John Hancock Capital Series, et al., 9387-9391 [E6-2534]
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Federal Register / Vol. 71, No. 36 / Thursday, February 23, 2006 / Notices
reporting burdens are not typically
spread evenly among the exchanges.1
For purposes of this analysis of burden,
however, the staff has assumed that
each exchange files an equal number
(five) of Form 26 notifications. Each
notification requires approximately 20
minutes to complete. Each respondent’s
compliance burden, then, in a given
year would be approximately 100
minutes (20 minutes/report × 5 reports
= 100 minutes), which translates to just
over 13 hours in the aggregate for all
respondents (8 respondents × 100
minutes/respondent = 800 minutes, or
131⁄3 hours).
Based on the most recent available
information, the Commission staff
estimates that the cost to respondents of
completing a notification on Form 26 is,
on average, $14.35 per response. The
staff estimates that the total annual
related reporting cost per respondent is
$71.75 (5 responses/respondent ×
$14.35 cost/response), for a total annual
related cost to all respondents of $574
($71.75 cost/respondent × 8
respondents).
Compliance with Rule 12a–5 is
required to obtain the benefit of the
temporary exemption from registration
offered by the Rule. Rule 12a–5 does not
have a record retention requirement per
se. However, responses made pursuant
to Rule 12a–5 are subject to the
recordkeeping requirements of Rules
17a–3 and 17a–4 of the Act. Information
received in response to Rule 12a–5 shall
not be kept confidential; the information
collected is public information.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Written comments regarding the
above information should be directed to
the following persons: (i) Desk Officer
for Securities and Exchange
Commission, Office of Information and
Regulatory Affairs, Office of
Management and Budget, Room 10102,
New Executive Office Building,
Washington, DC 20503 or by sending an
e-mail to: David_Rostker@omb.eop.gov;
and (ii) R. Corey Booth, Director/Chief
Information Officer, Office of
Information Technology, Securities and
Exchange Commission, Station Place,
100 F Street, NE., Washington, DC
20549. Comments must be submitted to
Office of Management and Budget
within 30 days of this notice.
1 In fact, some exchanges do not file any
notifications on Form 26 with the Commission in
a given year.
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Dated: February 15, 2006.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2533 Filed 2–22–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–27224; 812–12969]
John Hancock Capital Series, et al.;
Notice of Application
February 15, 2006.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
12(d)(1)(A) and (B) of the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and (2)
of the Act, and under section 17(d) of
the Act and rule 17d–1 under the Act to
permit certain joint transactions.
AGENCY:
Summary of Application: The
applicants request an order that would
permit (a) certain registered
management investment companies and
certain entities that are excluded from
the definition of investment company
under section 3(c)(1), 3(c)(7) or 3(c)(11)
of the Act to invest uninvested cash and
cash collateral in (i) affiliated money
market funds and/or short-term bond
funds or (ii) one or more affiliated
entities that operate as cash
management investment vehicles and
that are excluded from the definition of
investment company under section
3(c)(1) or 3(c)(7) of the Act, and (b) the
registered management investment
companies and certain affiliated entities
to engage in purchase and sale
transactions involving portfolio
securities in reliance on rule 17a–7
under the Act.
Applicants: John Hancock Capital
Series, John Hancock Declaration Trust,
John Hancock Equity Trust, John
Hancock Income Securities Trust, John
Hancock Investment Trust II, John
Hancock Investment Trust III, John
Hancock Investors Trust, John Hancock
Sovereign Bond Fund, John Hancock
Strategic Series, John Hancock TaxExempt Series Fund, John Hancock
World Fund, John Hancock Bank and
Thrift Opportunity Fund, John Hancock
Bond Trust, John Hancock California
Tax-Free Income Fund, John Hancock
Current Interest, John Hancock
Institutional Series Trust, John Hancock
Investment Trust, John Hancock Patriot
Global Dividend Fund, John Hancock
Patriot Preferred Dividend Fund, John
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9387
Hancock Patriot Premium Dividend
Fund, John Hancock Patriot Premium
Dividend Fund II, John Hancock Patriot
Select Dividend Trust, John Hancock
Preferred Income Fund, John Hancock
Preferred Income Fund II, John Hancock
Series Trust, John Hancock Tax-Free
Bond Trust, John Hancock Financial
Trends Fund, Inc. (each, an ‘‘Investment
Company’’ and collectively, the
‘‘Investment Companies’’), and John
Hancock Advisers, LLC (together with
any entity controlling, controlled by or
under common control with John
Hancock Advisers, LLC, ‘‘JHA’’).
Filing Dates: The application was
filed on April 24, 2003, and amended on
February 7, 2006.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on March 13, 2006, and
should be accompanied 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
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F St.,
NE., Washington, DC 20549–1090.
Applicants, c/o David C. Phelan,
Wilmer Cutler Pickering Hale and Dorr
LLP, 60 State Street, Boston,
Massachusetts 02109.
FOR FURTHER INFORMATION CONTACT:
Nadya B. Roytblat, Assistant Director, at
(202) 551–6821 (Office of Investment
Company Regulation, Division of
Investment Management).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F Street, NE., Washington, DC
20549–0102 (tel. 202–551–5850).
Applicants’ Representations
1. Each Investment Company is
organized as a Massachusetts business
trust or a Maryland corporation and is
registered under the Act as an open-end
or closed-end management investment
company. Each Fund, as defined below,
that is a series of an Investment
Company has separate investment
objectives, policies, and assets. JHA is
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an investment adviser registered under
the Investment Advisers Act of 1940
and serves as investment adviser to each
Investment Company.1
2. Each Fund that is not a money
market fund (a ‘‘Participating Fund’’)
has, or may be expected to have cash
that has not been invested in portfolio
securities (‘‘Uninvested Cash’’).
