Tactical Allocation Services, LLC and Agile Funds, Inc.; Notice of Application, 14041-14043 [E6-3958]
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Federal Register / Vol. 71, No. 53 / Monday, March 20, 2006 / Notices
MassMutual agrees that if, on the last
day of each fiscal quarter during the 24
month period, the total operating
expenses of a Replacement Fund (taking
into account any expense waiver or
reimbursement) exceed on an
annualized basis the net expense level
of the corresponding Replaced Fund for
the 2005 fiscal year, it will, for each
Contract outstanding on the date of the
Substitutions, make a corresponding
reimbursement of Separate Account
expenses as of the last day of such fiscal
quarter period, such that the amount of
the Replacement Fund’s net expenses,
together with those of the corresponding
Separate Account will, on an
annualized basis, be no greater than the
sum of the net expenses of the
corresponding Replaced Fund and the
expenses of the Separate Account for
the 2005 fiscal year.
6. Applicants assert that the
Substitutions will not result in the type
of costly forced redemption that section
26(c) was intended to guard against and,
for the following reasons, is consistent
with the protection of investors and the
purposes fairly intended by the 1940
Act:
(1) Each of the Replacement Funds is
an appropriate fund to which to move
contract owners with account values
allocated to the Replaced Funds because
the new funds have substantially similar
investment objectives and policies.
(2) The costs of the Substitutions,
including any brokerage costs, will be
borne by MassMutual and C.M. Life and
will not be borne by contract owners.
No charges will be assessed to effect the
Substitutions.
(3) The Substitutions will be at the net
asset values of the respective shares
without the imposition of any transfer
or similar charge and with no change in
the amount of any contract owner’s
account value.
(4) The Substitutions will not cause
the fees and charges under the Contracts
currently being paid by contract owners
to be greater after the Substitutions than
before the Substitutions and will result
in contract owners’ account values
being moved to a Mutual Fund with the
same or lower current total annual
expenses.
(5) All contract owners will be given
notice of the Substitutions prior to the
Substitutions and will have an
opportunity for 30 days after a
Substitution to reallocate account value
among other available Sub-Accounts
without diminishing the number of free
transfers that may be made in a given
contract year and without the
imposition of any transfer charge or
limitation, other than any applicable
limitations in place to deter potentially
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harmful excessive trading or
disintermediation involving the fixed
accounts available with the variable
annuity contracts.
(6) Within five days after a
Substitution, MassMutual and C.M. Life
will send to its affected contract owners
written confirmation that a Substitution
has occurred.
(7) The Substitutions will in no way
alter the insurance benefits to contract
owners or the contractual obligations of
MassMutual and C.M. Life.
(8) The Substitutions will have no
adverse tax consequences to contract
owners and will in no way alter the tax
benefits to contract owners.
7. The section 17 Applicants request
an order under section 17(b) exempting
them from the provisions of section
17(a) to the extent necessary to permit
MassMutual and C.M. Life to carry out
each of the proposed substitutions.
Sections 17(a)(1) and (2) of the 1940 Act
prohibit an affiliated person of a
registered investment company, or
affiliated persons of any such affiliated
person, or any principal underwriter for
such company (collectively,
‘‘Transaction Affiliates’’) from selling a
security to, or purchasing a security
from, the registered investment
company. Applicants may be deemed to
be Transaction Affiliates of one another
based upon the definition of ‘‘affiliated
person’’ under section 2(a)(3) of the
1940 Act. Because the Substitutions
may be effected, in whole or in part, by
means of in-kind redemptions and
purchases, the Substitutions may be
deemed to involve one or more
purchases or sales of securities or
property between Transaction Affiliates.
8. Section 17(b) provides that the
Commission may grant an application
exempting proposed transactions from
the prohibitions of section 17(a) if the
terms of the proposed transactions are
reasonable and fair and do not involve
overreaching on the part of any person
concerned; the transaction is consistent
with the investment policies of each
registered investment company
concerned; and the transaction is
consistent with the general purposes of
the 1940 Act. Applicants state that the
consideration to be paid by the
Replacement Fund, and each of the
Substituted Funds, will be fair and
reasonable and will not involve
overreaching. The proposed transactions
will take place at relative net asset value
in conformity with the requirements of
section 22(c) of the 1940 Act and Rule
22c–1 thereunder with no change in the
amount of any contract owner’s account
value or death benefit or in the dollar
value of his or her investment in any
Sub-Account.
