Federal Register / Vol. 66, No. 30 / Tuesday, February 13, 2001 / Notices 10039

the initial shareholder, the pertinent

Fund’s shareholders purchase shares on

the basis of a prospectus containing the

disclosure contemplated by condition 2

below. Similarly, before a Future Fund

may rely on the order requested in the

application, the operation of the Future

Fund in the manner described in the

application will be approved by its

initial shareholder before a public

offering of shares of such Future Fund,

provided that shareholders purchase

shares on the basis of a prospectus

containing the disclosure contemplated

by condition 2 below.

2. Each Fund will disclose in its

prospectus the existence, substance and

effect of any order granted pursuant to

the application. In addition, each Fund

and any Future Fund relying on the

requested order will hold themselves

out to the public as employing the

management structure described in the

application. The prospectus with

respect to each Fund and any Future

Fund will prominently disclose that the

Adviser has the ultimate responsibility

(subject to oversight by the Board) to

oversee the Subadvisers and

recommend their hiring, termination,

and replacement.

3. At all times, a majority of the Board

will be Independent Trustees, and the

nomination of new or additional

Independent Trustees will be at the

discretion of the then existing

Independent Trustees.

4. The Adviser will not enter into a

Subadvisory Agreement with any

Affiliated Subadviser without that

agreement, including the compensation

to be paid thereunder, being approved

by the shareholders of the applicable

Fund.

5. When a Subadviser change is

proposed for a Fund or any Future Fund

with an Affiliated Subadviser, the

Board, including a majority of the

Independent Trustees, will make a

separate finding, reflected in the Board

minutes, that the change is in the best

interests of the Fund or the Future Fund

and its shareholders and does not

involve a conflict of interest from which

the Adviser or the Affiliated Subadviser

derives an inappropriate advantage.

6. Within 90 days of the hiring of any

new Subadviser, shareholders will be

furnished all information about the new

Subadviser that would be included in a

proxy statement, including any change

in such disclosure caused by the

addition of the new Subadviser. Each

Fund will meet this condition by

providing shareholders with an

information statement meeting the

requirements of Regulation 14C,

Schedule 14C and Item 22 of Schedule

14A under the Securities Exchange Act

of 1934 within 90 days of the hiring of

any new Subadviser.

7. The Adviser will provide general

management services to each Fund,

including overall supervisory

responsibility for the general

management and investment of each

Fund’s assets, and, subject to review

and approval by the Board, will: (a) Set

the Fund’s overall investment strategies,

(b) select Subadvisers, (c) when

appropriate, allocate and reallocate a

Fund’s assets among multiple

Subadvisers; (d) monitor and evaluate

the performance of the Subadvisers, and

(e) ensure that the Subadvisers comply

with each Fund’s investment objective,

policies and restrictions by, among

other things, implementing procedures

reasonably designed to ensure

compliance.

8. No trustee or officer of the Trust,

or director or officer of the Adviser will

own, directly or indirectly (other than

through a pooled investment vehicle

that is not controlled by such person),

any interest in a Subadviser, except for:

(a) Ownership of interests in the

Adviser or any entity that controls, is

controlled by, or is under common

control with the Adviser; or (b)

ownership of less than 1% of the

outstanding securities of any class of

equity or debt of a publicly traded

company that is either a Subadviser or

an entity that controls, is controlled by,

or is under common control with a

Subadviser.

9. Shareholders of a Fund will

approve any change to a Subadvisory

Agreement if such change would result

in an increase in the overall

management and advisory fees payable

by the Fund that have been approved by

the shareholders of the Fund.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–3566 Filed 2–12–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24856; 812–12410]

Mutual Fund Select Group, et al.;

Notice of Application

February 8, 2001.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of application under

section 17(b) of the Investment

Company Act of 1940 (‘‘Act’’) for an

exemption from section 17(a) of the Act.

Summary of Application: Applicants

request an order to permit the proposed

reorganization of (a) Chase Vista Select

Short-Term Bond Fund (‘‘Select ShortTerm Bond Fund’’), a series of Mutual

Fund Select Group (‘‘MFSG’’), with and

into Chase Vista Short-Term Bond Fund

(‘‘Short-Term Bond Fund’’), a series of

Mutual Fund Group (‘‘MFG’’), and (b)

Chase Vista Bond Fund (‘‘Bond Fund’’),

a series of MFG, with and into Chase

Vista Select Bond Fund (‘‘Select Bond

Fund’’), a series of MFSG. Because of

certain affiliations, applicants may not

rely on rule 17a–8 under the Act.

