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6 (b), 9,
10, 12 (1)

330

Company

1 Section numbers in italic type, if any, refer to the Trust Indenture Act of 1939, title III of Securities Act of 1933. 1 Section numbers in italic type, if any, refer to the Investment Advisers Act of 1940.

23 8. E. C.

IN THE MATTER OF

INVESTMENT TRUST FUND B

File No. 811-21. Promulgated June 4, 1946

(Investment Company Act of 1940-Section 8 (f))

FINDINGS AND ORDER OF THE COMMISSION

Investment Trust Fund B has filed an application under Section 8 (f) of the Investment Company Act of 1940 for an order declaring that it has ceased to be an investment company within the meaning of the Act.

A public hearing having been duly held after appropriate notice, the Commission having examined the record in this matter, finds:

1. Investment Trust Fund B (“Fund B”), the applicant, was organized under the laws of the State of New York as an unincorporated investment trust under the terms of a trust indenture dated April 15, 1927, as amended, which provided that the assets should be held by Irving Trust Company, as Trustee, and that the affairs of the trust should be managed by Investors Management Company, Inc. It is registered as a diversified open-end management investment company under the Act.

2. On November 14, 1945 the board of directors of Investors Management Company, Inc. proposed to certificate holders of Fund B for their approval an amendment of the trust indenture providing for a plan of merger with Investors Fund C, Inc. (“Fund C”), a Delaware corporation, registered as a diversified, open-end management investment company under the Act. Under the terms of the plan of merger, the assets of Fund B other than a sum reserved for expenses and liabilities were to be transferred to Fund C and shares of Fund C issued in exchange therefor, to be distributed to certificate holders of Fund B upon surrender of their certificates.

The plan provided that the assets of Fund B to be transferred would be valued as of the close of business on the day preceding the closing date and the liquidating value of Fund C shares to be issued in exchange were to be determined as of the close of business on the day preceding the closing date. Shares of Fund C having an aggregate liquidating value equal to the value of such Fund B assets were then to be issued in exchange for such assets. The liquidating value of the shares of Fund C to be received in exchange by each Fund B certificate holder, plus the amount of cash to be received by such 23 S. E. C.-1. C.-901

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holder for adjustment of fractions would equal his distributive share in Fund B on the day preceding the closing date.

3. On November 14, 1945, the board of directors of Fund C approved the plan of merger and on December 14, 1945, at a meeting duly held holders of more than 70 percent of the certificates of Fund B approved the plan.

A total of 325 certificate holders owning an aggregate of 92,718 shares of Fund B signified in writing their assent to the plan of merger and 27 certificate holders owning an aggregate of 6,150 shares or approximately 6.3 percent of the shares of Fund B failed to signify their assent. The board of directors of Investors Management Company, Inc., provided for redemption of certificates of non-assenting holders as of January 25, 1946. Notice of redemption was mailed to non-assenting holders of certificates on January 24, 1946, and Irving Trust Company, as Trustee, segregated out of the assets of Fund B for the account of the non-assenting certificate holders an amount in cash equal to the distributive share in Fund B represented by the certificates of such holders as of the date of redemption.

4. Pursuant to the plan, the board of directors of Investors Management Company, Inc., fixed the closing date of the merger as January 31, 1946, and set aside out of the assets of Fund B a reserve fund of $8,500 to be held by Irving Trust Company against tax liabilities and other contingencies resulting from the plan and provided that any balance remaining of the reserve would be paid over to assenting certificate holders pro rata.

5. On January 31, 1946, Fund C agreed to issue 83,190 shares of Investors Fund C, Inc., of the par value of $1 per share and with a liquidating value per share as of January 30, 1946, of $17.55 or a total of $1,459,984.50 upon receipt of the assets of Fund B (after deduction of $8,500 for taxes and expenses) such shares to be transferred to the individuals entitled thereto upon surrender of certificates of Fund B with cash adjustment for fractional shares.

