[Federal Register Volume 66, Number 205 (Tuesday, October 23, 2001)]
[Notices]
[Pages 53647-53649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26590]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-25211;812-12162]


MassMutual Institutional Funds, et al.; Notice of Application

October 16, 2001
AGENCY: Securities and Exchange Commission (``Commission'' or ``SEC'').

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

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SUMMARY OF APPLICATION: Applicants request an order to permit them to 
enter into and materially amend sub-advisory agreements without 
shareholder approval.

APPLICANTS: Mass Mutual Institutional Funds (``MMIF''), MML Series 
Investment Fund (``MML Series,'' and together with MMIF, the 
``Trusts''), Massachusetts Mutual Life Insurance Company (the 
``Manager'').

FILING DATES: The application was filed on June 30, 2000 and amendments 
thereto on December 13, 2000 and October 16, 2001.

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 November 8, 
2001, 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 may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549-

[[Page 53648]]

0609. Applicants, 1295 State Street, B379, Springfield, MA 01111-0001.

FOR FURTHER INFORMATION CONTACT: 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, NW., Washington, DC 
20549-0102 (tel. 202-942-8090).

Applicant's Representations

    1. The Trusts, organized as Massachusetts business trusts, are 
registered under the Act as open-end management investment companies. 
MMIF and MML Series currently are comprised of eighteen and eleven 
series, respectively (each a ``Fund,'' and together, the ``Funds''), 
each with its own investment objectives, policies and restrictions.\1\ 
Shares of MML Series are offered solely to separate accounts 
established by the Manager and its life insurance company subsidiaries, 
including MML Bay State Life Insurance Company and C.M. Life Insurance 
Company. The Manager, a mutual life insurance company organized under 
the laws of The Commonwealth of Massachusetts, serves as the investment 
manager to the Funds and is registered under the Investment Advisers 
Act of 1940 (``Advisers Act'').
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    \1\ Applicants also request relief with respect to future series 
of the Trusts and all future registered open-end management 
investment companies or series thereof that (a) are advised by the 
Manager or any entity controlling, controlled by, or under common 
control with the Manager, (b) use the multi-manager structure 
described in the application; and (c) comply with the terms and 
conditions in the application (``Future Funds'', and together with 
the Funds, the ``Funds''). The Trusts are the only existing 
registered open-end management investment companies that currently 
intend to rely on the requested order. If the name of any Fund 
contains the name of a Sub-Adviser, as defined below, it will be 
preceded by, the name of the Manager or the name of the entity 
controlling, controlled by, or under common control with the Manager 
that serves as primary adviser to such Fund.
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    2. The Manager serves as investment manager to each Fund pursuant 
to separate investment management agreements (``Management 
Agreements'') between the Trusts and the Manager that were approved by 
the board of trustees of each Trust (each, the ``Board,'' and 
collectively, the ``Boards''), including a majority of the trustees who 
are not ``interested persons'' as defined in section 2(a)(19) of the 
Act (``Independent Trustees''), and each Fund's shareholders. Under the 
terms of the Management Agreements, the Manager provides investment 
management services to each Fund while delegating the day-to-day 
portfolio management for each Fund to one or more sub-advisers (``Sub-
Advisers'') pursuant to separate investment sub-advisory agreements 
(``Sub-Advisory Agreements''). Each Sub-Adviser is an investment 
adviser registered under the Advisers Act, and any future Sub-Adviser 
will be registered under the Advisers Act. The Manager selects each 
Sub-Adviser, subject to approval by the respective Board, and 
compensates the Sub-Advisers out of fees paid to the Manager by the 
respective Fund.
    3. The Manager monitors each Fund's performance and the Sub-
Advisers and makes recommendations to the Board regarding allocation, 
and reallocation, of assets among Sub-Advisers to the extent the 
Manager deems appropriate in order to achieve the overall objectives of 
the Fund. The Manager also is responsible for recommending whether to 
employ, terminate or replace a particular Sub-Adviser. The Manager 
recommends the selection of a Sub-Adviser based on a number of factors, 
including whether the Sub-Adviser has displayed discipline and 
thoroughness in pursuit of its stated investment objectives, has 
maintained consistently above-average performance over time, and has 
demonstrated a high level of services to clients.
    4. Applicants request relief to permit the Manager, subject to 
approval by the Boards, to enter into and materially amend Sub-Advisory 
Agreements without seeking shareholder approval.\2\ The requested 
relief will not extend to a Sub-Adviser that is an affiliated person, 
as defined in section 2(a)(3) of the Act, of either Trust or the 
Manager, other than by reason of serving as a Sub-Adviser to one or 
more of the Funds (``Affiliated Sub-Adviser'').
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    \2\ The term ``shareholders'' includes variable contract owners, 
as applicable.
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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 policies and provisions of the 
Act. Applicants believe that their requested relief meets this standard 
for the reasons discussed below.
    3. Applicants state that the structure of each Trust is different 
from that of traditional investment companies. Applicants assert that 
the investors are relying on the Manager's experience to select one or 
more Sub-Advisers best suited to achieve a Fund's desired investment 
objectives. Applicants assert that, from the perspective of the 
investors, the role of Sub-Advisers is comparable to that of individual 
portfolio managers employed by other investment advisory firms. 
Applicants contend that requiring shareholder approval of Sub-Advisory 
Agreements may impose unnecessary costs and delays on the Funds, and 
may preclude the Manager from acting promptly in a manner considered 
advisable by the Board. Applicants note that the Management Agreements 
will remain subject to the requirements of section 15(a) of the Act and 
rule 18f-2 under the Act.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the order, the operation of the Fund 
in the manner described in the application will be approved by a 
majority of the outstanding voting securities of the 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 
unitholders of the sub-account), as defined in the Act, or, in the case 
of a Fund created in the future whose public shareholders (or variable 
contract owners through a separate account) purchased shares on the 
basis of a prospectus containing the disclosure contemplated by 
condition (2) below, by the sole initial shareholder(s) before offering 
shares of that Fund to the public (or the variable contract owners 
through a separate account).
    2. Each Trust will disclose in its prospectuses the existence, 
substance, and effect of any order granted pursuant to the application. 
In addition, each Fund relying on the requested order will hold itself 
out to the public as employing the management structure described in 
the application. The

