[Federal Register Volume 67, Number 16 (Thursday, January 24, 2002)]
[Notices]
[Pages 3516-3517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1698]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25370; (812-12654)]


Harbor Fund and Harbor Capital Advisors, Inc.; Notice of 
Application

January 16, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') to amend a prior order 
that granted an exemption 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 amending a prior 
order (the ``Prior Order'') that permits them to enter into and 
materially amend sub-advisory agreements without shareholder 
approval.\1\
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    \1\ Harbor Fund and Harbor Capital Advisors, Inc., Investment 
Company Act Release Nos. 22832 (Sept. 25, 1997) (notice) and 22863 
(Oct. 21, 1997) (order).
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    Applicants: Harbor Fund (the ``Trust'') and Harbor Capital 
Advisors, Inc. (the ``New Adviser'').

Filing Date: The application was filed on October 4, 2001 and amended 
on January 14, 2002.
    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 February 11, 2002, 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 Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609. Applicants: One SeaGate, Toledo, Ohio 43666.

FOR FURTHER INFORMATION CONTACT: Jean Minarick, Senior Counsel, at 
(202) 942-0527 or Nadya Roytblat, Assistant Director, 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, NW., 
Washington, DC 20549-0102, (202) 942-8090.

Applicants' Representations

    1. The Trust is an open-end management investment company currently 
composed of thirteen series (``Funds'').\2\ The New Adviser, a wholly 
owned subsidiary of Robeco Groep, N.V., acts as investment adviser to 
the Trust and has the responsibility, subject to oversight by the board 
of trustees of the Trust (``Board'') to oversee the selection of 
investment sub-advisers (``Portfolio Managers'') which it selects and 
to recommend to the Trust's Board their hiring, termination and 
replacement. The New Adviser is registered under the Investment 
Advisers Act of 1940.
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    \2\ Applicants request that any relief granted also apply to any 
future series of the Trust and any other registered open-end 
management investment company or series thereof (a) that are advised 
by the New Adviser or any entity controlling, controlled by or under 
common control with the New Adviser, and (b) that use the management 
structure described in the application (``Future Funds,'' and 
together with the Funds, the ``Funds.'') Any Fund that relies on the 
requested order will do so only in accordance with the terms and 
conditions contained in the application. The trust is the only 
existing open-end management investment company that currently 
intends to rely on the order. No Fund will have in its name the name 
of a Portfolio Manager, as defined below.
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    2. On October 21, 1997, the Trust and its prior investment adviser, 
then a wholly owned subsidiary of Owens-Illinois, Inc. (the ``Prior 
Adviser''), received the Prior Order permitting the Trust and the Prior 
Adviser to enter into and materially amend sub-advisory agreements 
(``Sub-Advisory Agreements'') for the Funds without obtaining 
shareholder approval.

[[Page 3517]]

Applicants seek to amend the Prior Order to permit the New Adviser to 
enter into and materially amend Sub-Advisory Agreements for the Funds 
without obtaining shareholder approval. Except for the identity of the 
parent company, the New Adviser and the Prior Adviser are substantially 
similar in all material respects. The entire management team of the 
Prior Adviser has continued in their same capacities with the New 
Adviser. All key employees of the Prior Adviser have continued their 
employment with the New Adviser. Applicants also seek to modify 
condition 6 to the Prior Order to conform with recent precedent.

Applicants' Legal Analysis

    1. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction 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 submit that amending the Prior Order as requested would 
be consistent with the standards of section 6(c) of the Act. The New 
Adviser employs the same manager-of-managers investment management 
approach as did the Prior Adviser and similarly holds itself out to the 
public as an investment adviser whose strength, experience and 
expertise lies in its ability to evaluate, select and oversee those 
Portfolio Managers who can add the most value to a shareholder's 
investment in a Fund. While the New Adviser is a new legal entity, its 
experience in operating as a manager-of-managers comes from the 
experience of its management and staff, all of whom were previously 
employed by the Prior Adviser.

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 requested in this 
application, 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 as defined in the Act, or in the case of a Fund 
whose public shareholders purchase shares on the basis of a prospectus 
containing the disclosure contemplated by condition 2 below, by the 
initial shareholder(s) before offering shares of the Fund to the 
public.
    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 New Adviser has the ultimate 
responsibility to oversee Portfolio Managers and recommend their 
hiring, termination and replacement.
    3. At all times, a majority of the Board will be persons each of 
whom is not an ``interested person'' (as defined in section 2(a)(19) of 
the Act) (the ``Disinterested Trustees''), and the nomination of new or 
additional Disinterested Trustees will be at the discretion of the 
then-existing Disinterested Trustees.
    4. The New Adviser will not enter into a Sub-Advisory Agreement 
with any Portfolio Manager that is an affiliated person (as defined in 
section 2(a)(3) of the Act) of the Trust, the New Adviser or the Funds, 
other than by reason of serving as a Portfolio Manager to one or more 
of the Funds (the ``Affiliated Portfolio Manager'') without that 
agreement, including the compensation to be paid thereunder, being 
approved by the shareholders of the applicable Fund.
    5. When a Portfolio Manager change is proposed for a Fund with an 
Affiliated Portfolio Manager, the Board, including a majority of the 
Disinterested Trustees, will make a separate finding, reflected in the 
Fund's Board minutes, that the change is in the best interests of the 
Fund and its shareholders and does not involve a conflict of interest 
from which the New Adviser or the Affiliated Portfolio Manager derives 
an inappropriate advantage.
    6. Within 90 days of the hiring of any new Portfolio Manager, the 
New Adviser will furnish the shareholders of the affected Fund with all 
information about a new Portfolio Manager that would be contained in a 
proxy statement. This information will include any change in such 
disclosure caused by the addition of a new Portfolio Manager. The New 
Adviser will meet this condition by providing shareholders, within 90 
days of the hiring of a Portfolio Manager, 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.
    7. The New Adviser will provide general management services to each 
Fund, including overall oversight responsibility for the general 
management and investment of each Fund's securities portfolio, and, 
subject to review and approval by the Board, will: (a) Set the Fund's 
overall investment strategies; (b) evaluate, select and recommend 
Portfolio Managers; (c) when appropriate, recommend to the Board the 
allocation and reallocation of a Fund's assets among multiple Portfolio 
Managers; (d) monitor and evaluate the performance of Portfolio 
Managers, including their compliance with the Fund's investment 
objectives, policies and restrictions; and (e) implement procedures to 
ensure that the Portfolio Managers comply with the Fund's investment 
objectives, policies and restrictions.
    8. No trustee or officer of the Trust or director or officer of the 
New 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 Portfolio Manager except for: 
(a) Ownership of interests in the New Adviser or any entity that 
controls, is controlled by, or is under common control with the New 
Adviser; 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 Portfolio Manager or an entity that controls, is controlled 
by, or is under common control with a Portfolio Manager.
    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-1698 Filed 1-23-02; 8:45 am]
BILLING CODE 8010-01-P