Fidelity Rutland Square Trust, et al., 56808-56811 [E7-19631]
Download as PDF
56808
Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
Federated Capital Income Fund, Inc.
[File No. 811–5114]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On May 26, 2003,
applicant transferred its assets to
Federated Capital Income Fund, a
portfolio of Federated Income Securities
Trust, based on net asset value.
Applicant paid $103,804 in expenses
incurred in connection with the
reorganization.
Filing Dates: The application was
filed on April 17, 2007, and amended on
April 18, 2007, September 14, 2007 and
September 17, 2007.
Applicant’s Address: 5800 Corporate
Dr., Pittsburgh, PA 15237–7000.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–19579 Filed 10–3–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28008; 812–13232]
Fidelity Rutland Square Trust, et al.;
Notice of Application
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
12(d)(1)(A) and (B) of the Act, and
under sections 6(c) and 17(b) of the Act
for an exemption from section 17(a) of
the Act.
pwalker on PROD1PC71 with NOTICES
AGENCY:
SUMMARY OF THE APPLICATION:
Applicants request an order to permit
certain registered open-end management
investment companies to acquire shares
of other registered open-end
management investment companies and
unit investment trusts that are within
and outside the same group of
investment companies.
APPLICANTS: Fidelity Management &
Research Company (‘‘FMR’’), Fidelity
Management Trust Company (‘‘FMTC’’),
Strategic Advisers, Inc. (‘‘SAI’’)
(collectively, the ‘‘Adviser’’); Fidelity
Distributors Corporation (‘‘FDC’’) and
National Financial Services LLC
(‘‘NFS’’) (collectively, the
‘‘Distributor’’); and Fidelity Rutland
Square Trust (the ‘‘Trust’’).
16:20 Oct 03, 2007
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:
September 28, 2007.
VerDate Aug<31>2005
The application was filed
on September 6, 2005, and amended on
September 27, 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 October 23, 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, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090;
Applicants, 82 Devonshire Street,
Boston, MA 02109.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, or Michael W.
Mundt, Assistant Director, at (202) 551–
6821 (Office of Investment Company
Regulation, Division of Investment
Management).
FILING DATES:
Jkt 214001
Applicants’ Representations
1. The Trust is a statutory trust
organized under the laws of the state of
Delaware and is registered under the
Act as an open-end management
investment company. The Trust
currently offers three series that intend
to rely on the relief requested by the
application: PAS Small Cap Fund of
Funds, PAS International Fund of
Funds, and PAS U.S. Opportunity Fund
of Funds (‘‘PAS Funds,’’ and each a
‘‘Fund of Funds’’).1 Each PAS Fund
1 Applicants request that the order extend to each
registered open-end management investment
company or series thereof that is part of the same
group of investment companies, as defined in
section 12(d)(1)(G)(ii) of the Act as the Trust (each
included in the term ‘‘Fund of Funds’’) and advised
by the Adviser or any investment adviser
controlling, controlled by, or under common
control with the Adviser (each included in the term
‘‘Adviser’’). Each existing registered open-end
management investment company that currently
intends to rely on the order is named as an
applicant. Any other existing or future registered
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
operates as a fund of funds and has its
own distinct investment objectives,
policies and restrictions.
2. SAI currently serves as the
investment adviser to each PAS Fund.
FMR and SAI are investment advisers
registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers
Act’’). FMTC is a ‘‘bank’’ within the
meaning of section 202(a)(2) of the
Advisers Act and, accordingly, is
exempt from registration under the
Advisers Act. Any future Adviser will
be registered under the Advisers Act or
exempt from registration. Each of FMR,
FMTC, and SAI is a direct or indirect
subsidiary of FMR Corp., a
Massachusetts corporation. FDC and
NFS are broker-dealers registered under
the Securities Exchange Act of 1934
(‘‘Exchange Act’’). Each of FDC and NFS
is a direct or indirect subsidiary of FMR
Corp. FDC is currently the distributor of
the PAS Funds.