Uninvested Cash may result from a
variety of sources, including dividends
or interest received from portfolio
securities, unsettled securities
transactions, reserves held for
investment strategy purposes, scheduled
maturity of investments, liquidation of
investment securities to meet
anticipated redemptions and dividend
payments, and new monies received
from investors. Each Fund that is a
series of an Investment Company may
participate in a securities lending
program (‘‘Securities Lending Program’’)
under which it may lend its portfolio
securities to registered broker-dealers or
other institutional investors deemed by
JHA to be of good standing. The loans
are secured by collateral, including cash
(‘‘Cash Collateral’’ and together, with
Uninvested Cash, ‘‘Cash Balances’’),
equal at all times to at least the market
value of the securities loaned. The
Securities Lending Program, including
the investment of Cash Collateral, will
comply with all present and future
applicable Commission and staff
positions regarding securities lending
arrangements. Currently, certain
Participating Funds may be permitted to
invest a portion of their assets in money
market securities or other short-term
obligations. Applicants state that
Participating Funds either will be
management investment companies
registered under the Act (‘‘Registered
Participating Funds’’) or trusts or other
entities that are excluded from the
definition of investment company under
section 3(c)(1), 3(c)(7) or 3(c)(11) of the
Act (the ‘‘Non-Registered Participating
Funds’’). Applicants request an order to
permit: (i) The Participating Funds to
use their Cash Balances to purchase
shares of one or more of the Funds
registered under the Act as open-end
1 Applicants request that any relief granted also
apply to (a) any other registered management
investment company or series thereof and (b) any
entity excluded from the definition of investment
company under section 3(c)(1), section 3(c)(7) or
section 3(c)(11) of the Act, for which JHA is or in
the future may serve as investment adviser or
trustee exercising investment discretion (each, a
‘‘Fund,’’ and together with the Investment
Companies and any existing or future series of the
Investment Companies, the ‘‘Funds’’). All Funds
that currently intend to rely on the requested order
are named as applicants. Any other existing or
future Fund will rely on the order only in
accordance with the terms and conditions of the
application.
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management investment companies that
are money market funds or short-term
bond funds (the ‘‘Registered Central
Funds,’’ and together with the
Registered Participating Funds, the
‘‘Registered Funds’’) or shares of one or
more Funds that operate as cash
management investment vehicles and
that are excluded from the definition of
investment company pursuant to
section 3(c)(1) and 3(c)(7) of the Act (the
‘‘Non-Registered Central Funds,’’ and
together with the Non-Registered
Participating Funds, the ‘‘NonRegistered Funds’’) (the Registered
Central Funds and the Non-Registered
Central Funds, collectively, the ‘‘Central
Funds’’); (ii) the Central Funds to sell
their shares to and purchase (redeem)
such shares from the Participating
Funds; and (iii) JHA to effect the
transactions in (i) and (ii) above.
3. Applicants state that certain Funds
currently rely on rule 17a–7 under the
Act to conduct certain purchase and
sale transactions (‘‘Interfund
Transactions’’). Applicants seek relief to
permit these Interfund Transactions to
continue in the event that the
Participating Funds, pursuant to the
requested order, use Cash Balances to
purchase shares of the Central Funds
and become affiliated persons of each
other or affiliated persons of the Central
Funds by virtue of owning 5% or more
of the outstanding voting securities of a
Central Fund. Applicants also seek
relief to permit in-kind Interfund
Transactions in which a Participating
Fund, solely in instances where the
Participating Fund holds portfolio
securities that would be appropriate
investments for a Central Fund, invests
in the Central Fund by transferring such
portfolio securities to the Central Fund
in exchange for shares of the Central
Fund.
4. The investment by each Registered
Participating Fund in shares of the
Central Funds will be in accordance
with that Registered Participating
Fund’s investment policies and
restrictions as set forth in its registration
statement. The Registered Central Funds
are or will be open-end management
investment companies registered under
the Act operating either as money
market funds pursuant to rule 2a–7
under the Act or short-term bond funds
that seek to achieve high current income
consistent with the preservation of
capital by investing in fixed-income
securities and maintain a dollarweighted average maturity of three years
or less. The Non-Registered Central
Funds will comply with rule 2a–7 under
the Act.
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Applicants’ Legal Analysis
I. Investment of Cash Balances by the
Participating Funds in the Central
Funds
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act
provides that no investment company
may acquire securities of a registered
investment company if such securities
represent more than 3% of the acquired
company’s outstanding voting stock,
more than 5% of the acquiring
company’s total assets, or if such
securities, together with the securities of
other acquired investment companies,
represent more than 10% of the
acquiring company’s assets. Section
12(d)(1)(B) of the Act provides that a
registered open-end investment
company, its principal underwriter or
any broker or dealer may not sell the
company’s securities to another
investment company if the sale will
cause the acquiring company to own
more than 3% of the acquired
company’s voting stock or if the sale
will cause more than 10% of the
acquired company’s voting stock to be
owned by investment companies. Any
entity that is excluded from the
definition of investment company under
section 3(c)(1) or 3(c)(7) of the Act is
deemed to be an investment company
for the purposes of the 3% limitation
specified in sections 12(d)(1)(A) and (B)
with respect to purchases by and sales
to such entity.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction from any provision of
section 12(d)(1) if and to the extent that
such exemption is consistent with the
public interest and the protection of
investors. Applicants request relief
under section 12(d)(1)(J) to permit the
Participating Funds to use their Cash
Balances to acquire shares of the
Registered Central Funds in excess of
the percentage limitations in section
12(d)(1)(A), provided however, that in
all cases a Registered Participating
Fund’s aggregate investment of
Uninvested Cash in shares of the Central
Funds will not exceed the greater of
25% of the Registered Participating
Fund’s total assets or $10 million.
Applicants also request relief to permit
the Registered Central Funds to sell
their securities to the Participating
Funds in excess of the percentage
limitations in section 12(d)(1)(B).2
3. Applicants state that the proposed
arrangement will not result in the
2 The references to Participating Funds in the
paragraph do not include Funds relying on section
3(c)(11) of the Act.
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abuses that sections 12(d)(1)(A) and (B)
were intended to prevent. Applicants
state that there is no threat of
redemption to gain undue influence
over the Registered Central Funds due
to the highly liquid nature of each
Registered Central Fund’s portfolio.
Applicants state that the proposed
arrangement will not result in
inappropriate layering of fees. Shares of
the Central Funds sold to the
Participating Funds will not be subject
to a sales load, redemption fee, assetbased distribution fee, or service fee (as
defined in rule 2830(b)(9) of the
Conduct Rules of the National
Association of Securities Dealers Inc.