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14041
9. In addition, Applicants state that to
the extent the Substitutions are effected
by redeeming shares of the Substituted
Funds and using the redemption
proceeds to purchase shares of the
Replacement Funds, the Substitutions
will satisfy each of the procedural
safeguards adopted by the Board of
Directors responsible for each of the
Ameritas Portfolios and the Substituted
Funds, respectively under Rule 17a–7
under the 1940 Act.
Conclusions
1. Applicants request an order of the
Commission pursuant to Section 26(c)
of the 1940 Act approving the
Substitutions. Section 26(c), in pertinent
part, provides that the Commission shall
issue an order approving a substitution
of securities if the evidence establishes
that it is consistent with the protection
of investors and the purposes fairly
intended by the policy and provisions of
the 1940 Act. For the reasons and upon
the facts set forth above, the requested
order meets the standards set forth in
section 26(c) and should, therefore, be
granted.
2. The Section 17 Applicants request
that the Commission issue an order
pursuant to section 17(b) of the 1940
Act exempting the Separate Accounts,
MassMutual, C.M. Life, and each
Replacement Fund from the provisions
of section 17(a) of the 1940 Act to the
extent necessary to permit, as part of the
substitutions, the in-kind purchase of
shares of the Replacement Funds which
may be deemed to be prohibited by
section 17(a) of the 1940 Act. The
Section 17 Applicants represent that the
proposed in-kind transactions meet all
of the requirements of section 17(b) of
the 1940 Act and that an exemption
should be granted, to the extent
necessary, from the provisions of
section 17(a).
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Nancy M. Morris,
Secretary.
[FR Doc. 06–2598 Filed 3–17–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
27260; 812–13055]
Tactical Allocation Services, LLC and
Agile Funds, Inc.; Notice of Application
March 13, 2006.
Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’).
AGENCY:
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14042
Federal Register / Vol. 71, No. 53 / Monday, March 20, 2006 / Notices
Notice of application for an
order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from section
15(a) of the Act and rule 18f–2 under
the Act.
ACTION:
Applicants
request an order that would permit them
to enter into and materially amend
subadvisory agreements without
shareholder approval.
APPLICANTS: Tactical Allocation
Services, LLC (the ‘‘Adviser’’) and Agile
Funds, Inc. (the ‘‘Company’’).
FILING DATES: The application was filed
on December 19, 2003, and amended on
February 27, 2006. Applicants have
agreed to file a final amendment during
the notice period, the substance of
which is reflected in this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 7, 2006, 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 who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants, 4909 Pearl East Circle, Suite
300, Boulder, CO 80301.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
SUMMARY OF APPLICATION:
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Desk,
100 F Street, NE., Washington, DC
20549–0102 (telephone (202) 551–5850).
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SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. The Company, a Maryland
corporation, is registered under the Act
as an open-end management investment
company. The Company currently offers
shares of one series, the Agile Multi-
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Strategy Fund (the ‘‘Multi-Strategy
Fund,’’ included in the term ‘‘Fund,’’
defined below), and may establish
additional series, each consisting of
separate investment objectives, policies,
and restrictions (each, a ‘‘Fund’’ and
collectively, the ‘‘Funds’’). The Adviser,
a Colorado limited liability corporation,
serves as the investment adviser to the
Multi-Strategy Fund and is registered as
an investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’).1
2. The Adviser serves as investment
adviser to the Multi-Strategy Fund
pursuant to an investment advisory
agreement between the Company and
the Adviser (the ‘‘Advisory Agreement’’)
that was approved by the Company’s
board of directors (‘‘Board’’), including
a majority of the directors who are not
‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act, of the
Company or the Adviser (‘‘Independent
Directors’’), and the Multi-Strategy
Fund’s initial shareholders. The
Advisory Agreement permits the
Adviser to enter into investment
advisory agreements (‘‘Subadvisory
Agreements’’) with subadvisers
(‘‘Subadvisers’’) to whom the Adviser
may delegate responsibility for
providing investment advice and
making investment decisions for a
Fund. Each Subadviser is, and any
future Subadviser will be, registered
under the Advisers Act. The Adviser
monitors and evaluates the Subadvisers
and recommends to the Board their
hiring, termination, and replacement.
