[Federal Register Volume 64, Number 237 (Friday, December 10, 1999)]
[Notices]
[Pages 69299-69300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32061]
[[Page 69299]]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-24184, 812-11754]
Harris Insight Funds Trust and Harris Trust and Savings Bank;
Notice of Application
December 6, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an exemption under section 6(c) of
the Investment Company Act of 1940 (``Act'') from section 15(a) of the
Act and rule 18f-2 under the Act.
-----------------------------------------------------------------------
Summary of Application: The order would permit applicants to enter
into and materially amend sub-advisory agreements without shareholder
approval.
Applicants: Harris Insight Funds Trust (the ``Trust'') and Harris
Trust and Savings Bank (the ``Adviser'').
Filing Date: The application was filed on September 17, 1999.
Applicants have agreed to file an amendment to the application, the
substance of which is reflected in this notice, during the notice
period.
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 applicants with a copy of the request, personally or by mail.
Hearing requests should be received by the SEC by 5:30 p.m. on January
3, 2000, 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 may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20540-
0609. Applicants, Four Falls Corporate Center, 6th Floor, West
Conshohocken, Pennsylvania 19428-2961 (Trust) and 111 West Monroe
Street/6W, Chicago, Illinois 60602 (Adviser).
FOR FURTHER INFORMATION CONTACT: Paula L. Kashtan, Senior Counsel, at
(202) 942-0615, or Mary Kay Frech, 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, 450 Fifth Street, NW, Washington, DC
20549-0102 (tel. (202) 942-8090).
Applicants' Representations
1. The Trust, a Massachusetts business trust, is registered under
the Act as an open-end management investment company. The Trust
currently is comprised of thirteen separate series (the ``Funds''),
each with its own investment objectives, policies, and restrictions.\1\
---------------------------------------------------------------------------
\1\ Applicants also request relief with respect to future series
of the Trust and all future registered open-end management
investment companies that: (a) Are advised by the Adviser or any
entity controlling, controlled by or under common control with the
Adviser; (b) use the adviser/subadviser structure described in the
application; and (c) comply with the terms and conditions in the
application (``Future Funds''). The Trust is the only existing
investment company that currently intends to rely on the order.
---------------------------------------------------------------------------
2. The Adviser, an Illinois banking corporation, is exempt from
registration under the Investment Advisers Act of 1940 (``Advisers
Act'') and serves as investment adviser for each of the Funds under an
investment advisory agreement (``Advisory Agreement''). Under the
Advisory Agreement, the Adviser is responsible, subject to the ongoing
supervision of the Trust's board of trustees (``Board''), for
administering all operations of the Trust, and is ultimately
responsible for the management of the Trust's investments. For its
services, the Adviser receives from each Fund a fee based on the Fund's
average daily net assets.
3. The Advisory Agreement provides that the Adviser may delegate
its advisory duties to Harris Investment Management, Inc. (``HIM''), an
investment adviser registered under the Advisers Act. The Adviser and
HIM are each wholly-owned subsidiaries of Harris Bankcorp, Inc. Each
Fund currently is advised by HIM pursuant to a separate investment
advisory agreement (``Subadvisory Agreement''). Under the Subadvisory
Agreement, HIM is responsible for managing the assets of each Fund for
which it serves as the sole subadviser. HIM's duties consist of making
discretionary investment decisions on behalf of the Funds and
conducting any research that may be necessary to formulate investment
decisions. For its services, HIM receives from the Adviser a fee based
on the average daily net assets of a Fund.
4. HIM, in turn, has entered into a Subadvisory Agreement with
Hansberger Global Investors, Inc. (``HGI''), an investment adviser
registered under the Advisers Act, which serves as sub-subadviser with
respect to two of the Funds. HGI is not affiliated with the Adviser.
HGI is responsible for making investment decisions for these two Funds
after obtaining and evaluating appropriate economic, statistical, and
financial information. For its services, HGI receives from HIM a fee
based on the average daily net assets of the two Funds.
5. In the future, the Adviser may delegate its responsibility for
providing investment advice or making investment decisions for a
particular Fund to other subadvisers (together with HIM and HGI,
``Subadvisers'') and may employ multiple Subadvisers for a single Fund.
The Adviser will recommend the selection or termination of any
Subadvisers to the Board, and all future Subadvisers will be approved
by the Board. In the event of such delegation, the Adviser will oversee
and monitor the performance of each Subadviser, will allocate and, when
appropriate, reallocate a Fund's assets among Subadvisers, and will
compensate each Subadviser out of fees paid to the Adviser by the
Funds. Any future Subadviser will be registered under the Advisers Act
or exempt from registration.
