45886 Federal Register / Vol. 62, No. 168 / Friday, August 29, 1997 / Notices

1Applicants also request relief for any Series of

the Trusts organized in the future, and any openend management investment companies in the

future advised by NEFM or TNE Advisers or by a

person controlling, controlled by, or under common

control with NEFM or TNE Advisers that operates

in substantially the same manner as the Trusts and

complies with the conditions to the requested order

as set forth in the application.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23006 Filed 8–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

22796; 812–10420]

New England Funds Trust I, et al.;

Notice of Application

August 22, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from the provisions of section

15(a) of the Act and rule 18f–2 under

the Act.

SUMMARY OF APPLICATION: Applicants

request an order permitting TNE

Advisers, Inc. (‘‘TNE Advisers’’) and

New England Fund Management, L.P.

(‘‘NEFM’’), as investment advisers of

certain funds, to enter into sub-advisory

contracts on behalf of the funds without

receiving prior shareholder approval.

APPLICANTS: New England Funds Trust I,

New England Funds Trust II, New

England Funds Trust III, New England

Cash Management Trust, New England

Tax Exempt Money Market Trust

(collectively, the ‘‘New England

Funds’’), New England Zenith Fund

(collectively with the New England

Funds, the ‘‘Trusts’’), TNE Advisers,

and NEFM (together with TNE Advisers,

the ‘‘Advisers’’).

FILING DATES: The application was filed

on November 12, 1996, and amended on

July 1, 1997 and August 22, 1997.

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

September 16, 1997, 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 such notification

by writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

New England Funds and NEFM, 399

Boylston Street, 4th Floor, Boston,

Massachusetts 02116. New England

Zenith Fund and TNE Advisers, 501

Boylston Street, Boston, Massachusetts

02116.

FOR FURTHER INFORMATION CONTACT:

Kathleen L. Knisely, Staff Attorney, at

(202) 942–0517, 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 from the SEC’s

Public Reference Branch, 450 Fifth

Street, N.W. Washington, D.C. 20549

(tel. 202–942–8090).

Applicants’ Representations

1. Each of the New England Funds is

organized as a Massachusetts business

trust and registered under the Act as an

open-end management investment

company with one of more series.

NEFM, a limited partnership, is

registered as an investment adviser

under the Investment Advisers Act of

1940 (the ‘‘Advisers Act’’). NEFM serves

as investment adviser to each of the

New England Funds (except New

England Growth Fund Series).

2. New England Zenith Fund (the

‘‘Zenith Fund’’) is organized as a

Massachusetts business trust and

registered under the Act as an open-end

management investment company with

one or more series. The Zenith Fund

serves as a funding vehicle for certain

variable annuity and variable life

insurance products issued by

Metropolitan Life Insurance Company

(‘‘MetLife’’) and its subsidiary New

England Life Insurance Company

(‘‘NELICO’’). TNE Advisers is registered

as an investment adviser under the

Advisers Act. TNE Advisers serves as

investment adviser for each series of the

Zenith Fund (except the Capital Growth

Series).

3. Each series for the Zenith Fund

(except the Capital Growth Series) and

each series of the New England Funds

(except the New England Growth Fund

Series) (together, the ‘‘Series’’) utilizes

the adviser/subadviser management

structure.1 Under this two-tiered

structure, NEFM (in the case of the New

England Funds) or TNE Advisers (in the

case of the Zenith Fund) acts as each

Series’ investment adviser, delegating

the day-to-day portfolio management for

each Series to one or more sub-advisers.

4. The New England Funds have

entered into an advisory agreement with

NEFM, which states that NEFM will

provide both portfolio management

services and administrative services to

the New England Funds. TNE Advisers

has entered into an advisory agreement

with the Zenith Fund, which states that

TNE Advisers will provide both

portfolio management services and

administrative services for each Series

of the Zenith Fund for which TNE

Advisers is the adviser. NEFM and TNE

Advisers are responsible for: (a)

Evaluating existing and prospective subadvisers; (b) submitting

recommendations to the boards of

trustees of the Trusts concerning subadvisers to be engaged by the Series; (c)

monitoring and reporting to the Trusts’

boards concerning investment results of

the sub-advisers; (d) monitoring the subadvisers’ compliance with the Series’

investment objectives, policies, and

restrictions; and (e) when appropriate,

recommending that the trustees of the

relevant Trust terminate the services of

a Series’ sub-advisers.

