Liberty All-Star Equity Fund, et al.; Notice of Application, 9792-9794 [E7-3772]
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9792
Federal Register / Vol. 72, No. 42 / Monday, March 5, 2007 / Notices
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purchases and redemptions do not
result in abusive self-dealing or
overreaching by affiliated persons of the
Funds.
Section 17(d) of the Act and Rule 17d–
1 Under the Act
15. Section 17(d) of the Act and rule
17d–1 under the Act prohibit any
affiliated person of, or principal
underwriter for, a registered investment
company, or any affiliated person of the
affiliated person or the principal
underwriter, acting as principal, from
effecting any transaction in connection
with any joint enterprise or other
arrangement or profit-sharing plan in
which the investment company
participates, unless an application
regarding the joint transaction has been
filed with the Commission and granted
by order. Under rule 17d–1, in passing
upon such applications, the
Commission considers whether the
participation of the registered
investment company in the joint
transaction is consistent with the
provisions, policies and purposes of the
Act and the extent to which such
participation is on a basis different from
or less advantageous than that of other
participants.
16. Applicants request an order under
rule 17d–1 that would permit a Trust to
reimburse the Sponsor for the payment
to the BoNY Index Provider of an
annual license fee under the License
Agreement. Applicants believe that
relief is necessary because the Sponsor
may be deemed an affiliated person of
the Trust, as defined in section 2(a)(3)
of the Act, and the Trust’s undertaking
to reimburse the Sponsor might be
deemed a joint enterprise or other joint
arrangement in which the Trust is a
participant, in contravention of section
17(d) and rule 17d–1.
17. The License Agreement allows
applicants to use the Benchmark Indices
as bases for Trust Shares and to use
certain of BoNY’s trade name and
trademark rights. Applicants believe
that BoNY is a valuable name that is
well-known to investors and believe
that investors wish to invest in
instruments that closely mirror the
Benchmark Indices. In view of this,
applicants state that it is necessary to
obtain from BoNY the License
Agreement so that appropriate reference
to BoNY may be made in materials
describing Trust Shares and the Trust.
Applicants assert that the terms and
provisions of the License Agreement are
comparable to the terms and provisions
of other similar license agreements and
that the annual license fee is for fair
value, is in an amount comparable to
that which would be charged by the
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15:17 Mar 02, 2007
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BoNY Index Provider for similar
arrangements, and is in an amount
comparable to that charged by licensors
in connection with the formation of
other UITs based on other indices. For
these reasons, applicants state that the
proposed license fee arrangement
satisfies the standards of section 17(d)
and rule 17d–1.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Each Trust’s prospectus and
Product Description will clearly
disclose that, for purposes of the Act,
Trust Shares are issued by a registered
investment company, and the
acquisition of Trust Shares by
investment companies is subject to the
restrictions of Section 12(d)(1) of the
Act, except as permitted by an
exemptive order that permits registered
investment companies to invest in Trust
Shares beyond the limits in Section
12(d)(1)(A), subject to certain terms and
conditions, including that the registered
investment company enter into an
agreement with the Trust regarding the
terms of the investment.
2. As long as a Trust operates in
reliance on the requested order, the
Trust Shares will be listed on an
Exchange.
3. The Web site for the Trusts, which
will be publicly accessible at no charge,
will contain the following information,
on a per Trust Share basis, for each
Trust: (a) The prior Business Day’s NAV
and the reported closing price, and a
calculation of the premium or discount
of such price against such NAV; and (b)
data in chart format displaying the
frequency distribution of discounts and
premiums of the daily closing price
against the NAV, within appropriate
ranges, for each of the four previous
calendar quarters. In addition, the
Product Description for each Trust will
state that the Web site for the Trusts has
information about the premiums and
discounts at which the Trust Shares
have traded.
