[Federal Register Volume 65, Number 24 (Friday, February 4, 2000)]
[Notices]
[Pages 5709-5711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2449]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24270, 812-11778]


HT Insight Funds, Inc., et al., Notice of Application

January 28, 2000.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of an application for an order under section 17(b) of 
the Investment Company Act of 1940 (``Act'') for an exemption from 
section 17(a) of the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain 
series of Harris Insight Funds Trust (``HIFT'') to acquire all of the 
assets and liabilities of all of the series of HT Insight Funds Inc. 
(``HTIF'') (the ``Reorganization''). Because of certain affiliations, 
applicants may not rely on rule 17a-8 under the Act.

    APPLICANTS: HIFT, HTIF, and Harris Trust and Savings Bank (``Harris 
Bank'').

    FILING DATES: The application was filed on September 17, 1999, and 
amended and restated on January 18, 2000.

    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 applicants with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on February 
22, 2000, and should be accompanied by proof of service on 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 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549-0609. HIFT and HTIF, Four Falls Corporate Center, 6th Floor, West 
Conshohocken, Pennsylvania, 19428-2961. Harris Bank, 111 West Monroe 
Street/6W, Chicago, Illinois, 60603.

FOR FURTHER INFORMATION CONTACT: Paula L. Kashtan, Senior Counsel, at 
(202) 942-0615, 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 at the 
SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 
20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. HTIF, a Maryland corporation, is registered under the Act as an 
open-end management investment company and is comprised of five series, 
Harris Insight Equity Fund, Harris Insight Short/Intermediate Bond 
Fund, Harris Insight Money Market Fund, Harris Insight Government Money 
Market Fund, and Harris Insight Tax-Exempt Money Market Fund (the 
``Acquired Funds'').
    2. HIFT, a Massachusetts business trust, is registered under the 
Act as an open-end management investment company and is currently 
comprised of thirteen series. As part of the Reorganization, HIFT is 
organizing the following five new shell series: Harris Insight Equity 
Fund, Harris Insight Short/Intermediate Bond Fund, Harris Insight Money 
Market Fund, Harris Insight Government Money Market Fund, and Harris 
Insight Tax-Exempt Money Market Fund (the ``Acquiring Funds,'' 
collectively with the Acquired Fund, the ``Funds''). \1\ Applicants 
state that the investment objectives and policies of the Acquiring 
funds are substantially similar to those of the corresponding Acquired 
Funds.
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    \1\ A registration statement for the five shell Acquiring Funds 
is expected to be filed in February, 2000, and it is anticipated 
that it will be declared effective on or before May 1, 2000. The 
Acquiring funds are expected to commence operations upon the 
consummation of the Reorganization.
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    3. Harris Bank serves as investment adviser to the Acquired Funds 
and is exempt from registration under the Investment Advisers Act of 
1940. Harris Bank will act as the investment adviser to the Acquiring 
Funds. Harris Investment Management, Inc. (``HIM''), an affiliate of 
Harris Bank, is registered as an investment adviser under the Advisers 
Act, and serves as subadviser to four of the Acquired Funds and will 
serve as subadviser to the four corresponding Acquiring Funds. Harris 
Bank and HIM are each wholly-owned subsidiaries of Harris Bankcorp, 
Inc. Currently, Harris Bank, HIM and/or certain of their affiliates 
that are under common control (the ``Harris Group'') hold of record, in 
their names or in the names of their nominees, in excess of 25% of the 
outstanding voting securities of each of the Acquired Funds. All of 
these securities are held for the benefit of others in a trust, agency, 
custodial or other fiduciary or representative capacity.
    4. On July 29, 1999, the board of directors of HTIF (the ``Board'' 
or ``HTIF'') and the board of trustees of HIFT, none of whom are 
``interested persons'' as defined in section 2(a)(19) of the Act 
(``Disinterested Directors/Trustees''), approved the Reorganization 
pursuant to which the assets and liabilities of each of the Acquired 
Funds will be transferred to the corresponding Acquiring Fund in 
exchange for shares of designated classes of the corresponding 
Acquiring Fund

[[Page 5710]]