3. Applicants request relief to permit:
(a) A Fund of Funds to acquire shares
of registered open-end management
investment companies that are not part
of the same ‘‘group of investment
companies’’ (as defined in section
12(d)(1)(G)(ii) of the Act) as the Fund of
Funds (the ‘‘Non-Affiliated Investment
Companies’’) and unit investment trusts
(‘‘UITs’’) that are not part of the same
group of investment companies as the
Fund of Funds (‘‘Non-Affiliated Trusts,’’
and together with the Non-Affiliated
Investment Companies, the ‘‘NonAffiliated Underlying Funds’’); (b) the
Non-Affiliated Underlying Funds, their
principal underwriter and brokers and
dealers registered under the Exchange
Act (‘‘Brokers’’) to sell such shares to
the Fund of Funds; (c) a Fund of Funds
to acquire shares of certain other
registered open-end management
investment companies advised by the
Adviser or series thereof and that are
part of the same ‘‘group of investment
companies’’ (as defined in section
12(d)(1)(G)(ii) of the Act) as the Fund of
Funds (‘‘Affiliated Underlying Funds,’’
and together with the Non-Affiliated
Underlying Funds, the ‘‘Underlying
Funds’’); and (d) the Affiliated
Underlying Funds, their principal
underwriter and Brokers to sell such
shares to the Fund of Funds.2 Certain of
the Non-Affiliated Underlying Funds
open-end management investment company that
subsequently relies on the order will do so only in
accordance with the terms and conditions of the
application.
2 With regard to purchases of shares of NonAffiliated Underlying Funds, the requested order
would apply to purchases made by a Fund of Funds
only to the extent that the Fund of Funds could not
rely on the provisions of section 12(d)(1)(F) of the
Act.
E:\FR\FM\04OCN1.SGM
04OCN1
Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
may be registered under the Act as
either UITs or open-end management
investment companies and have
received exemptive relief to permit their
shares to be listed and traded on a
national securities exchange at
negotiated prices (‘‘ETFs’’). Each Fund
of Funds also may invest in stocks,
bonds, money market instruments and
other securities and financial
instruments that are consistent with its
investment objective.
Applicants’ Legal Analysis
pwalker on PROD1PC71 with NOTICES
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act
prohibits a registered investment
company from acquiring shares of an
investment company if the securities
represent more than 3% of the total
outstanding voting stock of the acquired
company, more than 5% of the total
assets of the acquiring company, or,
together with the securities of any other
investment companies, more than 10%
of the total assets of the acquiring
company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end
investment company, its principal
underwriter and any broker or dealer
from selling the shares of the investment
company to another investment
company if the sale will cause the
acquiring company to own more than
3% of the acquired company’s voting
stock, or if the sale will cause more than
10% of the acquired company’s voting
stock to be owned by investment
companies generally.
2. Section 12(d)(1)(J) 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 provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants seek an exemption under
section 12(d)(1)(J) of the Act to permit
the Funds of Funds to acquire shares of
the Underlying Funds and to permit the
Underlying Funds, their principal
underwriter and Brokers to sell shares to
the Funds of Funds beyond the limits
set forth in sections 12(d)(1)(A) and (B)
of the Act.
3. Applicants state that the proposed
arrangement will not give rise to the
policy concerns underlying sections
12(d)(1)(A) and (B), which include
concerns about undue influence by a
fund of funds over underlying funds,
excessive layering of fees, and overly
complex fund structures. Accordingly,
applicants believe that the requested
exemption is consistent with the public
interest and the protection of investors.
VerDate Aug<31>2005
16:20 Oct 03, 2007
Jkt 214001
4. Applicants state that the proposed
arrangement will not result in undue
influence by a Fund of Funds or its
affiliated persons over the NonAffiliated Underlying Funds. The
concern about undue influence does not
arise in connection with a Fund of
Funds’ investment in the Affiliated
Underlying Funds, since they are part of
the same group of investment
companies. To limit the control that a
Fund of Funds may have over a NonAffiliated Underlying Fund, applicants
propose a condition prohibiting: (a) The
Adviser and any person controlling,
controlled by or under common control
with the Adviser, any investment
company or issuer that would be an
investment company but for section
3(c)(1) or section 3(c)(7) of the Act,
advised or sponsored by the Adviser or
any person controlling, controlled by or
under common control with the Adviser
(collectively, the ‘‘Group’’), and (b) any
investment adviser to a Fund of Funds
within the meaning of section
2(a)(20)(B) of the Act (‘‘Subadviser’’),
any person controlling, controlled by or
under common control with the
Subadviser, and any investment
company or issuer that would be an
investment company but for section
3(c)(1) or 3(c)(7) of the Act (or portion
of such investment company or issuer)
advised or sponsored by the Subadviser
or any person controlling, controlled by
or under common control with the
Subadviser (collectively, the
‘‘Subadviser Group’’) from controlling
(individually or in the aggregate) a NonAffiliated Underlying Fund within the
meaning of section 2(a)(9) of the Act.
