[Federal Register Volume 66, Number 158 (Wednesday, August 15, 2001)]
[Notices]
[Pages 42905-42907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20450]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25104; 812-12520]


ABN AMRO Funds, et al.; Notice of Application

August 8, 2001.
AGENCY: Securities and Exchange Commission (``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.

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SUMMARY: Applicants request an order to permit certain series of a 
registered open-end management investment company to acquire all of the 
assets and assume certain stated liabilities of certain series of 
anther registered open-end management investment company. Because of 
certain affiliations, applicants may not rely on rule 17a-8 under the 
Act.

APPLICANTS: ABN AMRO Funds, Alleghany Funds, and ABN AMRO North America 
Holding Company (``ABN AMRO'').

FILING DATES: The application was filed on May 11, 2001 and amended on 
August 2, 2001.

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 September 4, 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 who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609. Applicants, c/o Leslie Sperling Cruz, Esq., Morgan Lewis & 
Bockius LLP, 1800 M Street, NW., Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 942-0714, or Janet M. Grossnickle, 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, DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. ABN AMRO Funds, a Massachusetts business trust, is registered 
under the Act as an open-end management investment company and

[[Page 42906]]

currently offers eighteen series, sixteen of which are referred to as 
the ``Acquired Funds.'' Alleghany Funds, a Delaware business trust, is 
registered under the Act as an open-end management investment company 
and offers thirty series. Three existing series of Alleghany funds are 
referred to as the ``Existing Acquiring Funds'' and thirteen of its 
newly established series,\1\ together with the Existing Acquiring 
Funds, are referred to as the ``Acquiring Funds'' (together with the 
Acquired Funds, the ``Funds''). ABN AMRO Funds and Alleghany Funds are 
referred to as the ``Trusts.''
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    \1\ A registration statement for the new series that will 
participate in the Reorganization was filed with the Commission on 
May 4, 2001, and it is anticipated that it will be declared 
effective on September 21, 2001.
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    2. ABN AMRO Asset Management (USA) LLC (``AAAM''), a wholly-owned 
subsidiary of ABN AMRO North America Holding Company (``ABN AMRO''), 
will serve as the investment adviser to the Acquired Funds and the 
Acquiring Funds (except the Existing Acquiring Funds) and is registered 
under the Investment Advisers Act of 1940 (``Advisers Act''). Chicago 
Capital Management, Inc., an indirect, wholly-owned subsidiary of ABN 
AMRO, currently serves as the investment adviser to the Existing 
Acquiring Funds and is registered under the Advisers Act. Affiliated 
persons of ABN AMRO own 5% or more (and in some cases more than 25%) of 
the outstanding securities of the Acquiring Funds in a fiduciary 
capacity. In addition, affiliated persons of ABN AMRO, in a fiduciary 
or custodial capacity, or on behalf of brokerage customers, own 5% or 
more (and in some cases more than 25%) of the outstanding voting 
securities of the Acquired Funds.
    3. On April 23, 2001 and June 21, 2001, the boards of trustees of 
the ABN AMRO Funds and Alleghany Funds (together, the ``Boards''), 
including all the trustees who are not ``interested persons,'' as 
defined in section 2(a)(19) of the Act (``Independent Trustees''), 
unanimously approved the reorganization and an agreement and plan for 
reorganization (the ``Plan of Reorganization''). Under the Plan of 
Reorganization, certain series of Alleghany Funds will acquire all of 
the assets and certain stated liabilities of certain series of ABN AMRO 
Funds (the ``Reorganization'').\2\ Applicants state that the 
Reorganization will occur on or about September 15, 2001 and September 
22, 2001 (each a ``Closing Date'' and collectively, the ``Closing 
Dates''). On the applicable Closing Date, each class of shares of each 
Acquiring Fund will acquire all of the assets and certain stated 
liabilities of the corresponding class of shares of the corresponding 
Acquired Fund in exchange for shares of the designated class of the 
Acquiring Fund. 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 
business on the business day immediately preceding the applicable 
Closing Date. The net asset value of the Acquiring Funds and value of 
the assets of the Acquired Funds will be determined according to the 
Funds' then-current prospectuses and statements of additional 
