[Federal Register Volume 62, Number 46 (Monday, March 10, 1997)]
[Pages 10887-10888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5838]


[Rel. No. IC-22538; 811-6410]

Strong Insured Municipal Bond Fund, Inc.; Notice of Application

March 4, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').

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


APPLICANT: Strong Insured Municipal Bond Fund, Inc.


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

FILING DATES: The application was filed on November 20, 1996 and 
amended on February 25, 1997.

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 March 31, 1997, 
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 

ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, DC 20549. 
Applicant, 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.

Suzanne Krudys, Senior Counsel, at (202) 942-0641, or Mercer E. 
Bullard, Branch Chief, (202) 942-0564 (Office of Investment Company 
Regulation, Division of Investment Management).

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.

Applicant's Representations

    1. Applicant, a registered open-end investment company, was 
organized as a Wisconsin corporation on December 12, 1990. On September 
13, 1991, applicant registered under the Act and filed a registration 
statement under section 8(b) of the Act and the Securities Act of 1933. 
The registration statement was declared effective on November 25, 1991 
and applicant's initial public offering commenced that same day.

[[Page 10888]]

Applicant initially registered under the name Strong B Fund, Inc. and 
changed its name to Strong Insured Municipal Bond Fund, Inc. on 
November 4, 1991.
    2. At a meeting held on April 24, 1996, the board of directors of 
applicant unanimously approved the Agreement and Plan of Reorganization 
(``Reorganization Agreement'') whereby applicant would exchange its 
assets for shares of Strong Municipal Bond Fund, Inc. (``Bond Fund''). 
The Reorganization Agreement provided: (i) for the transfer of all of 
applicant's assets to the Bond Fund less a reserve for liabilities in 
exchange for shares of Bond fund (``Bond Fund Shares'') equal in value 
to applicant's net assets; (ii) the pro rata distribution of the Bond 
Fund Shares to applicant's shareholders in liquidation of applicant; 
(iii) the cancellation of applicant's shares; and (iv) deregistration 
of applicant as an investment company under the Act.
    3. At the April 24 meeting, applicant's directors, (i) in reliance 
on rule 17a-8 under the Act,\1\ found that participation in the 
reorganization was in the best interest of applicant and its 
shareholders and that the interests of applicant's shareholders would 
not be diluted as a result of the reorganization, (ii) authorized the 
preparation and filing of proxy solicitations, and (iii) called a 
shareholders meeting. In making its determination that the 
reorganization was in the best interest of applicant's shareholders, 
the board noted that the relatively small size of applicant had 
prevented it from realizing significant economies of scale or reducing 
its expense ratio, and had been a factor in causing its performance to 
lag its competitors in recent periods. The board also considered that, 
because of heightened competition in the insurance industry, most 
municipal securities are now insurable. As a result, the board 
recognized that applicant, which sought to keep its assets in insured 
municipal securities, was no longer unique and therefore was less 
attractive to investors. The board determined that the reorganization 
offered the greatest likelihood of addressing the asset size and growth 
problem while reorganizing applicant into an investment company with an 
identical investment objective and similar investment policies and 
restrictions. The board further noted that the reorganization would 
result in continuity of investment services (advisory, transfer agent 
and distributor services) and no sales or other charges would be 
imposed on any shares of the Bond Fund acquired by shareholders in the 

    \1\ Section 17(a) of the Act generally prohibits sales or 
purchases of securities between registered investment companies and 
any affiliated person of that company. Rule 17a-8 provides an 
exemption from section 17(a) for certain reorganizations among 
registered investment companies that may be affiliated persons, or 
affiliated persons of an affiliated person, solely by reason of 
having a common investment adviser, common directors, and/or common 

    4. On May 24, 1996, the Reorganization Agreement was entered into 
by applicant, the Bond Fund, and with respect to certain matters, 
Strong Capital Management, Inc., the investment adviser of both 
applicant and the Bond Fund. Proxy materials relating to the merger 
(which were contained in the Bond Fund's registration statement on Form 
N-14) were filed with the SEC on May 24, 1996, and mailed to 
applicant's shareholders on July 3, 1996. The Reorganization Agreement 
was approved by applicant's shareholders on August 27, 1996.
    5. As of August 30, 1996, the date of the transfer of assets, there 
was an aggregate of 2,885,713.293 shares of outstanding common stock of 
applicant having an aggregate net asset value of $29,090,061.39 and a 
per share value of $10.08. In accordance with the Reorganization 
Agreement, applicant transferred its assets to the Bond Fund in 
exchange for 3,235,825.05 shares of the Bond Fund. Such shares were 
equal in value to applicant's net asset value. Such Bond Fund Shares 
received by applicant were then distributed pro rata to applicant's 
shareholders in complete liquidation of applicant. No brokerage 
commissions were paid in the exchange.
    6. The total expenses incurred in connection with the 
Reorganization, consisting of legal, accounting, proxy solicitation, 
liquidation, and other related administrative fees and expenses, were 
approximately $92,903. The applicant and Bond Fund each paid for their 
own expenses in connection with entering into and carrying out the 
transactions contemplated by the Reorganization Agreement. The adviser 
waived all of applicant's unamortized organizational expenses of 
    7. The applicant has no shareholders, assets, debts or liabilities. 
Applicant is not 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.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-5838 Filed 3-7-97; 8:45 am]