5. NEFM and TNE Advisers have

entered into sub-advisory agreements

with one or more advisory firms (subadvisers) with respect to each Series,

pursuant to which the sub-advisers

provide day-to-day portfolio

management services. Each subadvisory agreement requires the relevant

sub-advisers to manage the investment

and reinvestment of the assets of the

Series, subject to the supervision of

either NEFM or TNE Advisers and

oversight by the trustees. The subadvisers’ responsibilities include

effecting portfolio transactions and

reporting periodically to NEFM or TNE

Advisers, their agents, and the trustees

of the Trusts.

6. Under their advisory agreements,

NEFM and TNE Advisers receive from

the relevant Series compensation at a

specified annual percentage of the

corresponding Series’ average daily net

assets. NEFM and TNE Advisers, in

turn, compensate the relevant subadvisers at specified annual percentage

rates of the Series’ average daily net

assets. The sub-advisory fee paid to the

sub-advisers is payable by NEFM or

TNE Advisers, and not by the Series.

7. The Advisers have contractual

rights under their applicable advisory
Federal Register / Vol. 62, No. 168 / Friday, August 29, 1997 / Notices 45887

2NELICO and MetLife are the legal owners of

shares attributable to variable life insurance and

variable annuity contracts issued by separate

accounts of NELICO and MetLife. As such, they are

required to vote their shares in accordance with the

instructions received from the owners of variable

life and variable annuity contracts issued by

separate accounts that are registered under the Act.

All Zenith Fund shares held by separate accounts

that are registered under the Act for which no

timely instructions are received are voted for, voted

against, or withheld from voting on any proposition

in the same proportion as the shares held in that

separate account for all contracts for which voting

instructions are received.

agreements to delegate their duties to

provide administrative services to a subadviser or third party. The Advisers

agree that no such Series will utilize the

relief granted under the requested order

until such time as the Advisers have

waived such rights with respect to such

Series. The Advisers, however, may

continue to delegate to a third party

routine accounting and legal functions

(e.g., legal work performed in

connection with periodic filings and

other routine legal matters) that do not

include establishing investment policies

or the selection, evaluation, or

termination of sub-advisers. The

Advisers, under their advisory

agreements, retain all responsibility for

the performance of these delegated

duties.

Applicants’ Legal Analysis

1. Applicants request an exemption

from section 15(a) of the Act and rule

18f–2 under the Act to permit NEFM

and TNE Advisers to enter into new or

amended agreements with sub-advisers

without obtaining shareholder approval.

Such relief would include any subadvisory agreement necessitated

because the prior sub-adviser was

terminated as a result of an

‘‘assignment,’’ as defined in section

2(a)(4) of the Act.

2. Section 15(a) of the Act makes it

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 a majority of the

investment company’s outstanding

voting securities. Rule 18f–2 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.

3. Applicants state that adviser/subadviser arrangements differ from

conventionally managed mutual funds.

Unlike conventional mutual funds,

adviser/sub-adviser managed funds

divide responsibility for general

management and investment advice

between the adviser and the subadviser. The adviser provides general

management and administrative

services to the funds, including

monitoring the sub-adviser. The adviser

selects the sub-adviser it believes is

most likely to make portfolio securities

selections that will achieve the funds’

objectives. The sub-adviser, in turn,

selects portfolio investments.

Applicants believe that the shareholders

in an adviser/sub-adviser fund rely on

the fund’s adviser to perform the

selecting and monitoring of sub-advisers

and to respond promptly to any

significant change in the sub-advisory

services provided to the fund.

4. Applicants believe that without the

ability to employ promptly a new subadviser, investors’ expectation may be

frustrated and the Trusts and their

shareholders could be disadvantaged

when a sub-adviser has resigned or has

been terminated because its

performance was unsatisfactory or

where there has been an ‘‘assignment’’

of a sub-advisory agreement.

