[Federal Register Volume 61, Number 197 (Wednesday, October 9, 1996)]
[Notices]
[Pages 52979-52980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25827]


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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 22261; 811-7936]


Hercules Funds Inc.; Notice of Application

October 2, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').

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

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APPLICANT: Hercules Funds Inc.

RELEVANT ACT SECTIONS: Section 8(f).

SUMMARY OF APPLICATION: Applicant seeks an order declaring that it has 
ceased to be an investment company.

FILING DATES: The application was filed on July 25, 1996, and amended 
on September 13, 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 October 28, 
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 such notification by writing to 
the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicant, 222 South Ninth Street, Minneapolis, Minnesota 55402.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, 
at (202) 942-0583, or Alison E. Baur, 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 from 
the SEC's Public Reference Branch.

Applicant's Representations

    1. Applicant, a Minnesota corporation, is an open-end non-
diversified management investment company consisting of six series: 
North American Growth and Income Fund (``North American Fund''), 
Pacific Basin Value Fund (``Pacific Basin Fund''), European Value Fund 
(``European Fund''), Latin American Value Fund (``Latin American 
Fund'') (collectively, the ``Acquired Funds''), World Bond Fund (``Bond 
Fund''), and Money Market Fund. On August 4, 1993, applicant filed a 
notification of registration on Form N-8A under section 8(a) of the Act 
and registered under section 8(b) of the Act and the Securities Act of 
1933 by filing a registration statement on Form N-1A. The registration 
statement became effective on November 1, 1993, and the initial public 
offering commenced on November 9, 1993.
    2. At a meeting held on March 29, 1996, applicant's board of 
directors (the ``Board'') approved the following plans by written 
action pursuant to Minnesota law; (a) a plan or reorganization between 
North American Fund and Growth and Income Fund, a series of Piper Funds 
Inc.; (b) a plan of reorganization between Pacific Basin Fund and 
Pacific-European Growth Fund (``Pacific-European Fund''), a series of 
Piper Global Funds Inc. (``Piper Global''); (c) a plan of 
reorganization between European Fund and Pacific-European Fund; (d) a 
plan of reorganization between Latin American Fund and Emerging Markets 
Growth Fund (with Growth and Income Fund and Pacific-European Fund, the 
``Acquiring Funds''), a series of Piper-Global (collectively, the 
``Plans''); and (e) a plan of liquidation of Bond Fund (the 
``Liquidation Plan''). In approving the Plans and the Liquidation Plan, 
the Board considered, among other things: (a) the belief of Piper 
Capital Management Incorporated (the ``Manager''), applicant's 
investment adviser, that applicant's assets were unlikely to grow to an 
economically viable size; (b) the Manager's intent to cease waiving and 
absorbing expenses relating to any of applicant's series after June 30, 
1996; (c) the Manager's agreement to incur all direct expenses 
associated with the Plans and the Liquidation Plan; and (d) the 
Manager's expectation that the Plans would not result in any Federal 
taxable income to the applicable funds or their shareholders.
    3. Applicant and the Acquiring Fund may be deemed affiliated 
persons of each other because they share a common investment adviser, 
common directors, and common officers. Accordingly, applicant relied on 
the exemption provided in rule 17a-8 to effect the Plans.\1\ The Board 
determined, in accordance with rule 17a-8, that the sale of each 
Acquired Fund's assets to the applicable Acquiring Fund was in the best 
interests of the Acquired Fund and its shareholders, and that the 
interests of the existing shareholders would not be diluted as a result 
of such transaction.
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    \1\ Rule 17a-8 provides relief from the affiliated transaction 
prohibition of section 17(a) of the Act for a merger of investment 
companies that may be affiliated persons of each other solely by 
reason of having a common investment adviser, common directors, and/
or common officers.
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    4. To solicit approval of each Plan by shareholders, applicant 
distributed to each Acquired Fund's shareholders a combined proxy 
statement and prospectus dated May 17, 1996. To solicit approval of the 
Liquidation Plan, applicant distributed to Bond Fund's shareholders a 
proxy statement dated

[[Page 52980]]

May 17, 1996. On June 18, 1996, the holders of a majority of 
outstanding shares of each Acquired Fund and Bond Fund voted to approve 
each Plan and the Liquidation Plan, respectively. There was no formal 
plan to liquidate Money Market Fund, nor was there a shareholder vote 
or consent to a liquidation. However, shareholders of Money Market Fund 
were informed of the Manager's intention to cease waiving and absorbing 
the Fund's expenses effective July 1, 1996 in a supplement to 
applicant's prospectus filed on February 7, 1996 and in applicant's 
semi-annual report for the period ended January 31, 1996. Shareholders 
of Money Market Fund subsequently began voluntarily redeeming their 
shares at an increased rate, and had redeemed all of their shares by 
the close of business on June 21, 1996 (the ``Closing Date'').
    5. As of the Closing Date, North American Fund had 660,209 shares 
outstanding at a net asset value (``NAV'') of $11.11 per share and an 
aggregate NAV of $7,333,807, Pacific Basin Fund had 1,983,812 shares 
outstanding at a NAV of $9.29 per share and an aggregate NAV of 
$18,426,580, European fund had 984,469 shares outstanding at a NAV of 
$10.31 per share and an aggregate NAV of $10,146,588, Latin American 
fund had 1,617,505 shares outstanding at a NAV of $8.77 per share and 
an aggregate NAV of $14,191,312, and Bond Fund had 833,326 shares 
outstanding at a NAV of $10.34 per share and an aggregate NAV of 
$5,516,964. As of June 20, 1996, Money Market Fund had an aggregate NAV 
of $1,050,236, but by the close of business on the Closing Date, the 
Fund had an aggregate NAV of $0 as a result of shareholders' voluntary 
redemption of their shares in complete liquidation of the fund. 
Accordingly, as of the Closing Date, applicant had an aggregate NAV of 
$55,931,299.
    6. On the Closing Date, the assets and state liabilities of each 
Acquired Fund were transferred to the relevant Acquiring Fund in 
exchange for shares of the Acquiring Fund. These shares, which had an 
aggregate NAV equal to the value of Acquired Fund assets transferred to 
the Acquiring Fund, less the Acquired Fund liabilities assumed by the 
Acquiring Fund, subsequently were distributed pro rata  to each 
Acquired Fund shareholder. Also on the Closing Date, the portfolio 
securities and other assets of Bond Fund were sold, creditors were paid 
or reserves for such payments established, and the net proceeds of such 
sales were distributed to Bond Fund's shareholders in cash, pro rata, 
in accordance with their shareholdings.
    7. All expenses incurred in soliciting proxies from applicant's 
shareholders for approval of each of the Plans and the Liquidation 
Plan, including the cost of preparing and mailing proxy statements and 
other materials, were borne by the Manager. Such expenses were 
approximately $750,000. Total brokerage fees paid by applicant in 
connection with the Plans and the Liquidation Plan amounted to $11,534 
(with respect to North American Fund).
    8. At the time of the application, applicant had no shareholders, 
assets, or liabilities, nor was applicant a party to any litigation or 
administrative proceeding. Applicant is not engaged, nor does it 
propose to engage, in any business activities other than those 
necessary for the winding-up of its affairs.
    9. Applicant intends to file articles of dissolution with the 
Secretary of State of Minnesota upon receipt of the order requested by 
this application.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-25827 Filed 10-8-96; 8:45 am]
BILLING CODE 8010-01-M