4. The prospectus and annual report
for each Trust will also include: (a) The
information listed in condition 3(b)
above, (i) in the case of the prospectus,
for the most recently completed year
(and the most recently completed
quarter or quarters, as applicable), and
(ii) in the case of the annual report, for
the immediately preceding five years, as
applicable; and (b) the following data,
calculated on a per Trust Share basis for
one, five and ten year periods (or life of
that Trust), (i) the cumulative total
return and the average annual total
return based on NAV and closing price,
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and (ii) the cumulative total return of
the relevant Benchmark Index.
5. Before a Trust may rely on the
order, the Commission will have
approved pursuant to rule 19b–4 under
the Exchange Act, an Exchange rule
requiring Exchange members and
member organizations effecting
transactions in Trust Shares to deliver a
Product Description to purchasers of
Trust Shares.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–3784 Filed 3–2–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
27741; 812–13327]
Liberty All-Star Equity Fund, et al.;
Notice of Application
February 27, 2007.
Securities and Exchange
Commission.
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.
AGENCY:
Applicants
request an order to permit the two
applicant registered closed-end
investment companies to delay
shareholder vote on agreements with
sub-advisers (‘‘Portfolio Managers,’’ and
the agreements, ‘‘Portfolio Management
Agreements’’) until the next annual
shareholders meeting. The order would
supersede prior orders (‘‘Prior
Orders’’).1
APPLICANTS: Liberty All-Star Equity
Fund (the ‘‘Equity Fund’’) and Liberty
All-Star Growth Fund, Inc. (the ‘‘Growth
Fund’’) (collectively, the ‘‘Funds’’), and
ALPS Advisers, Inc. (‘‘ALPS Advisers’’).
SUMMARY OF APPLICATION:
1 Previous orders received by the Equity Fund (as
defined below) are: Liberty All-Star Equity Fund, et
al., Investment Company Act Release Nos. 19436
(April 26, 1993) (notice) and 19491 (May 25, 1993)
(order); Liberty All-Star Equity Fund, et al.,
Investment Company Act Release Nos. 20347 (June
8, 1994) (notice) and 20385 (July 6, 1994) (order);
and Liberty All-Star Equity Fund, et al., Investment
Company Act Release Nos. 22498 (February 6,
1997) (notice) and 22543 (March 4, 1997) (order).
Previous orders received by the Growth Fund (as
defined below) are: The Charles Allmon Trust, Inc.,
et al., Investment Company Act Release Nos. 20772
(December 15, 1994) (notice) and 20824 (January 10,
1995) (order); and Liberty All-Star Growth Fund,
Inc., et al., Investment Company Act Release Nos.
22499 (February 6, 1997) (notice) and 22542 (March
4, 1997) (order).
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Federal Register / Vol. 72, No. 42 / Monday, March 5, 2007 / Notices
The application was filed
on September 18, 2006, and amended
on January 24, 2007. 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 March 26, 2007, 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, 1625 Broadway, Suite 2200,
Denver, CO 80202.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, or Nadya Roytblat,
Assistant Director, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
FILING DATES:
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).
SUPPLEMENTARY INFORMATION:
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Applicants’ Representations
1. The Equity Fund, a Massachusetts
business trust, and the Growth Fund, a
Maryland corporation, are closed-end
management investment companies
registered under the Act. Each Fund’s
shares are currently listed and traded on
the New York Stock Exchange. Each
Fund holds an annual meeting of its
shareholders, usually in April. ALPS
Advisers, a Colorado corporation, serves
as the investment adviser to the Funds
and is registered as an investment
adviser under the Investment Advisers
Act of 1940 (the ‘‘Advisers Act’’). ALPS
Advisers is a wholly owned subsidiary
of ALPS Holdings, Inc. (‘‘ALPS
Holdings’’), which in turn is majority
owned by an institutional limited
partnership controlled by Lovell
Minnick Partners LLC.
