Forward Funds, et al.; Notice of Application, 18495-18497 [E7-6891]
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Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices
BILLING CODE 8010–01–P
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to R. Corey Booth, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way,
Alexandria, VA 22312; or send an email to: PRA_Mailbox@sec.gov.
SECURITIES AND EXCHANGE
COMMISSION
Dated: April 4, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–6894 Filed 4–11–07; 8:45 am]
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
Comments should be directed to: R.
Corey Booth, Director/Chief Information
Officer, Securities and Exchange
Commission, C/O Shirley Martinson,
6432 General Green Way, Alexandria,
Virginia 22312 or send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 60 days of
this notice.
Dated: April 5, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–6892 Filed 4–11–07; 8:45 am]
rmajette on PROD1PC67 with NOTICES
Proposed Collection; Comment
Request
BILLING CODE 8010–01–P
Upon Written Request, Copies
Available From: Securities and
Exchange Commission, Office of Filings
and Information Services, Washington,
DC 20549.
Extension: Form 10–D; OMB Control
No. 3235–0604; SEC File No. 270–544.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on this collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for approval.
Form 10–D (17 CFR 249.312) is used
by asset-backed issuers to file periodic
distribution reports pursuant to Section
13 or 15(d) under the Securities
Exchange Act 1934 (‘‘Exchange Act’’)
(15 U.S.C. 78a et seq.) within 15 days
after each required distribution date.
The information provided by Form 10–
D is mandatory and all information is
made available to the public upon
request. Form 10–D takes approximately
30 hours per response to prepare and is
filed by 9,500 respondents. We estimate
that 75% of the 30 hours per response
(22.5 hours) is prepared by the company
for a total annual reporting burden of
213,750 hours (22.5 hours per response
x 9,500 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
SECURITIES AND EXCHANGE
COMMISSION
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[Investment Company Act Release No.
27777; 812–13249]
Forward Funds, et al.; Notice of
Application
April 5, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act.
AGENCY:
Applicants
request an order that would permit them
to enter into and materially amend
subadvisory agreements without
shareholder approval.
APPLICANTS: Forward Funds (the
‘‘Trust’’) and Forward Management, LLC
(‘‘Forward Management’’).
FILING DATES: The application was filed
on December 20, 2005, and amended on
April 2, 2007.
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 30, 2007, and
should be accompanied by proof of
SUMMARY OF APPLICATION:
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18495
service on 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, U.S. Securities
and Exchange Commission, 100 F St.,
NE., Washington, DC 20549–1090;
Applicants, 433 California Street, 11th
Floor, San Francisco, CA 94104, Attn.:
Mary Curran, Esq.
FOR FURTHER INFORMATION CONTACT:
Marilyn Mann, Senior Counsel, at (202)
551–6813, or Nadya B. 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 St., NE., Washington, DC 20549–
0102 (telephone (202) 551–5850).
Applicants’ Representations
1. The Trust is organized as a
Delaware statutory trust and is
registered under the Act as an open-end
management investment company. The
Trust has fourteen operating series (the
‘‘Funds’’). Applicants request that the
order apply to: (a) The Funds; and (b)
any future series of the Trust and any
other registered open-end management
investment companies or series thereof
that (1) use the ‘‘manager-of-managers’’
arrangement described in the
application, (2) comply with the terms
and conditions of the application, and
(3) are advised by a Manager (as defined
below) (the investment companies and
series thereof, as well as the Funds, the
‘‘Sub-Advised Funds’’).1
2. Forward Management is registered
as an investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’) and serves as
investment adviser to the Funds
pursuant to an investment advisory
agreement (‘‘Advisory Agreement’’) with
the Trust, on behalf of the Funds. The
Advisory Agreement has been approved
by the Trust’s board of trustees
(‘‘Board’’), including a majority of the
1 All existing entities that currently intend to rely
on the order are named as applicants. Any entity
that relies on the order in the future will do so only
in accordance with the terms and conditions of the
application. If the name of any Sub-Advised Fund
contains the name of a Sub-Adviser (as defined
below), the name of the Manager that serves as the
primary adviser to the Sub-Advised Fund will
precede the name of the Sub-Adviser.