Applicants: MFSG, MFG, and The

Chase Manhattan Bank (‘‘Chase’’).

Filing Dates: The application was

filed on January 16, 2001. Applicants

have agreed to file an amendment

during the notice period, the substance

of which is reflected in this notice.

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 requests

should be received by the Commission

by 5:30 p.m. on February 28, 2001, 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 Commission’s Secretary.

ADDRESSES: Secretary, Commission, 450

Fifth Street, NW., Washington, DC

20549–0609. Applicants, 1211 Avenue

of the Americas, 41st Floor, New York,

New York, 10036.

FOR FURTHER INFORMATION CONTACT: John

L. Sullivan, Senior Counsel, at (202)

942–0681, or Michael W. Mundt,

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, NW., Washington, DC

20549–0102 (tel. 202–942–8090).

Applicant’s Representations

1. MFSG, a Massachusetts business

trust,is registered under the Act as an

open-end management investment

10040 Federal Register / Vol. 66, No. 30 / Tuesday, February 13, 2001 / Notices

company and currently offers ten series,

including Select Short-Term Bond Fund

and Select Bond Fund. MFG, a

Massachusetts business trust, is

registered under the Act as an open-end

management investment company and

currently offers twenty series, including

Bond Fund and Select Short-Term Bond

Fund. Select Short-Term Bond Fund,

Select Bond Fund, Short-Term Bond

Fund and Bond Fund are each a

‘‘Fund.’’ Chase serves as investment

adviser, and Chase Fleming Asset

Management (USA) Inc. (‘‘CFAM’’), a

wholly owned subsidiary of Chase,

serves as subadviser to each Fund.

Chase is not currently required to

register as an investment adviser

pursuant to section 202(a)(11)(A) of the

Investment Advisers Act of 1940

(‘‘Advisers Act’’), while CFAM is an

investment adviser registered under the

Advisers Act. Chase holds of record for

the benefit of others, in trust, more than

5% (in come cases, more than 25%) of

the total outstanding voting securities of

each of the Funds.

2. On September 19, 2000 and

October 24, 2000, the boards of trustees

of the Funds (together, the ‘‘Boards’’)

including the trustees who are not

‘‘interested persons’’ of the Funds, as

defined in section 2(a)(19) of the Act

(‘‘Independent Trustees’’), unanimously

approved plans of reorganization

(‘‘Plans’’) under which Select ShortTerm Bond Fund will reorganize into

Short-Term Bond Fund, and Bond Fund

will reorganize into Select Bond Fund

(Select Short-Term Bond Fund and

Bond Fund are ‘‘Acquired Funds,’’ and

Short-Term Bond Fund and Select Bond

Fund are ‘‘Acquiring Funds’’). Under

the Plans, each Acquiring Fund will

acquire all of the assets and liabilities of

the corresponding Acquired Fund in

exchange for shares of the Acquiring

Fund (each a ‘‘Reorganization’’). The

shares of each Acquiring Fund

exchanged will have an aggregate net

asset value equal to the aggregate net

asset value of the corresponding

Acquired Fund’s shares determined as

of the close of regular trading on the

New York Stock Exchange on the

closing date of each Reorganization

(each a ‘‘Closing Date’’), currently

anticipated to occur as soon as

practicable after the granting of the

order of the Commission requested by

the application. The value of the assets

of each Fund will be determined

according to the Fund’s then-current

prospectus and statement of additional

information. On the Closing Date, each

Acquired Fund will be liquidated by the

distribution of the corresponding

Acquiring Fund’s shares pro rata to the

shareholders of the Acquired Fund.

3. Applicants state that the in

vestment objectives and policies of each

Acquired Fund are identical to those of

the corresponding Acquiring Fund.

Select Short-Term Bond Fund currently

offers shares that are not subject to sales

charges or distribution fees, but are

subject to shareholder servicing fees.