5. Applicants assert that the ability to

enter into sub-advisory agreements

without shareholder approval would

enable the Trusts and their Series that

employ an adviser/sub-adviser structure

to act promptly upon the Adviser’s

recommendations with respect to the

sub-adviser, as well as save the Series

and their shareholders the expense of

convening shareholder meetings.

Applicants further assert that the Trusts’

investors will be able to exercise control

over their relationship with the Adviser

because the Trusts’ advisory agreements

with NEFM or TNE Advisers, as

applicable, will be subject to the

shareholder voting requirements of

section 15(a) of the Act.

6. Section 6(c) of the Act provides that

the SEC may exempt any person,

security, or transaction from any

provision of the Act, if and to the extent

that 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 state that the

requested exemption is in accordance

with the standards of section 6(c).

Applicants’ Conditions

Applicants agree that the order shall

be subject to the following conditions:

1. The Advisers will provide general

management and administrative

services to the Trusts, including overall

supervisory responsibility for the

general management and investment of

the Trusts’ securities portfolios that

employ an adviser/sub-adviser

structure, and subject to review and

approval by each Trust’s board with

respect to its respective Series that

employ an adviser/sub-adviser

structure, will (i) set the Series’ overall

investment strategies; (ii) select subadvisers; (iii) monitor and evaluate the

performance of the sub-advisers; (iv)

allocate, and when appropriate,

reallocate a Series’ assets among its subadvisers in those cases where a Series

has more than one sub-adviser; and (v)

implement procedures reasonably

designed to ensure that the sub-advisers

comply with the relevant Trust’s

investment objectives, policies, and

restrictions.

2. Before a Series may rely on the

order requested in the application, the

operation of the Series in the manner

described in the application will be

approved by a majority of its

outstanding voting securities,2 as

defined in the Act, or, in the case of a

new Series whose public shareholders

purchased shares on the basis of a

prospectus containing the disclosure

contemplated by 4. below, by the sole

shareholder before the offering of shares

of such Series to the public.

3. Within 90 days after the hiring of

any new sub-adviser or the

implementation of any proposed

material change in a sub-advisory

agreement, the Trusts will furnish

shareholders the information about a

new sub-adviser or sub-advisory

agreement that would be included in a

proxy statement. Such information will

include any change in such disclosure

caused by the addition of a new subadviser or any proposed material change

in the sub-advisory agreement of a

Series. The Series will meet this

condition by providing shareholders

with an information statement meeting

the requirements of Regulation 14C and

Schedule 14C under the Securities

Exchange Act of 1934 (‘‘Exchange Act’’).

The information statement also will

meet the requirements of Item 22 of

Schedule 14A under the Exchange Act.

The Zenith Fund will ensure that the

information statement is furnished to

the unitholders of any separate account

for which the Zenith Fund serves as a

funding vehicle.

4. The Trusts will disclose in all

prospectuses relating to any Series the

existence, substance and effect of any

order granted pursuant to the

application. In addition, each Series

will hold itself out to the public as

employing the adviser/sub-adviser

approach described in the application.

The prospectus will prominently

disclose that the adviser has ultimate

responsibility to oversee sub-advisers

and recommend their hiring,

termination, and replacement.
45888 Federal Register / Vol. 62, No. 168 / Friday, August 29, 1997 / Notices

5. The Advisers will not enter into a

sub-advisory agreement with any subadviser that is an affiliated person, as

defined in section 2(a)(3) of the Act, the

advisers, or the Trusts other than by

reason of serving as sub-adviser to one

or more Series (‘‘Affiliated SubAdviser’’) without such agreement,

including compensation to be paid

thereunder, being approved by the

shareholders of the applicable Series.

6. At all times, a majority of the

trustees of the Trusts will be persons

each of whom is not an ‘‘interested

person’’ of each of the Trusts (as defined

in section 2(a)(19) of the Act) (the

‘‘Independent Trustees’’), and the

nomination of new or additional

Independent Trustees will be committed

to the discretion of then existing

Independent Trustees.