(‘‘NASD Conduct Rules’’). If a Central
Fund offers multiple classes of shares, a
Registered Participating Fund will
invest in the class with the lowest
expense ratio at the time of investment
(after giving effect to the Registered
Participating Fund’s investment). Before
the next meeting of the board of trustees
(‘‘Board’’) of a Registered Participating
Fund that invests in the Central Funds
is held for the purpose of voting on an
advisory contract under section 15 of
the Act, JHA will provide the Board
with such information as the Board,
including a majority of the directors or
trustees who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act (the ‘‘Independent Trustees’’),
may request to evaluate the effect of the
investment of Uninvested Cash in a
Central Fund upon the direct and
indirect compensation by the Registered
Participating Funds to JHA. Applicants
represent that no Central Fund will
acquire securities of any investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of
the limitations contained in section
12(d)(1)(A) of the Act.
B. Section 17(a) of the Act
1. Section 17(a) of the Act makes it
unlawful for any affiliated person of a
registered investment company, acting
as principal, to sell or purchase any
security to or from the investment
company. Section 2(a)(3) of the Act
defines an affiliated person of another
person to include any person directly or
indirectly owning, controlling, or
holding with power to vote 5% or more
of the outstanding voting securities of
the other person, any person 5% or
more of whose outstanding securities
are directly or indirectly owned,
controlled, or held with power to vote
by the other person, any person directly
or indirectly controlling, controlled by,
or under common control with the other
person, and any investment adviser to
an investment company. Because JHA
serves as, or will serve as each Fund’s
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investment adviser or trustee exercising
investment discretion, the Funds may
be deemed to be under common control
and therefore affiliated persons of each
other. In addition, if a Participating
Fund purchases more than 5% of the
voting securities of a Central Fund, the
Central Fund and the Participating Fund
may be affiliated persons of each other.
As a result, section 17(a) would prohibit
the sale of the shares of Central Funds
to the Participating Funds, and the
redemption of the shares by the
Participating Funds.
2. Section 17(b) of the Act authorizes
the Commission to exempt a transaction
from section 17(a) of the Act if the terms
of the proposed transaction, including
the consideration to be paid or received,
are reasonable and fair and do not
involve overreaching on the part of any
person concerned, and the proposed
transaction is consistent with the policy
of each registered investment company
concerned and with the general
purposes of the Act. Section 6(c) of the
Act permits the Commission to exempt
persons or transactions from any
provision of the Act, if the 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.
3. Applicants submit that their
request for relief to permit the purchase
and redemption of shares of the Central
Funds by the Participating Funds is
consistent with the standards in
sections 6(c) and 17(b) of the Act.
Applicants note that shares of the
Central Funds will be purchased and
redeemed at their net asset value.
Applicants state that the Registered
Participating Funds will retain their
ability to invest Cash Balances directly
in money market instruments and other
short-term obligations as permitted by
their investment objectives and policies.
Applicants state that a Registered
Central Fund has the right to
discontinue selling shares to any of the
Participating Funds if the Registered
Central Fund’s Board or JHA determines
that such sale would adversely affect the
Registered Central Fund’s portfolio
management and operations.
C. Section 17(d) of the Act and Rule
17d–1 Under the Act
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit an
affiliated person of a registered
investment company, acting as
principal, from participating in or
effecting any transaction in connection
with any joint enterprise or joint
arrangement in which the investment
company participates, unless the
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Commission has approved the joint
arrangement. Applicants state that the
Participating Funds and the Central
Funds, by participating in the proposed
transactions, and JHA, by managing the
proposed transactions, could be deemed
to be participating in a joint
arrangement within the meaning of
section 17(d) and rule 17d–1.
2. In considering whether to approve
a joint transaction under rule 17d–1, the
Commission considers whether the
registered investment company’s
participation in the joint transaction is
consistent with the provisions, policies
and purposes of the Act, and the extent
to which the participation is on a basis
different from or less advantageous than
that of other participants. Applicants
state that the investment by the
Registered Participating Funds in shares
of the Central Funds would be on the
same basis and no different from or less
advantageous than that of other
participants. Applicants submit that the
proposed transactions meet the
standards for an order under
rule 17d–1.
II. Interfund Transactions
1. As noted above, section 17(a) of the
Act would prohibit the purchase and
sale of portfolio securities between the
Funds. Rule 17a–7 under the Act
provides an exemption from section
17(a) for a purchase or sale of certain
securities between a registered
investment company and an affiliated
person (or an affiliated person of an
affiliated person), provided certain
conditions are met, including that the
affiliation between the registered
investment company and the affiliated
person (or an affiliated person of the
affiliated person) must exist solely by
reason of the entities having a common
investment adviser, common directors
and/or common officers and the
transaction must be for no consideration
other than cash. Applicants state that
the Participating Funds could become
affiliated persons of each other, and
affiliated persons of the Central Funds,
by virtue of a Participating Fund owning
5% or more of the outstanding voting
securities of a Central Fund (‘‘5%
Ownership Affiliation’’). In addition, a
Participating Fund may invest in a
Central Fund by transferring its
portfolio securities to the Central Fund
in exchange for shares of the Central
Fund.
2. Applicants request relief under
sections 6(c) and 17(b) of the Act to
permit the Interfund Transactions. The
Interfund Transactions for which relief
is requested are transactions between
Registered Participating Funds and NonRegistered Central Funds and between
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Non-Registered Participating Funds and
Registered Central Funds. Applicants
submit that the requested relief satisfies
the standards for relief in sections 6(c)
and 17(b). Applicants state that, with
respect to the Participating Funds’ inkind purchases of shares of the Central
Funds, the consideration paid by the
Participating Funds for shares of the
Central Funds will be based on the net
asset value of the Central Funds. With
respect to the purchase and sale of
portfolio securities between the Funds,
Applicants state that the price paid for
the securities will be the current market
price of the securities. Further,
Applicants state that the Funds will
comply with the requirements set forth
in rule 17a–7 in all respects other than
(a) the requirement that the parties to
the transactions be affiliated persons (or
affiliated persons of affiliated persons)
of each other solely by reason of having
a common investment adviser or
investment advisers that are affiliated
persons of each other, common officers
and/or common directors, solely
because the Participating Funds and the
Central Funds might become affiliated
persons within the meaning of section
2(a)(3)(A) and (B) of the Act and (b) the
requirement that the transactions be for
no consideration other than cash, solely
because certain of the Interfund
Transactions may be effected in shares
of a Central Fund.
