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U.S. Securities and Exchange Commission

Investment Company Act of 1940 – Section 12(d)(1)(A)
John Hancock Trust, et al

April 12, 2012

RESPONSE OF THE OFFICE OF INVESTMENT COMPANY REGULATION
DIVISION OF INVESTMENT MANAGEMENT

Our Ref. No. 2012-2-ICR
John Hancock Trust, et al.

Your letter dated April 11, 2012 requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission (“Commission”) under sections 12(d)(1)(A), 12(d)(1)(B), 17(a)(1), and 17(a)(2) of the Investment Company Act of 1940 (the “Act”) against any person relying on an existing exemptive order (“Covered Persons”)1 issued to John Hancock Variable Insurance Trust (formerly known as John Hancock Trust) (“JHVIT”), John Hancock Funds II (“JHFII”), John Hancock Funds III (“JHFIII”), John Hancock Capital Series (“JHCS,” and together with JHVIT, JHFII and JHFIII, the “Trusts”), John Hancock Advisers, LLC (“JHA”) and John Hancock Investment Management Services, LLC (“JHIMS,” and together with JHA, “Advisers”) under the circumstances described below.

The Order conditionally permits the existing series of the Trusts, and any existing or future series of the Trusts as well as any existing or future registered open-end management investment company (or series thereof) that is part of the same “group of investment companies” as the Trusts and advised by an Adviser or an entity controlling, controlled by or under common control with the Advisers (together with existing series of the Trusts, the “Portfolios”), to acquire shares of other registered open-end management investment companies and unit investment trusts (“UITs”) that are within and outside the same group of investment companies as the Portfolios (“Underlying Funds”) in excess of the limits of Sections 12(d)(1)(A) and 12(d)(1)(B) of the Act.2

The terms and conditions of the Order are intended to prevent, among other things, the creation of an overly complex fund structure. To this end, and as relevant to your request, under Condition 12 of the Order no Underlying Fund in which the Portfolios invest in reliance on the Order will acquire securities of any other investment company in excess of the limits set forth in Section 12(d)(1)(A) except to the extent that such Underlying Fund, pursuant to exemptive relief issued by the Commission, acquires securities of an affiliated investment company for short-term cash management purposes.

You acknowledge that the Underlying Funds therefore may not invest in unaffiliated investment companies under Condition 12. You request our assurances that we would not recommend that the Commission institute enforcement action under sections 12(d)(1)(A), 12(d)(1)(B), 17(a)(1), and 17(a)(2) of the Act against any Covered Person if a Portfolio invests in Underlying Funds that invest in unaffiliated investment companies in excess of the limits of section 12(d)(1)(A) for short-term cash management purposes. You state that Covered Persons will otherwise comply with all of the terms and conditions of the Order. You explain that granting the relief requested would effectively align the Order with more recent fund of funds orders and be consistent with the approach taken by the Commission in adopting Rule 12d1-1 under the Act.3 You argue that the structure of the investment company industry has changed since the Order was issued, and many fund complexes today do not include funds appropriate for the investment of uninvested cash for short-term cash management purposes. You further note that the adopting release for Rule 12d1-1 under the Act stated that the rule may be used by funds to invest uninvested cash on a short-term basis and explicitly stated that funds could invest in unaffiliated funds in reliance on the rule.4

Based on all of the facts and representations made in your letter, and particularly based on your representation that Covered Persons would otherwise comply with all of the terms and conditions of the Order, we would not recommend that the Commission institute enforcement action under sections 12(d)(1)(A), 12(d)(1)(B), 17(a)(1), and 17(a)(2) of the Act against any Covered Person if the Underlying Funds, pursuant to exemptive relief issued by the Commission, acquire securities of one or more unaffiliated investment companies for short-term cash management purposes in excess of the limits of section 12(d)(1)(A) of the Act.

This response expresses the Division’s position on enforcement action only, and does not purport to express any legal conclusions on the questions presented. Because our position is based upon all of the facts and representations in your letter, any facts or representations different from those presented in your letter might require a different conclusion.

Jean E. Minarick
Senior Counsel
Office of Investment Company Regulation


1 In the Matter of John Hancock Trust, et al., Investment Company Act Release Nos. 27848 (May 30, 2007) (notice) and 27873 (June 26, 2007) (order) (the “Order”).

2 The Order was issued under Section 12(d)(1)(J) of the Act for exemptions from Sections 12(d)(1)(A) and (B) of the Act and under Sections 6(c) and 17(b) of the Act for exempting certain transactions from Section 17(a) of the Act.

3 E.g., Jackson National Life Insurance Company, et al., Investment Company Act Release Nos. 29442 (Sept. 27, 2010) (notice) and 29484 (Oct. 25, 2010) (order).

4 Fund of Fund Investments, Investment Company Act Release No. 27399 (June 20, 2006) at paragraph accompanying note 26.

Incoming Letter

The Incoming Letter is in Acrobat format.

 

http://www.sec.gov/divisions/investment/noaction/2012/jht041212.htm


Modified: 04/16/2012