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trustees (‘‘Trustees’’) who are not
‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act, of the Trust
(the ‘‘Independent Trustees’’), as well as
by the shareholders of the Funds. The
term ‘‘Manager’’ refers to Forward
Management and any existing or future
entity controlling, controlled by, or
under common control with Forward
Management that is an investment
adviser registered under the Advisers
Act or exempt from such registration
and any successor in interest thereto.2
3. Under the terms of the Advisory
Agreement, the Manager provides
investment advisory services to each
Sub-Advised Fund and has the
authority, subject to Board approval, to
enter into investment subadvisory
agreements (‘‘Sub-Advisory
Agreements’’) with one or more
subadvisers (‘‘Sub-Advisers’’). Each
Sub-Adviser is registered under the
Advisers Act. The Manager will monitor
and evaluate the Sub-Advisers and
recommend to the Board their hiring,
retention or termination. Sub-Advisers
recommended to the Board by the
Manager are selected and approved by
the Board, including a majority of the
Independent Trustees. Each SubAdviser has discretionary authority to
invest the assets or a portion of the
assets of the relevant Fund. The
Manager compensates each Sub-Adviser
out of the fees paid to the Manager
under the Advisory Agreement.
4. Applicants request an order that
would permit the Manager to hire SubAdvisers 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 Sub-Advised Fund or the Manager,
other than by reason of serving as a SubAdviser to one or more of the SubAdvised Funds (‘‘Affiliated SubAdviser’’).
rmajette on PROD1PC67 with NOTICES
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
2 A successor in interest is limited to entities that
result from a reorganization into another
jurisdiction or a change in the type of business
organization.
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15:49 Apr 11, 2007
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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 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
state that their requested relief meets
this standard for the reasons discussed
below.
3. Applicants assert that the SubAdvised Funds’ shareholders are relying
on the Manager’s experience to select
one or more Sub-Advisers best suited to
achieve a Sub-Advised Fund’s
investment objectives. Applicants assert
that, from the perspective of an investor
in the Sub-Advised Fund, the role of the
Sub-Advisers is comparable to that of
the individual portfolio managers
employed by traditional investment
company advisory firms. Applicants
state that requiring shareholder
approval of each Sub-Advisory
Agreement would impose costs and
unnecessary delays on the Sub-Advised
Funds, and may preclude the Manager
from acting promptly in a manner
considered advisable by the Board.
Applicants note that the Advisory
Agreement and any Sub-Advisory
Agreement with an Affiliated SubAdviser will remain subject to section
15(a) of the Act and rule 18f–2 under
the Act.
4. Applicants 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
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Before a Sub-Advised Fund may
rely on the requested order, the
operation of the Sub-Advised Fund in
the manner described in the application
will be approved by a majority of the
Sub-Advised Fund’s outstanding voting
securities, as defined in the Act, or in
the case of a Sub-Advised 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 SubAdvised Fund to the public.
3 Investment Company Act Release No. 26230
(Oct. 23, 2003).
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2. Each Sub-Advised Fund will
disclose in its prospectus the existence,
substance and effect of the order. In
addition, each Sub-Advised Fund will
hold itself out to the public as
employing the manager-of-managers
arrangement described in the
application. The prospectus relating to
each Sub-Advised Fund will
prominently disclose that the Manager
has ultimate responsibility (subject to
oversight by the Board) to oversee SubAdvisers and to recommend their
hiring, termination, and replacement.
3. Within 90 days of the hiring of a
new Sub-Adviser, the Manager will
furnish shareholders of the applicable
Sub-Advised Fund all information about
the new Sub-Adviser that would be
included in a proxy statement. To meet
this condition, the Manager will provide
shareholders of the applicable SubAdvised Fund 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.
4. The Manager will not enter into a
Sub-Advisory Agreement with any
Affiliated Sub-Adviser unless such
agreement, including the compensation
to be paid thereunder, has been
approved by the shareholders of the
applicable Sub-Advised Fund.
5. At all times, at least a majority of
the Board will be Independent Trustees,
and the nomination of new or additional
Independent Trustees will be placed
within the discretion of the thenexisting Independent Trustees.
6. When a change of Sub-Adviser is
proposed for a Sub-Advised Fund with
an Affiliated Sub-Adviser, the Board,
including a majority of the Independent
Trustees, will make a separate finding,
reflected in the Board minutes, that
such change is in the best interests of
such Sub-Advised Fund and its
shareholders and does not involve a
conflict of interest from which the
Manager or an Affiliated Sub-Adviser
derives an inappropriate advantage.