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2. On December 15, 2006, ALPS
Advisers became the Funds’ investment
adviser. Previously, Banc of America
Investment Advisers, Inc. (‘‘BAIA’’),
formerly known as Liberty Asset
Management Company, served as the
Funds’ investment adviser and
administrator. Pursuant to an asset
purchase agreement dated September 7,
2006, among BAIA, ALPS Advisers and
ALPS Holdings, ALPS Advisers entered
into fund management agreements
(‘‘Fund Management Agreements’’) with
the Funds. At a special meeting of
shareholders held on November 21,
2006, Fund shareholders approved the
Fund Management Agreements with
ALPS Advisers, new Portfolio
Management Agreements with each
Portfolio Manager and a policy
permitting the Funds and ALPS
Advisers to enter into Portfolio
Management Agreements in advance of
shareholder approval.
3. Under the terms of the Fund
Management Agreements, ALPS
Advisers is responsible for the general
management and investment of the
Funds, subject to the authority of the
Funds’ boards of trustees/directors (each
a ‘‘Board’’ and collectively, the
‘‘Boards’’). For providing services to the
Funds, ALPS Advisers receives an
investment advisory fee based on the
average daily net assets of the Funds.
4. ALPS Advisers, on behalf of the
Funds, has entered into Portfolio
Management Agreements with multiple
Portfolio Managers. The Equity Fund
currently has five Portfolio Managers
and the Growth Fund currently has
three Portfolio Managers. Each Portfolio
Manager is and each new Portfolio
Manager will be an investment adviser
that is registered under the Advisers
Act. None of the existing Portfolio
Managers is and no new Portfolio
Manager will be an affiliated person of
the Funds or ALPS Advisers other than
as Portfolio Manager. ALPS Advisers
will evaluate, allocate assets to, and
oversee the Portfolio Managers, and
make recommendations about their
hiring, termination and replacement to
the Board. ALPS Advisers will
recommend Portfolio Managers based
on a number of factors discussed in the
application used to evaluate their skills
in managing assets pursuant to
particular investment objectives. ALPS
Advisers will compensate the Portfolio
Managers out of the fee paid to ALPS
Advisers by the Funds.
5. Applicants request an order to
permit ALPS Advisers, subject to Board
approval, to change or add Portfolio
Managers, or continue the services of a
Portfolio Manager following an
assignment of its Portfolio Management
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9793
Agreement, and delay shareholder
approval until the next annual
shareholders meeting. Applicants state
that the Prior Orders had granted BAIA,
as investment adviser to the Funds,
substantially identical relief.
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.
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
have operated under the Prior Orders for
over 10 years. During the time that the
Prior Orders have been in effect, there
have been 11 Portfolio Manager changes
for the Equity Fund and four changes for
the Growth Fund. Applicants further
state that the Portfolio Manager changes
have not had any impact on premiums
or discounts to net asset value at which
the Funds’ shares have traded, and that
there is no pattern of premiums or
discounts related to Portfolio Manager
changes. Applicants state that Portfolio
Manager changes have been frequent
enough over the lives of the Funds that
they are not viewed as a significant
event by shareholders or in the
securities markets. Applicants state that
the Board and ALPS Advisers believe
the ability to quickly fire and hire a
Portfolio Manager have been important
to the success of the Funds’ investment
strategy and process. Finally, applicants
state that the conditions to the requested
relief set forth below will address the
concerns underlying section 15(a) with
respect to the Portfolio Management
Agreements.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Each Fund will hold itself out to
the public as employing the multimanager investment management
structure described in the application.
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9794
Federal Register / Vol. 72, No. 42 / Monday, March 5, 2007 / Notices
Each Fund’s periodic reports to
shareholders will prominently disclose
that ALPS Advisers has ultimate
responsibility (subject to oversight by
the Board) to oversee the Portfolio
Managers and recommend their hiring,
termination, and replacement.
2. Any new Portfolio Management
Agreement with respect to a Fund will
be submitted for ratification and
approval to the vote of such Fund’s
shareholders no later than at the
regularly scheduled annual meeting of
shareholders of the Fund next following
the effective date of the new Portfolio
Management Agreement, and its
continuance after such vote is
conditioned on approval by the majority
vote (as defined in section 2(a)(42) of
the Act) of such shareholders.
3. The Funds will continue to hold
annual meetings of their shareholders,
whether or not required to do so by the
rules of the New York Stock Exchange
or otherwise.