(``Reorganization Plan'').\2\ Shareholders of each of the Acquired 
Funds will receive shares of the corresponding Acquiring Fund having an 
aggregate net asset value equal to the aggregate net asset value of the 
Acquired Fund's shares held by each shareholder, as determined on the 
closing date of the Reorganization, currently anticipated to occur on 
May 2, 2000. The value of the assets of the Funds will be determined in 
the manner set forth in the Funds' then current prospectuses and 
statements of additional information. As soon as practicable after the 
closing date, the Acquiring Fund shares received by each Acquired Fund 
will be distributed pro rata to the shareholders of the Acquired Fund 
and each Acquired Fund will liquidate and dissolve.
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    \2\ Prior to the implementation of the Reorganization Plan, the 
Acquired Funds intend to discharge substantially all of their 
liabilities. Each Acquiring Fund will assume all remaining 
liabilities of the corresponding Acquired Fund.
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    5. The Acquired Funds and the Acquiring Funds fall into two 
categories. First, there are two non-money market funds that offer or, 
after the Reorganization, will offer shares in three classes (a shares, 
N shares and Institutional shares) (``Non-Money Market Funds''). 
Second, there are three Money Market Funds that offer or, after the 
Reorganization, will offer shares in two classes (N shares and 
Institutional shares) (``Money Market Funds'').
    6. Class A shares of the Funds are subject to a maximum front-end 
sales load of 5.50%, a maximum contingent deferred sales charge 
(``CDSC'') of 1.00%, and a maximum .35% rule 12b-1 fee. Class N shares 
of the Funds are subject to a maximum .25% service fee, and class N 
shares of the Money Market Funds have a maximum .10% rule 12b-1 fee. 
None of the class N shares is subject to a front-end sales charge of 
CDSC. Institutional shares are offered without service fees, front-end 
sales charges, CDSCs or 12b-1 fees. For purposes of calculating the 
CDSCs on class A shares, shareholders of class A shares of each of the 
Non-Money Market Acquired Funds will be deemed to have held the class A 
shares of the corresponding Acquiring Fund since the date the 
shareholders initially purchased the Class A shares of the Acquired 
Fund. Shareholders of the Acquired Funds will not incur any sales 
charges in connection with the Reorganization. Harris Bank assumed 
approximately one half of the proxy costs, and the shareholders of the 
Acquired Funds will pay the remainder of the Reorganization expenses, 
as determined by the Board of each Acquired Fund.
    7. The Board of each Acquired Fund, consisting solely of 
Disinterested Directors, found that the Reorganization is in the best 
interests of the Acquired Fund, and that the interests of existing 
shareholders of the Acquired Fund will not be diluted as a result of 
the Reorganization. During its deliberations, the Board reviewed, among 
other things: (a) the terms and conditions of the Reorganization; (b) 
the investment advisory and other fees projected to be paid by the 
Acquiring Fund, and the projected expense ratio of the Acquiring Fund 
as compared to that of the Acquired Fund; (c) the investment 
objectives, strategies, investment risks, policies and limitations of 
the Acquiring Fund and their compatibility with those of the Acquired 
Fund; (d) the potential economies of scale to be gained from combining 
the assets of the Acquired Fund into the Acquiring Fund; and (e) the 
anticipated tax-free nature of the Reorganization.
    8. The Reorganization is subject to a number of conditions 
precedent, including that: (a) the shareholders of each of the Acquired 
Funds will have approved the Reorganization Plan; (b) applicants will 
have received exemptive relief from the SEC; (c) a registration 
statement under the Securities Act of 1933 for the Acquiring Funds will 
have become effective; and (d) an opinion of counsel is received with 
respect to the tax-free nature of the Reorganization. The 
Reorganization Plan may be terminated by mutual written consent of the 
Boards of HTIF and HIFT at any time prior to the closing. Applicants 
agree not to make any material changes to the Reorganization Plan 
without prior SEC approval.
    9. The definitive proxy statement was filed with the SEC on October 
25, 1999. A special meeting of the shareholders of the Acquired Funds 
was held on November 29, 1999, at which the shareholders approved the 
Reorganization Plan.

Applicants' Legal Analysis

    1. Section 17(a) of the Act generally prohibits an affiliated 
person of a registered investment company, or an affiliated person of 
such a person, acting as principal, from selling any security to, or 
purchasing any security from, the company. Section 2(a)(3) of the Act 
defines an ``affiliated person'' of another person to include: (a) any 
person directly or indirectly owning, controlling, or holding with 
power to vote 5% or more of the outstanding voting securities of the 
other person; (b) any person 5% or more of whose securities are 
directly or indirectly owned, controlled, or held with power to vote by 
the other person; (c) any person directly or indirectly controlling, 
controlled by, or under common control with the other person, and (d) 
if the other person is an investment company, any investment adviser of 
that company. Applicants state that the Funds may be deemed affiliated 
persons and thus the Reorganization may be prohibited by section 17(a).
    2. Rule 17a-8 under the Act exempts from the prohibitions of 
section 17(a) mergers, consolidations, or purchases or sales of 
substantially all of the assets of registered investment companies that 
are affiliated persons, or affiliated persons of an affiliated person, 
solely by reason of having a common investment adviser, common 
directors, and/or common officers, provided that certain conditions set 
forth in the rule are satisfied. Applicants believe that they may not 
rely on rule 17a-8 in connection with the Reorganization because the 
Funds may be deemed to be affiliated for reasons other than those set 
forth in the rule. By virtue of the direct or indirect ownership by the 
Harris Group of more than 25% of the outstanding voting securities of 
each of the Acquired Funds, each of the Acquired Funds may be deemed an 
affiliated person of an affiliated person of each of the corresponding 
Acquiring Fund. In addition, because of this ownership, the Funds may 
be deemed to be under common control, and thus affiliated persons under 
Section 2(a)(3)(C) of the Act.
    3. Section 17(b) of the Act provides that the SEC may exempt a 
transaction from the provisions of section 17(a) if the evidence 
establishes that the terms of the proposed transaction, including the 
consideration to be paid, are reasonable and fair and do not involve 
overreaching on the part of any person concerned, and that the proposed 
transaction is consistent with the policy of each registered investment 
company concerned and with the general purposes of the Act.
    4. Applicants request an order under section 17(b) of the Act 
exempting them from section 17(a) of the Act to the extent necessary to 
permit applicants to consummate the Reorganization. Applicants submit 
that the Reorganization satisfies the standards of section 17(b) of the 
Act. Applicants state that the Board of HTIF, including a majority of 
its Disinterested Directors, found that participation in the 
Reorganization is in the best interests of each of the Acquired Funds, 
and that the interests of the existing shareholders will not be diluted 
as a result of the Reorganization. Applicants also note that the 
exchange of the Acquired

[[Page 5711]]

Funds' assets for shares in the Acquiring Funds will be based on the 
Funds' relative net asset values.
    For the SEC, by the Division of Investment Management, under 
delegated authority.

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-2449 Filed 2-3-00; 8:45 am]
BILLING CODE 8010-01-M