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

10042 Federal Register / Vol. 66, No. 30 / Tuesday, February 13, 2001 / Notices

shares of the Acquired and Acquiring

Funds are subject to a front-end sales

charge and a rule 12b–1 distribution fee.

Class B shares are subject to a

contingent deferred sales charge and a

rule 12b–1 distribution fee. No sales

charges will be imposed in connection

with the Reorganization. For purposes

of calculating the deferred sales charge,

shareholders of Class B of the Acquired

Fund will be deemed to have held Class

B shares of the Acquiring Fund since

the date the shareholders initially

purchased the shares of the Acquired

Fund. NorthPointe and VCI will bear the

Acquiring fund’s costs associated with

the Reorganization and B.C. Ziegler and

Company (‘‘Ziegler’’), the Acquired

Fund’s distributor and administrator,

will bear the Acquired Fund’s costs.

6. The Boards, including all of the

Disinterested Trustees, determined that

the Reorganization was in the best

interests of each Fund and its

shareholders, and that the interests of

the existing shareholders of the Funds

would not be diluted as a result of the

Reorganization. In assessing the

Reorganization, the Boards considered

various factors, including: (a) The

investment objectives and strategies of

the Acquired Fund and the Acquiring

Fund; (b) the investment advisory and

other fees paid by the Acquiring Fund

and the projected expense ratio of the

Acquiring Fund; (c) the terms and

conditions of the Plans; (d) the

anticipated tax consequences of the

Reorganization for the Funds and their

shareholders; and (e) the benefits to

Ziegler, VMF and its affiliates that could

result from the Reorganization.

7. The Reorganization is subject to a

number of conditions precedent,

including that: (a) The parties will have

complied with all material aspects of

the Plan on or before the Closing Date;

(b) there will have been no material

adverse changes to either the Acquiring

or the Acquired Fund; (c) the Funds will

have received opinions of counsel

concerning the tax-free nature of the

Reorganization; (d) the Acquired Fund’s

shareholders will have approved the

Plan; (e) an N–14 registration statement

relating to the Reorganization will have

become effective with the Commission;

(f) the Acquired Fund shall have

declared and paid dividends and other

distributions on or before the Closing

Date; and (g) applicants will have

received from the Commission the

exemptive relief requested by the

Application.

8. The Plan may be terminated and

the Reorganization abandoned at any

time prior to the Closing Date by the

mutual consent of the parties. In

addition, the plan may be terminated by

either party under certain circumstances

specified in the Plan. Applicants agree

not to make any material changes to the

Plan without prior approval of the

Commission staff.

9. A registration statement on Form

N–14 and definitive proxy solicitation

materials have been filed with the SEC

and were mailed to the Acquired Fund’s

shareholders on January 23, 2001. A

shareholders meeting of the Acquired

Fund is scheduled for February 22,

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: (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

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 believe that they may

not rely on rule 17a–8 in connection

with the Reorganization because the

Funds may be deemed to be affiliated by

reasons other than having a common

investment adviser, common directors,

and/or common officers. Applicants

state that the Acquiring Fund may be

deemed to be an affiliated person of

VMF because VMF owns more than 5%

of the outstanding voting securities of

the Acquiring Fund. Additionally, VMF

and NorthPointe are under the common

control of VCI. Therefore, the Acquiring

Fund may be deemed an ‘‘affiliated

person of an affiliated person’’ of the

Acquired Fund.

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 request an order under

section 17(b) of the Act exempting them

from section 17(a) to the extent

necessary to complete the

Reorganization. Applicants submit that

the Reorganization satisfies the

standards of section 17(b) of the Act.

Applicants state that the terms of the

Reorganization are reasonable and fair

and do not involve overreaching.

Applicants state that the investment

objectives and strategies of the Acquired

Fund are similar to those of the

Acquiring Fund. Applicants also state

that the Boards, including all of the

Disinterested Trustees, found that the

participation of the Acquired and the

Acquiring Funds in the Reorganization

is in the best interests 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 Reorganization 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. 01–3627 Filed 2–12–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43930; File No. 265–22]

Advisory Committee on Market

Information

AGENCY: Securities and Exchange

Commission.

ACTION: Notice of meeting of the

Securities and Exchange Commission

Advisory Committee on Market

Information.

SUMMARY: The third meeting of the

Securities and Exchange Commission

Advisory Committee on Market

Information (‘‘Committee’’) will be held

on March 1, 2001, in the William O.

Douglas Room, at the Commission’s

main offices, 450 Fifth Street, NW.,

Washington, DC, beginning at 9 a.m.

The meeting will be open to the public,

and the public is invited to submit

written comments to the Committee.