4. At all times, at least a majority of
the Board of each Fund will be trustees/
directors who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act, of the Funds or ALPS
Advisers (‘‘Independent Trustees/
Directors’’), and the nomination of new
or additional Independent Trustees/
Directors will be at the discretion of the
then existing Independent Trustees/
Directors.
5. In the case of a previous Portfolio
Management Agreement terminated by
an assignment by an investment adviser
or a controlling person of the
investment adviser in connection with
which assignment the investment
adviser or a controlling person directly
or indirectly receives money or other
benefit (‘‘Assignment’’), the new
Portfolio Management Agreement will
comply with rule 15a–4(b)(2) under the
Act. In any other case, each new
Portfolio Management Agreement for a
Fund will provide for a sub-advisory fee
no higher than that provided in that
Fund’s existing Portfolio Management
Agreements and, except for the
provisions relating to shareholder
approval referred to in Condition 2
above, will be on substantially the same
other terms and conditions as such
Fund’s existing Portfolio Management
Agreements. In all cases, in the event
that the new Portfolio Management
Agreement provides for sub-advisory
fees at rates less than those provided in
the existing Portfolio Management
Agreements, the difference will be
passed on to the Fund and its
shareholders through a corresponding
voluntary reduction in the fund
management fees payable by the Fund
to ALPS Advisers.
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15:17 Mar 02, 2007
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6. A Portfolio Manager will have no
affiliation with the Funds or ALPS
Advisers other than as Portfolio
Manager, and will have no duties or
responsibilities with respect to the
Funds beyond the investment
management of the portion of the
Fund’s portfolio assets allocated to it by
ALPS Advisers from time to time and
related record keeping and reporting.
7. The Board of each Fund, in
addition to approving any new Portfolio
Management Agreement in accordance
with the requirements of section 15(c) of
the Act, will specifically determine that
entering into the new Portfolio
Management Agreement in advance of
the next regular annual meeting of the
shareholders of the Fund and without
prior shareholder approval is in
furtherance of the multi-management
methodology as applied to each Fund’s
multi-managed assets and is in the best
interests of the Fund and its
shareholders.
8. ALPS Advisers will have
responsibility for the general
management and investment of each
Fund’s assets, subject to oversight by the
Fund’s Board. In particular, ALPS
Advisers will (i) provide overall
investment programs and strategies for
the Funds, (ii) recommend to the Fund
Boards investment management firms
for appointment or replacement as the
Fund’s Portfolio Managers, (iii) allocate
and reallocate each Fund’s portfolio
assets among the Portfolio Managers,
(iv) monitor and evaluate the
investment performance of the Portfolio
Managers, including their compliance
with each Fund’s investment objectives,
policies and restrictions, and (v)
implement procedures reasonably
designed to ensure that the Portfolio
Managers comply with each Fund’s
investment objectives, policies and
restrictions.
9. The appointment of the new or
successor Portfolio Manager will be
announced by press release promptly
following the Fund’s Board’s action
referred to in Condition 7 above, and a
notice of the new Portfolio Management
Agreement, together with a description
of the new or successor Portfolio
Manager, will be included in the
applicable Fund’s next report to
shareholders.
10. No director/trustee or officer of
the Funds nor director or officer of
ALPS Advisers will own directly or
indirectly (other than through a pooled
investment vehicle that is not controlled
by such person) any interest in a
Portfolio Manager, except for (a)
ownership of interests in ALPS Advisers
or any entity that controls, is controlled
by, or is under common control with
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Fmt 4703
Sfmt 4703
ALPS Advisers, or (b) ownership of less
than 1% of the outstanding securities of
any class of equity or debt of any
publicly traded company that is either
a Portfolio Manager or controls, is
controlled by or is under common
control with a Portfolio Manager.
