[Federal Register Volume 64, Number 62 (Thursday, April 1, 1999)]
[Notices]
[Pages 15842-15844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7958]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-23762; File No. 812-11400]
Manufacturers Investment Trust, et al.; Notice of Application
March 25, 1999.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of application for an order under section 17(b) of the
Investment Company Act of 1940 (the ``Act'').
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SUMMARY OF APPLICATION: Applicants seek an order exempting them from
the provisions of section 17(a) of the Act to the extent necessary to
permit the merger of the Worldwide Growth Trust and the Capital Growth
Bond Trust (collectively, the ``Transferor Portfolios'') of the
Manufacturers Investment Trust (``Manulife Investment Trust'' or the
``Investment Trust'') with and into the Global Equity Trust and the
Investment Quality Bond Trust (collectively, the ``Acquiring
Portions''), respectively, of the Investment Trust.
APPLICANTS: Manulife Investment Trust, Manufacturers Securities
Services, LLC (``Manulife Securities''), The Manufacturers Life
Insurance Company of North America (``Manulife North America''), The
Manufacturers Life Insurance Company of New York (``Manulife New
York''), The Manufacturers Life Insurance Company (``Manulife''), The
Manufacturers Life Insurance Company of America (``Manufacturers
America''), The Manufacturers Life Insurance Company (U.S.A.)
(``Manufacturers U.S.A.''), and Manufacturers Adviser Corporation
(``MAC'').
FILING DATES: The application was filed on November 13, 1998, and
amended on March 18, 1999.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving Applicants with a copy of the request personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on April 19, 1999, and should be accompanied by proof of
service on the 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 who wish to be notified of a hearing may request
notification by writing to the Secretary of the Commission.
ADDRESSES: For the Commission: Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. For the
Applicants: Manulife Investment Trust and Manulife Securities, 73
Tremont Street, Boston, Massachusetts 02108; Manulife North America,
116 Huntington Avenue, Boston Massachusetts 02116; Manulife New York,
International Corporate Center at Rye, 555 Theodore Fremd Avenue, Suite
C-209, Rye, New York 10580; Manulife, Manufacturers America,
Manufacturers U.S.A. and MAC at 200 Bloor Street East, Toronto,
Ontario, Canada M4W 1E5.
FOR FURTHER INFORMATION CONTACT: Keith E. Carpenter, Senior Counsel, or
Kevin M. Kirchoff, Branch Chief, Office of Insurance Products, Division
of Investment Management, at (202) 942-0670.
Supplementary Information: The following is a summary of the
application. The complete application is available for a fee from the
Commission's Public Reference Branch, 450 Fifth St., NW, Washington, DC
(tel (202) 942-8090).
Applicants' Representations
1. Applicants state that Manulife Investment Trust is an open-end,
series, management investment company registered under the Act, which
currently offers 36 investment portfolios (collectively, the
``Portfolios''). The Investment Trust receives investment advisory
services from Manulife Securities. In addition, MAC serves as
subadviser to the Capital Growth Bond Trust, one of the Portfolios
involved in the proposed reorganization. The shares of Manulife
Investment Trust are sold generally only to insurance companies and
their separate accounts as the underlying investment medium for
variable annuity and variable life insurance contracts issued by such
insurance companies. Manulife North America, Manulife New York,
Manufacturers America and Manufacturers U.S.A. and their separate
accounts are the only shareholders of the Transferor Portfolios and the
Acquiring Portfolios. Manulife North America is controlled by Manulife,
a Canadian mutual life insurance company based in Toronto, Canada.
Manulife New York, Manufacturers America and Manufacturers U.S.A. are
indirect wholly-owned subsidiaries of Manulife.