Applicants’ Conditions
Applicants agree that the order
granting the requested relief shall be
subject to the following conditions:
1. Shares of the Central Funds sold to
and redeemed by the Participating
Funds will not be subject to a sales load,
redemption fee, asset-based distribution
fee under a plan adopted in accordance
with rule 12b–1 under the Act, or
service fee (as defined in rule 2830(b)(9)
of the NASD Conduct Rules).
2. Before the next meeting of the
Board of the Registered Participating
Fund that invests in the Central Funds
is held for the purpose of voting on an
advisory contract under section 15 of
the Act, JHA will provide the Board
with such information as the Board may
request to evaluate the effect of the
investment of Uninvested Cash in the
Central Funds upon the direct and
indirect compensation to JHA. Such
information will include specific
information regarding the approximate
cost to JHA of, or portion of the advisory
fee under the existing advisory contract
attributable to, managing the
Uninvested Cash of the Registered
Participating Fund that can be expected
to be invested in the Central Funds. In
connection with approving any advisory
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contract for a Registered Participating
Fund, the Registered Participating
Fund’s Board, including a majority of
the Independent Trustees, shall
consider to what extent, if any, the
advisory fees charged to the Registered
Participating Fund by JHA should be
reduced to account for reduced services
provided to the Registered Participating
Fund by JHA as a result of the
Uninvested Cash being invested in the
Central Funds. The minute books of the
Registered Participating Fund will
record fully the Board’s consideration in
approving the advisory contract,
including the considerations relating to
fees referred to above.
3. Each Registered Participating Fund
will invest Uninvested Cash in, and
hold shares of, the Central Funds only
to the extent that the Registered
Participating Fund’s aggregate
investment of Uninvested Cash in the
Central Funds does not exceed the
greater of 25% of the Registered
Participating Fund’s total assets or $10
million.
4. Investment by a Registered
Participating Fund in shares of the
Central Funds will be in accordance
with each Registered Participating
Fund’s respective investment
restrictions and will be consistent with
each Registered Participating Fund’s
investment policies as set forth in its
prospectus and statement of additional
information.
5. Each Registered Participating Fund
and the Registered Central Fund in
which it invests shall be in the same
group of investment companies as
defined in section 12(d)(1)(G) of the Act.
Each Non-Registered Fund that may rely
on the order shall have JHA as its
investment adviser or trustee exercising
investment discretion.
6. No Central Fund shall acquire
securities of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
Act.
7. The Non-Registered Central Funds
will comply with the requirements of
sections 17(a), (d), and (e), and 18 of the
Act as if the Non-Registered Central
Funds were registered open-end
investment companies. With respect to
all redemption requests made by a
Participating Fund, the Non-Registered
Central Funds will comply with section
22(e) of the Act. JHA will adopt
procedures designed to ensure that each
Non-Registered Central Fund complies
with sections 17(a), (d), and (e), 18 and
22(e) of the Act. JHA will also
periodically review and update as
appropriate such procedures and will
maintain books and records describing
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such procedures, and maintain the
records required by rules 31a–1(b)(1),
31a–1(b)(2)(ii), and 31a–1(b)(9) under
the Act. All books and records required
to be made pursuant to this condition
will be maintained and preserved for a
period of not less than six years from
the end of the fiscal year in which any
transaction occurred, the first two years
in an easily accessible place, and will be
subject to examination by the
Commission and its staff.
8. Each Non-Registered Central Fund
will comply with rule 2a–7 under the
Act and will use the amortized cost
method of valuation. With respect to
each Non-Registered Central Fund, JHA
will adopt and monitor the procedures
described in rule 2a–7(c)(7) under the
Act and will take such other actions as
are required to be taken under those
procedures. A Participating Fund may
only purchase shares of a NonRegistered Central Fund if JHA
determines on an ongoing basis that the
Non-Registered Central Fund is in
compliance with rule 2a–7. JHA will
preserve for a period of not less than six
years from the date of determination,
the first two years in an easily accessible
place, a record of such determination
and the basis upon which the
determination was made. This record
will be subject to examination by the
Commission and its staff.
9. Each Participating Fund will
purchase and redeem shares of any NonRegistered Central Fund as of the same
time and at the same price, and will
receive dividends and bear its
proportionate share of expenses on the
same basis, as other shareholders of the
Non-Registered Central Fund. A
separate account will be established in
the shareholder records of each NonRegistered Central Fund for the account
of each Participating Fund that invests
in such Non-Registered Central Fund.
10. To engage in Interfund
Transactions, the Funds will comply
with rule 17a–7 under the Act in all
respects other than (a) the requirement
that the parties to the transaction be
affiliated persons (or affiliated persons
of affiliated persons) of each other solely
by reason of having a common
investment adviser, or investment
advisers which are affiliated persons of
each other, common officers, general
partners, trustees, managers and/or
common directors, solely because a
Participating Fund and a Central Fund
might become affiliated persons within
the meaning of section 2(a)(3)(A) and (B)
of the Act and (b) the requirement that
the transactions be for no consideration
other than cash, solely because certain
of the Interfund Transactions may be
effected in shares of a Central Fund.
E:\FR\FM\23FEN1.SGM
23FEN1
Federal Register / Vol. 71, No. 36 / Thursday, February 23, 2006 / Notices
11. Before a Registered Participating
Fund may participate in the Securities
Lending Program, a majority of the
Board (including a majority of the
Independent Trustees) will approve the
Registered Participating Fund’s
participation in the Securities Lending
Program. No less frequently than
annually, the Board also will evaluate,
with respect to each Registered
Participating Fund, any securities
lending arrangement and its results and
determine that any investment of Cash
Collateral in the Central Funds is in the
best interests of the Registered
Participating Fund.
12. The Board of each Registered
Participating Fund will satisfy the fund
governance standards as defined in rule
0–1(a)(7) under the Act by the
compliance date for the rule.
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2534 Filed 2–22–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53319; File No. SR–Amex–
2006–13]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Extend
the Deadline for Implementation of the
ANTE System
rwilkins on PROD1PC63 with NOTICES
February 15, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
6, 2006, the American Stock Exchange
LLC (‘‘Exchange’’ or ‘‘Amex’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. Amex
has designated this proposal as noncontroversial under Section
19(b)(3)(A)(iii) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which renders
the proposed rule change effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
VerDate Aug<31>2005
16:15 Feb 22, 2006
Jkt 205001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Amex Rule 900—ANTE to extend the
deadline for implementation of the
Amex New Trading Environment
trading platform (the ‘‘ANTE System’’ or
‘‘ANTE’’) for all option classes from
December 31, 2005, to June 30, 2006.
