Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / Notices 51495

1Applicants also request relief with respect to

any series of the Trust that may be created in the

future and all subsequently registered open-end

investment companies that in the future are advised

by the Adviser, operate in substantially the same

manner as the Funds with respect to the Adviser’s

responsibility to select, evaluate and supervise

portfolio managers, and comply with the conditions

to the requested order.

2As of the date of the application, only one Fund

has more than one Portfolio Manager.

the Secretary and Director of Public

Affairs. Effective August 19, 1997.

Department of the Treasury

Senior Advisor to the Assistant

Secretary for Management and CFO.

Effective August 12, 1997.

Deputy Director of Scheduling to the

Director, Scheduling Affairs. Effective

August 13, 1997.

Public Affairs Specialist to the

Director, Office of Public Affairs.

Effective August 21, 1997.

Environmental Protection Agency

Special Assistant to the Chief of Staff.

Effective August 20, 1997.

Farm Credit Administration

Special Assistant to the Member.

Effective August 6, 1997.

National Aeronautics and Space

Administration

Writer-Editor to the Associate

Administrator for Public Affairs.

Effective August 22, 1997.

Office of Management and Budget

Confidential Assistant to the

Associate Director, National Security

and International Affairs. Effective

August 22, 1997.

Office of National Drug Control Policy

Events Manager to the Director.

Effective August 14, 1997.

Securities and Exchange Commission

Confidential Assistant to the

Commissioner. Effective August 28,

1997.

Small Business Administration

Deputy Associate Administrator to the

Associate Administrator for

Communications and Public Liaison.

Effective August 14, 1997.

Senior Advisor to the Administrator.

Effective August 28, 1997.

United States Information Agency

White House Liaison to the Chief of

Staff, Office of the Director. Effective

August 7, 1997.

Authority: 5 U.S.C. 3301 and 3302; E.O.

10577, 3 CFR 1954–1958 comp., P. 218.

Office of Personnel Management.

Janice R. Lachance,

Acting Director.

[FR Doc. 97–25950 Filed 9–30–97; 8:45 am]

BILLING CODE 6325–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. IC–22832; 812–10650]

Harbor Fund and Harbor Capital

Advisors, Inc.; Notice of Application

September 25, 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

Harbor Fund (the ‘‘Trust’’) and Harbor

Capital Advisors, Inc. (the ‘‘Adviser’’)

request an order to permit the Adviser

to enter into and materially amend

contracts with the Trust’s subadvisers

without shareholder approval.

FILING DATES: The application was filed

on May 9, 1997, and amended on

August 29, 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

October 20, 1997, 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 SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants, One SeaGate, Toledo, Ohio

43666.

FOR FURTHER INFORMATION CONTACT:

Joseph B. McDonald, Jr., Senior

Counsel, at (202) 942–0533, 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 St.,

N.W., Washington, D.C. 20549 (tel. 202–

942–8090).

Applicants’ Representations

1. The Trust is organized as a

Delaware business trust and is

registered under the Act as an open-end

management investment company. The

Trust is comprised of nine series

(‘‘Funds’’), each of which has its own

investment objectives and policies.1

Each Fund offers only one class of

shares, which are distributed to the

public without a sales charge or

distribution or service fees. The

Adviser, a Delaware corporation, is

registered under the Investment

Advisers Act of 1940 (the ‘‘Advisers

Act’’).

2. The Trust, on behalf of each Fund,

has entered into separate investment

advisory agreements (‘‘Agreements’’)

with the Adviser. Under the terms of

these Agreements, the Adviser provides

each Fund with investment research,

advice and supervision, and furnishes

continuously an investment program for

each Fund consistent with the

investment objectives and policies of

the Fund. The Adviser also administers

each Fund’s business affairs, furnishes

each Fund with office facilities and is

responsible for clerical, recordkeeping,

and bookkeeping services and for the

financial and accounting records

required to be maintained by each Fund

(other than those maintained by the

Trust’s custodian and shareholder

servicing agent). The Agreements

specifically permit the Adviser to enter

into investment subadvisory agreements

(‘‘Subadvisory Agreements’’) with

portfolio managers (‘‘Portfolio

Managers’’) to whom the Adviser

delegates its responsibility for providing

investment advice and making

investment decisions for the particular

Fund.

3. Since 1987, the Adviser has

selected Portfolio Managers to make

investment decisions for the Funds, and

has represented itself as an investment

adviser whose strength, experience, and

expertise lies in its ability to evaluate,

select, and supervise those Portfolio

Managers who can add the most value

to a shareholder’s investment in the

Trust. Currently, all nine Funds have

contracted for subadvisory services with

Portfolio Managers selected by the

Adviser.2 In addition to selecting

Portfolio Managers, the Adviser

provides management oversight services

to the Funds, which include, but are not

limited to, supervising the Portfolio
51496 Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / Notices

Managers’ compliance with federal

regulations, including those imposed

under the Act; extensive evaluation of

the Portfolio Managers’ investment

performance; analyzing the composition

of the investment portfolios of each

Fund and preparing reports for the

Trustees; preparing presentations to

shareholders which analyze each Fund’s

overall investment program and

performance; and intensive and

continual review of its Portfolio

Manager selection process. The Adviser

retains the ultimate responsibility to

both oversee the Portfolio Managers

which it selects and to recommend to

the Trust’s board of trustees (the ‘‘Board

of Trustees’’) their hiring, termination,

and replacement.

