[Federal Register Volume 61, Number 141 (Monday, July 22, 1996)]
[Notices]
[Pages 37945-37946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18455]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22074/812-10168]
Aetna Series Fund, Inc., et al.; Notice of Application
July 16, 1996.
AGENCY: Securities and Exchange Commission (``SEC``).
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Aetna Series Fund, Inc. (the ``Fund''), on behalf of the
Aetna Asian Growth Fund (the ``Asian Growth Fund'') and the Aetna
International Growth Fund (the ``International Growth Fund''), Aetna
Life Insurance and Annuity Company (``ALIAC''), and Aetna Life
Insurance Company (``ALIC'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) for an
exemption from section 17(a).
SUMMARY OF APPLICATION: Applicants request an order to permit the
International Growth Fund to acquire substantially all of the assets of
the Asian Growth Fund. Because of certain affiliations, the
International Growth Fund and the Asian Growth Fund may not rely on
rule 17a-8 under the Act.
FILING DATE: The application was filed on May 23, 1996, and amended on
July 11, 1996.
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 August 12, 1996,
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, NW., Washington, DC 20549.
Applicants, 151 Farmington Avenue, Hartford, Connecticut 06156-3124.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Staff Attorney, at
(202) 942-0574, or Robert A. Robertson, 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.
Applicants' Representations
1. The Fund is a Maryland corporation registered under the Act as
an open-end management investment company. The International Growth
Fund and the Asian Growth Fund are each a series of the Fund. The
International Growth Fund and the Asian Growth Fund are referred to
herein as the ``Portfolios.''
2. ALIAC is the adviser and administrator for the Portfolios, and
principal underwriter for the Fund. ALIAC and ALIC are indirect wholly-
owned subsidiaries of Aetna Life and Casualty Company (together with
ALIAC and ALIC, ``Aetna''). As of May 31, 1996, Aetna in the aggregate
owned 49.99% of the outstanding shares of the International Growth Fund
and 91.59% of the outstanding shares of the Asian Growth Fund.
3. Each Portfolio offers two classes of shares: Adviser Class
shares, which are offered primarily to the general public, and Select
Class shares, which are offered principally to institutions. Adviser
Class shares are normally subject to a contingent deferred sales charge
(``CDSC'') of 1%, declining to 0% after 4 years from the date of
initial purchase. The adviser Class shares are subject to a rule 12b-1
distribution fee and a service fee at an annual rate of 0.50% and
0.25%, respectively. Select Class shares are not subject to any sales
charge, CDSC, distribution fee or service fee.
4. The investment objectives, policies and restrictions of the
International Growth Fund and the Asian Growth Fund are similar. Both
seek long-term capital growth by investing in a diversified portfolio
of common stocks principally traded in countries outside of North
America. While the Asian Growth Fund's principal investments are
limited to countries in Asia excluding Japan, the International Growth
Fund may invest principally in a broader range of countries, which
includes countries in which the Asian Growth Fund may currently invest.
5. The International Growth Fund proposes to acquire all or
substantially all of the assets and certain liabilities of the Asian
Growth Fund in exchange for shares of the International Growth Fund
pursuant to an agreement and plan of reorganization and liquidation
(the ``Plan''). The shares of the International Growth Fund to be
issued (the ``New Shares'') will have an aggregate net asset value
equal to the value of the assets of the Asian Growth Fund transferred
less the liabilities assumed, determined as of the close of regular
trading on the New York Stock Exchange on the business day next
preceding the closing (the ``Valuation Date''). As soon as practicable
after the closing, the New Shares will be distributed to the Asian
Growth Fund shareholders in exchange for the shares of the Asian Growth
Fund, each such shareholder to receive the number of New Shares that is
equal in dollar amount to the value of shares of stock of the Asian
Growth Fund held by such shareholder on the Valuation Date. After such
distribution, the Asian Growth Fund will be terminated. For a 30-day
period following the reorganization, the CDSC applicable to the Adviser
Class shares will be waived for all Asian Growth Fund shareholders who
redeem their newly issued shares of the International Growth Fund.
