redeem shares of the Money Market Series; (b) the Money Market 
Series to sell and redeem their shares to and from the Non-Money Market 
Series; and (c) the advisers to effect such purchases and redemptions 
of shares of the Money Market Series as investment adviser to the 
Funds.\1\

    \1\Applicants will comply with the percentage limitations set 
forth in section 12(d)(1) of the Act.
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    2. Section 17(a) of the Act provides, in pertinent part, that it is 
unlawful for any affiliated person of a registered investment company, 
acting as principal, to sell any security to, or purchase any security 
from, such investment company. Since the series of Norwest Funds and 
Norwest Select Funds share a common board of trustees and the series of 
Forum Funds share a common board of trustees, the series of each such 
Fund may be ``affiliated persons'' of each other under section 
2(a)(3)(C) of the Act by virtue of the possibility that they may be 
deemed under common control with each other. Additionally, since the 
series of Norwest Funds, Norwest Select Funds, and Core Trust have the 
same investment adviser, they also may be ``affiliated persons'' of 
each other under section 2(a)(3)(C). Because of these potential 
affiliations, the sale of shares of the Money Market Series to the Non-
Money Series, and the redemption of such shares from the Money Market 
Series, could be prohibited under section 17(a).
    3. Section 17(b) of the Act provides that the SEC may, upon 
application, grant an order exempting applicants from section 17(a) if 
evidence establishes that: (a) 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 persons 
concerned; (b) the proposed transaction is consistent with the policy 
of each investment company concerned; and (c) the proposed transaction 
is consistent with the general purposes of the Act. Under section 6(c) 
of the Act, the SEC may exempt transactions from any provision of the 
Act or any rule or regulations thereunder ``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 request 
relief under sections 6(c) and 17(b) because they wish to engage in a 
series of transactions, rather than a single transaction.
    4. Under the proposed transactions, the Non-Money Market Series 
will retain their ability to invest their cash balances directly in 
money market instruments as authorized by their respective investment 
objectives and policies. Under the proposal, shares of the Money Market 
Series will be purchased and redeemed at their net asset value, which 
is the same consideration paid and received for these shares by any 
other shareholder. These shares will be purchased and sold by the Non-
Money Market Series on the same terms and on the same basis as shares 
are purchased and sold to all other shareholders.
    5. On the other side of the proposed transactions, each Money 
Market Series reserves the right to discontinue selling shares to any 
Non-Money Market Series if the board of trustees of such applicants 
determine, based on then current facts and circumstances, that such 
sales would adversely affect its portfolio management and operations. 
In order to ensure that the Non-Money Market Series will not exert any 
undue influence on the voting process for any matter submitted to a 
vote by the shareholders of the Money Market Series, the Non-Money 
Market Series will vote their shares of each of the Money Market Series 
in proportion to the vote by all other shareholders of such Money 
Market Series. Based on the above, applicants believe that the proposed 
transactions satisfy the standards of sections 6(c) and 17(b).
    6. Section 17(d) of the Act and rule 17d-1 thereunder provide that 
it is unlawful for an affiliated person of a registered investment 
company, acting as principal, to participate in any joint enterprise or 
other joint arrangement in which any such registered company is a 
participant. Rule 17d-1 provides that the SEC may issue an order 
permitting applicants to participate in a joint transaction after 
considering certain factors. The Money Market Series would purchase and 
redeem shares from the Non-Money Market Series. In addition, the 
Advisers manage assets of the Money Market and Non-Money Market Series. 
Due to the relationships between the Advisers and the Money Market and 
Non-Money Market Series, the proposed transactions between the Money 
Market and Non-Money Market Series could be deemed a joint enterprise 
or other joint arrangement.
    7. The investment by the Non-Money Market Series in shares of the 
Money Market Series would be on the same basis and would be 
indistinguishable from any other shareholder account maintained by the 
Money Market Series. To the extent that any of the Non-Money Market 
Series invest in the Money Market Series as proposed, applicants 
believe that the Non-Money Market Series will participate on a fair and 
reasonable basis in the returns and expenses of the Money Market 
Series. Thus, applicants believe that relief is appropriate.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. The shares of the Money Market Series sold to and redeemed from 
the Non-Money Market Series will not be subject to a sales load, 
redemption fee, [[Page 13196]] or distribution fee under a plan adopted 
in accordance with rule 12b-1 under the Act.

    2. The investment advisers and their respective affiliates, in 
their capacities as service providers for the Money Market Series, will 
remit to the respective Non-Money Market Series, or waive their fees 
with respect to the Non-Money Market Series, in an amount equal to all 
fees received by them or their affiliates under their respective 
agreements with the Money Market Series to the extent such fees are 
based upon the Non-Money Market Series' assets invested in shares of 
the Money Market Series. Any of these fees remitted or waived will not 
be subject to recoupment by the Series' investment advisers or their 
affiliates at a later date.

    3. For the purpose of determining any amount to be waived and/or 
expenses to be borne to comply with an Expense Waiver, the adjusted 
fees for a Non-Money Market Series (gross fees minus Expense Waiver) 
will be calculated without reference to the amounts waived or remitted 
pursuant to condition 2. Adjusted fees then will be reduced by the 
amount waived pursuant to condition 2. If the amount waived pursuant to 
condition 2 exceeds adjusted fees, the Non-Money Market Series' 
investment adviser also will reimburse the Non-Money Market Series in 
an amount equal to such excess.

    4. The Non-Money Market Series will vote their shares of each of 
the Money Market Series in the same proportion as the votes of all 
other shareholders in such Money Market Series.

    5. The Non-Money Market Series will receive dividends and bear 
their proportionate share of expenses on the same basis as other 
shareholders of such Money Market Series. A separate account will be 
established in the shareholder records of each of the Money Market 
Series for each of the acquiring Non-Money Market Series.

    For the Commission, by the Division of Investment Management, 
under delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 95-5965 Filed 3-9-95; 8:45 am]

BILLING CODE 8010-01-M