11. In the case of an Assignment of a
Fund’s Portfolio Management
Agreement with a Portfolio Manager,
ALPS Advisers or the Portfolio Manager
(or its successor) will pay the
incremental cost of including the
proposal to approve or disapprove the
new Portfolio Management Agreement
in the proxy material for the next annual
meeting of the Fund’s shareholders.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–3772 Filed 3–2–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55348; File No. SR–Amex–
2007–18]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Order Granting
Accelerated Approval to Proposed
Rule Change and Amendment No. 1
Thereto To Provide for an Optional
Exchange-Provided Fingerprinting
Service and To Amend Its Member
Fees To Include a Processing Fee for
the Fingerprinting Service
February 26, 2007.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’)
and Rule 19b–4 thereunder,2 notice is
hereby given that on February 7, 2007,
the American Stock Exchange LLC
(‘‘Amex’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
substantially prepared by the Exchange.
On February 16, 2007, Amex submitted
Amendment No. 1 to the proposed rule
change. This order provides notice of
the proposed rule change as modified by
Amendment No. 1 and approves the
proposed rule change as amended on an
accelerated basis.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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]]>Agencies
[Federal Register Volume 72, Number 42 (Monday, March 5, 2007)]
[Notices]
[Pages 9792-9794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3772]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 27741; 812-13327]
Liberty All-Star Equity Fund, et al.; Notice of Application
February 27, 2007.
AGENCY: Securities and Exchange Commission.
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.
-----------------------------------------------------------------------
SUMMARY OF APPLICATION: Applicants request an order to permit the two
applicant registered closed-end investment companies to delay
shareholder vote on agreements with sub-advisers (``Portfolio
Managers,'' and the agreements, ``Portfolio Management Agreements'')
until the next annual shareholders meeting. The order would supersede
prior orders (``Prior Orders'').\1\
---------------------------------------------------------------------------
\1\ Previous orders received by the Equity Fund (as defined
below) are: Liberty All-Star Equity Fund, et al., Investment Company
Act Release Nos. 19436 (April 26, 1993) (notice) and 19491 (May 25,
1993) (order); Liberty All-Star Equity Fund, et al., Investment
Company Act Release Nos. 20347 (June 8, 1994) (notice) and 20385
(July 6, 1994) (order); and Liberty All-Star Equity Fund, et al.,
Investment Company Act Release Nos. 22498 (February 6, 1997)
(notice) and 22543 (March 4, 1997) (order). Previous orders received
by the Growth Fund (as defined below) are: The Charles Allmon Trust,
Inc., et al., Investment Company Act Release Nos. 20772 (December
15, 1994) (notice) and 20824 (January 10, 1995) (order); and Liberty
All-Star Growth Fund, Inc., et al., Investment Company Act Release
Nos. 22499 (February 6, 1997) (notice) and 22542 (March 4, 1997)
(order).
APPLICANTS: Liberty All-Star Equity Fund (the ``Equity Fund'') and
Liberty All-Star Growth Fund, Inc. (the ``Growth Fund'') (collectively,
the ``Funds''), and ALPS Advisers, Inc. (``ALPS Advisers'').
[[Page 9793]]
FILING DATES: The application was filed on September 18, 2006, and
amended on January 24, 2007. 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 March 26, 2007, 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, 1625 Broadway, Suite 2200,
Denver, CO 80202.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, or Nadya Roytblat, Assistant Director, 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 Equity Fund, a Massachusetts business trust, and the Growth
Fund, a Maryland corporation, are closed-end management investment
companies registered under the Act. Each Fund's shares are currently
listed and traded on the New York Stock Exchange. Each Fund holds an
annual meeting of its shareholders, usually in April. ALPS Advisers, a
Colorado corporation, serves as the investment adviser to the Funds and
is registered as an investment adviser under the Investment Advisers
Act of 1940 (the ``Advisers Act''). ALPS Advisers is a wholly owned
subsidiary of ALPS Holdings, Inc. (``ALPS Holdings''), which in turn is
majority owned by an institutional limited partnership controlled by
Lovell Minnick Partners LLC.
2. On December 15, 2006, ALPS Advisers became the Funds' investment
adviser. Previously, Banc of America Investment Advisers, Inc.