4. Under the terms of the Subadvisory

Agreements, the Portfolio Managers

have authority to provide the respective

Funds with advice concerning the

investment management of that portion

of the Fund’s assets allocated to the

Portfolio Manager by the Board of

Trustees. The Portfolio Managers

determine what securities will be

purchased and sold. The Portfolio

Managers also perform certain

recordkeeping and compliance

functions required by the Act and the

Advisers Act.

5. For the Adviser’s advisory and

administrative services, each fund pays

the Adviser a monthly fee at an annual

rate based on the average daily net

assets of that fund. For their

subadvisory services to the Funds, the

Adviser pays each Portfolio Manager a

monthly fee at an annual rate based on

the average daily net assets of the Fund.

Subadvisory fees paid by the Adviser to

a Portfolio Manager of a Fund with more

than one Portfolio Manager depend both

on the fee rate negotiated with the

Adviser and on the percentage of the

Fund’s assets allocated to the Portfolio

Manager by the Adviser.

6. Applicants request an exemption

from section 15(a) of the Act and rule

18f-2 under the Act to permit the

Adviser, subject to the approval of the

Trust’s Board of Trustees, to enter into

and materially amend Subadvisory

Agreements with Portfolio Managers

without obtaining shareholder approval.

The Adviser will obtain shareholder

approval of a Subadvisory Agreement

with a Portfolio Manager that is an

affiliated person, as defined in section

2(a)(3) of the Act, of the Fund or the

Adviser, other than by reason of serving

as Portfolio Manager to one or more of

the Funds.

Applicants’ Legal Analysis

1. 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 the matter if the Act

requires shareholder approval.

2. 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 request an order

under section 6(c) to permit the Adviser,

subject to the approval of the Trust’s

Board of Trustees, to enter into and

materially amend Subadvisory

Agreements with Portfolio Managers

without obtaining shareholder approval.

3. Applicants assert tha, from the

perspective of the investor, the role of

the Portfolio Managers with respect to

the Trust is substantially equivalent to

the role of the individual portfolio

managers employed by an adviser to an

investment company. In both cases, the

portfolio managers are concerned

principally with selection of portfolio

investments in accordance with the

fund’s investment objectives and

policies and have no significant

supervisory, management or

administrative responsibilities with

respect to the fund. Applicants also

assert that investors look to the Adviser

when they have questions or concerns

about the Trust’s management or about

their Fund’s investment performance.

Applicants state that investors expect

the Adviser and the Board of Trustees

to select the Portfolio Managers for the

Fund and, for multiple manager Funds,

rely upon the Adviser’s expertise in

selecting specific Portfolio Managers for

segments of the Fund’s assets in

accordance with a Portfolio Manager’s

experience and expertise.

4. Applicants contend that the

requested relief will allow each Fund to

operate more efficiently. Without the

delay inherent in calling and holding

shareholder meetings and without the

associated costs, the Funds will be able

to act more quickly and with less

expense to replace Portfolio Managers

when the Adviser and the Board of

Trustees feel that change would benefit

a Fund.

5. Applicants believe that the

requested relief is consistent with the

protection of investors in light of the

management structure of the Trust, as

well as the Adviser’s significant

experience and expertise in selecting

Portfolio Managers and the

shareholder’s expectation that the

Adviser will utilize that expertise and

select the most able Portfolio Managers.

6. Applicants also believe that

shareholders of the Funds will be

provided with adequate information

about the Portfolio Managers. The

Trust’s prospectus and statement of

additional information will contain all

required information regarding each

Portfolio Manager. The Trust will

furnish to shareholders, within 90 days

of the date that a Portfolio Manager is

appointed, relevant information that

would have been provided in a proxy

statement.

Applicants’ Conditions

Applicants agree that the requested

order will be subject to the following

conditions:

1. Before a Fund may rely on the

order requested in the application, the

operation of the Fund in the manner

described in the application will be

approved by a majority of its

outstanding voting securities, as defined

in the Act, or, in the case of a new Fund

whose public shareholders purchased

shares on the basis of a prospectus

containing the disclosure contemplated

by condition number 2 below, by the

sole initial shareholder(s) before offering

shares of that Fund to the public.

2. The Trust will disclose in its

prospectus the existence, substance, and

effect of any order granted pursuant to

this 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 the ultimate

responsibility to oversee Portfolio

Managers and recommend their hiring,

termination, and replacement.