7. When a sub-adviser change is

proposed for a Series having an

Affiliated Sub-Adviser, the trustees of

the Trusts, including a majority of the

Independent Trustees, will make a

separate finding, reflected in such

Trust’s board minutes, that the change

is in the best interests of the Series and

its shareholders and does not involve a

conflict of interest from which the

Advisers or the Affiliated Sub-Adviser

derives an inappropriate advantage.

8. No trustee or officer of the Trusts,

or the Advisers will own directly or

indirectly (other than through a pooled

investment vehicle that is not controlled

by any such trustee or officer) any

interest in a sub-adviser except for: (a)

Ownership of interests in the Advisers

or any entity that controls the Advisers;

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 subadviser.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23007 Filed 8–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22797; International Series

Release No. 1098; File No. 812–10376]

Tele-Communications International,

Inc.; Notice of Application

August 22, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

SUMMARY OF APPLICATION: Applicant

Tele-Communications International, Inc.

requests an order under section 6(c) of

the Act that would permit applicant and

its controlled companies to participate

in certain foreign tele-media ventures

without being subject to the provisions

of the Act.

FILING DATES: The application was filed

on October 2, 1996, and amended on

June 30, 1997 and August 18, 1997.

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

September 16, 1997 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 who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

General Counsel, Applicant, 5619 DTC

Parkway, Englewood, CO 80111.

FOR FURTHER INFORMATION CONTACT:

David W. Grim, Staff Attorney, at (202)

942–0571, 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 Fifth

Street, N.W., Washington, D.C. 20549;

(202) 942–8090].

Applicant’s Representations

1. Applicant, a Delaware corporation,

was incorporated in 1994 as a whollyowned subsidiary of TeleCommunications, Inc. (‘‘TCI’’), a

Delaware corporation. TCI, through its

subsidiaries and affiliates (other than

applicant), is principally engaged in the

construction, acquisition, ownership,

and operation of cable television

systems in the United States and the

provision of cable and satellitedelivered video entertainment,

information, and home shopping

programming services to various

distribution media.

2. Applicant was formed by TCI as a

holding company for the purpose of

consolidating TCI’s international cable

and telecommunications and certain of

its international programming

businesses under one corporation,

pending an initial public offering of

stock by applicant in mid-1995.

Applicant was formed with its own

management team, which largely

consisted of those executive officers of

TCI who had been responsible for the

operations of TCI’s international

divisions. During the fourth quarter of

1994 and the first quarter of 1995, TCI

contributed its ownership interests in

substantially all of its international

cable and telephony assets and certain

of its international programming assets

to applicant (the ‘‘TCI Contributions’’).

TCI currently owns approximately 85%

of the outstanding shares of all series of

common stock of applicant and

approximately 92% of the combined

voting power of all series of outstanding

shares of common stock of applicant.

3. Applicant has expanded and built

upon the assets it received through the

TCI Contributions and has established

ventures in new markets. Today

applicant, directly and through joint

ventures and controlled companies, is

engaged in the business of acquiring,

developing, operating, and managing

broadband distribution,

telecommunications, and programming

businesses in selected markets outside

the United States.

4. Applicant’s assets are not held as

passive or portfolio investments and are

not traded for short-term profit.

Applicant has never been a registered

investment company (or subject to any

analogous regulatory scheme in another

jurisdiction) and has never been

engaged in the business of investing,

reinvesting, or trading in securities.

5. Applicant requests relief to permit

applicant and each entity that is now or

in the future controlled by, or under

common control with, applicant (each,

including applicant, a ‘‘Covered Entity’’)

to engage, either directly or indirectly

through subsidiaries, in certain foreign

tele-media ventures without being

subject to the provisions of the Act. For

purposes of the application, applicant

represents that ‘‘foreign tele-media

venture’’ means any and all activities

outside the United States involving:

communications; media; the creation,

storage and transmission of voice, video,

or data; programming, including

entertainment, news, information, and

home shopping services; print media;

broadband and satellite distribution;

over the air broadcast;

telecommunications; wireline or

wireless distribution and telephony;