The Adviser recommends Subadvisers
based on a number of factors discussed
in the application used to evaluate their
skills in managing assets pursuant to
particular investment objectives. The
Adviser compensates the Subadvisers
out of the fee paid to the Adviser by a
Fund.
3. Applicants request an order to
permit the Adviser, subject to Board
approval, to enter into and materially
amend Subadvisory Agreements
1 The applicants request that any relief granted
pursuant to the application apply to future series
of the Company and any other existing or future
registered open-end management investment
company and its series that: (a) Are advised by the
Adviser or any entity controlling, controlled by, or
under common control with the Adviser; (b) are
managed in a manner consistent with the
application; and (c) comply with the terms and
conditions in the application (included in the term
‘‘Funds’’). The Company is the only existing
registered open-end management investment
company that currently intends to rely on the order.
If the name of any Fund contains the name of a
Subadviser (as defined below), the name of the
Adviser or the name of the entity controlling,
controlled by or under common control with the
Adviser that serves as the primary adviser to the
Fund will precede the name of the Subadviser.
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without obtaining shareholder approval.
The requested relief will not extend to
any Subadviser that is an affiliated
person, as defined in section 2(a)(3) of
the Act, of a Fund or the Adviser, other
than by reason of serving as a
Subadviser to one or more of the Funds
(‘‘Affiliated Subadviser’’). None of the
current Subadvisers is an Affiliated
Subadviser.
Applicants’ Legal Analysis
1. Section 15(a) of the Act provides,
in relevant part, that it is unlawful for
any person to act as an investment
adviser to a registered investment
company except under a written
contract that has been approved by the
vote of a majority of the company’s
outstanding voting securities. Rule 18f–
2 under the Act provides that each
series or class of stock in a series
company affected by a matter must
approve such matter if the Act requires
shareholder approval.
2. Section 6(c) of the Act provides that
the Commission may exempt any
person, security, or transaction or any
class or classes of persons, securities, or
transactions from any provisions of the
Act, or from any rule thereunder, 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
believe that the requested relief meets
this standard for the reasons discussed
below.
3. Applicants state that the Funds’
shareholders rely on the Adviser to
select the Subadvisers best suited to
achieve a Fund’s investment objectives.
Applicants assert that, from the
perspective of the investor, the role of
the Subadvisers is comparable to that of
individual portfolio managers employed
by traditional investment advisory
firms. Applicants contend that requiring
shareholder approval of each
Subadvisory Agreement would impose
costs and unnecessary delays on the
Funds, and may preclude the Adviser
from acting promptly in a manner
considered advisable by the Board.
Applicants also note that the Advisory
Agreement will remain subject to
section 15(a) of the Act and rule 18f–2
under the Act.
4. Applicants note that the
Commission adopted certain fund
governance standards on July 27, 2004.2
Applicants agree that each Fund will
comply with the fund governance
standards set forth in rule 0–1(a)(7)
2 See Investment Company Act Release No. 26520
(July 27, 2004).
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Federal Register / Vol. 71, No. 53 / Monday, March 20, 2006 / Notices
under the Act by the compliance date.
Applicants also note that the
Commission has proposed rule 15a–5
under the Act and agree that the
requested order will expire on the
effective date of rule 15a–5 under the
Act, if adopted.3
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Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Before a Fund may rely on the
requested order, the operation of the
Fund in the manner described in the
application will be approved by a
majority of the Fund’s outstanding
voting securities, as defined in the Act,
or, in the case of a Fund whose public
shareholders purchase shares on the
basis of a prospectus containing the
disclosure contemplated by condition 2
below, by the initial shareholder(s)
before offering shares of that Fund to the
public.
2. Each Fund will disclose in its
prospectus the existence, substance and
effect of any order granted pursuant to
the 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 (subject to oversight by
the Board) to oversee Subadvisers and
recommend their hiring, termination,
and replacement.