6. Applicants state that the Adviser has longstanding and
substantial experience managing assets itself and managing external,
unaffiliated managers. Applicants believe that the allocation of
responsibilities between the Adviser and the Subadvisers benefits
shareholders because of the specialization and efficiency it provides.
Applicants request relief to permit the Adviser to enter into and
materially amend Subadvisory Agreements without obtaining shareholder
approval. The requested relief will not extend to HIM or any other
Subadviser that is an affiliated person, as defined in section 2(a)(3)
of the Act, of the Trust or the Adviser, other than by reason of
serving as a Subadviser to one or more of the Fund (``Affiliated
Subadviser'').
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except under a written contract that has been
approved by a majority of the investment company's outstanding voting
securities. Rule 18f-2 under the Act provides that each series or class
of stock in a series company affected by a matter must approve the
matter if the Act requires shareholder approval.
2. Section 6(c) of the Act authorizes the SEC to exempt persons or
transactions from the provisions of the
[[Page 69300]]
Act to the extent that the exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policies and provisions of the Act.
Applicants state that the requested relief meets this standard for the
reasons discussed below.
3. Applicants assert that the Fund's shareholders rely on the
Adviser to select the Subadvisers best suited to achieve a Fund's
investment objectives. Therefore, applicants assert that, from the
perspective of the investor, the role of the Subadvisers is comparable
to that of individual portfolio managers employed by other investment
advisory firms. Applicants submit that the requested relief will reduce
the Funds' expenses associated with shareholder meetings and proxy
solicitations, and enable the Funds to operate more efficiently.
Applicants also note that the Advisory Agreement will remain subject to
sections 15(a) and 15(c) of the Act and rule 18f-2 under the Act.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. Before a Fund may rely on the order requested in the
application, the operation of the Fund in the manner described in the
application will be approved by a majority of its outstanding voting
securities, as defined in the Act, or, in the case of a Future Fund
whose shareholders purchased shares on the basis of a prospectus
containing the disclosure contemplated by condition 2 below, by the
sole initial shareholder(s) before offering shares of the Future Fund
to the public.
2. The Trust will disclose in its prospectus the existence,
substance, and effect of any order granted pursuant to the application.
In addition, each Fund will hold itself out to the public as employing
the management structure described in the application. The prospectus
for each Fund will prominently disclose that the Adviser has the
ultimate responsibility, subject to review of the Board, to oversee
Subadvisers and recommend their hiring, termination, and replacement.
3. At all times, a majority of the board will be persons each of
whom is not an ``interested person'' of the Trust as defined in Section
2(a)(19) of the Act (``Independent Trustees''), and the nomination of
new or additional Independent Trustees will be at the discretion of the
then-existing Independent Trustees.
4. The Adviser will not enter into a Sub-Advisory Agreement on
behalf of a Fund with any Affiliated Subadviser, unless that agreement,
including the compensation to be paid thereunder, has been approved by
the shareholders of the applicable Fund.
5. When a Subadviser change is proposed for a Fund with an
Affiliated Subadviser, the Board, including a majority of the
Independent Trustees, will make a separate finding, reflected in the
Board's minutes, that the change of Subadviser is in the best interests
of the Fund and its shareholders and that the change does not involve a
conflict of interest from which the Adviser or the Affiliated
Subadviser derives an inappropriate advantage.
6. Within 90 days of the hiring of any Subadviser, shareholders of
the affected Fund will be furnished with all information about the new
Subadviser that would be included in a proxy statement. The Adviser
will meet this condition by providing shareholders of the applicable
Fund with an information statement meeting the requirement of
Regulation 14C, Schedule 14C, and Item 22 of Schedule 14A under the
Securities Exchange Act of 1934.
7. The Adviser will provide general management services to each
Fund, including overall supervisory responsibility for the general
management and investment of each Fund's portfolio, and, subject to
review and approval by the Board, will (i) Set the Fund's overall
investment strategies; (ii) Select Subadvisers; (iii) When appropriate,
recommend to the Board the allocation and allocation of a Fund's assets
among multiple Subadvisers; (iv) Monitor and evaluate the performance
of Subadvisers; and (v) Ensure that the Subadvisers comply with the
Fund's investment objectives, policies, and restrictions.
8. No trustee or officer of the Trust or director or officer of the
Adviser will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by that trustee, director or
officer) any interest in a Subadviser except for (i) Ownership of
interests in the Adviser or any entity that controls, is controlled by,
or is under common control with the Adviser or (ii) Ownership of less
that 1% of the outstanding securities of any class of equity or debt of
a publicly-traded company that is either the Subadviser or an entity
that controls, is controlled by, or is under common control with the
Subadviser. For the SEC, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 99-32061 Filed 12-9-99; 8:45 am]
BILLING CODE 8010-01-M