information. As soon as reasonably practicable after the applicable 
Closing Date, the Acquired Funds will distribute the shares of the 
corresponding Acquiring Funds pro rata to their shareholders of record, 
determined as of the close of business on the business day immediately 
preceding the applicable Closing Date. Following the distribution of 
the Acquiring Funds' shares, the Acquired Funds will terminate.
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    \2\ Under the Plan of Reorganization, the Acquired Funds will 
merge into the corresponding Acquiring Funds as follows: ABN AMRO 
Money Market Fund will merge into ABN AMRO Money Market Fund, ABN 
AMRO Government Money Market Fund into ABN AMRO Government Money 
Market Fund, ABN AMRO Treasury Money Market Fund into ABN AMRO 
Treasury Money Market Fund, ABN AMRO Tax-Exempt Money Market Fund 
into ABN AMRO Tax-Exempt Money Market Fund, ABN AMRO Value Fund into 
ABN AMRO Value Fund, ABN AMRO Growth Fund into ABN AMRO Growth Fund, 
ABN AMRO Small Cap Fund into ABN AMRO Small Cap Fund, ABN AMRO Real 
Estate Fund into ABN AMRO Real Estate Fund, ABN AMRO International 
Equity Fund into ABN AMRO International Equity Fund, ABN AMRO Europe 
Equity Growth Fund into ABN AMRO Europe Equity Growth Fund, ABN AMRO 
Asian Tigers Fund into ABN AMRO Asian Tigers Fund, ABN AMRO Latin 
America Equity Fund into ABN AMRO Latin America Equity Fund, ABN 
AMRO Institutional Prime Money Market Fund into ABN AMRO 
Institutional Prime Money Market Fund, ABN AMRO Balanced Fund into 
Alleghany/Chicago Trust Balanced Fund, ABN AMRO Fixed Income Fund 
into Alleghany/Chicago Trust Bond Fund and ABN AMRO Tax-Exempt Fixed 
Income Fund into Alleghany/Chicago Trust Municipal Bond Fund.
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    4. The Acquired Funds offer Common Shares, which are not subject to 
any rule 12b-1 distribution fees, shareholder servicing fees or sales 
loads; Investor Shares, which are subject to rule 
12b-1 distribution fees of 0.25% and shareholder servicing fees, but 
not sales loads; Institutional Shares, which are not subject to rule 
12b-1 distribution fees, shareholder servicing fees or sales loads; and 
Institutional Service Shares, which are subject to shareholder 
servicing fees, but not rule 12b-1 distribution fees or sales loads. 
The Acquiring Funds will offer Class N Shares, which are subject to 
rule 
12b-1 distribution fees of 0.25%, but not shareholder servicing fees or 
sales loads; Class I shares and Class Y Shares, which are not subject 
to rule 12b-distribution fees, shareholder servicing fees or sales 
loads; Class S Shares, which are subject to rule 12b-1 distribution 
fees and shareholder servicing fees, but not sales loads and; Class YS 
Shares, which are subject to shareholder servicing fees, but not rule 
12b-1 distribution fees or sales loads.
    5. Shareholders with Common or Investor Shares of the Acquired 
Funds (except the ABN AMRO Money Market Funds) will receive Class N 
Shares of the corresponding Acquiring Fund. Shareholders of Common 
Shares of the ABN AMRO Government Money Market Fund, ABN AMRO Money 
Market Fund, ABN AMRO Tax-Exempt Money Market Fund and ABN AMRO 
Treasury Money Market Fund will receive Class I Shares of the 
corresponding Acquiring Fund. Shareholders with Investors Shares of the 
ABN AMRO Government Money Market Fund, ABN AMRO Money Market Fund, ABN 
AMRO Tax-Exempt Money Market Fund and ABN AMRO Treasury Money Market 
Fund will receive Class S Shares of the corresponding Acquiring Fund. 
Shareholders with Institutional Shares of the ABN AMRO Institutional 
Prime Money Market Fund will receive Class Y Shares of the 
corresponding Acquiring Fund. Shareholders with Institutional Service 
Shares of the ABN AMRO Institutional Money Market Fund will receive 
Class YS Shares of the corresponding Acquiring Fund.
    6. Applicants state that the investment objectives, policies and 
restrictions of each Acquired Fund are substantially similar to those 
of the corresponding Acquiring Fund. Applicants state that the rights 
and obligations of each class of shares of the Selling Funds are 
similar to those of the corresponding class of shares of the Acquiring 
Funds. No sales charges will be imposed in connection with the 
Reorganization. ABN AMRO and/or affiliated persons (but not the Funds) 
will bear the costs associated with the Reorganization.
    7. The Boards, including all of the Independent Trustees, 
determined that the Reorganization is in the best interests of each 
Fund and that the interests of the shareholders of each Fund would not 
be diluted as a result of the Reorganization. In assessing the 
Reorganization, the Boards considered various factors, including: (a) 
The terms and conditions of the Reorganization;