3. Each Fund will comply with the
fund governance standards set forth in
rule 0–1(a)(7) under the Act by the
compliance date for the rule
(‘‘Compliance Date’’). Prior to the
Compliance Date, a majority of the
Board will be Independent Directors,
and the nomination of new or additional
Independent Directors will be at the
discretion of the then-existing
Independent Directors.
4. The Adviser will not enter into a
Subadvisory Agreement with any
Affiliated Subadviser without that
agreement, including the compensation
to be paid thereunder, being approved
by the shareholders of the applicable
Fund.
5. When a Subadviser change is
proposed for a Fund with an Affiliated
Subadviser, the Board, including a
majority of the Independent Directors,
will make a separate finding, reflected
in the 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 Subadviser
derives an inappropriate advantage.
6. Within 90 days of the hiring of a
new Subadviser, shareholders of the
affected Fund will be furnished all
information about the new Subadviser
that would be contained in a proxy
statement. Each Fund will meet this
condition by providing shareholders
with an information statement meeting
the requirements of Regulation 14C,
Schedule 14C and Item 22 of Schedule
14A under the Securities Exchange Act
of 1934 within 90 days of the hiring of
a new Subadviser.
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 assets, and, subject to review
and approval by the Board, will (a) Set
the Fund’s overall investment strategies;
(b) evaluate, select, and recommend
Subadvisers to manage all or part of the
Fund’s assets; (c) when appropriate,
allocate and reallocate a Fund’s assets
among multiple Subadvisers; (d)
monitor and evaluate the performance
of Subadvisers; and (e) implement
procedures reasonably designed to
ensure that the Subadvisers comply
with each Fund’s investment objectives,
policies and restrictions.
8. No director or officer of the
Company, or director, manager or officer
of the Adviser, will own, directly or
indirectly (other than through a pooled
investment vehicle that is not controlled
by that director, manager or officer), any
interest in a Subadviser, except for (a)
ownership of interests in the Adviser or
any entity that controls, is controlled by,
or is under common control with the
Adviser, or (b) ownership of less than
1% of the outstanding securities of any
class of equity or debt of a publiclytraded company that is either a
Subadviser or an entity that controls, is
controlled by, or is under common
control with a Subadviser.
9. The requested order will expire on
the effective date of rule 15a–5 under
the Act, if adopted.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Nancy M. Morris,
Secretary.
[FR Doc. E6–3958 Filed 3–17–06; 8:45 am]
BILLING CODE 8010–01–P
3 Investment Company Act Release No. 26230
(Oct. 23, 2003).
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14043
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53474; File No. SR–NASD–
2006–022]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Thereto Relating to Optional Routing
of Orders in Nasdaq’s INET Facility
March 13, 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
10, 2006, the National Association of
Securities Dealers, Inc.(‘‘NASD’’),
through its subsidiary, the Nasdaq Stock
Market, Inc. (‘‘Nasdaq’’), submitted to
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by Nasdaq. Nasdaq filed
the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 which
renders it effective upon filing with the
Commission. On March 9, 2006, Nasdaq
filed Amendment No. 1 to the proposed
rule change.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to create a new
voluntary routing option for its INET
facility that will allow INET users to
instruct that orders being ultimately
directed to the New York Stock
Exchange or the American Stock
Exchange first check INET and then the
Nasdaq Market Center and/or Nasdaq’s
Brut facility for potential execution
before being delivered to those
exchanges. Nasdaq will implement the
proposed rule change immediately. The
text of the proposed rule change is
below. Proposed new language is in
italics; deletions are in [brackets].5
*
*
*
*
*
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 Amendment No. 1 made a non-substantive,
clarifying change to the rule text, as well as
provided rationale for the request for the
Commission to accelerate the operative delay.
5 Changes are marked to the rule text that appears
in the electronic NASD Manual found at
www.nasd.com. Prior to the date when The
NASDAQ Stock Market LLC (‘‘NASDAQ LLC’’)
commences operations, NASDAQ LLC will file a
conforming change to the rules of NASDAQ LLC
2 17
Continued
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]]>Agencies
[Federal Register Volume 71, Number 53 (Monday, March 20, 2006)]
[Notices]
[Pages 14041-14043]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-3958]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 27260; 812-13055]
Tactical Allocation Services, LLC and Agile Funds, Inc.; Notice
of Application
March 13, 2006.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
[[Page 14042]]
ACTION: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
section 15(a) of the Act and rule 18f-2 under the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order that would permit
them to enter into and materially amend subadvisory agreements without
shareholder approval.