The text of the proposed rule change is
available on Amex’s Web site (https://
www.amex.com), at Amex’s principal
office, and at the Commission’s Public
Reference Room.
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
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On May 20, 2004, the Commission
approved Amex’s proposal to
implement a new options trading
platform known as ANTE.5 On May 25,
2004, Amex began rolling out the ANTE
System on its trading floor on a
specialist’s post-by-specialist’s post
basis. At that time it was anticipated the
roll-out would be completed by the end
of the second quarter of 2005. The
implementation date for the full roll-out
of the ANTE System was subsequently
extended to December 31, 2005.6 Amex
has rolled out the ANTE System to all
its option classes except one—the
Nasdaq 100 Index (‘‘NDX’’). NDX has
the largest notional value of any option
class, with average option premiums of
$40. The specialist for this product is
concerned that the theoretical price
calculator provided by the ANTE
System may not accurately price the
options on this index. The specialist has
installed its own theoretical index price
calculator, which currently calculates
prices for the firm’s other options
products, including the Mini Nasdaq
Index (MNX), an index valued at onetenth the value of NDX. The specialist
for NDX has sought more time to gain
experience using its proprietary price
calculator before it moves NDX onto the
ANTE System. The Exchange expects
that NDX will be moved onto the ANTE
System by June 30, 2006.
Amex is now proposing to revise its
implementation schedule to provide
that all option classes traded by the
Exchange will be on the ANTE System
by June 30, 2006. Maintaining two
platforms for options trading—the
legacy systems (AODB, the Amex
Options Display Book; XTOPS, Amex’s
theoretical price calculator; and AutoEx) and ANTE—is costly. In a separate
filing submitted February 6, 2006, for
immediate effectiveness pursuant to
Section 19(b)(3)(A)(ii) of the Act,7 the
Exchange is proposing to impose a
Technology Assessment Fee on
members for the continued use of its
legacy options trading systems.8 The
intent of this assessment is to recover
some of the costs incurred for
maintaining the legacy systems and to
provide an additional incentive to the
NDX specialist to transition NDX to the
ANTE System as soon as possible.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 9 in general and
furthers the objectives of Section
6(b)(5) 10 in particular in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and is not designed to
permit unfair discrimination between
customers, issuers, brokers, and dealers.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
7 15
5 See
Securities Exchange Act Release No. 49747,
69 FR 30344 (May 27, 2004) (File No. SR–Amex–
2003–89).
6 See Securities Exchange Act Release No. 52984
(December 20, 2005), 70 FR 76472 (December 27,
2005) (File No. SR–Amex–2005–123).
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
9391
U.S.C. 78s(b)(3)(A)(ii).
File No. SR–Amex–2006–12, notice of
which the Commission is separately publishing for
comment today (Securities Exchange Act Release
No. 53318).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
8 See
E:\FR\FM\23FEN1.SGM
23FEN1
]]>Agencies
[Federal Register Volume 71, Number 36 (Thursday, February 23, 2006)]
[Notices]
[Pages 9387-9391]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2534]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27224; 812-12969]
John Hancock Capital Series, et al.; Notice of Application
February 15, 2006.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under section 12(d)(1)(J) of
the Investment Company Act of 1940 (``Act'') for an exemption from
sections 12(d)(1)(A) and (B) of the Act, under sections 6(c) and 17(b)
of the Act for an exemption from sections 17(a)(1) and (2) of the Act,
and under section 17(d) of the Act and rule 17d-1 under the Act to
permit certain joint transactions.
-----------------------------------------------------------------------
Summary of Application: The applicants request an order that would
permit (a) certain registered management investment companies and
certain entities that are excluded from the definition of investment
company under section 3(c)(1), 3(c)(7) or 3(c)(11) of the Act to invest
uninvested cash and cash collateral in (i) affiliated money market
funds and/or short-term bond funds or (ii) one or more affiliated
entities that operate as cash management investment vehicles and that
are excluded from the definition of investment company under section
3(c)(1) or 3(c)(7) of the Act, and (b) the registered management
investment companies and certain affiliated entities to engage in
purchase and sale transactions involving portfolio securities in
reliance on rule 17a-7 under the Act.
Applicants: John Hancock Capital Series, John Hancock Declaration
Trust, John Hancock Equity Trust, John Hancock Income Securities Trust,
John Hancock Investment Trust II, John Hancock Investment Trust III,
John Hancock Investors Trust, John Hancock Sovereign Bond Fund, John
Hancock Strategic Series, John Hancock Tax-Exempt Series Fund, John
Hancock World Fund, John Hancock Bank and Thrift Opportunity Fund, John
Hancock Bond Trust, John Hancock California Tax-Free Income Fund, John
Hancock Current Interest, John Hancock Institutional Series Trust, John
Hancock Investment Trust, John Hancock Patriot Global Dividend Fund,
John Hancock Patriot Preferred Dividend Fund, John Hancock Patriot
Premium Dividend Fund, John Hancock Patriot Premium Dividend Fund II,
John Hancock Patriot Select Dividend Trust, John Hancock Preferred
Income Fund, John Hancock Preferred Income Fund II, John Hancock Series
Trust, John Hancock Tax-Free Bond Trust, John Hancock Financial Trends
Fund, Inc. (each, an ``Investment Company'' and collectively, the
``Investment Companies''), and John Hancock Advisers, LLC (together
with any entity controlling, controlled by or under common control with
John Hancock Advisers, LLC, ``JHA'').
Filing Dates: The application was filed on April 24, 2003, and
amended on February 7, 2006.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicant with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on March 13, 2006, and should be accompanied 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 Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
St., NE., Washington, DC 20549-1090. Applicants, c/o David C. Phelan,
Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109.
FOR FURTHER INFORMATION CONTACT: Nadya B. Roytblat, Assistant Director,
at (202) 551-6821 (Office of Investment Company Regulation, Division of
Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC
20549-0102 (tel. 202-551-5850).
