[Federal Register Volume 65, Number 4 (Thursday, January 6, 2000)]
[Notices]
[Pages 797-799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-232]


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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24226; 812-11668]


Manufacturers Investment Trust and Manufacturers Securities 
Services, LLC; Notice of Application

December 29, 1999.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act.

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

Summary of Application: Applicants, Manufacturers Investment Trust (the 
``Trust'') (formerly NASL Series Trust) and Manufacturers Securities 
Services, LLC (the ``Adviser'') (formerly NASL Financial Services, 
Inc.), request an order that would permit applicants to enter into and 
materially amend sub-advisory agreements without shareholder approval. 
The order would supersede a prior order.
    Filing Dates: The application was filed on June 22, 1999 and 
amended on October 8, 1999. Applicants have agreed to file an amendment 
during the notice period, the substance of which is reflected in this 
notice.
    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 Commission's 
Secretary and serving applicant with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 pm on January 24, 2000 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 of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 5th 
Street NW, Washington, DC 20549-0609. Applicant, c/o John W. Blouch, 
Esq., Jones & Blouch L.L.P., 1025 Thomas Jefferson St., NW, Suite 405 
West, Washington, DC 20007.

FOR FURTHER INFORMATION CONTACT: Lawrence W. Pisto, Senior Counsel, at 
(202) 942-0527, or George J. Zornada, Branch Chief at (202) 942-0564, 
Office of Investment Company Regulation, Division of Investment 
Management.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 5th 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 is 
currently comprised of thirty-nine series (``Portfolios''), each of 
which has its own investment objectives, and policies.\1\ The shares of 
the Portfolios serve as funding vehicles for variable annuity contracts 
and life insurance contracts offered through separate accounts of 
subsidiaries of The Manufacturers Life Insurance Company, a Canadian 
life insurance company (``Manulife'').
---------------------------------------------------------------------------

    \1\ Applicants also request relief with respect to future series 
of the Trust and all future registered open-end management 
investment companies that are: (a) Advised by the Adviser or any 
entity controlling, controlled by, or under common control within 
the Adviser, and (b) which operate in substantially the same manner 
as the Trust and comply with the terms and conditions contained in 
the application. The Trust is the only existing investment company 
that currently intends to rely on the order.
---------------------------------------------------------------------------

    2. The Adviser, a Delaware limited liability company, serves as 
investment adviser to each of the Portfolios, and is registered as an 
investment adviser under the Investment Advisers Act of 1940 
(``Advisers Act''). The Adviser is an indirectly-owned subsidiary of 
Manulife.
    3. The Adviser serves as investment adviser to the Portfolios 
pursuant to an investment advisory agreement between the Adviser and 
the Trust that was approved by the board of trustees of the Trust (the 
``Board''), including a majority of the trustees (``Trustees'') who are 
not ``interested persons,'' as defined in section 2(a)(19) of the Act 
(``Independent Trustees''), and the shareholders of the Trust 
(``Investment Advisory Agreement''). Under the Investment Advisory 
Agreement, the Adviser has overall general supervisory responsibility 
for the investment program of the Portfolios and recommends to the 
Board the selection of one or more subadvisers (each a ``Manager'' and 
collectively, ``Managers'') to provide one or more Portfolios with day-
to-day portfolio management services (``Manager of Managers 
Strategy''). Each Manager is an investment adviser registered or exempt 
from registration under the Advisers Act, and performs services 
pursuant to a written agreement with the Adviser (the ``Portfolio 
Management Agreement''). Managers' fees are paid by the Adviser out of 
its fees from the Portfolios at rates negotiated with the Managers by 
the Adviser. The Portfolios currently have 16 Managers.
    4. The Trust has operated under a prior order (``Original Order'') 
granting relief for the Manager of Managers Strategy since December 31, 
1996.\2\ The Adviser makes qualitative evaluations of each Manager's 
skills and demonstrated performance in managing assets under particular 
investment styles. The Adviser recommends to the Board for selection 
those Managers that have consistently distinguished themselves

[[Page 798]]

and demonstrated a high level of service and responsibility to 
investors. The Adviser reviews, monitors and reports to the Board 
regarding the performance and procedures of the Managers. The Adviser 
may recommend to the Board reallocation of assets of a Portfolio among 
Managers, if necessary, and the Adviser also may recommend hiring 
additional Managers or the termination of Managers in appropriate 
circumstances.
---------------------------------------------------------------------------

    \2\ Investment Company Act Release Nos. 22382 (Dec. 9, 1996) 
(notice) and 22429 (Dec. 31, 1996) (order). The Original Order was 
granted to NASL Financial Services, Inc., NASL Series Trust and 
North American Funds. NASL Financial Services, Inc. has been merged 
into another wholly-owned subsidiary of Manulife. NASL Series 
Trust's name has been changed to Manufactures Investment Trust. The 
Adviser is no longer advising North American Funds; consequently it 
is not a party to this application. The Original Order also granted 
relief from certain disclosure requirements.
---------------------------------------------------------------------------

    5. Applicants request relief to permit the Adviser to enter in and 
materially amend Portfolio Management Agreements without shareholder 
approval.\3\ The order would supersede the Original Order. The 
requested relief will not extend to a Manager 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 Portfolios (an ``Affiliated Manager''). Currently, one of the 
Managers is an Affiliated Manager.
---------------------------------------------------------------------------