2. Applicants state that it is proposed that the Transferor
Portfolios merge with and into the Acquiring Portfolios, respectively,
(the ``Reorganization''), pursuant to the terms and conditions stated
in the Agreement and Plan of Reorganization (the ``Plan''). In the
Reorganization, all of the assets of each Transferor Portfolio will be
transferred to a corresponding Acquiring Portfolio having a
substantially similar investment objective. In exchange, each Acquiring
Portfolio will issue and deliver to the corresponding Transferor
Portfolio shares of such Acquiring Portfolio. The total value of all
shares of each Acquiring Portfolio issued in the Reorganization will
equal the total value of the net assets of the corresponding Transferor
Portfolio being acquired by such Acquiring Portfolio. In connection
with the Reorganization, shares of each Acquiring Portfolio will be
distributed to holders of the shares of the respective corresponding
Transferor Portfolio in liquidation of the Transferor Portfolio. The
number of full and fractional shares of an Acquiring Portfolio received
by a shareholder of the corresponding Transferor Portfolio will be
equal in value to the value of that shareholder's
[[Page 15843]]
shares of the corresponding Transferor Portfolio as of the close of
regularly scheduled trading on the New York Stock Exchange on the
closing date of the Reorganization. As a result of the Reorganization,
each holder of shares of each Transferor Portfolio will become a holder
of shares of the Acquiring Portfolio.
3. Applicants state that Reorganization will be affected in two
distinct but contemporaneous transfers. The Global Equity Trust will
acquire the assets and liabilities of the Worldwide Growth Trust and
the Investment Quality Bond Trust will acquire the assets and
liabilities of the Capital Growth Bond Trust.
4. Applicants state that the Reorganization will be submitted to a
vote of the shareholders of the Transferor Portfolios for approval at a
special shareholders' meeting in accordance with Massachusetts law, the
Act and Commission rules. The shareholders of the Transferor Portfolios
are Manulife North America, Manulife New York, Manufacturers America
and Manufacturers U.S.A., through their registered and unregistered
separate accounts. Manulife North America, Manulife New York,
Manufacturers America and Manufacturers U.S.A. thus have the right to
vote upon matters that are required by the Act to be approved or
ratified by shareholders and to vote upon any other matters that may be
voted upon at a special shareholders' meeting. However, each of
Manulife North America, Manulife New York, Manufacturers America and
Manufacturers U.S.A. will vote all shares of the Transferor Portfolios
in accordance with and in proportion to timely instructions received
from owners of the variable contracts issued by it participating in
separate accounts registered under the Act, the values of which are
invested in shares of the Transferor Portfolios through such separate
accounts at the record date. Shares of each Transferor Portfolio for
which properly executed voting instruction forms are not received,
including shares not attributable to variable contracts, will be voted
in the same proportion as that of shares of such Transferor Portfolio
for which instructions are received. Prior to voting on the
Reorganization, contractholders participating in registered separate
accounts holding shares of the Transferor Portfolios will receive a
Notice of Special Meeting of Shareholders and combined prospectus/proxy
statement containing all material disclosures, including any material
differences in investment objectives and policies.
5. Applicants represent that a description of the respective
subadvisory fees for the Transferor Portfolios and the corresponding
Acquiring Portfolios and a pro forma presentation of expenses after
giving effect to the Reorganization were included in the materials
presented to the Board of Trustees and will be included in the
prospectus/proxy statement delivered to shareholders of the Transferor
Portfolios, in each case in connection with their consideration of the
Reorganization. It is anticipated that the investment management fees
and the annualized expenses as a percentage of average net assets paid
by the Acquiring Portfolios generally will be comparable to or lower
than those paid by the corresponding Transferor Portfolios.
Applicants' Legal Analysis
1. Section 17(a) of the Act provides in part that it is unlawful
for any affiliated person of a registered investment company, or any
affiliated person of such an affiliated person, acting as principal,
knowingly to sell to such investment company or to purchase from such
investment company any securities or other property.
2. Applicants state that as a result of the relationships described
above, the Transferor Portfolios and the Acquiring Portfolios may be
deemed to be under common control, and therefore, affiliated persons of
each other as defined by section 2(a)(3) of the Act, and for the
purposes of the prohibitions of section 17(a) of the Act.
Alternatively, they may be deemed to be affiliated persons of
affiliated persons of each other.