Applicants: Tactical Allocation Services, LLC (the ``Adviser'') and
Agile Funds, Inc. (the ``Company'').
Filing Dates: The application was filed on December 19, 2003, and
amended on February 27, 2006. Applicants have agreed to file a final
amendment during the notice period, the substance of which is reflected
in this notice.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on April 7, 2006, 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 who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090. Applicants, 4909 Pearl East Circle,
Suite 300, Boulder, CO 80301.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, or Mary Kay Frech, Branch Chief, at (202)
551-6821 (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
Commission's Public Reference Desk, 100 F Street, NE., Washington, DC
20549-0102 (telephone (202) 551-5850).
Applicants' Representations
1. The Company, a Maryland corporation, is registered under the Act
as an open-end management investment company. The Company currently
offers shares of one series, the Agile Multi-Strategy Fund (the
``Multi-Strategy Fund,'' included in the term ``Fund,'' defined below),
and may establish additional series, each consisting of separate
investment objectives, policies, and restrictions (each, a ``Fund'' and
collectively, the ``Funds''). The Adviser, a Colorado limited liability
corporation, serves as the investment adviser to the Multi-Strategy
Fund and is registered as an investment adviser under the Investment
Advisers Act of 1940 (the ``Advisers Act'').\1\
---------------------------------------------------------------------------
\1\ The applicants request that any relief granted pursuant to
the application apply to future series of the Company and any other
existing or future registered open-end management investment company
and its series that: (a) Are advised by the Adviser or any entity
controlling, controlled by, or under common control with the
Adviser; (b) are managed in a manner consistent with the
application; and (c) comply with the terms and conditions in the
application (included in the term ``Funds''). The Company is the
only existing registered open-end management investment company that
currently intends to rely on the order. If the name of any Fund
contains the name of a Subadviser (as defined below), the name of
the Adviser or the name of the entity controlling, controlled by or
under common control with the Adviser that serves as the primary
adviser to the Fund will precede the name of the Subadviser.
---------------------------------------------------------------------------
2. The Adviser serves as investment adviser to the Multi-Strategy
Fund pursuant to an investment advisory agreement between the Company
and the Adviser (the ``Advisory Agreement'') that was approved by the
Company's board of directors (``Board''), including a majority of the
directors who are not ``interested persons,'' as defined in section
2(a)(19) of the Act, of the Company or the Adviser (``Independent
Directors''), and the Multi-Strategy Fund's initial shareholders. The
Advisory Agreement permits the Adviser to enter into investment
advisory agreements (``Subadvisory Agreements'') with subadvisers
(``Subadvisers'') to whom the Adviser may delegate responsibility for
providing investment advice and making investment decisions for a Fund.
Each Subadviser is, and any future Subadviser will be, registered under
the Advisers Act. The Adviser monitors and evaluates the Subadvisers
and recommends to the Board their hiring, termination, and replacement.
The Adviser recommends Subadvisers based on a number of factors
discussed in the application used to evaluate their skills in managing
assets pursuant to particular investment objectives. The Adviser
compensates the Subadvisers out of the fee paid to the Adviser by a
Fund.
3. Applicants request an order to permit the Adviser, subject to
Board approval, to enter into and materially amend Subadvisory
Agreements without obtaining shareholder approval. The requested relief
will not extend to any Subadviser that is an affiliated person, as
defined in section 2(a)(3) of the Act, of a Fund or the Adviser, other
than by reason of serving as a Subadviser to one or more of the Funds
(``Affiliated Subadviser''). None of the current Subadvisers is an
Affiliated Subadviser.
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except under a written contract that has been
approved by the vote of a majority of the company's outstanding voting
securities. Rule 18f-2 under the Act provides that each series or class
of stock in a series company affected by a matter must approve such
matter if the Act requires shareholder approval.
2. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction or any class or classes of
persons, securities, or transactions from any provisions of the Act, or
from any rule thereunder, 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 believe that the requested relief
meets this standard for the reasons discussed below.
