[Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
[Notices]
[Pages 65613-65614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31722]


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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 22381; 811-5668]


The Hanover Funds, Inc.; Notice of Application

December 9, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').

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

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APPLICANT: The Hanover Funds, Inc.

RELEVANT ACT SECTION: Order requested under Section 8(f).

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

FILING DATE: The application was filed on September 12, 1996 and 
amended on November 25, 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 January 6, 1997, 
and should be accompanied by proof of service on the 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 reasons 
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, N.W., Washington, D.C. 
20549. Applicant, 237 Park Avenue, New York, N.Y. 10017.

FOR FURTHER INFORMATION CONTACT: Kathleen L. Knisely, Law Clerk, at 
(202) 942-0517, 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.

Applicant's Representations

    1. Applicant is an open-end management investment company

[[Page 65614]]

organized as a Maryland corporation and consisting of six portfolios: 
The 100% U.S. Treasury Securities Money Market Fund, The U.S. Treasury 
Money Market Fund, The Cash Management Fund, The Tax Free Money Market 
Fund, The New York Tax Free Money Market Fund, and The Government Money 
Market Fund. All of the portfolios are diversified except for The New 
York Tax Free Money Market Fund, which is non-diversified.
    2. On October 6, 1988, applicant filed a Notification of 
Registration on Form N-8A pursuant to section 8(a) under the Act and a 
registration statement on Form N-1A under the Securities Act of 1933. 
The registration statement became effective on December 12, 1988.
    3. On December 13, 1995, applicant's board of directors approved an 
Agreement and Plan of Reorganization and Liquidation (the ``Plan'') 
whereby applicant would exchange its net assets for shares of Mutual 
Fund Trust (``MFT''), a Massachusetts business trust registered under 
the Act as an open-end management investment company, in exchange for 
shares of MFT.
    4. In approving the Plan, the directors identified certain 
potential benefits likely to result from the reorganization, including, 
(a) that shareholders of the U.S. Treasury Money Market Fund, the Tax 
Free Money Market Fund, and the New York Tax Free Money Market Fund 
would be able to pursue substantially the same investment goals in 
respective larger funds, which would enhance the ability of portfolio 
managers to effect their portfolio transactions on more favorable terms 
and give portfolio managers greater investment flexibility and the 
ability to select a larger number of portfolio securities, with the 
attendant benefits of increased diversification, (b) that shareholders 
of each of applicant's portfolios would receive the combined investment 
advisory services of The chase Manhattan Bank, N.A. (including Chemical 
Bank as its successor, renamed The Chase Manhattan Bank) and Chase 
Asset Management or Texas Commerce Bank National Association, as the 
case may be, which the directors found to be experienced and qualified 
investment managers, (c) that shareholders of applicant's portfolios 
would become shareholders in a larger combined fund family consisting 
of a wide range of stock, bond, and money market funds, including both 
domestic and international portfolios, and (d) that shareholders of 
applicant's portfolios would benefit from a more focused marketing and 
distribution effort, thereby reducing potential investor confusion and 
promoting asset growth in such portfolios.
    5. The investment advisers of applicant and MFT came under the 
common control of Chemical Banking Corporation (renamed The Chase 
Manhattan Corporation) as a result of the merger of The Chase Manhattan 
Corporation into Chemical Banking Corporation. Consequently, applicant 
and MFT may be deemed to be affiliated persons by reason of being under 
the control of investment advisers that are themselves under common 
control. Applicant therefore relied on the exemption provided by rule 
17a-8 to effect the transaction.\1\ Pursuant to rule 17a-8 under the 
Act, applicant board of directors determined that the proposed 
reorganization was in the best interest of applicant and that the 
interests of the existing shareholders would not be diluted as a result 
of the proposed reorganization.
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    \1\ 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, e.g., Capitol Mutual Funds and Nations Fund Trust 
(pub. avail. Feb. 24, 1994).
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    6. On December 29, 1995, applicant filed a proxy statement with the 
SEC that was declared effective on February 8, 1996. On February 15, 
1996, proxy materials were distributed to applicant's shareholders. 
Applicant's shareholders approved the Plan at special meetings held on 
April 2, 1996 and April 16, 1996.
    7. On May 3, 1996 (the ``Closing Date''), the capitalization of 
applicant was as follows: The 100% U.S. Treasury Securities Money 
Market Fund had 1,779,110,820.74 shares outstanding, with aggregate net 
assets of $1,779,033,262 and a net asset value per share outstanding of 
$1.00; The U.S. Treasury Money Market Fund had 1,658,435,519.07 shares 
outstanding, with aggregate net assets of $1,658,335,329 and a net 
asset value per share outstanding of $1.00; The Cash Management Fund 
had 1,521,305,012.28 shares outstanding, with aggregate net assets of 
$1,521,280,125 and a net asset value per share outstanding of $1.00; 
The Tax Free Money Market Fund had 351,365,963.70 shares outstanding, 
with aggregate net assets of $350,999,109 and a net asset value per 
share outstanding of $1.00; The New York Tax Free Money Market Fund had 
321,245,415.71 shares outstanding, with aggregate net assets of 
$321,162,382 and a net asset value per share outstanding of $1.00; and 
The Government Money Market Fund had 1,551,339,231.25 shares 
outstanding, with aggregate net assets of $1,551,222,906 and a net 
asset value per share outstanding of $1.00.
    8. Pursuant to the Plan, on the Closing Date, applicant transferred 
all of the assets and liabilities of each of its six portfolios in 
exchange for shares of a corresponding portfolio of MFT. The number of 
shares issued to applicant was determined by dividing the net asset 
value per share of applicant's portfolio shares by the net asset value 
of a share of MFT portfolio shares of the corresponding MFT portfolio. 
Following this exchange, applicant distributed the shares of the 
corresponding MFT portfolio received in connection with the 
reorganization to its shareholders on a pro rata basis.
    9. Expenses incurred in connection with the reorganization are 
estimated to be approximately $4,390,128, which includes legal fees, 
printing fees, audit fees and expenses, and proxy solicitation 
expenses. The expenses resulting from the reorganization were borne by 
The Chase Manhattan Corporation (including its affiliates). The Chase 
Manhattan Corporation is the ultimate parent of the investment advisers 
to MFT and applicant.
    10. As of the date of the application, applicant had no 
shareholders and no securities outstanding. Applicant has no debts or 
other liabilities outstanding. Applicant is not a party to any 
litigation or administrative proceeding. Applicant is neither engaged 
nor proposes to engage in any business activities other than those 
necessary for the winding up of its affairs.
    11. Applicant filed Articles of Transfer with the State of Maryland 
on May 6, 1996, and intends to file Articles of Dissolution with the 
State of Maryland.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-31722 Filed 12-12-96; 8:45 am]
BILLING CODE 8010-01-M