Applicants' Representations
1. Each Investment Company is organized as a Massachusetts business
trust or a Maryland corporation and is registered under the Act as an
open-end or closed-end management investment company. Each Fund, as
defined below, that is a series of an Investment Company has separate
investment objectives, policies, and assets. JHA is
[[Page 9388]]
an investment adviser registered under the Investment Advisers Act of
1940 and serves as investment adviser to each Investment Company.\1\
---------------------------------------------------------------------------
\1\ Applicants request that any relief granted also apply to (a)
any other registered management investment company or series thereof
and (b) any entity excluded from the definition of investment
company under section 3(c)(1), section 3(c)(7) or section 3(c)(11)
of the Act, for which JHA is or in the future may serve as
investment adviser or trustee exercising investment discretion
(each, a ``Fund,'' and together with the Investment Companies and
any existing or future series of the Investment Companies, the
``Funds''). All Funds that currently intend to rely on the requested
order are named as applicants. Any other existing or future Fund
will rely on the order only in accordance with the terms and
conditions of the application.
---------------------------------------------------------------------------
2. Each Fund that is not a money market fund (a ``Participating
Fund'') has, or may be expected to have cash that has not been invested
in portfolio securities (``Uninvested Cash''). Uninvested Cash may
result from a variety of sources, including dividends or interest
received from portfolio securities, unsettled securities transactions,
reserves held for investment strategy purposes, scheduled maturity of
investments, liquidation of investment securities to meet anticipated
redemptions and dividend payments, and new monies received from
investors. Each Fund that is a series of an Investment Company may
participate in a securities lending program (``Securities Lending
Program'') under which it may lend its portfolio securities to
registered broker-dealers or other institutional investors deemed by
JHA to be of good standing. The loans are secured by collateral,
including cash (``Cash Collateral'' and together, with Uninvested Cash,
``Cash Balances''), equal at all times to at least the market value of
the securities loaned. The Securities Lending Program, including the
investment of Cash Collateral, will comply with all present and future
applicable Commission and staff positions regarding securities lending
arrangements. Currently, certain Participating Funds may be permitted
to invest a portion of their assets in money market securities or other
short-term obligations. Applicants state that Participating Funds
either will be management investment companies registered under the Act
(``Registered Participating Funds'') or trusts or other entities that
are excluded from the definition of investment company under section
3(c)(1), 3(c)(7) or 3(c)(11) of the Act (the ``Non-Registered
Participating Funds''). Applicants request an order to permit: (i) The
Participating Funds to use their Cash Balances to purchase shares of
one or more of the Funds registered under the Act as open-end
management investment companies that are money market funds or short-
term bond funds (the ``Registered Central Funds,'' and together with
the Registered Participating Funds, the ``Registered Funds'') or shares
of one or more Funds that operate as cash management investment
vehicles and that are excluded from the definition of investment
company pursuant to section 3(c)(1) and 3(c)(7) of the Act (the ``Non-
Registered Central Funds,'' and together with the Non-Registered
Participating Funds, the ``Non-Registered Funds'') (the Registered
Central Funds and the Non-Registered Central Funds, collectively, the
``Central Funds''); (ii) the Central Funds to sell their shares to and
purchase (redeem) such shares from the Participating Funds; and (iii)
JHA to effect the transactions in (i) and (ii) above.
3. Applicants state that certain Funds currently rely on rule 17a-7
under the Act to conduct certain purchase and sale transactions
(``Interfund Transactions''). Applicants seek relief to permit these
Interfund Transactions to continue in the event that the Participating
Funds, pursuant to the requested order, use Cash Balances to purchase
shares of the Central Funds and become affiliated persons of each other
or affiliated persons of the Central Funds by virtue of owning 5% or
more of the outstanding voting securities of a Central Fund. Applicants
also seek relief to permit in-kind Interfund Transactions in which a
Participating Fund, solely in instances where the Participating Fund
holds portfolio securities that would be appropriate investments for a
Central Fund, invests in the Central Fund by transferring such
portfolio securities to the Central Fund in exchange for shares of the
Central Fund.
4. The investment by each Registered Participating Fund in shares
of the Central Funds will be in accordance with that Registered
Participating Fund's investment policies and restrictions as set forth
in its registration statement. The Registered Central Funds are or will
be open-end management investment companies registered under the Act
operating either as money market funds pursuant to rule 2a-7 under the
Act or short-term bond funds that seek to achieve high current income
consistent with the preservation of capital by investing in fixed-
income securities and maintain a dollar-weighted average maturity of
three years or less. The Non-Registered Central Funds will comply with
rule 2a-7 under the Act.
Applicants' Legal Analysis
I. Investment of Cash Balances by the Participating Funds in the
Central Funds
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act provides that no investment
company may acquire securities of a registered investment company if
such securities represent more than 3% of the acquired company's
outstanding voting stock, more than 5% of the acquiring company's total
assets, or if such securities, together with the securities of other
acquired investment companies, represent more than 10% of the acquiring
company's assets. Section 12(d)(1)(B) of the Act provides that a
registered open-end investment company, its principal underwriter or
any broker or dealer may not sell the company's securities to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock or if the sale will
cause more than 10% of the acquired company's voting stock to be owned
by investment companies. Any entity that is excluded from the
definition of investment company under section 3(c)(1) or 3(c)(7) of
the Act is deemed to be an investment company for the purposes of the
3% limitation specified in sections 12(d)(1)(A) and (B) with respect to
purchases by and sales to such entity.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or transaction from any provision of
section 12(d)(1) if and to the extent that such exemption is consistent
with the public interest and the protection of investors. Applicants
request relief under section 12(d)(1)(J) to permit the Participating
Funds to use their Cash Balances to acquire shares of the Registered
Central Funds in excess of the percentage limitations in section
12(d)(1)(A), provided however, that in all cases a Registered
Participating Fund's aggregate investment of Uninvested Cash in shares
of the Central Funds will not exceed the greater of 25% of the
Registered Participating Fund's total assets or $10 million. Applicants
also request relief to permit the Registered Central Funds to sell
their securities to the Participating Funds in excess of the percentage
limitations in section 12(d)(1)(B).\2\
---------------------------------------------------------------------------
\2\ The references to Participating Funds in the paragraph do
not include Funds relying on section 3(c)(11) of the Act.