3. Applicants state that the Funds' shareholders rely on the
Adviser to select the Subadvisers best suited to achieve a Fund's
investment objectives. Applicants assert that, from the perspective of
the investor, the role of the Subadvisers is comparable to that of
individual portfolio managers employed by traditional investment
advisory firms. Applicants contend that requiring shareholder approval
of each Subadvisory Agreement would impose costs and unnecessary delays
on the Funds, and may preclude the Adviser from acting promptly in a
manner considered advisable by the Board. Applicants also note that the
Advisory Agreement will remain subject to section 15(a) of the Act and
rule 18f-2 under the Act.
4. Applicants note that the Commission adopted certain fund
governance standards on July 27, 2004.\2\ Applicants agree that each
Fund will comply with the fund governance standards set forth in rule
0-1(a)(7)
[[Page 14043]]
under the Act by the compliance date. Applicants also note that the
Commission has proposed rule 15a-5 under the Act and agree that the
requested order will expire on the effective date of rule 15a-5 under
the Act, if adopted.\3\
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\2\ See Investment Company Act Release No. 26520 (July 27,
2004).
\3\ Investment Company Act Release No. 26230 (Oct. 23, 2003).
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Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Fund may rely on the requested order, the operation of
the Fund in the manner described in the application will be approved by
a majority of the Fund's outstanding voting securities, as defined in
the Act, or, in the case of a Fund whose public shareholders purchase
shares on the basis of a prospectus containing the disclosure
contemplated by condition 2 below, by the initial shareholder(s) before
offering shares of that Fund to the public.
2. Each Fund will disclose in its prospectus the existence,
substance and effect of any order granted pursuant to the 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 (subject to oversight by the Board) to oversee
Subadvisers and recommend their hiring, termination, and replacement.
3. Each Fund will comply with the fund governance standards set
forth in rule 0-1(a)(7) under the Act by the compliance date for the
rule (``Compliance Date''). Prior to the Compliance Date, a majority of
the Board will be Independent Directors, and the nomination of new or
additional Independent Directors will be at the discretion of the then-
existing Independent Directors.
4. The Adviser will not enter into a Subadvisory Agreement with any
Affiliated Subadviser without that agreement, including the
compensation to be paid thereunder, being approved by the shareholders
of the applicable Fund.
5. When a Subadviser change is proposed for a Fund with an
Affiliated Subadviser, the Board, including a majority of the
Independent Directors, will make a separate finding, reflected in the
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 Subadviser derives an inappropriate
advantage.
6. Within 90 days of the hiring of a new Subadviser, shareholders
of the affected Fund will be furnished all information about the new
Subadviser that would be contained in a proxy statement. Each Fund will
meet this condition by providing shareholders with an information
statement meeting the requirements of Regulation 14C, Schedule 14C and
Item 22 of Schedule 14A under the Securities Exchange Act of 1934
within 90 days of the hiring of a new Subadviser.
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 assets, and, subject to review
and approval by the Board, will (a) Set the Fund's overall investment
strategies; (b) evaluate, select, and recommend Subadvisers to manage
all or part of the Fund's assets; (c) when appropriate, allocate and
reallocate a Fund's assets among multiple Subadvisers; (d) monitor and
evaluate the performance of Subadvisers; and (e) implement procedures
reasonably designed to ensure that the Subadvisers comply with each
Fund's investment objectives, policies and restrictions.
8. No director or officer of the Company, or director, manager or
officer of the Adviser, will own, directly or indirectly (other than
through a pooled investment vehicle that is not controlled by that
director, manager or officer), any interest in a Subadviser, except for
(a) ownership of interests in the Adviser or any entity that controls,
is controlled by, or is under common control with the Adviser, or (b)
ownership of less than 1% of the outstanding securities of any class of
equity or debt of a publicly-traded company that is either a Subadviser
or an entity that controls, is controlled by, or is under common
control with a Subadviser.
9. The requested order will expire on the effective date of rule
15a-5 under the Act, if adopted.
For the Commission, by the Division of Investment Management,
under delegated authority.
Nancy M. Morris,
Secretary.
[FR Doc. E6-3958 Filed 3-17-06; 8:45 am]
BILLING CODE 8010-01-P