3. At all times, a majority of the

Trust’s Board of Trustees will be

persons each of whom is not an

‘‘interested person’’ of the Trust as

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

(‘‘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 any

Portfolio Manager that is an affiliated

person, as defined in section 2(a)(3) of

the Act, of the Adviser or the Funds,

other than by reason of serving as

Portfolio Manager to one or more of the

Funds (‘‘Affiliated Portfolio Manager’’),

without that agreement, including the

compensation to be paid thereunder,
Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 / Notices 51497

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

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 Trust’s

Trustees, 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 Portfolio

Manager derives an inappropriate

advantage.

6. Within 90 days of the hiring of any

new Portfolio Manager, shareholders

will be furnished relevant information

about a new Portfolio Manager that

would be contained in a proxy

statement, including any change in such

disclosure caused by the addition of a

new Portfolio Manager. The Adviser

will meet this condition by providing

shareholders, within 90 days of the

hiring of a Portfolio Manager, an

informal information statement meeting

the requirements of Regulation 14C and

Schedule 14C of the Securities

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

The information statement will also

meet the relevant requirements of

Schedule 14A of the Exchange Act.

7. The Adviser will provide general

management services to each Fund,

including overall supervisory

responsibility for the general

management and investment of each

Fund’s portfolio, and subject to review

and approval by the Trustees, will: (i)

Set the Fund’s overall investment

strategies; (ii) select Portfolio Managers;

(iii) when appropriate, recommend to

the Fund’s Board of Trustees the

allocation and reallocation of a Fund’s

assets among multiple Portfolio

Managers; (iv) monitor and evaluate the

performance of Portfolio Managers; and

(v) ensure that the Portfolio Managers

comply with the Board’s investment

objectives, policies, and restrictions.

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 that Trustee,

director or officer) any interest in a

Portfolio Manager except for (i)

Ownership of interests in the Adviser or

any entity that controls, is controlled by,

or is under common control with the

Adviser; or (ii) ownership of less than

1 percent of the outstanding securities

of any class or debt or equity 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, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25990 Filed 9–30–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39129; File No. SR–NYSE–

97–16]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Notice of

Filing and Order Granting Accelerated

Approval of Proposed Rule Change

Relating to Amendments to NYSE Rule

79A

September 25, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Exchange Act’’) 1 and Rule 19b–4

thereunder,2 notice is hereby given that

on August 28, 1997, the New York Stock

Exchange, Inc. (‘‘NYSE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in items I and II below, which Items

have been prepared by the Exchange.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

persons and is approving the proposal

on an accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change consists of

amendments to Exchange rule 79A to

conform with requirements for display

of customer limit orders as contained in

Rule 11Ac1–4 under the Exchange Act.

The text of the proposed rule change is

as follows. (Additions are italicized;

deletions are bracketed.)

* * * * *

NYSE Rule 79A

Miscellaneous Requirements on Stock

and Bond Market Procedures

.10 Request to make better bid or

offer. When any [member] Floor broker

does not bid or offer at the limit of an

order which is better than the currently

quoted price in the security and is

requested by his principal to bid or offer

at such limit, he shall do so.

.15 With respect to limit orders

received by specialists, each specialist

shall publish immediately (i.e., as soon

as practicable, which under normal

market conditions means no later than

30 seconds from time of receipt) a bid

or offer that reflects:

(i) the price and full size of each

customer limit order that is at a price

that would improve the specialist’s bid

or offer in such security; and

(ii) the full size of each limit order

that

(A) is priced equal to the specialist’s

bid or offer for such security;

(B) is priced equal to the national best

bid or offer; and

(C) represents more than a de minimis

change (i.e., more than 10 percent) in

relation to the size associated with the

Exchange’s bid or offer.

The requirements with respect to

specialists’ display of limit orders shall

not apply to any customer limit order

that is:

(1) executed upon receipt of the order;

(2) placed by a customer who

expressly requests, either at the time the

order is placed or prior thereto pursuant

to an individually negotiated agreement

with respect to such customer’s orders,

that the order not be displayed;

(3) an odd-lot order;

(4) delivered immediately upon

receipt to an exchange or associationsponsored system or an electronic

communications network that complies

with the requirements of Securities and

Exchange Commission Rule 11Ac1–1

(c)(5)(ii) under the Securities Exchange

Act with respect to that order;

(5) delivered immediately upon

receipt to another exchange member or

over-the-counter market maker that

complies with the requirements of

Securities and Exchange Commission

Rule 11Ac1–4 under the Securities

Exchange Act with respect to that order;

(6) an ‘‘all or none’’ order;

(7) a limit order to buy at a price

significantly above the current offer or a

limit order to sell at a price significantly

below the current bid that is handled in

compliance with Exchange procedures

regarding such orders, (‘‘too marketable

limit orders’’); or

(8) an order that is handled in

compliance with Exchange procedures

regarding block crosses at significant

premiums or discounts from the last

sale.

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

Exchange included statements

concerning the purpose of and basis for

the proposed rule change and discussed

any comments it received on the