(``BAIA''), formerly known as Liberty Asset Management Company, served
as the Funds' investment adviser and administrator. Pursuant to an
asset purchase agreement dated September 7, 2006, among BAIA, ALPS
Advisers and ALPS Holdings, ALPS Advisers entered into fund management
agreements (``Fund Management Agreements'') with the Funds. At a
special meeting of shareholders held on November 21, 2006, Fund
shareholders approved the Fund Management Agreements with ALPS
Advisers, new Portfolio Management Agreements with each Portfolio
Manager and a policy permitting the Funds and ALPS Advisers to enter
into Portfolio Management Agreements in advance of shareholder
approval.
3. Under the terms of the Fund Management Agreements, ALPS Advisers
is responsible for the general management and investment of the Funds,
subject to the authority of the Funds' boards of trustees/directors
(each a ``Board'' and collectively, the ``Boards''). For providing
services to the Funds, ALPS Advisers receives an investment advisory
fee based on the average daily net assets of the Funds.
4. ALPS Advisers, on behalf of the Funds, has entered into
Portfolio Management Agreements with multiple Portfolio Managers. The
Equity Fund currently has five Portfolio Managers and the Growth Fund
currently has three Portfolio Managers. Each Portfolio Manager is and
each new Portfolio Manager will be an investment adviser that is
registered under the Advisers Act. None of the existing Portfolio
Managers is and no new Portfolio Manager will be an affiliated person
of the Funds or ALPS Advisers other than as Portfolio Manager. ALPS
Advisers will evaluate, allocate assets to, and oversee the Portfolio
Managers, and make recommendations about their hiring, termination and
replacement to the Board. ALPS Advisers will recommend Portfolio
Managers based on a number of factors discussed in the application used
to evaluate their skills in managing assets pursuant to particular
investment objectives. ALPS Advisers will compensate the Portfolio
Managers out of the fee paid to ALPS Advisers by the Funds.
5. Applicants request an order to permit ALPS Advisers, subject to
Board approval, to change or add Portfolio Managers, or continue the
services of a Portfolio Manager following an assignment of its
Portfolio Management Agreement, and delay shareholder approval until
the next annual shareholders meeting. Applicants state that the Prior
Orders had granted BAIA, as investment adviser to the Funds,
substantially identical relief.
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.
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 have operated under the Prior
Orders for over 10 years. During the time that the Prior Orders have
been in effect, there have been 11 Portfolio Manager changes for the
Equity Fund and four changes for the Growth Fund. Applicants further
state that the Portfolio Manager changes have not had any impact on
premiums or discounts to net asset value at which the Funds' shares
have traded, and that there is no pattern of premiums or discounts
related to Portfolio Manager changes. Applicants state that Portfolio
Manager changes have been frequent enough over the lives of the Funds
that they are not viewed as a significant event by shareholders or in
the securities markets. Applicants state that the Board and ALPS
Advisers believe the ability to quickly fire and hire a Portfolio
Manager have been important to the success of the Funds' investment
strategy and process. Finally, applicants state that the conditions to
the requested relief set forth below will address the concerns
underlying section 15(a) with respect to the Portfolio Management
Agreements.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Each Fund will hold itself out to the public as employing the
multi-manager investment management structure described in the
application.
[[Page 9794]]
Each Fund's periodic reports to shareholders will prominently disclose
that ALPS Advisers has ultimate responsibility (subject to oversight by
the Board) to oversee the Portfolio Managers and recommend their
hiring, termination, and replacement.
2. Any new Portfolio Management Agreement with respect to a Fund
will be submitted for ratification and approval to the vote of such
Fund's shareholders no later than at the regularly scheduled annual
meeting of shareholders of the Fund next following the effective date
of the new Portfolio Management Agreement, and its continuance after
such vote is conditioned on approval by the majority vote (as defined
in section 2(a)(42) of the Act) of such shareholders.
3. The Funds will continue to hold annual meetings of their
shareholders, whether or not required to do so by the rules of the New
York Stock Exchange or otherwise.