3. Section 17(b) of the Act permits a person to file with the
Commission an application for an order exempting a proposed transaction
from one or more of the prohibitions of section 17(a). The Commission
shall grant such application if evidence establishes that the terms of
the proposed transaction are fair and reasonable and do not involve
overreaching on the part of any person concerned, and the proposed
transaction is consistent with the policy of each registered investment
company concerned and with the general purposes of the Act. Applicants
seek an order of the Commission, pursuant to section 17(b) of the Act,
exempting them from the provisions of section 17(a) of the Act.
4. Rule 17a-8 under the Act provides, in part, that a merger of
registered investment companies which are affiliated persons solely by
reason of having a common investment adviser, directors, and/or
officers is exempt from the prohibitions of Section 17(a). Applicants
state that Rule 17a-8 is not availale because of the share ownership by
the affiliated insurance companies. Applicants state that, as a
substantive matter, the Reorganization is consistent with the routine
mergers that otherwise do not require exemptive relief, as well as with
the spirit of Rule 17a-8. Applicants state that the additional
affiliations presented arise out of the nature of variable product
investing and are negated by the fact that contractholders
participating in registered separate accounts holding shares of the
Transferor Portfolios will have the opportunity to provide voting
instructions on the Reorganization and that all shares technically
owned by Manulife North America, Manulife New York, Manufacturers
America and Manufacturers U.S.A. will be vetoed in proportion to voting
instructions received.
5. The Board of Trustees of Manulife Investment Trust, including
the disinterested Trustees, has reviewed the contemplated transactions
and determined that the participation by each Transferor Portfolio and
each corresponding Acquiring Portfolio in the Reorganization is in the
best interest of each Transferor Portfolio and each corresponding
Acquiring Portfolio, as well as in the best interests of shareholders
and the contractholders whose contract values are invested in shares of
the Transferor Portfolios and the corresponding Acquiring Portfolios,
and that the interests of existing shareholders and contractholders
will not be diluted as a result of the Reorganization. Accordingly, if
Rule 17a-8 were available, its conditions would be satisfied.
6. Applicants represent that the Plan will provide that the
exchange of assets and liabilities of the Transferor Portfolios for
shares of capital stock of the Acquiring Portfolios shall be
accomplished on the basis of the net asset value of the respective
Portfolios, and thus the Reorganization will not involve dilution of
the interests of existing shareholders or contractholders. Applicants
submit that the terms of the proposed transactions are fair and
reasonable and do not involve overreaching on the part of any person
concerned.
7. Applicants represent that the proposed transactions have been
reviewed by the Board of Trustees for consistency with the policies of
the Transferor Portfolios and the Acquiring Portfolios. Material
differences, if any, between a Transferor Portfolio and its
corresponding Acquiring Portfolio, including differences in investment
[[Page 15844]]
policies have been reviewed by the Board of Trustees and described in
the prospectus/proxy statement. Applicants state that this is precisely
the same process followed with respect to reorganizations that fit
within the technical requirements of Rule 17a-8.
8. Applicants state that the proposed transactions are also
consistent with the general purposes of the Act as stated in the
Findings and Declaration of Policy in Section 1 of the Act, and that
the proposed transactions do not result in any of the self-dealing
abuses that the Act was designed to prevent.
9. Applicants represent that the terms of the proposed transactions
are consistent with the provisions, policies and purposes of the Act in
that they are reasonable and fair to all parties, do not involve
overreaching, and are consistent with the investment objective and
policies of each Transferor Portfolio and of each Acquiring Portfolio
participating in the proposed transactions. The participation in the
Reorganization by each portfolio is at respective net asset value, and
not on a basis different or less advantageous than that of other
participants. Contractholders will have the opportunity to provide
voting instructions as to whether the Reorganization should be approved
with respect to each Transferor Portfolio.
Conclusion
For the reasons stated herein, Applicants state that the terms of
the contemplated transactions meet all the requirements of section
17(b) of the Act.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-7958 Filed 3-31-99; 8:45 am]
BILLING CODE 8010-01-M