---------------------------------------------------------------------------
3. Applicants state that the proposed arrangement will not result
in the
[[Page 9389]]
abuses that sections 12(d)(1)(A) and (B) were intended to prevent.
Applicants state that there is no threat of redemption to gain undue
influence over the Registered Central Funds due to the highly liquid
nature of each Registered Central Fund's portfolio. Applicants state
that the proposed arrangement will not result in inappropriate layering
of fees. Shares of the Central Funds sold to the Participating Funds
will not be subject to a sales load, redemption fee, asset-based
distribution fee, or service fee (as defined in rule 2830(b)(9) of the
Conduct Rules of the National Association of Securities Dealers Inc.
(``NASD Conduct Rules''). If a Central Fund offers multiple classes of
shares, a Registered Participating Fund will invest in the class with
the lowest expense ratio at the time of investment (after giving effect
to the Registered Participating Fund's investment). Before the next
meeting of the board of trustees (``Board'') of a Registered
Participating Fund that invests in the Central Funds is held for the
purpose of voting on an advisory contract under section 15 of the Act,
JHA will provide the Board with such information as the Board,
including a majority of the directors or trustees who are not
``interested persons,'' as defined in section 2(a)(19) of the Act (the
``Independent Trustees''), may request to evaluate the effect of the
investment of Uninvested Cash in a Central Fund upon the direct and
indirect compensation by the Registered Participating Funds to JHA.
Applicants represent that no Central Fund will acquire securities of
any investment company or company relying on section 3(c)(1) or 3(c)(7)
of the Act in excess of the limitations contained in section
12(d)(1)(A) of the Act.
B. Section 17(a) of the Act
1. Section 17(a) of the Act makes it unlawful for any affiliated
person of a registered investment company, acting as principal, to sell
or purchase any security to or from the investment company. Section
2(a)(3) of the Act defines an affiliated person of another person to
include any person directly or indirectly owning, controlling, or
holding with power to vote 5% or more of the outstanding voting
securities of the other person, any person 5% or more of whose
outstanding securities are directly or indirectly owned, controlled, or
held with power to vote by the other person, any person directly or
indirectly controlling, controlled by, or under common control with the
other person, and any investment adviser to an investment company.
Because JHA serves as, or will serve as each Fund's investment adviser
or trustee exercising investment discretion, the Funds may be deemed to
be under common control and therefore affiliated persons of each other.
In addition, if a Participating Fund purchases more than 5% of the
voting securities of a Central Fund, the Central Fund and the
Participating Fund may be affiliated persons of each other. As a
result, section 17(a) would prohibit the sale of the shares of Central
Funds to the Participating Funds, and the redemption of the shares by
the Participating Funds.
2. Section 17(b) of the Act authorizes the Commission to exempt a
transaction from section 17(a) of the Act if the terms of the proposed
transaction, including the consideration to be paid or received, are
reasonable and fair and do not involve overreaching on the part of any
person concerned, and the proposed transaction is consistent with the
policy of each registered investment company concerned and with the
general purposes of the Act. Section 6(c) of the Act permits the
Commission to exempt persons or transactions from any provision of the
Act, if the 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.
3. Applicants submit that their request for relief to permit the
purchase and redemption of shares of the Central Funds by the
Participating Funds is consistent with the standards in sections 6(c)
and 17(b) of the Act. Applicants note that shares of the Central Funds
will be purchased and redeemed at their net asset value. Applicants
state that the Registered Participating Funds will retain their ability
to invest Cash Balances directly in money market instruments and other
short-term obligations as permitted by their investment objectives and
policies. Applicants state that a Registered Central Fund has the right
to discontinue selling shares to any of the Participating Funds if the
Registered Central Fund's Board or JHA determines that such sale would
adversely affect the Registered Central Fund's portfolio management and
operations.
C. Section 17(d) of the Act and Rule 17d-1 Under the Act
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an affiliated person of a registered investment company, acting as
principal, from participating in or effecting any transaction in
connection with any joint enterprise or joint arrangement in which the
investment company participates, unless the Commission has approved the
joint arrangement. Applicants state that the Participating Funds and
the Central Funds, by participating in the proposed transactions, and
JHA, by managing the proposed transactions, could be deemed to be
participating in a joint arrangement within the meaning of section
17(d) and rule 17d-1.
2. In considering whether to approve a joint transaction under rule
17d-1, the Commission considers whether the registered investment
company's participation in the joint transaction is consistent with the
provisions, policies and purposes of the Act, and the extent to which
the participation is on a basis different from or less advantageous
than that of other participants. Applicants state that the investment
by the Registered Participating Funds in shares of the Central Funds
would be on the same basis and no different from or less advantageous
than that of other participants. Applicants submit that the proposed
transactions meet the standards for an order under rule 17d-1.
II. Interfund Transactions
1. As noted above, section 17(a) of the Act would prohibit the
purchase and sale of portfolio securities between the Funds. Rule 17a-7
under the Act provides an exemption from section 17(a) for a purchase
or sale of certain securities between a registered investment company
and an affiliated person (or an affiliated person of an affiliated
person), provided certain conditions are met, including that the
affiliation between the registered investment company and the
affiliated person (or an affiliated person of the affiliated person)
must exist solely by reason of the entities having a common investment
adviser, common directors and/or common officers and the transaction
must be for no consideration other than cash. Applicants state that the
Participating Funds could become affiliated persons of each other, and
affiliated persons of the Central Funds, by virtue of a Participating
Fund owning 5% or more of the outstanding voting securities of a
Central Fund (``5% Ownership Affiliation''). In addition, a
Participating Fund may invest in a Central Fund by transferring its
portfolio securities to the Central Fund in exchange for shares of the
Central Fund.
2. Applicants request relief under sections 6(c) and 17(b) of the
Act to permit the Interfund Transactions. The Interfund Transactions
for which relief is requested are transactions between Registered
Participating Funds and Non-Registered Central Funds and between
[[Page 9390]]
Non-Registered Participating Funds and Registered Central Funds.
