New England Funds Trust I, et al,; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23829; 812-11232]

New England Funds Trust I, et al,; Notice of Application

May 10, 1999.

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

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 APPLICATION: Applicants request an order amending a prior

order that permits them to enter into and materially amend investment

sub-advisory contracts without receiving shareholder approval (``Prior

Order'').\1\

\1\ New England Funds Trust I, et al., Investment Company Act

Release Nos. 22796 (Aug. 22, 1997) (notice) and 22824 (Sept. 17,

1997) (order).

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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 (the ``New England Funds''), New England

Zenith Fund (the ``Zenith Fund'') (together with the New England Funds,

the ``Trusts'') New England Funds Management, L.P. (``NEFM''), and TNE

Advisers, Inc. (``TNE Advisers'').

FILING DATES: The application was filed on July 24, 1998, and amended

on December 2, 1998, and on March 4, 1999. Applicants have agreed to

file an amendment during the notice period, the substance of which is

included in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested

relief 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 June 3,

1999 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 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, 399 Boylston Street, 4th Floor, Boston, MA 02116.

FOR FURTHER INFORMATION CONTACT: 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 SAC's Public Reference Branch, 450 5th Street, N.W., Washington,

DC, 20549-0102 (tel. 202-942-8090).

Applicants' Representations

1. The Trusts are open-end management investment companies

registered under the Act. The Zenith Fund serves as a funding vehicle

for certain variable annuity and variable life insurance products is

sued by Metropolitan Life Insurance Company, and its subsidiary, New

England Life Insurance Company.

2. NEFM and TNE Advisers are registered as investment advisers

under the Investment Advisers Act of 1940. NEFM serves as investment

adviser to each of the New England Funds, except the New England Growth

Fund Series. TNE Advisers serves as investment adviser for each series

of the Zenith Fund, except the Capital Growth Series.

3. Each series of each of the New England Funds (except the New

England Growth Fund Series) and of the Zenith Fund (except the Capital

Growth Series) (together, the ``Series'') utilizes an adviser/sub-

adviser management structure. Under this structure, either NEFM or TNE

Advisers acts as each Series' investment adviser, delegating the day-

to-day portfolio management for each Series to one or more sub-

advisers.

4. On September 17, 1997, applicants received the Prior Order

permitting NEFM and TNE Advisers to enter into sub-advisory agreements

for the Series without obtaining shareholder approval. Among other

things, the Prior Order is subject to a condition that requires that a

notice, in the form of an information statement, be sent to

shareholders following the hiring of a new sub-adviser or the

implementation of a material change to a sub-advisory agreement.

Applicants seek to amend the Prior Order to preserve the requirement to

provide notice to shareholders regarding the hiring of a new sub-

adviser, but eliminate the

[[Page 26467]]

requirement to provide a notice in the form of an information statement

of other material changes to a sub-advisory agreement.

5. Applicants assert that the requested amendment would save the

Series the expense of preparing and mailing an information statement to

shareholders, and would be consistent with the relief granted in the

Prior Order. Applicants also state that any amendments to sub-advisory

agreements which are material so as to warrant disclosure in the

prospectus would be disclosed to shareholders by means of prospectus

supplements commonly known as ``stickers''.

Applicants' Legal Analysis

1. Section 6(c) of the Act authorizes the SEC to exempt persons or

transactions from the provisions of the Act to the extent that such

exemptions are 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 submit

that amending the Prior Order as requested would be consistent with the

standards of section 6(c) of the Act.

Applicants' Conditions

Applicants agree that the order granting the requested relief will

be subject to the conditions of the Prior Order, with condition 3 of

the Prior Order modified to read as follows:

Within 90 days after the hiring of any new sub-adviser, the Trusts

will furnish shareholders with all information about a new sub-adviser

or sub-advisory agreement that would be included in a proxy statement.

The information will include any change in the disclosure caused by the

addition of a new sub-adviser. 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 (the ``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.

For the SEC, by the Division of Investment Management, under

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 99-12231 Filed 5-13-99; 8:45 am]

BILLING CODE 8010-01-M