[Federal Register Volume 65, Number 64 (Monday, April 3, 2000)]
[Notices]
[Pages 17546-17547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8070]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24368; 812-11790]


Sun Capital Advisers Trust and Sun Capital Advisers, Inc.; Notice 
of Application

March 27, 2000.
AGENCY: Securities and Exchange Commission. (``Commission'')

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

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Summary of Application: The requested order would permit applicants, 
Sun Capital Advisers Trust (the ``Trust'') and Sun Capital Advisers, 
Inc. (the ``Adviser''), to enter into and materially amend investment 
subadvisory agreements without obtaining shareholder approval.

Filing Dates: The application was filed on September 29, 1999, and 
amended on January 18, 2000. Applicants have agreed to file an 
additional 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 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 21, 2000, 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 Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609; Applicants, One Sun Life Executive Park, Wellesley 
Hills, MA 02481-5699.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, 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 
Commission's Public Reference Branch, 450 Fifth Street, N.W., 
Washington, D.C. 20549-0102 (tel. (202) 942-8090).

Applicants' Representations

    1. The Trust, a Delaware business trust, is registered under the 
Act as an open-end management investment company. The Trust is 
comprised of six separate series, each with its own distinct investment 
objectives, policies, and restrictions (each, a ``Fund'').\1\ Each 
Fund's shares are continually offered for sale as funding vehicles for 
variable annuity and variable life insurance contracts issued by 
participating insurance companies and for qualified pension plans.
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    \1\ Applicants also request relief with respect to future Funds 
and any other registered open-end management investment company and 
its series that in the future: (a) Is advised by the Adviser, or a 
person controlling, controlled by or under common control with the 
Adviser; (b) operates in substantially the same manner as the Funds 
with regard to the Adviser's responsibility to select, evaluate, and 
supervise Subadvisers; and (c) complies with the terms and 
conditions in the application (``Future Funds''). The only existing 
registered open-end management investment company that currently 
intends to rely on the order is named as an applicant
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    2. The Adviser, an indirect wholly-owned subsidiary of Sun Life 
Assurance Company of Canada (``Sun Life''), is registered under the 
Investment Advisers Act of 1940 (``Advisers Act''). The Trust, on 
behalf of each fund, has entered into investment advisory agreements 
with the Adviser (each, an ``Advisory Agreement''), pursuant to which 
the Adviser serves as the investment adviser to the Funds. Each 
Advisory Agreement has been approved by the Funds' initial shareholder, 
Sun Life, and by a majority of the Trust's board of trustees (the 
``Board''), including a majority of the trustees who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act, of 
the Trust or the Adviser (``Independent Trustees'').
    3. Under the Advisory Agreements, the Adviser, subject to Board 
oversight, provides each Fund with investment research, advice, and 
supervision, and furnishes an investment program for each Fund. The 
Advisory Agreements also provide that the Adviser may delegate its 
responsibility for providing investment advice and making investment 
decisions for a particular Fund to one or more subadvisers 
(``Subadvisers''). The Adviser selects Subadvisers based on the 
Adviser's continuing evaluation of their skills in managing assets 
pursuant to particular investment styles. The Adviser screens potential 
new Subadvisers and engages in an on-going analysis of the continued 
advisability as to the retention of its existing Subadvisers. From time 
to time, the Adviser may recommend to the Board that the services of a 
Subadviser be terminated. Each Fund pays the Adviser a fee for its 
services based on the Fund's average daily net assets.
    4. The Adviser has entered into investment subadvisory agreements 
(``Subadvisory Agreements'') with Wellington Capital Management LLC 
(``Wellington'') to serve as Subadviser to three of the Funds. 
Wellington is not an ``affiliated person,'' as defined in section 
2(a)(3) of the Act (``Affiliated Person''), of the Trust or the 
Adviser. The Trust may in the future offer Funds managed by other 
Subadvisers or by multiple Subadvisers. Each Subadviser will have 
discretionary authority to invest the assets of a particular Fund, 
subject to general supervision by the Adviser and the Board, and will 
be registered under the Advisers Act or exempt from registration. The 
Adviser pays each Subadviser's fees out of the fees the Adviser 
receives from each Fund.
    5. Applicants request relief to permit the Adviser to enter into 
and materially amend Subadvisory Agreements without obtaining 
shareholder approval. The requested relief will not extend to a 
Subadviser that is an Affiliated Person of the Trust or the Adviser, 
other than by reason of serving as a Subadviser to one or more of the 
Funds (``Affiliated Subadviser'').