6. On April 30, 1996, at a meeting of the board, the Plan was
approved by the directors of the Fund, including a majority of the
directors who are not ``interested persons'' of ALIAC or the Portfolios
(the ``disinterested directors''). In approving the Plan, the board,
including the disinterested directors, found that participation in the
reorganization is in the best interests of each Portfolio and that the
interest of existing shareholders of each Portfolio will not be diluted
as a result of the reorganization. The factors considered by the board
included, among other things: (a) Recent and anticipated asset and
expense levels of the Portfolios and future prospects of each
Portfolio; (b) the similarity of the investment advisory, distribution
and administration arrangements, the fact that the Portfolios have the
same custodian, transfer agent, dividend disbursing agent and
independent accounts, and the fact that the Portfolios expect the
reorganization to realize savings in fixed expenses; (c) alternative
options to the reorganization; (d) the potential benefits to Aetna; (e)
the terms and conditions of the reorganization; (f) the similarity of
the investment objectives; policies and restrictions of the two
Portfolio; (g) the representation
[[Page 37946]]
that Aetna would bear the costs of the reorganization; and (h) the tax
consequences expected to result from the reorganization. The board also
considered ALIAC's proposal for managing the assets of the Portfolios,
whereby after the reorganization, ALIAC and its affiliate, Aeltus
Investment Management, Inc., would be the investment adviser and
subadviser, respectively, to the International Growth Fund, subject to
shareholder approval.
7. Applicants contemplate that the Plan will be submitted for
approval by the shareholders of the Asian Growth Fund at a meeting
scheduled to be held on or about August 28, 1996. A registration
statement containing a combined prospectus/proxy statement has been
filed with the SEC. The prospectus/proxy statement will be sent to
shareholders of the Asian Growth Fund on or about July 25, 1996.
Shareholders of the Select Class and Adviser Class shares of the Asian
Growth Fund will vote together as a single class. Assuming that the
required shareholder vote is obtained at the shareholders' meeting, the
closing is expected to be held August 30, 1996.
8. Applicants agree not to make any material changes to the Plan
that affect representations in the application without the prior
approval of the SEC.
Applicants' Legal Analysis
1. Section 17(a), in pertinent part, prohibits an affiliated person
of a registered investment company, acting as principal, from selling
to or purchasing from such registered company, any security or other
property.
2. Section 2(a)(3) of the Act defines the term ``affiliated
person'' of another person to include, among other persons, any person
directly or indirectly owning, controlling, or holding with power to
vote, 5% or more of the outstanding voting securities of such other
person; any person directly or indirectly controlling, controlled by,
or under common control with, such other person; and, if such other
person is an investment company, any investment adviser thereof.
3. Section 17(b) provides that the SEC may exempt a transaction
from section 17(a) if evidence establishes that the terms of the
proposed transaction, including the consideration to be paid, are
reasonable and fair and do not involve overreaching on the part of any
person concerned, and that the proposed transaction is consistent with
the policy of the registered investment company concerned and with the
general purposes of the Act.
4. Rule 17a-8 under the Act exempts from section 17(a) mergers,
consolidations, or purchases or sales of substantially all the assets
involving registered investment companies that may be affiliated
persons solely by reason of having a common investment adviser, common
directors, and/or common officers provided that certain conditions are
satisfied. The reorganization may not be exempt from the prohibitions
of section 17(a) by reason of rule 17a-8 because Aetna owns 5% or more
of the outstanding voting securities of each Portfolio. Consequently,
applicants are requesting an order under section 17(b) exempting the
transactions from section 17(a) to the extent necessary to consummate
the reorganization.
5. Applicants believe that the reorganization is consistent with
the policies of the Portfolios and that the participation of Aetna in
the reorganization would not be on a basis that is more advantageous
than that of the Portfolios. Applicants believe that the terms of the
proposed reorganization satisfy the standards set forth in section
17(b).
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18455 Filed 7-19-96; 8:45 am]
BILLING CODE 8010-01-M