Shareholders of Select Short-Term Bond

Fund will receive shares of a class of

Short-Term Bond Fund with the same

sales charge and fee arrangements. Bond

Fund offers three classes of shares, and

Select Bond Fund currently offers only

one class of shares. However, in

connection with the Reorganizations,

Select Bond Fund will introduce two

new classes, and shareholders of Bond

Fund will receive shares of Select Bond

Fund subject to the same sales charges,

distribution fees, and shareholder

servicing fees as their current shares.

For purposes of calculating deferred

sales charges on certain shares, the

amount of time a shareholder held

shares of Bond Fund will be added to

the amount of time the shareholder

holds shares of Select Bond Fund. No

sales charge will be imposed in

connection with the Reorganizations.

Chase will bear all of the costs

associated with the Reorganizations.

4. Each Board, including the

Independent Trustees, unanimously

determined that the participation of its

Fund in the respective Reorganization

was in the best interests of the Fund and

the shareholders, and that the interests

of the shareholders of the Fund would

not be diluted as a result of the

Reorganization. In approving the

Reorganizations, the Board of Each

Acquired Fund considered various

factors, including: (a) The terms of the

Plan; (b) the Funds’ historical, current

and projected expense ratios; (c) the

Funds’ investment objectives and

policies; and (d) the tax-free nature of

the Reorganizations. The Board of each

Acquiring Fund considered factors

including: (a) The terms of the Plan; 9b)

the potential operational and

administrative efficiencies resulting

from the Reorganizations, and (c) the

fact that Chase would bear the expenses

of the Reorganizations.

5. The Reorganizations are subject to

a number of conditions, including that:

(a) The shareholders of each Acquired

Fund will have approved the

Reorganization; (b) the Funds will have

received opinions of counsel concerning

the tax-free nature of each

Reorganization; and (c) applicants will

have received exemptive relief from the

Commission to permit the

Reorganization. An Acquired Fund or

Acquiring Fund may terminate its Plan

by written notice if certain conditions

are not satisfied prior to the Closing

Date. Applicants agree not to make any

material changes to either Plan that

affect the exemptive order without prior

approval of the Commission or its staff.

6. A registration statement on Form

N–14 with respect to each

Reorganization, containing a proxy

statement/prospectus, was filed on

October 25, 2000 with the Commission

and became effective on November 27,

2000. Definitive proxy materials were

filed with the Commission on December

13, 2000 and first mailed to

shareholders on or about December 14,

2000. The shareholders of each

Acquired Fund considered and

approved the Reorganizations at special

meetings held on January 26, 2001.

Applicants’ Legal Analysis

1. Section 17(a) of the Act, in relevant

part, 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, among others: (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.

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

certain mergers, consolidations, and

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 are satisfied.

3. Applicants state that Chase holds of

record for the benefit of others, in trust,

more than 5% (in some cases, more than

25%) of the total outstanding voting

securities of each of the Funds. Because

Chase holds these securities, each

Acquiring Fund and Acquired Fund

may be deemed to be affiliated persons

for reasons other than those set forth in

rule 17a–8 and therefore unable to rely

on the rule.

Federal Register / Vol. 66, No. 30 / Tuesday, February 13, 2001 / Notices 10041

4. Section 17(b) of the Act provides,

in relevant part, that the Commission

may exempt a transaction from the

provisions of section 17(a) if 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.

5. Applicants requests an order under

section 17(b) of the Act exempting them

from section 17(a) to the extent

necessary to complete the

Reorganizations. Applicants submit that

the Reorganizations satisfy the

standards of section 17(b). Applicants

state that the Boards, including the

Independent Trustees, unanimously

found that the participation of the

Acquired Funds and Acquiring Funds

in the Reorganizations is in the best

interest of each Fund and its

shareholders and that such participation

will not dilute the interests of the

existing shareholders of each Fund. In

addition, applicants state that the

Reorganizations will be on the basis of

the Funds’ relative net asset values.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–3626 Filed 2–12–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24855; 812–12404]

Nationwide Mutual Funds, et al.; Notice

of Application

February 7, 2001.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘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.

Summary of Application: Applicants

request an order to permit a series of

Nationwide Mutual Funds

(‘‘Nationwide’’) to acquire all of the

assets, net of liabilities, of a series of

Principal Preservation Portfolios, Inc.

