[Federal Register Volume 67, Number 141 (Tuesday, July 23, 2002)]
[Notices]
[Pages 48228-48230]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18564]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25665 ; 812-12748]


MassMutual Institutional Funds, et al.; Notice of Application

July 17, 2002.
AGENCY: Securities and Exchange Commission (``SEC'' or ``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 the Application: Applicants request an order to amend a 
prior order (``Prior Order'') that permits them to enter into and 
materially amend sub-advisory agreements without shareholder 
approval.\1\ The amended order would exempt applicants from certain 
disclosure requirements.
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    \1\ MassMutual Institutional Funds, et al., Investment Company 
Act Release Nos. 25211 (Oct. 16, 2001) (notice) and 25260 (Nov. 9, 
2001) (order).

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

FILING DATES: The application was filed on December 17, 2001, and 
amended on July 11, 2002.

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 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on

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August 12, 2002, and should be accompanied by proof of service on 
applicant, 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 5th Street, NW., Washington, DC 20549-
0609. Applicants, 1295 State Street, B379, Springfield, MA 01111-0001.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at 
(202) 942-0634 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 5th Street, NW., Washington, DC 
20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Trusts are registered under the Act as open-end management 
investment companies and are comprised of multiple series (each a 
``Fund'' and together the ``Funds'').\2\ The Manager serves as the 
investment manager to each Fund pursuant to separate investment 
management agreements between each Trust and the Manager (``Management 
Agreements'') that were approved by the board of trustees of the 
relevant 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'').\3\ 
The Prior Order permits the Manager, subject to approval by the 
respective Board, to enter into and materially amend Sub-Advisory 
Agreements without seeking shareholder approval. The Prior Order does 
not extend to a Sub-Advisory Agreement with any Sub-Adviser that is an 
affiliated person, as defined in section 2(a)(3) of the Act, of a Fund 
or the Manager (other than by reason of serving as a Sub-Adviser to a 
Fund) (``Affiliated Sub-Adviser'').
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    \2\ 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 and the Prior Order (``Future Funds,'' 
and together with the Funds, the ``Funds''). The Trusts are the only 
existing investment companies that currently intend to rely on the 
requested order.
    \3\ If the name of any Fund contains the name of a Sub-Adviser, 
the name of the Fund also will contain the name of the Manager (or 
an acronym of the name of the Manager), or the name of the entity 
controlling, controlled by, or under common control with the Manager 
to the Funds, which will appear before the name of the Sub-Adviser.
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    2. Applicants request an order that would amend the Prior Order to 
exempt the Funds from the various disclosure provisions described 
below. These provisions may require the Funds to disclose the fees paid 
by the Manager to each Sub-Adviser. An exemption is requested to permit 
the Funds to disclose (as both a dollar amount and as a percentage of a 
Fund's net assets): (a) Aggregate fees paid to the Manager and 
Affiliated Sub-Advisers; and (b) aggregate fees paid to Sub-Advisers 
other than Affiliated Sub-Advisers (``Aggregate Fee Disclosure''). If a 
Fund employs an Affiliated Sub-Adviser, the Fund will provide separate 
disclosure of any fees paid to the Affiliated Sub-Adviser.

Applicants' Legal Analysis

    1. Form N-1A is the registration statement used by open-end 
investment companies. Item 15(a)(3) of Form N-1A requires disclosure of 
the method and amount of the investment adviser's compensation.
    2. Rule 20a-1 under the Act requires proxies solicited with respect 
to an investment company to comply with Schedule 14A under the 
Securities Exchange Act of 1934. Items 22(c)(1)(ii), 22(c)(1)(iii), 
22(c)(8), and 22(c)(9) of Schedule 14A, taken together, require a proxy 
statement for a shareholder meeting at which the advisory contract will 
be voted upon to include the ``rate of compensation of the investment 
adviser,'' the ``aggregate amount of the investment adviser's fees,'' a 
description of ``the terms of the contract to be acted upon,'' and, if 
a change in the advisory fee is proposed, the existing and proposed 
fees and the difference between the two fees.
    3. Form N-SAR is the semi-annual report filed with the Commission 
by registered investment companies. Item 48 of Form N-SAR requires 
investment companies to disclose the rate schedule for fees paid to 
their investment advisers, including the Sub-Advisers.
    4. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of investment company 
registration statements and shareholder reports filed with the 
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require 
that investment companies include in their financial statements 
information about investment advisory fees.
    5. 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.
    6. Applicants assert that many Sub-Advisers charge their customers 
for advisory services according to a ``posted'' rate schedule. 
Applicants state that while Sub-Advisers are willing to negotiate fees 
lower than those posted in the schedule, particularly with large 
institutional clients, they are reluctant to do so when the fees are 
disclosed to other prospective and existing customers. Applicants 
submit that the relief will encourage Sub-Advisers to negotiate lower 
fees with the Manager, the benefits of which are likely to be passed on 
to a Fund's shareholders.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the conditions contained in the Prior Order and the 
following additional conditions:
    1. With respect to the Funds relying on the requested relief, the 
Manager will provide the Board, no less frequently than quarterly, with 
information about the Manager's profitability on a per Fund basis. This 
information will reflect the impact on profitability of the hiring or 
termination of any Sub-Adviser during the applicable quarter.
    2. Whenever a Sub-Adviser is hired or terminated, the Manager will 
provide the relevant Board with information showing the expected impact 
on the Manager's profitability.
    3. Each Trust will disclose in its registration statement the 
Aggregate Fee Disclosure.
    4. Independent counsel knowledgeable about the Act and the

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duties of Independent Trustees will be engaged to represent the 
Independent Trustees. The selection of such counsel will be within the 
discretion of the then-existing Independent Trustees.

    For the Commission, by the Division of Investment Management, 
under delegated authority.

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-18564 Filed 7-22-02; 8:45 am]
BILLING CODE 8010-01-P