4. At all times, at least a majority of the Board of each Fund will
be trustees/directors who are not ``interested persons,'' as defined in
section 2(a)(19) of the Act, of the Funds or ALPS Advisers
(``Independent Trustees/Directors''), and the nomination of new or
additional Independent Trustees/Directors will be at the discretion of
the then existing Independent Trustees/Directors.
5. In the case of a previous Portfolio Management Agreement
terminated by an assignment by an investment adviser or a controlling
person of the investment adviser in connection with which assignment
the investment adviser or a controlling person directly or indirectly
receives money or other benefit (``Assignment''), the new Portfolio
Management Agreement will comply with rule 15a-4(b)(2) under the Act.
In any other case, each new Portfolio Management Agreement for a Fund
will provide for a sub-advisory fee no higher than that provided in
that Fund's existing Portfolio Management Agreements and, except for
the provisions relating to shareholder approval referred to in
Condition 2 above, will be on substantially the same other terms and
conditions as such Fund's existing Portfolio Management Agreements. In
all cases, in the event that the new Portfolio Management Agreement
provides for sub-advisory fees at rates less than those provided in the
existing Portfolio Management Agreements, the difference will be passed
on to the Fund and its shareholders through a corresponding voluntary
reduction in the fund management fees payable by the Fund to ALPS
Advisers.
6. A Portfolio Manager will have no affiliation with the Funds or
ALPS Advisers other than as Portfolio Manager, and will have no duties
or responsibilities with respect to the Funds beyond the investment
management of the portion of the Fund's portfolio assets allocated to
it by ALPS Advisers from time to time and related record keeping and
reporting.
7. The Board of each Fund, in addition to approving any new
Portfolio Management Agreement in accordance with the requirements of
section 15(c) of the Act, will specifically determine that entering
into the new Portfolio Management Agreement in advance of the next
regular annual meeting of the shareholders of the Fund and without
prior shareholder approval is in furtherance of the multi-management
methodology as applied to each Fund's multi-managed assets and is in
the best interests of the Fund and its shareholders.
8. ALPS Advisers will have responsibility for the general
management and investment of each Fund's assets, subject to oversight
by the Fund's Board. In particular, ALPS Advisers will (i) provide
overall investment programs and strategies for the Funds, (ii)
recommend to the Fund Boards investment management firms for
appointment or replacement as the Fund's Portfolio Managers, (iii)
allocate and reallocate each Fund's portfolio assets among the
Portfolio Managers, (iv) monitor and evaluate the investment
performance of the Portfolio Managers, including their compliance with
each Fund's investment objectives, policies and restrictions, and (v)
implement procedures reasonably designed to ensure that the Portfolio
Managers comply with each Fund's investment objectives, policies and
restrictions.
9. The appointment of the new or successor Portfolio Manager will
be announced by press release promptly following the Fund's Board's
action referred to in Condition 7 above, and a notice of the new
Portfolio Management Agreement, together with a description of the new
or successor Portfolio Manager, will be included in the applicable
Fund's next report to shareholders.
10. No director/trustee or officer of the Funds nor director or
officer of ALPS Advisers will own directly or indirectly (other than
through a pooled investment vehicle that is not controlled by such
person) any interest in a Portfolio Manager, except for (a) ownership
of interests in ALPS Advisers or any entity that controls, is
controlled by, or is under common control with ALPS Advisers, or (b)
ownership of less than 1% of the outstanding securities of any class of
equity or debt of any publicly traded company that is either a
Portfolio Manager or controls, is controlled by or is under common
control with a Portfolio Manager.
11. In the case of an Assignment of a Fund's Portfolio Management
Agreement with a Portfolio Manager, ALPS Advisers or the Portfolio
Manager (or its successor) will pay the incremental cost of including
the proposal to approve or disapprove the new Portfolio Management
Agreement in the proxy material for the next annual meeting of the
Fund's shareholders.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3772 Filed 3-2-07; 8:45 am]
BILLING CODE 8010-01-P