(‘‘Principal Preservation’’) (the

‘‘Reorganization’’). Because of certain

affiliations, applicants may not rely on

rule 17a–8 under the Act.

Applicants: Nationwide, Principal

Preservation, Villanova Mutual Fund

Capital Trust (‘‘VMF’’), and NorthPointe

Capital, LLC (‘‘NorthPointe’’).

Filing Dates: The application was

filed on January 16, 2001. Applicants

have agreed to file an amendment to the

application during the notice period, the

substance of which is reflected in this

notice.

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 copies of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on February 27, 2001, 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 5th

Street NW., Washington, DC 20549–

0609. Applicants, c/o Elizabeth A.

Davin, Esq., Nationwide Mutual funds,

1–35–10, One Nationwide Plaza,

Columbus, Ohio 43215.

FOR FURTHER INFORMATION CONTACT:

Bruce R. MacNeil, Senior Counsel, at

(202) 942–0634, or Nadya B. Roytblat,

Assistant Director, 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, 450 Fifth

Street NW., Washington, DC 20549–

0102 (telephone (202) 942–8090).

Applicants’ Representations

1. Nationwide, an Ohio business trust,

is an open-end management investment

company registered under the Act.

Nationwide currently offers thirty-seven

series, including Nationwide Value

Opportunities Fund (the ‘‘Acquiring

Fund’’). Principal Preservation, a

Maryland corporation, is an open-end

management investment company

registered under the Act. Principal

Preservation currently offers nine series

including Select Value Fund (the

‘‘Acquired Fund,’’ together with the

Acquired Fund, the ‘‘Funds’’).

2. VMF is an investment adviser

registered under the Investment

Advisers Act of 1940 (‘‘Advisers Act’’)

and serves as investment adviser to the

Acquiring Fund. VMF is a whollyowned subsidiary of Villanova Capital,

Inc. (‘‘VCI’’), a holding company. VCI is

a subsidiary of Nationwide Financial

Services. As of December 29, 2000, VMF

owns approximately 13.3% of the

Acquiring Fund’s shares.

3. NorthPointe is an investment

adviser registered under the Advisers

Act and serves as investment adviser to

the Acquired Fund. NorthPointe also

serves as the sub-adviser of the

Acquiring Fund. NorthPointe is a

majority-owned subsidiary of VCI.

4. On December 12, 2000, and

December 15, 2000, the board of trustees

of Principal Preservation (‘‘Principal

Board’’), and the board of trustees of

Nationwide (‘‘Nationwide Board’’) and

together with the Principal Board, the

‘‘Boards’’), respectively, including all of

the trustees who are not ‘‘interested

persons,’’ as defined in section 2(a)(19)

of the Act (‘‘Disinterested Trustees’’),

approved the agreement and plan of

reorganization entered into between the

Funds (‘‘Plan’’). Pursuant to the Plan, as

a result of the Reorganization, the

Acquiring Fund will acquire

substantially all of the assets, net of

liabilities, of the Acquired Fund in

exchange for shares of the Acquiring

Fund. The shares of the Acquiring Fund

exchanged will have a total net asset

value equal to the total net asset value

of the Acquired Fund’s shares

determined as of the close of regular

trading on the New York Stock

Exchange on the business day preceding

the day of the closing of the

Reorganization (‘‘Closing Date’’). The

value of the assets of the Acquired Fund

will be determined according to the

Acquired Fund’s then-current

prospectuses and statement of

additional information.

Contemporaneously with the

distribution of the Acquiring Fund’s

shares pro rata to the Acquired Fund’s

shareholders, the Acquired Fund will

satisfy its liabilities with its remaining

assets and will be liquidated.

Applicants anticipate the Closing Date

will be on or around February 28, 2001.

5. Applicants state that the

investment objectives and strategies of

the Acquired Fund are similar to those

of the Acquiring Fund. The Acquiring

Fund has four classes of shares: Class A,

Class B, Class C, and Investor Service

Class. The Acquired Fund has three

classes, Class A, Class B and Class C.

Only Class A and Class B shares will be

involved in the Reorganization. Neither

the Acquiring Fund nor the Acquired

Fund currently offers Class C shares,

and the Acquired Fund has no Class C

shares issued or outstanding. Class A