The transfer to Fund C of all the assets of Fund B except the reserve of $8,500, and the delivery of shares of Fund C for exchange was effected on January 31, 1946, and since that date Fund B has ceased to exist.

Wherefore it is declared that Investment Trust Fund B has ceased to be and is not now an investment company within the meaning of the Investment Company Act of 1940; and

It is ordered that the registration of Investment Trust Fund B under said Act shall forthwith cease to be in effect.

By the Commission (Commissioners McConnaughey, Caffrey, and McEntire) : Chairman Purcell and Commissioner Healy being absent and not participating.

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IN THE M

TER OF

COLUMBIA GAS & ELECTRIC CORPORATION

THE DAYTON POWER AND LIGHT COMPANY

File No. 70—1271. Promulgated June 6, 1946

(Public Utility Holding Company Act of 1935—Rule U-50)

MEMORANDUM OPINION OF THE COMMISSION

Columbia Gas & Electric Corporation ("Columbia"), a registered holding company and a subsidiary of The United Corporation (“United"), also a registered holding company, and Columbia's public utility subsidiary, The Dayton Power and Light Company (“Dayton”) have filed a joint application and declaration and amendments thereto pursuant to the provisions of the Public Utility Holding Company Act of 1935 regarding, among other things, the sale by Columbia of 1,530,000 shares of common stock, $7 par value, of Dayton pursuant to the competitive bidding requirements of Rule U-50.

The Commission by Order dated May 23, 1946, granted the application and permitted the declaration to become effective subject to a reservation of jurisdiction over the price to be paid Columbia for the Dayton common stock, and the underwriters spread and its allocation and all legal fees and other expenses to be paid in connection with the proposed transactions.

In accordance with the terms of Columbia's invitation for bids, bids were opened at 11 a. m., on June 5, 1946. The record indicates that bids were received from two syndicates, one headed by Blyth & Co., Inc., and Mellon Securities Corporation as joint managers, and the other headed by Morgan Stanley and Co. and W. E. Hutton & Co. as joint managers. The price bid by the group headed by Blyth & Co., Inc., and Mellon Securities Corporation was $33.639 per share to the company for the strek, and the underwriters proposed to offer the stock to the public at $35.75, resulting in a spread to such underwriters of $2.111 per share. The price bid by the group headed by Morgan Stanley and Co. and W. E. Hutton & Co. was $30.6399 per share. The bid submitted by Blyth & Co., Inc., and by Mellon Securities Corporation was accepted by the company.

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On June 6, 1946, we held a hearing to consider the results of the bidding. At this hearing officers for the company testified with respect to their acceptance of the bid and representatives of the managing underwriters testified with respect to the formation of the underwriting syndicate and related matters. At this hearing, United, the parent of Columbia, which owns approximately 16 percent of its common stock, opposed the acceptance of the bid by Columbia on the ground that the amount of the bid was too low and acceptance thereof would be detrimental to the interest of common stockholders.

Subsequent to the hearing we heard oral argument.

In the course of the day information was brought to our attention indicating a substantial probability of violations of the Securities Act of 1933 by the underwriters in effecting sales of the proposed securities prior to a proper amending of the Securities Act of 1933 registration statement and in violation of the underwriting agreement.

In view of the difficult questions raised under the Public Utility Holding Company Act of 1935, plus the further complications which may result if indicated violations of the Securities Act of 1933 are established, including possible contingent liabilities of Columbia and Dayton, we have concluded that it would be inadvisable to enter an order either approving or disapproving the transaction presented to us under the Public Utility Holding Company Act prior to the indicated deadline of 8:00 p. m., Daylight Saving Time, today.

Under the circumstances, we have ordered a reopening of the record for the purpose of including such evidence as our investigation may reveal concerning violations of the Securities Act of 1933.

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By the Commission (Commissioners McConnaughey, Caffrey, and McEntire) : Chairman Purcell and Commissioner Healy being absent and not participating.

23 S. E.C.

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