[Federal Register Volume 61, Number 239 (Wednesday, December 11, 1996)]
[Notices]
[Pages 65251-65252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31397]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 22373; 811-7328]


The Hanover Investment Funds, Inc.; Notice of Application

December 5, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for deregistration under the Investment 
Company Act of 1940 (``Act'').

-----------------------------------------------------------------------

APPLICANT: The Hanover Investment Funds, Inc.

RELEVANT ACT SECTIONS: Section 8(f).

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

FILING DATES: The application was filed on September 12, 1996, and 
amended on November 26, 1996.

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 December 30, 
1996, 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 such notification by writing to 
the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicant, 237 Part Avenue, New York, New York 10017.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, 
at (202) 942-0583, or Alison E. Baur, 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.

Applicant's Representations

    1. Applicant, a Maryland corporation, is an open-end management 
investment company consisting of ten investment portfolios, eight of 
which are diversified and two of which are non-diversified. On October 
30, 1992, applicant filed a notification of registration on Form N-8A 
under section 8(a) of the Act, and registered under section 8(b) of the 
Act and the Securities Act of 1933 on Form N-1A. The registration 
statement was declared effective on December 29, 1992, and an initial 
public offering was commenced for each of the following portfolios on 
the date indicated: The Hanover Blue Chip Growth Fund (``Blue Chip 
Fund'' (February 19, 1993); The Hanover American Value Fund (``Value 
Fund'') (February 3, 1995); the Hanover U.S. Government Securities Fund 
(``Government Securities Fund'') (February 19, 1993); The Hanover Short 
Term U.S. Government Fund (``Short Term Government Fund'') (February 
25, 1993); and The Hanover Small Capitalization Growth Fund (``Small 
Cap Fund'')\1\ (April 1, 1993) (collectively, the ``Merger 
Portfolios''). Applicant has never made a public offering with respect 
to the following five portfolios: The Hanover Tax Free Income Fund, The 
Hanover New York Tax Free Income Fund, The Hanover New Jersey Tax Free 
Income Fund, The Hanover International Equity Fund, and The Hanover 
International Bond Fund (collectively, the ``Non-Merger Portfolios'').
---------------------------------------------------------------------------

    \1\ The Small Cap Fund offered two classes of shares: CBC 
Benefit Shares, which were offered only through an investment 
program made available to Chemical Banking Corporation employees 
(and employees of its affiliates), and Investor Shares, which were 
offered to the public. Unlike Investor Shares, CBC Benefit Shares 
were not subject to a rule 12b-1 distribution plan and did not bear 
shareholder servicing fees.
---------------------------------------------------------------------------

    2. At a special meeting held on December 13, 1995, applicant's 
board of directors (the ``Board'') approved a plan of reorganization 
(the ``Plan'') between applicant and Mutual Fund Group (``MFG''), a 
Massachusetts business trust registered as an investment company under 
the Act. In approving the Plan, the Board considered the benefits to 
shareholders of pursuing their investment goals in larger funds and/or 
a larger combined fund group, receiving the combined investment 
advisory services of The Chase Manhattan Bank, N.A. (including Chemical 
Banking) Corporation (``Chemical'') as its successor, renamed The Chase 
Manhattan Corporation (``Chase'')), and Chase Asset Management or Van 
Deventer & Hoch (as the case may be), and a more focused marketing and 
distribution effort.
    3. Applicant and MFG may be deemed affiliated persons of each other

[[Page 65252]]

within the meaning of the Act because their respective investment 
advisers came under common control as a result of the merger of Chase 
into Chemical on March 31, 1996. Applicant and MFG therefore relied on 
the exemption provided in rule 17a-8 to effect the Plan.\2\ The Board 
and the board of trustees of MFG each determined, in accordance with 
rule 17a-8, that participation in the Plan was in the best interests of 
applicant or MFG, as applicable, and that the interests of existing 
shareholders of applicant or MFG, as applicable, would not be diluted 
as a result of participation in the Plan.
---------------------------------------------------------------------------

    \2\ Rule 17a-8 provides relief from the affiliated transaction 
prohibition of section 17(a) of the Act for a merger of investment 
companies that may be affiliated persons of each other solely by 
reason of having a common investment adviser, common directors, and/
or common officers. The staff of the Division of Investment 
Management has stated that it would not recommend that the 
Commission take enforcement action under section 17(a) of the Act if 
investment companies that are affiliated persons solely by reason of 
having investment advisers that are under common control rely on 
rule 17a-8. See Capitol Mutual Funds and Nations Fund Trust (pub. 
avail. Feb. 24, 1994).
---------------------------------------------------------------------------

    4. A proxy statement dated February 8, 1996 describing the Plan, a 
management letter, and proxy cards soliciting shareholder approval of 
the Plan were distributed to applicant's shareholders. Preliminary 
copies of these proxy materials were filed with the SEC by MFG as part 
of a registration statement on Form N-14 on December 29, 1995 and 
amended on February 8, 1996; definitive copies of these proxy materials 
were filed with the SEC on February 15, 1996.
    5. On April 2, 1996, at a special meeting of the shareholders of 
the Merger Portfolios, shareholders of the Short Term Government Fund, 
the Government Securities Fund, the Blue Chip Fund, the Investor Shares 
of the Small Cap Fund, and the Value Fund considered and approved the 
Plan. The special meeting with respect to the CBC Benefit Shares of the 
Small Cap Fund was adjourned to solicit additional proxies. At a 
special meeting on April 16, 1996, holders of CBC Benefit Shares of the 
Small Cap Fund considered and approved the Plan.
    6. As of May 3, 1996 (the ``Closing Date''), applicant had an 
aggregate NAV of $209,505,473. On the Closing Date, all of the assets 
and liabilities of each of the Merger Portfolios were exchanged for 
corresponding shares of a corresponding portfolio of MFG.\3\ This 
exchange was based on a ratio determined by dividing the NAV per share 
of the relevant Merger Portfolio by the NAV per share of the 
corresponding MFG portfolio. Applicant's shareholders then received a 
pro rata distribution of the shares of the corresponding MFG portfolio 
received by the relevant Merger Portfolio. The merger Portfolio shares 
held by such shareholders then were cancelled. The Non-Merger 
Portfolios did not participate in the Plan, as they have never issued 
any shares and have no shareholders, assets, or liabilities.
---------------------------------------------------------------------------

    \3\ Holders of CBC Benefit Shares and Investor Shares received 
Institutional and Class A shares, respectively, of the Vista Small 
cap Equity Fund.
---------------------------------------------------------------------------

    7. All expenses incurred in connection with the Plan, including 
legal, printing, audit, and proxy solicitation expenses, were borne by 
Chase (including its affiliates), as the ultimate parent of the 
investment advisers to applicant and MFG. These expenses amounted to 
approximately $2,330,335.
    8. At the time of the application, applicant had no shareholders, 
assets, or liabilities, nor was applicant 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.
    9. Applicant filed Articles of Transfer with respect to the merger 
transaction in the State of Maryland on May 6, 1996, and intends to 
file Articles of Dissolution in the state following the grant of an 
order pursuant to this application.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-31397 Filed 12-10-96; 8:45 am]
BILLING CODE 8010-01-M