7. The Manager will provide general
investment management services to
each Sub-Advised Fund, including
overall supervisory responsibility for
the general management and investment
of each Sub-Advised Fund’s assets and,
subject to review and approval by the
Board, will: (i) Set the Sub-Advised
Fund’s overall investment strategies; (ii)
evaluate, select, and recommend SubAdvisers to manage all or a part of the
Sub-Advised Fund’s assets; (iii) when
appropriate, allocate and reallocate the
Sub-Advised Fund’s assets among
multiple Sub-Advisers; (iv) monitor and
evaluate the Sub-Advisers’ investment
performance; and (v) implement
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Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices
procedures reasonably designed to
ensure compliance by the SubAdviser(s) with the Sub-Advised Fund’s
investment objectives, policies and
restrictions.
8. No Trustee or officer of the Trust,
or director or officer of the Manager,
will own directly or indirectly (other
than through a pooled investment
vehicle over which such person does
not have control) any interest in a SubAdviser serving in reliance on the order,
except for ownership of less than 1% of
the outstanding securities of any class of
equity or debt of any publicly traded
company.
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.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–6891 Filed 4–11–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55584; File No. SR–CHX–
2006–38]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Order
Granting Approval to Proposed Rule
Change to Extend the Late Trading
Session and to Permit Only the
Execution of Cross Orders During That
Session
April 5, 2007.
rmajette on PROD1PC67 with NOTICES
I. Introduction
On December 22, 2006, the Chicago
Stock Exchange, Inc. (the ‘‘CHX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) 1 of the Securities Exchange Act
(‘‘Act’’), and Rule 19b–4 thereunder,2 a
proposed rule change (i) To extend its
late trading session until 4:00 p.m.
(Central Time) and (ii) to provide that
only cross orders may be executed
during that session. The proposed rule
change was published for comment in
the Federal Register on February 23,
2007.3 The Commission received no
comments on the proposed rule change.
This order approves the proposed rule
change.
1 15
U.S.C. 78s(b)(1)
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 55308
(Feb. 15, 2007), 71 FR 8215.
2 17
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15:49 Apr 11, 2007
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II. Description of the Proposal
The Exchange conducts two trading
sessions in its new trading model. The
first session—called the regular trading
session—is held from 8:30 a.m. (Central
Time) to 3 p.m. (Central Time).4 The
second trading session—called the late
trading session—is held from the end of
the regular session until 3:30 p.m.
(Central Time). The Exchange’s
Matching System begins accepting
orders for the late trading session
immediately after the closing of the
regular trading session in a security.5
The proposed rule change would
extend the Exchange’s late trading
session by one-half hour, to 4 p.m.
(Central Time), and confirm that only
cross orders may be executed during the
late trading session. The Exchange states
that the longer trading session is
designed to allow CHX participants to
trade for a full hour after the normal
close of the regular trading session. The
Exchange further states that the crossorders-only rule simply confirms that
CHX participants may only submit cross
orders for execution during the late
trading session. The Exchange believes
that it is appropriate to limit the late
trading session to cross orders for a
variety of reasons—including the fact
that doing so is consistent with the
types of orders currently submitted by
CHX participants during its current
after-hours trading session. The
Exchange also believes that this
proposal is consistent with late trading
sessions operated by other markets.6
As part of the proposed rule change,
the Exchange is also proposing a change
in its definition of ‘‘NBBO’’ to confirm
that it applies only to protected quotes
disseminated during regular trading
hours. Without this change, the
Exchange explained that a cross order in
the late trading session technically
would be required to be submitted at a
price that is at or better than the NBBO
during the late trading session (if
markets are disseminating protected
4 The regular trading session for certain ETFs
extends to 3:15 p.m. (Central Time).
5 See CHX Rules, Article 20, Rule 8(c)(3). All
orders remaining in the Matching System at the end
of the regular trading session are cancelled back to
the firms that submitted them; firms must submit
new orders if they seek to trade in the late trading
session.
6 Other markets have instituted trading sessions
that occur after the end of regular trading and that
involve the execution of cross transactions. See,
e.g., Boston Stock Exchange Rules, Ch. IIC
(Extended Hours Crossing Session), Section 4
(noting that ‘‘only matched orders are eligible for
execution during the ETS’’); New York Stock
Exchange 900 Series Rules ((‘‘Off-Hours Trading
Facility Rules’’) including Rules 902 and 907
(describing different types of coupled orders that
can be executed during the NYSE off-hours
sessions)).