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prospectuses will prominently disclose that the Manager has the 
ultimate responsibility (subject to oversight by the Boards) to oversee 
the Sub-Advisers and recommend their hiring, termination, and 
replacement.
    3. Within ninety (90) days of the hiring of any new Sub-Adviser, 
the Manager will furnish 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) with the information about the new 
Sub-Adviser that would be included in a proxy statement. This 
information will include any change in such disclosure caused by the 
addition of a new Sub-Adviser. The Manager will meet this condition by 
providing 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) within ninety (90) days of the hiring of a Sub-Adviser 
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.
    4. The Manager will not enter into a Sub-Advisory Agreement with 
any Affiliated Sub-Adviser without that Sub-Advisory Agreement, 
including the compensation to be paid thereunder, being approved by the 
Fund's shareholders (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).
    5. At all times, a majority of each 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.
    6. When a Sub-Adviser change is proposed for a Fund with an 
Affiliated Sub-Adviser, 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, in the best interests of 
the Fund and the unit-holders of any sub-account) and does not involve 
a conflict of interest from which the Manager or the Affiliated Sub-
Adviser derives an inappropriate advantage.
    7. The Manager will provide general management services to each 
Trust and the Funds relying on the requested order, including overall 
supervisory responsibility for the general management and investment of 
each Fund's assets and, subject to review and approval by the Boards, 
will: (a) Set each Fund's overall investment strategies; (b) evaluate, 
select, and recommend Sub-Advisers to manage all or a part of a Fund's 
assets; (c) allocate and, when appropriate, reallocate a Fund's assets 
among multiple Sub-Advisers; (d) monitor and evaluate the performance 
of Sub-Advisers; and (e) ensure that the Sub-Advisers comply with the 
relevant Fund's investment objective, policies, and restrictions by, 
among other things, implementing procedures reasonably designed to 
ensure compliance.
    8. No director, trustee or officer of either Trust or director or 
officer of the Manager will own directly or indirectly (other than 
through a pooled investment vehicle that is not controlled by such 
person) any interest in any Sub-Adviser except for: (a) Ownership of 
interests in the Manager or any entity that controls, is controlled by, 
or is under common control with the Manager; or (b) 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 Sub-Adviser or an entity 
that controls, is controlled by or is under common control with a Sub-
Adviser.

    For the Commission by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-26590 Filed 10-22-01; 8:45 am]
BILLING CODE 8010-01-M