Applicant's 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 under a written

[[Page 17547]]

contract approved by a majority of the investment company's outstanding 
voting shares. Rule 18f-2 under the Act provides that each series or 
class of stock in a series company affected by a matter must approve 
the matter if the Act requires shareholder approval.
    2. Section 6(c) of the Act authorizes the Commission to exempt 
persons or transactions from the provisions of the Act, or from any 
rule thereunder, to the extent that the exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policies 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 Subadvisory 
Agreements without shareholder approval.
    3. Applicants assert that a Fund's investors rely on the Adviser to 
select and monitor Subadvisers best suited to manage the Fund's 
portfolio. Applicants submit that, from the perspective of an investor, 
the role of the Subadvisers is comparable to that of individual 
portfolio managers employed by other investment company advisory firms. 
Applicants contend that requiring shareholder approval of Subadvisory 
Agreements would impose expenses and unnecessary delays on the Funds, 
and may preclude the Adviser from promptly acting in a manner 
considered advisable by the Board. Applicants note that the Advisory 
Agreements will remain subject to section 15(a) of the Act and rule 
18f-2 under the Act, including the requirements for shareholder 
approval.

Applicant's Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the order requested in the 
application, the operation of the Fund's in the manner described in the 
application will be approved by a majority of the Fund's outstanding 
voting securities (or, if the Fund 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 by its initial shareholder, provided that, in 
the case of the approval by the initial shareholder, the pertinent 
Fund's shareholders (or, if the Fund serves as a funding medium for any 
sub-account of a registered separate account, the unitholders of the 
sub-account) purchase shares on the basis of a prospectus containing 
the disclosure contemplated by condition 2 below. Similarly, before a 
Future Fund may rely on the order requested in the application, the 
operation of the Future Fund in the manner described in the application 
will be approved by its initial shareholder before a public offering of 
shares of such Future Fund, provided that shareholders (or, if the Fund 
serves as a funding medium for any sub-account of a registered separate 
account, the unitholders of the sub-account) purchase shares on the 
basis of a prospectus containing the disclosure contemplated by 
condition 2 below.
    2. Each Fund will disclose in its prospectus the existence, 
substance, and effect of any order granted pursuant to the application. 
In addition, each Fund will hold itself out to the public as employing 
the management structure described in the application. The prospectus 
will prominently disclose that the Adviser has the ultimate 
responsibility to oversee the Subadvisers and recommend their hiring, 
termination and replacement.
    3. At all times, a majority of the board will be Independent 
Trustees, and the nomination of new or additional Independent Trustees 
will be at the discretion of the then-existing Independent Trustees.
    4. The Adviser will not enter into a Subadvisory Agreement with any 
Affiliated Subadviser without the agreement, including the compensation 
be paid thereunder, being approved by the shareholders of the 
applicable Fund (or, if the Fund serves as a funding medium for any 
sub-account of a registered separate account, pursuant to voting 
instructions provided by the unit holders of the sub-account).
    5. When a Subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
Board minutes, that the change is in the best interests of the Fund and 
its shareholders (or, if the Fund serves as a funding medium for any 
sub-account of a registered separate account, the best interests of the 
Fund and unit holders of any such sub-account), and does not involve a 
conflict of interest from which the Adviser or the Affiliated 
Subadviser derives an inappropriate advantage.
    6. Within 90 days of the hiring of any new Subadviser for any Fund, 
the Fund shareholders (or, if the Fund serves as a funding medium for 
any sub-account of a registered separate account, the unit holders of 
the sub-account) will be furnished all relevant information about a new 
Subadviser that would be contained in a proxy statement, including any 
change in such disclosure caused by the addition of a new Subadviser. 
Each Fund will meet this condition by providing shareholders (or unit 
holders) with an information statement meeting the disclosure 
requirements of Regulations 14C, Schedule 14C, and Item 22 of Schedule 
4A under the Securities Exchange Act of 1934 within 90 days of the 
hiring of a Subadviser.
    7. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of each Fund's portfolio, and, subject to 
review and approval by the Board, will: (i) Set the Fund's overall 
investment strategies; (ii) select Subadviser(s); (iii) monitor and 
evaluate the performance of Subadviser(s); (iv) ensure that the 
Subadviser(s) comply with each Fund's investment objectives, polices 
and restrictions by, among other things, implementing procedures 
reasonably designed to ensure compliance; and (b) allocate and, where 
appropriate, reallocate a Fund's assets among its Subadvisers when a 
Fund has more than one Subadviser.
    8. No trustee or officer of the Trust or director or officer of the 
Adviser will own, directly or indirectly (other than through a pooled 
investment vehicle that is not controlled by that trustee, director or 
officer), any interest in a Subadviser, except for: (i) ownership of 
interests in the Adviser or any entity that controls, is controlled by, 
or is under a common control with the Adviser; or (ii) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of a publicly-traded company that is either a Subadviser or any 
entity that controls, is controlled by, or is under common control with 
a Subadviser.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-8070 Filed 3-31-00; 8:45 am]
BILLING CODE 8010-01-M