[Federal Register Volume 63, Number 248 (Monday, December 28, 1998)]
[Notices]
[Pages 71517-71518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34255]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23615; 812-11426]


Calvert Social Investment Fund, et al.; Notice of Application

December 21, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act.

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SUMMARY OF THE APPLICATION: The requested order would permit a 
subadviser to a registered investment company to serve under a 
subadvisory agreement without prior shareholder approval for a period 
beginning on the date the requested order is issued (``Order Date'') 
and continuing through the date the subadvisory agreement is approved 
or disapproved by the shareholders of the investment company, but in no 
event longer than 90 days from the Order Date (``Interim Period'').

APPLICANTS: Calvert Social Investment Fund (``Fund''), Calvert Asset 
Management Company, Inc. (``CAM''), and Atlanta Capital Management 
Company, LLC (``Atlanta Capital'').

FILING DATES: The application was filed on December 7, 1998. Applicants 
have agreed to file an amendment, the substance of which is included 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 
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 14, 
1999, 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 may request 
notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicants, c/o Kirkpatrick & Lockhart, Attn: Robert J. Zutz, 
Esq. or Richard H. Kirk, Esq., 1800 Massachusetts Avenue, NW, Suite 
200, Washington, D.C. 20036.

FOR FURTHER INFORMATION, CONTACT:
Rachel H. Graham, Senior Counsel, at (202) 942-0583, or Nadya B. 
Roytblat, Assistant Director, 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, N.W., Washington, 
D.C. 20549 (telephone (202) 942-8090).

[[Page 71518]]

Applicants' Representations

    1. The Fund is a Massachusetts business trust that is registered 
under the Act as an open-end management investment company. Equity 
Portfolio (``Portfolio'') is a series of the Fund.
    2. Each of CAM and Atlanta Capital is an investment adviser 
registered under the Investment Advisers Act of 1940. CAM serves as 
investment adviser to the Portfolio pursuant to an investment advisory 
agreement (``Adviser Agreement''). Atlanta Capital serves as investment 
subadviser to the Portfolio pursuant to an investment subadvisory 
agreement with CAM (``New Agreement''). Atlanta Capital's subadvisory 
fee is paid by CAM out of the fee that CAM receives from the Portfolio.
    3. On September 16, 1998, the Fund's Board of Trustees (``Board''), 
including a majority of the trustees who are not ``interested persons'' 
as the term is defined in section 2(a)(19) of the Act (``Independent 
Trustees''), terminated the Portfolio's investment subadvisory 
agreement with Loomis, Sayles & Company, LP (``Loomis'') (such 
agreement to be referred to as the ``Loomis Agreement''), effective as 
of September 21, 1998. The Board, including a majority of the 
Independent Trustees, approved the New Agreement with Atlanta Capital 
pending its approval as successor subadviser to the Portfolio and voted 
to recommend that the New Agreement be submitted to the Portfolio's 
shareholders for approval. Applicants anticipate that the Portfolio 
will distribute proxy materials to its shareholders on or about 
December 31, 1998 and will hold the shareholder meeting on or about 
February 24, 1999.
    4. Applicants request an exemption to permit Atlanta Capital to 
serve under the New Agreement without prior shareholder approval for 
the Interim Period, which begins on the Order Date and continues 
through the date that the New Agreement is approved or disapproved by 
the Portfolio's shareholders, but in no event longer than 90 days from 
the Order Date. Applicants state that the New Agreement has 
substantially the same terms and conditions as the Loomis Agreement, 
which had been approved by shareholders, except for the name of the 
subadviser and the commencement and termination dates. Applicants also 
state that the Portfolio will receive during the Interim Period 
advisory and subadvisory services that are at least equivalent in scope 
and quality to the services provided by the Adviser and Loomis under 
the Adviser Agreement and the Loomis Agreement.
    5. Applicants state that, because the Loomis Agreement contained a 
performance fee adjustment and the New Agreement does not provide for 
such an adjustment, Atlanta Capital may receive a different dollar 
amount in fees during the Interim Period than Loomis would have 
received under the Loomis Agreement for the same period. Applicants 
represent, however, that since CAM pays Atlanta Capital out of the fees 
that CAM receives from the Portfolio, the aggregate amount of advisory 
fees to be paid by the Portfolio during the Interim Period will not 
exceed the aggregate amount of such fees that would have been payable 
had Loomis continued to serve as investment subadviser during the 
Interim Period.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to serve as an investment adviser to a 
registered investment company, except pursuant to a written contract 
that has been approved by the vote of a majority of the outstanding 
voting securities of the investment company.
    2. Rule 15a-4 under the Act provides, in relevant part, that if an 
investment company's board of directors terminates the investment 
advisory contract of its subadviser, a new subadviser may provide 
services to the investment company for up to 120 days under a written 
contract that has not been approved by the company's shareholders, 
provided that: (i) the new contract has been approved by the board of 
directors (including a majority of the non-interested directors); and 
(ii) the compensation to be paid does not exceed the compensation that 
would have been paid under the contract most recently approved by the 
company's shareholders. Applicants state that they are currently 
relying on rule 15a-4 but that the 120-day period provided for in the 
rule will expire on January 19, 1999. Applicants state that they 
therefore will require an exemptive order for the Interim Period.
    3. Section 6(c) of the Act provides that the SEC may exempt any 
person, security, or transaction from any provision of the Act or any 
rule thereunder to the extent that such exemption is necessary or 
appropriate in the public interest and consistent with both the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act. Applicants state that the requested relief 
meets this standard.
    4. Applicants state that a meeting of all shareholders in the 
Calvert Group Family of Funds, which includes the Fund, (``Calvert 
Group Meeting'') will take place on or about February 24, 1999 in 
connection with the pending merger of the CAM's parent organizations 
with other organizations.\1\ Applicants assert that the requested order 
would permit the Portfolio's shareholders to vote on the New Agreement 
at the Calvert Group Meeting and thereby save the Portfolio the expense 
of holding a separate special shareholder meeting to approve the New 
Agreement.
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    \1\ Applicants state that they have determined that the merger 
will not result in an ``assignment'' of the Adviser Agreement or any 
investment subadvisory agreements, within the meaning of the Act. 
Accordingly, applicants are not seeking any relief with respect to 
the merger.
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Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. The New Agreement in effect during the Interim Period will have 
substantially the same terms and conditions as the Loomis Agreement, 
except that the New Agreement names a new subadviser, has different 
commencement and termination dates, and does not provide for a 
performance fee adjustment with respect to the investment subadvisory 
fee.
    2. The Fund will hold a meeting of its shareholders to vote on 
approval of the New Agreement on or before the 90th day following the 
Order Date.
    3. CAM and Atlanta Capital will take all appropriate steps to 
assure that the scope and quality of advisory and order services 
provided to the Portfolio during the Interim Period will be at least 
equivalent, in the judgment of the Board, including a majority of the 
Independent Trustees, to the scope and quality of services that were 
provided under the Loomis Agreement. If personnel providing material 
services during the Interim Period change materially, CAM will apprise 
and consult with the Board to assure that the Board, including a 
majority of the Independent Trustees, is satisfied that the services 
provided will not be diminished in scope or quality.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-34255 Filed 12-24-98; 8:45 am]
BILLING CODE 8010-01-M