Applicants submit that the requested relief satisfies the standards for
relief in sections 6(c) and 17(b). Applicants state that, with respect
to the Participating Funds' in-kind purchases of shares of the Central
Funds, the consideration paid by the Participating Funds for shares of
the Central Funds will be based on the net asset value of the Central
Funds. With respect to the purchase and sale of portfolio securities
between the Funds, Applicants state that the price paid for the
securities will be the current market price of the securities. Further,
Applicants state that the Funds will comply with the requirements set
forth in rule 17a-7 in all respects other than (a) the requirement that
the parties to the transactions be affiliated persons (or affiliated
persons of affiliated persons) of each other solely by reason of having
a common investment adviser or investment advisers that are affiliated
persons of each other, common officers and/or common directors, solely
because the Participating Funds and the Central Funds might become
affiliated persons within the meaning of section 2(a)(3)(A) and (B) of
the Act and (b) the requirement that the transactions be for no
consideration other than cash, solely because certain of the Interfund
Transactions may be effected in shares of a Central Fund.
Applicants' Conditions
Applicants agree that the order granting the requested relief shall
be subject to the following conditions:
1. Shares of the Central Funds sold to and redeemed by the
Participating Funds will not be subject to a sales load, redemption
fee, asset-based distribution fee under a plan adopted in accordance
with rule 12b-1 under the Act, or service fee (as defined in rule
2830(b)(9) of the NASD Conduct Rules).
2. Before the next meeting of the Board of the Registered
Participating Fund that invests in the Central Funds is held for the
purpose of voting on an advisory contract under section 15 of the Act,
JHA will provide the Board with such information as the Board may
request to evaluate the effect of the investment of Uninvested Cash in
the Central Funds upon the direct and indirect compensation to JHA.
Such information will include specific information regarding the
approximate cost to JHA of, or portion of the advisory fee under the
existing advisory contract attributable to, managing the Uninvested
Cash of the Registered Participating Fund that can be expected to be
invested in the Central Funds. In connection with approving any
advisory contract for a Registered Participating Fund, the Registered
Participating Fund's Board, including a majority of the Independent
Trustees, shall consider to what extent, if any, the advisory fees
charged to the Registered Participating Fund by JHA should be reduced
to account for reduced services provided to the Registered
Participating Fund by JHA as a result of the Uninvested Cash being
invested in the Central Funds. The minute books of the Registered
Participating Fund will record fully the Board's consideration in
approving the advisory contract, including the considerations relating
to fees referred to above.
3. Each Registered Participating Fund will invest Uninvested Cash
in, and hold shares of, the Central Funds only to the extent that the
Registered Participating Fund's aggregate investment of Uninvested Cash
in the Central Funds does not exceed the greater of 25% of the
Registered Participating Fund's total assets or $10 million.
4. Investment by a Registered Participating Fund in shares of the
Central Funds will be in accordance with each Registered Participating
Fund's respective investment restrictions and will be consistent with
each Registered Participating Fund's investment policies as set forth
in its prospectus and statement of additional information.
5. Each Registered Participating Fund and the Registered Central
Fund in which it invests shall be in the same group of investment
companies as defined in section 12(d)(1)(G) of the Act. Each Non-
Registered Fund that may rely on the order shall have JHA as its
investment adviser or trustee exercising investment discretion.
6. No Central Fund shall acquire securities of any investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A) of the Act.
7. The Non-Registered Central Funds will comply with the
requirements of sections 17(a), (d), and (e), and 18 of the Act as if
the Non-Registered Central Funds were registered open-end investment
companies. With respect to all redemption requests made by a
Participating Fund, the Non-Registered Central Funds will comply with
section 22(e) of the Act. JHA will adopt procedures designed to ensure
that each Non-Registered Central Fund complies with sections 17(a),
(d), and (e), 18 and 22(e) of the Act. JHA will also periodically
review and update as appropriate such procedures and will maintain
books and records describing such procedures, and maintain the records
required by rules 31a-1(b)(1), 31a-1(b)(2)(ii), and 31a-1(b)(9) under
the Act. All books and records required to be made pursuant to this
condition will be maintained and preserved for a period of not less
than six years from the end of the fiscal year in which any transaction
occurred, the first two years in an easily accessible place, and will
be subject to examination by the Commission and its staff.
8. Each Non-Registered Central Fund will comply with rule 2a-7
under the Act and will use the amortized cost method of valuation. With
respect to each Non-Registered Central Fund, JHA will adopt and monitor
the procedures described in rule 2a-7(c)(7) under the Act and will take
such other actions as are required to be taken under those procedures.
A Participating Fund may only purchase shares of a Non-Registered
Central Fund if JHA determines on an ongoing basis that the Non-
Registered Central Fund is in compliance with rule 2a-7. JHA will
preserve for a period of not less than six years from the date of
determination, the first two years in an easily accessible place, a
record of such determination and the basis upon which the determination
was made. This record will be subject to examination by the Commission
and its staff.
9. Each Participating Fund will purchase and redeem shares of any
Non-Registered Central Fund as of the same time and at the same price,
and will receive dividends and bear its proportionate share of expenses
on the same basis, as other shareholders of the Non-Registered Central
Fund. A separate account will be established in the shareholder records
of each Non-Registered Central Fund for the account of each
Participating Fund that invests in such Non-Registered Central Fund.
10. To engage in Interfund Transactions, the Funds will comply with
rule 17a-7 under the Act in all respects other than (a) the requirement
that the parties to the transaction be affiliated persons (or
affiliated persons of affiliated persons) of each other solely by
reason of having a common investment adviser, or investment advisers
which are affiliated persons of each other, common officers, general
partners, trustees, managers and/or common directors, solely because a
Participating Fund and a Central Fund might become affiliated persons
within the meaning of section 2(a)(3)(A) and (B) of the Act and (b) the
requirement that the transactions be for no consideration other than
cash, solely because certain of the Interfund Transactions may be
effected in shares of a Central Fund.
[[Page 9391]]
11. Before a Registered Participating Fund may participate in the
Securities Lending Program, a majority of the Board (including a
majority of the Independent Trustees) will approve the Registered
Participating Fund's participation in the Securities Lending Program.
No less frequently than annually, the Board also will evaluate, with
respect to each Registered Participating Fund, any securities lending
arrangement and its results and determine that any investment of Cash
Collateral in the Central Funds is in the best interests of the
Registered Participating Fund.
12. The Board of each Registered Participating Fund will satisfy
the fund governance standards as defined in rule 0-1(a)(7) under the
Act by the compliance date for the rule.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-2534 Filed 2-22-06; 8:45 am]
BILLING CODE 8010-01-P