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18497
quotes), even though the trade-through
provisions of Rule 611 of Regulation
NMS do not apply during that session.7
III. Discussion
After careful review of the proposal,
the Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.8 In
particular, the Commission finds that
the proposal is consistent with Section
6(b)(5) of the Act,9 which requires,
among other things, that the rules of an
exchange be designed to promote just
and equitable principles of trade, to
remove impediments to and perfect the
mechanism of a free and open market
and the national market system, and, in
general, to protect investors and the
public interest. In making this finding,
the Commission notes that other
markets operate late trading sessions
involving the execution of cross
transactions.10
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (SR–CHX–2006–
38) be, and hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–6893 Filed 4–11–07; 8:45 am]
BILLING CODE 8010–01–P
7 See Article 20, Rule 4(b)(4)(defining a cross
order as one that is equal to or better than the
NBBO).
8 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition and capital
formation. See 15 U.S.C. 78c(f).
9 15 U.S.C. 78f(b)(5).
10 See, e.g., Boston Stock Exchange Rules, Ch. IIC
(Extended Hours Crossing Session), Section 4; New
York Stock Exchange 900 Series Rules ((‘‘Off-Hours
Trading Facility Rules’’) including Rules 902 and
907 (describing different types of coupled orders
that can be executed during the NYSE off-hours
sessions)).
11 15 U.S.C. 78s(b)(2).
12 17 CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 72, Number 70 (Thursday, April 12, 2007)]
[Notices]
[Pages 18495-18497]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-6891]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 27777; 812-13249]
Forward Funds, et al.; Notice of Application
April 5, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``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: Forward Funds (the ``Trust'') and Forward Management, LLC
(``Forward Management'').
Filing Dates: The application was filed on December 20, 2005, and
amended on April 2, 2007.
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 30, 2007, and should be accompanied by proof of service
on 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, U.S. Securities and Exchange Commission, 100 F
St., NE., Washington, DC 20549-1090; Applicants, 433 California Street,
11th Floor, San Francisco, CA 94104, Attn.: Mary Curran, Esq.
FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Senior Counsel, at (202)
551-6813, or Nadya B. 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 St., NE., Washington, DC
20549-0102 (telephone (202) 551-5850).
Applicants' Representations
1. The Trust is organized as a Delaware statutory trust and is
registered under the Act as an open-end management investment company.
The Trust has fourteen operating series (the ``Funds''). Applicants
request that the order apply to: (a) The Funds; and (b) any future
series of the Trust and any other registered open-end management
investment companies or series thereof that (1) use the ``manager-of-
managers'' arrangement described in the application, (2) comply with
the terms and conditions of the application, and (3) are advised by a
Manager (as defined below) (the investment companies and series
thereof, as well as the Funds, the ``Sub-Advised Funds'').\1\
---------------------------------------------------------------------------
\1\ All existing entities that currently intend to rely on the
order are named as applicants. Any entity that relies on the order
in the future will do so only in accordance with the terms and
conditions of the application. If the name of any Sub-Advised Fund
contains the name of a Sub-Adviser (as defined below), the name of
the Manager that serves as the primary adviser to the Sub-Advised
Fund will precede the name of the Sub-Adviser.
---------------------------------------------------------------------------
2. Forward Management is registered as an investment adviser under
the Investment Advisers Act of 1940 (the ``Advisers Act'') and serves
as investment adviser to the Funds pursuant to an investment advisory
agreement (``Advisory Agreement'') with the Trust, on behalf of the
Funds. The Advisory Agreement has been approved by the Trust's board of
trustees (``Board''), including a majority of the
[[Page 18496]]
trustees (``Trustees'') who are not ``interested persons,'' as defined
in section 2(a)(19) of the Act, of the Trust (the ``Independent
Trustees''), as well as by the shareholders of the Funds. The term
``Manager'' refers to Forward Management and any existing or future
entity controlling, controlled by, or under common control with Forward
Management that is an investment adviser registered under the Advisers
Act or exempt from such registration and any successor in interest
thereto.\2\
---------------------------------------------------------------------------
\2\ A successor in interest is limited to entities that result
from a reorganization into another jurisdiction or a change in the
type of business organization.
---------------------------------------------------------------------------
3. Under the terms of the Advisory Agreement, the Manager provides
investment advisory services to each Sub-Advised Fund and has the
authority, subject to Board approval, to enter into investment
subadvisory agreements (``Sub-Advisory Agreements'') with one or more
subadvisers (``Sub-Advisers''). Each Sub-Adviser is registered under
the Advisers Act. The Manager will monitor and evaluate the Sub-
Advisers and recommend to the Board their hiring, retention or
termination. Sub-Advisers recommended to the Board by the Manager are
selected and approved by the Board, including a majority of the
Independent Trustees. Each Sub-Adviser has discretionary authority to
invest the assets or a portion of the assets of the relevant Fund. The
Manager compensates each Sub-Adviser out of the fees paid to the
Manager under the Advisory Agreement.
