[Federal Register Volume 64, Number 77 (Thursday, April 22, 1999)]
[Notices]
[Pages 19839-19840]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10100]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23789; 812-11424]


The RBB Fund, Inc. and Boston Partners Asset Management, L.P.; 
Notice of Application

April 16, 1999.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 12(d)(1)(J) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 12(d)(1)(G)(i)(II) of the Act.

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Summary of Application: Applicants request an order to permit a fund of 
funds relying on section 12(d)(1)(G) of the Act to invest directly in 
securities and other instruments.

Applicants: The RBB Fund, Inc. (``Company'') and Boston Partners Asset 
Management, L.P. (``Boston Partners''). The requested order also would 
extend to any existing or future open-end management investment company 
or series thereof advised by Boston Partners (an ``Upper Tier Fund'') 
that wishes to invest in a registered open-end management investment 
company or series thereof that is advised by Boston Partners and is 
part of the same ``group of investment companies'' (as defined in 
section 12(d)(1)(G)(ii) of the Act) (together with the series of the 
Company excluding the Boston Partners Long-Short Equity Fund, the 
``Underlying Funds'') as the investing Upper Tier Fund.\1\

    \1\ All existing entities that currently intend to rely on the 
order are named as applicants and any registered open-end management 
investment company that may rely on this order in the future will do 
so only in accordance with the terms and conditions of the 
application.

Filing Dates: The application was filed on December 4, 1998 and amended 
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on April 9, 1999.

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 May 11, 1999 and should be accompanied by proof of service on 
the 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, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, D.C. 20549-0609. Applicants, c/o Allan J. 
Oster, Drinker Biddle & Reath LLP, 1345 Chestnut Street, Philadelphia, 
PA 19107-3496.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 942-0714, or George J. Zornada, 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 Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, D.C. 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Company, a Maryland corporation, is registered under the Act 
as an open-end management investment company and organized as a series 
company (each series a ``Fund'' and collectively, the ``Funds''). 
Boston Partners is an investment adviser registered under the 
Investment Advisers Act of 1940 and is the investment adviser for five 
of the Funds (the ``Boston Partners Funds''), including the Boston 
Partners Market Neutral Fund (the ``Market Neutral Fund'').\2\ Boston 
Partners also will be the investment adviser for a proposed series of 
the Company, the Boston Partners Long-Short Equity Fund (the ``Equity 
Fund'').
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    \2\ The other Boston Partners Funds are the Boston Partners 
Board Fund, Boston Partners Micro Cap Value Fund, Boston Partners 
Mid Cap Fund and Boston Partners Large Cap Value Fund.
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    2. The Equity Fund will seek a total return greater than that of 
the Standard and Poor's 500 Composite Stock Price Index by investing in 
shares of the Market Neutral Fund, while also investing in futures, 
options on futures, equity swap contracts and other investments 
(collectively, ``Index Securities''). The Market Neutral Fund seeks 
long-term capital appreciation while minimizing exposure to general 
equity market risk, by taking long positions in stocks that Boston 
Partners has identified as undervalued and short positions in stocks 
that Boston Markets has identified as overvalued. By investing in 
shares of the Market Neutral Fund, the Equity Fund seeks to capture the 
return generated by the ``market neutral strategy'' of the Market 
Neutral Fund. The Equity Fund and Upper Tier Funds also would like to 
retain the flexibility to invest, subject to their respective 
investment restrictions, in other securities and financial instruments 
(excluding investments in shares of investment companies other than 
those made in reliance on section 12(d)(1)(G) (collectively, ``Other 
Securities'').
    3. With respect to the Equity Fund and Market Neutral Fund, Boston 
Partners expects to reduce its advisory fees and bear certain expenses 
to the extent that each Fund's total annual operating expenses 
(excluding nonrecurring account fees and extraordinary expenses) exceed 
a specified percentage of net assets. Any advisory fee that Boston 
Partners charges to the Equity Fund will be for services that are in 
addition to, rather than duplicative of, services provided to the 
Underlying Funds. Neither the Equity Fund's nor the Underlying Funds' 
shares are subject to a sales charge and the Equity Fund intends to 
invest only in shares of the Underlying Funds that are not subject to 
distribution fees. Applicants believe that the proposed operation of 
the Equity Fund will benefit investors by lowering transactions and 
operational costs and providing them with investment alternatives.

Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company may acquire securities of another investment company 
if such securities represent more than 3% of the

[[Page 19840]]

acquired company's outstanding voting stock, more than 5% of the 
acquiring company's total assets, or if such securities, together with 
the securities of other acquired investment companies, represent more 
than 10% of the acquiring company's total assets. Section 12(d)(1)(B) 
of the Act provides that no registered open-end investment company may 
sell its securities to another investment company if the sale will 
cause the acquiring company to own more than 3% of the acquired 
company's voting stock, or cause more than 10% of the acquired 
company's voting stock to be owned by investment companies.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (a) The acquiring company and the acquired 
company are part of the same group of investment companies; (b) the 
acquiring company holds only securities of acquired companies that are 
part of the same group of investment companies, government securities, 
and short-term paper; (c) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the Securities Exchange Act of 1934 or the Commission; and (d) 
the acquired company has a policy that prohibits it from acquiring 
securities of registered open-end investment companies or registered 
unit investment trust in reliance on section 12(d)(1) (F) or (G) of the 
Act. Applicants state that the proposed arrangement would comply with 
provisions of section 12(d)(1)(G), but for the fact that the Equity 
Fund's policies contemplate that it will invest in Index Securities and 
may invest in Other Securities.
    3. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt, conditionally or unconditionally, persons or transactions from 
the provisions of section 12(d)(1) if, and to the extent that, the 
exemption is consistent with the public interest and the protection of 
investors. Applicants believe that permitting the Equity Fund and other 
Upper Tier Funds to invest in securities as described in the 
application would not raise any of the concerns that the requirements 
of section 12(d)(1)(G) were designed to address.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before approving any advisory contract under section 15 of the 
Act, the Board of Directors of the Company, on behalf of the Equity 
Fund or an Upper Tier Fund, including a majority of the directors who 
are not ``interested persons,'' as defined in section 2(a)(19) of the 
Act, will find that the advisory fees, if any, charged under such 
contract are based on services provided that are in addition to, rather 
than duplicative of, services that are provided under any Underlying 
Fund's advisory contract. Such finding, and the basis upon which the 
finding was made, will be recorded fully in the Company's minute books 
on behalf of the Equity Fund or Upper Tier Fund.
    2. Applicants will comply with all of the provisions of section 
12(d)(1)(G) of the Act, except for section 12(d)(1)(G)(i)(II) to the 
extent that it restricts the Equity Fund or an Upper Tier Fund from 
investing in securities as described in the application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-10100 Filed 4-21-99; 8:45 am]
BILLING CODE 8010-01-M