[[Page 42907]]

(b) the compatibility of the Funds' investment objectives, policies and 
limitations; (c) the Acquired Funds and corresponding Existing 
Acquiring Funds' performance histories; (d) the pro forma expense 
ratios of the Acquiring Funds; (e) the potential economies of scale to 
be gained from the Reorganization; (f) the advantages of increased 
investment opportunities for the Acquired Funds' shareholders; (g) the 
anticipated tax-free nature of the Reorganization, (h) the service 
features available to shareholders of the corresponding Funds; (i) the 
assumption of identified liabilities of the Acquired Funds; and (j) the 
fact that Reorganization expenses will be borne by ABN AMRO and/or its 
affiliated persons (but not the Funds).
    8. The Reorganization is subject to a number of conditions 
precedent, including that: (a) The shareholders of each Acquired Fund 
will have approved the Reorganization; (b) the Trusts will have 
received opinions of counsel that the Reorganization will be tax-free 
for the Trusts and their shareholders; (c) applicants will have 
received from the Commission an exemption from section 17(a) of the Act 
for the Reorganization; (d) the registration statement under the 
Securities Act of 1933 for the Acquiring Funds will have become 
effective; and (e) each Acquired Fund shall have declared and paid 
dividend(s) which shall have the effect of distributing to its 
shareholders all net investment company taxable income for all taxable 
periods ending on or before the applicable Closing Date and, with 
respect to each Acquired Fund that is reorganizing into an Existing 
Acquiring Fund, all of its net capital gains, if any, to its 
shareholders. The Plan of Reorganization may be terminated by mutual 
agreement or by either party at or before the Closing Dates. No 
material changes to the Plan of Reorganization will be made without 
prior Commission approval.
    9. The registration statement on Form N-14 for ABN AMRO Funds, Inc. 
(which contains a combined proxy prospectus/proxy statement for three 
of the Acquired Funds) was filed with the Commission on June 13, 2001. 
The definitive proxy materials for the other Acquired Funds were filed 
with the Commission on July 13, 2001. The solicitation materials 
related to the Reorganization were mailed to shareholders of the 
Acquired Funds on July 13, 2001. A special meeting of shareholders of 
the Acquired Funds to consider the Reorganization is scheduled for 
August 24, 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 outstanding voting 
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. Applicants believe that 
rule 17a-8 may not be available to exempt 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 because affiliated persons of ABN AMRO, in a 
fiduciary capacity, own 5% or more (and in some cases more than 25%) of 
the outstanding voting securities of the Acquiring Funds, each may be 
deemed to be affiliated persons of the Acquiring Funds. In addition, 
applicants state that because affiliating of ABN AMRO also own 5% or 
more (and in some cases more than 25%) of the outstanding voting 
securities of the Acquired Funds, in a fiduciary or custodial capacity, 
or on behalf of brokerage customers, each also may be deemed to be an 
affiliated person of the Acquired Funds. As a result, the Acquiring 
Funds may be deemed to be affiliated persons of an affiliated person of 
the Acquired Funds.
    3. 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 to 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.
    4. Applicants request an order under section 17(b) of the Act 
exempting them from section 17(a) to the extent necessary to effect the 
Reorganization. Applicants submit that the Reorganization satisfies the 
conditions of section 17(b) of the Act. Applicants also state that the 
Boards, including all of the Independent Trustees, have determined that 
the participation of the Funds in the Reorganization is in the best 
interests of each Fund and that such participation will not dilute the 
interests of the existing shareholders of each Fund. Applicants also 
state that the Reorganization will be effected on the basis of relative 
net asset value.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-20450 Filed 8-14-01; 8:45 am]
BILLING CODE 8010-01-M