4. Applicants request an order that would permit the Manager to
hire Sub-Advisers and materially amend Sub-Advisory Agreements without
obtaining shareholder approval. The requested relief will not extend to
any Sub-Adviser that is an affiliated person, as defined in section
2(a)(3) of the Act, of a Sub-Advised Fund or the Manager, other than by
reason of serving as a Sub-Adviser to one or more of the Sub-Advised
Funds (``Affiliated Sub-Adviser'').
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 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 state that their requested relief meets this standard
for the reasons discussed below.
3. Applicants assert that the Sub-Advised Funds' shareholders are
relying on the Manager's experience to select one or more Sub-Advisers
best suited to achieve a Sub-Advised Fund's investment objectives.
Applicants assert that, from the perspective of an investor in the Sub-
Advised Fund, the role of the Sub-Advisers is comparable to that of the
individual portfolio managers employed by traditional investment
company advisory firms. Applicants state that requiring shareholder
approval of each Sub-Advisory Agreement would impose costs and
unnecessary delays on the Sub-Advised Funds, and may preclude the
Manager from acting promptly in a manner considered advisable by the
Board. Applicants note that the Advisory Agreement and any Sub-Advisory
Agreement with an Affiliated Sub-Adviser will remain subject to section
15(a) of the Act and rule 18f-2 under the Act.
4. Applicants 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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\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 Sub-Advised Fund may rely on the requested order, the
operation of the Sub-Advised Fund in the manner described in the
application will be approved by a majority of the Sub-Advised Fund's
outstanding voting securities, as defined in the Act, or in the case of
a Sub-Advised 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 Sub-Advised Fund to the public.
2. Each Sub-Advised Fund will disclose in its prospectus the
existence, substance and effect of the order. In addition, each Sub-
Advised Fund will hold itself out to the public as employing the
manager-of-managers arrangement described in the application. The
prospectus relating to each Sub-Advised Fund will prominently disclose
that the Manager has ultimate responsibility (subject to oversight by
the Board) to oversee Sub-Advisers and to recommend their hiring,
termination, and replacement.
3. Within 90 days of the hiring of a new Sub-Adviser, the Manager
will furnish shareholders of the applicable Sub-Advised Fund all
information about the new Sub-Adviser that would be included in a proxy
statement. To meet this condition, the Manager will provide
shareholders of the applicable Sub-Advised Fund 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.
4. The Manager will not enter into a Sub-Advisory Agreement with
any Affiliated Sub-Adviser unless such agreement, including the
compensation to be paid thereunder, has been approved by the
shareholders of the applicable Sub-Advised Fund.
5. At all times, at least a majority of the Board will be
Independent Trustees, and the nomination of new or additional
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
6. When a change of Sub-Adviser is proposed for a Sub-Advised Fund
with an Affiliated Sub-Adviser, the Board, including a majority of the
Independent Trustees, will make a separate finding, reflected in the
Board minutes, that such change is in the best interests of such Sub-
Advised Fund and its shareholders and does not involve a conflict of
interest from which the Manager or an Affiliated Sub-Adviser derives an
inappropriate advantage.
7. The Manager will provide general investment management services
to each Sub-Advised Fund, including overall supervisory responsibility
for the general management and investment of each Sub-Advised Fund's
assets and, subject to review and approval by the Board, will: (i) Set
the Sub-Advised Fund's overall investment strategies; (ii) evaluate,
select, and recommend Sub-Advisers to manage all or a part of the Sub-
Advised Fund's assets; (iii) when appropriate, allocate and reallocate
the Sub-Advised Fund's assets among multiple Sub-Advisers; (iv) monitor
and evaluate the Sub-Advisers' investment performance; and (v)
implement
[[Page 18497]]
procedures reasonably designed to ensure compliance by the Sub-
Adviser(s) with the Sub-Advised Fund's investment objectives, policies
and restrictions.
8. No Trustee or officer of the Trust, or director or officer of
the Manager, will own directly or indirectly (other than through a
pooled investment vehicle over which such person does not have control)
any interest in a Sub-Adviser serving in reliance on the order, except
for ownership of less than 1% of the outstanding securities of any
class of equity or debt of any publicly traded company.
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.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-6891 Filed 4-11-07; 8:45 am]
BILLING CODE 8010-01-P
