[Federal Register Volume 67, Number 129 (Friday, July 5, 2002)]
[Notices]
[Pages 44886-44888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16845]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25642 ; 812-12498]


Vision Group of Funds, et al.; Notice of Application June 28, 
2002.

AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order 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 the Application: The order would permit applicants to 
enter into and materially amend subadvisory agreements without 
shareholder approval.
    Applicants: Vision Group of Funds (the ``Trust'') and Manufacturers 
and Traders Trust Company (``M&T'').
    Filing Dates: The application was filed on April 4, 2001 and 
amended on June 27, 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 the 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 July 23, 2002, 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 5th Street, NW, Washington, DC 
20549-0609. Applicants, c/o C. Grant Anderson, Esq., Federated Services 
Company, Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 
15222-3779.

FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Senior Counsel, at (202) 
942-0582, 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 
Commission's Public Reference Branch, 450 5th Street, NW, Washington, 
DC 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 currently 
offers eighteen series (``Funds''), each of which has its own 
investment objectives, policies and restrictions. M&T Asset Management 
(the ``Adviser''), a department of M&T, is registered under the 
Investment Advisers Act of 1940 (the ``Advisers Act''), and serves as 
the investment adviser to the Funds. M&T is a national banking 
association and is wholly owned by M&T Bank Corporation, a bank holding 
company.
    2. Applicants also request relief with respect to any existing or 
future registered open-end management investment company or series 
thereof that (a) is advised by the Adviser or any entity controlling, 
controlled by or under common control with the Adviser; (b) uses the 
adviser/subadviser structure that is described in the application; and 
(c) complies with the terms and conditions in the application (together 
with any current or future series of the Trust, the ``Funds'').
    3. The Adviser serves as the investment adviser to each Fund 
pursuant to an investment advisory agreement with the Trust (``Advisory 
Agreement'') that was approved by the board of trustees of the Trust 
(the

[[Page 44887]]

``Board''), including a majority of the trustees who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act 
(``Independent Trustees''), and the shareholders of each Fund. Under 
the terms of the Advisory Agreement, the Adviser manages the investment 
of assets of each Fund and may, subject to oversight by the Board, hire 
one or more subadvisers (``Subadvisers'') to provide portfolio 
management services to each of the Funds pursuant to separate 
investment advisory agreements (``Subadvisory Agreements''). Each 
Subadviser is an investment adviser registered under the Advisers Act. 
Subadvisers are recommended to the Board by the Adviser and selected 
and approved by the Board, including a majority of the Independent 
Trustees. Each Subadviser's fees are paid by the Adviser out of the 
management fees received by the Adviser from the respective Fund.\1\
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    \1\ The Trust is the only existing investment company that 
currently intends to rely on the order. Applicants represent that if 
the name of any Fund contains the name of a Subadviser that is not 
an Affiliated Subadviser as defined below, it will also contain the 
name of the Adviser, which will appear before the name of the 
Subadviser.
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    4. The Adviser monitors the Funds and the Subadvisers and makes 
recommendations to the Board regarding allocation, and reallocation, of 
assets between Subadvisers and is responsible for recommending the 
hiring, termination and replacement of Subadvisers. The Adviser 
recommends Subadvisers based on a number of factors used to evaluate 
their skills in managing assets pursuant to particular investment 
objectives.
    5. Applicants request relief to permit the Adviser, subject to the 
Board's approval, to enter into and materially amend Subadvisory 
Agreements without shareholder approval. The requested relief would not 
extend to any Subadviser 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 Funds (an 
``Affiliated Subadviser'').

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, 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 state that the requested 
relief meets this standard for the reasons discussed below.
    3. Applicants assert that the Funds' shareholders rely on the 
Adviser to select the Subadvisers best suited to achieve a Fund's 
investment objectives. Applicants assert that, from the perspective of 
the investor, the role of the Subadvisers is comparable to that of 
individual portfolio managers employed by other investment advisory 
firms. Applicants submit that the requested relief will reduce the 
Funds' expenses associated with shareholder meetings and proxy 
solicitations, and enable the Funds to operate more efficiently. 
Applicants also note that the Advisory Agreement will remain subject to 
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 requested order, the operation of 
the Fund, as described in the application, will be approved by the vote 
of a majority of the Fund's outstanding voting securities, as defined 
in the Act, or in the case of a Fund whose public shareholders 
purchased shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the initial shareholders before 
offering shares of that Fund to the public.
    2. Each Fund relying on the requested relief 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 ultimate responsibility, subject to review of the Board, to 
monitor and evaluate 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 an 
Affiliated Subadviser without that agreement, including the 
compensation to be paid under it, being approved by the shareholders of 
the applicable Fund.
    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 
Trust'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 Adviser or the Affiliated Subadviser derives an 
inappropriate advantage.
    6. Within 90 days of the hiring of a new Subadviser, the Adviser 
will furnish shareholders of the affected Fund with the information 
about the Subadviser that would be included in a proxy statement. The 
information will include any changes caused by the addition of the new 
Subadviser. The Adviser will meet this condition by providing 
shareholders of the applicable Fund 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 Adviser will provide general management services to the 
Funds including overall supervisory 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 each Fund's 
overall investment strategies; (b) evaluate, select, and recommend 
Subadvisers to manage all or a part of a Fund's assets; (c) when 
appropriate, allocate and reallocate the Fund's assets among multiple 
Subadvisers; (d) monitor and evaluate the performance of the 
Subadvisers; and (e) implement procedures reasonably designed to ensure 
that the Subadvisers comply with the Fund's investment objectives, 
restrictions and policies.
    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 any such director, 
trustee, or officer), any interest in a Subadviser except for: (a) 
Ownership of interests in the Adviser or any entity that controls, is 
controlled by, or under common control with the Adviser, or (b) 
ownership of less than 1% of the outstanding securities of any class of 
equity or debt securities of any publicly traded company that is either

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a Subadviser or an entity that controls, is controlled by, or is under 
common control with a Subadviser.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 02-16845 Filed 7-3-02; 8:45 am]
BILLING CODE 8010-01-P