    \3\ The term ``shareholder'' includes variable life insurance 
policy and variable annuity contract owners that are unitholders of 
any separate account for which the Portfolios serve as a funding 
medium.
---------------------------------------------------------------------------

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 pursuant to a written contract that has been 
approved by the vote of the 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 such matter if the 
Act requires shareholder approval.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provision of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants request an exemption under section 6(c) of the Act from 
section 15(a) of the Act and rule 18f-2 under the Act to permit them to 
enter into and materially amend Portfolio Management Agreements without 
shareholder approval.
    3. Applicants assert that under the Manager of Managers Strategy, 
the Portfolios' shareholders rely on the Adviser to select and monitor 
one or more Managers best suited to achieve a Portfolios' investment 
objectives. Applicants contend that, from the perspective of the 
investor, the role of the Managers is comparable to that of individual 
portfolio managers employed by other investment advisory firms. 
Applicants contend that requiring shareholder approval of Portfolio 
Management Agreements would impose expenses and unnecessary delays on 
the Portfolios, and may preclude the Adviser from promptly acting in a 
manner considered advisable by the Board. Applicants note that the 
Investment Advisory Agreement between the Trust and the Adviser will 
remain subject to section 15(a) of the Act and rule 18f-2 under the 
Act, including the requirements for shareholder approval.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. No Portfolio will enter into a Portfolio Management Agreement 
with an Affiliated Manager without such agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the Portfolio (or, if the Portfolio serves as a funding medium for 
any sub-account of a registered separate account, pursuant to voting 
instructions by the unitholders of the sub-account).
    2. At all times, a majority of the Trustees will be Independent 
Trustees, and the nomination of new or additional Independent Trustees 
will be at the discretion of the then-existing Independent Trustees.
    3. When a Manager change is proposed for a Portfolio with an 
Affiliated Manager, the Trustees, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
Trust's Board minutes, that the change is in the best interests of the 
Portfolio and its shareholders (or, if the Portfolio serves as a 
funding medium for any sub-account of a registered separate account, in 
the best interests of the Portfolio and the unitholders of any sub-
account) and that the change does not involve a conflict of interest 
from which the Adviser or the Affiliated Manager derives an 
inappropriate advantage.
    4. Before a Portfolio may rely on the order, the operation of the 
Portfolio in the manner described in the application will be approved 
by a majority of the Portfolio's outstanding voting securities (or, if 
the Portfolio serves as a funding medium for any sub-account of a 
registered separate account, pursuant to voting instructions provided 
by the unitholders of the sub-account), as defined in the Act, or in 
the case of a new Portfolio whose public shareholders (or variable 
contract owners through a separate account) purchase shares on the 
basis of a prospectus(es) containing the disclosure contemplated by 
Condition 6 below, by the sole initial shareholder(s) before the shares 
of such Portfolio are offered to the public (or the variable contract 
owners through a separate account).
    5. The Adviser will provide management services to the Trust and 
its Portfolios, including overall supervisory responsibility for the 
general management and investment of each Portfolio's securities 
portfolio, and, subject to review and approval by the Board will (a) 
set each Portfolio's overall investment strategies; (b) evaluate, 
select and recommend Managers to manage all or a part of a Portfolio's 
assets; (c) when appropriate, allocate and reallocate a Portfolio's 
assets among multiple Managers; (d) monitor and evaluate the investment 
performance of Managers; and (e) implement procedures reasonably 
designed to ensure that the Managers comply with the relevant 
Portfolio's investment objectives, policies, and restrictions.
    6. Each Portfolio relying on the requested relief will disclose in 
its prospectus the existence, substance and effect of any order granted 
pursuant to this application. In addition, any such Portfolio will hold 
itself out as employing the Manager of Managers Strategy described in 
the application. The prospectus will prominently disclose that the 
Adviser has ultimate responsibility to oversee the Managers and 
recommend their hiring, termination, and replacement.
    7. No Trustee or officer of the Trust or officer or director of the 
Adviser will own directly or indirectly (other than through a pooled 
investment vehicle that is not controlled by that trustee, officer or 
director) any interest in a Manager 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 
than 1% of the outstanding securities of any class of equity or debt 
securities of a publicly-traded company that is either a Manager or an 
entity controls, is controlled by, or is under common control with a 
Manager.
    8. Within 90 days of the hiring of any new Manager, the Adviser 
will furnish shareholders (or, if the Portfolio serves as a funding 
medium for any sub-account of a registered separate account, the 
Adviser will furnish the unit holders of the sub-account) with respect 
to the appropriate Portfolio all information about the new Manager that 
would be included in a proxy statement. Such

[[Page 799]]

information will include any changes caused by the addition of a new 
Manager. To meet this condition, the Adviser will provide shareholders 
(or, if the Portfolio serves as a funding medium for any sub-account of 
a registered separate account, then by providing unitholders of the 
sub-account) with an information statement meeting the requirements of 
Regulation 14C, Schedule 14C, and Item 22 of Schedule 14A under the 
Securities Exchange Act of 1934.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-232 Filed 1-5-00; 8:45 am]
BILLING CODE 8010-01-M