5. Applicants further state that
condition 2 below precludes a Fund of
Funds and its Adviser, Subadviser,
promoter, principal underwriter and
any person controlling, controlled by or
under common control with any of
these entities (each, a ‘‘Fund Affiliate’’)
from causing any existing or potential
investment by the Fund of Funds in a
Non-Affiliated Underlying Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund Affiliate and the NonAffiliated Underlying Fund or its
investment adviser(s), sponsor,
promoter, principal underwriter and
any person controlling, controlled by or
under common control with any of
these entities (each, a ‘‘Non-Affiliated
Fund Affiliate’’). Non-Affiliated
Underlying Funds will be prohibited
from purchasing a security in an
offering of securities during the
existence of any underwriting or selling
syndicate of which a principal
underwriter is an officer, director,
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
56809
member of an advisory board, Adviser,
Subadviser, or employee of the Fund of
Funds, or a person of which any such
officer, director, member of an advisory
board, Adviser, Subadviser, or employee
is an affiliated person (each, an
‘‘Underwriting Affiliate,’’ except any
person whose relationship to the NonAffiliated Underlying Fund is covered
by section 10(f) of the Act is not an
Underwriting Affiliate). An offering of
securities during the existence of an
underwriting or selling syndicate of
which a principal underwriter is an
Underwriting Affiliate is an ‘‘Affiliated
Underwriting.’’
6. Applicants also propose a
condition that once an investment by a
Fund of Funds in the securities of a
Non-Affiliated Investment Company
exceeds the limit in section
12(d)(1)(A)(i) of the Act, the board of
directors or trustees of the NonAffiliated Investment Company,
including a majority of the independent
directors or trustees, will determine that
any consideration paid by the NonAffiliated Investment Company to the
Fund of Funds or a Fund Affiliate
Service Provider 3 in connection with
any services or transactions: (a) Is fair
and reasonable in relation to the nature
and quality of the services and benefits
received by the Non-Affiliated
Investment Company; (b) is within the
range of consideration that the NonAffiliated Investment Company would
be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned.
7. To further assure that a NonAffiliated Investment Company
understands the implications of an
investment by a Fund of Funds under
the requested order, prior to a Fund of
Funds’ investment in a Non-Affiliated
Investment Company in excess of the
limit in section 12(d)(1)(A)(i) of the Act,
the Fund of Funds and Non-Affiliated
Investment Company will execute an
agreement stating, without limitation,
3 A ‘‘Fund Affiliate Service Provider’’ is the
Adviser, any Subadviser, promoter or principal
underwriter of the Fund of Funds, and any person
controlling, controlled by or under common control
with any of these entities, provided that (i) such
person would reasonably be expected to be in a
position to provide services of a securities-related
nature (that is, investment advisory, brokerage,
distribution, transfer agency, administration,
participant recordkeeping or shareholder services)
to a Non-Affiliated Underlying Fund, or (ii) if such
person is not described by clause (i), to the actual
knowledge of the Adviser, any Subadviser,
promoter or principal underwriter of the Fund of
Funds, such person currently has or is reasonably
expected to begin having a material business
relationship with a Non-Affiliated Underlying
Fund.
E:\FR\FM\04OCN1.SGM
04OCN1
56810
Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
pwalker on PROD1PC71 with NOTICES
that their boards of directors or trustees
and their investment advisers
understand the terms and conditions of
the order and agree to fulfill their
responsibilities under the order
(‘‘Participation Agreement’’). Applicants
note that a Non-Affiliated Underlying
Fund (other than an ETF whose shares
are purchased by a Fund of Funds in the
secondary market) will retain the right
to reject an investment from a Fund of
Funds.4
8. Applicants do not believe that the
proposed arrangement will involve
excessive layering of fees. With respect
to investment advisory fees, applicants
state that, prior to approving any
investment advisory contract under
section 15 of the Act, the board of
trustees of the Fund of Funds (the
‘‘Board’’), including a majority of the
trustees who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act (the ‘‘Independent Trustees’’),
will find that the investment advisory
fees charged under the Fund of Fund’s
investment advisory contract are based
on services provided that are in addition
to, rather than duplicative of, services
provided pursuant to any Underlying
Fund’s advisory contract(s). Applicants
further state that the Adviser or
Distributor will waive fees otherwise
payable to it by a Fund of Funds in an
amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by a NonAffiliated Investment Company under
rule 12b–1 under the Act) received from
a Non-Affiliated Underlying Fund by
the Adviser, or an affiliated person of
the Adviser, other than any advisory
fees paid to the Adviser or its affiliated
person by the Non-Affiliated Investment
Company, in connection with the
investment by the Fund of Funds in the
Non-Affiliated Underlying Fund.
Applicants also state that any sales
charges and/or service fees, as defined
in Rule 2830 of the Conduct Rules of the
NASD (‘‘NASD Conduct Rule 2830’’),
charged with respect to shares of a Fund
of Funds will not exceed the limits
applicable to a funds of funds set forth
in NASD Conduct Rule 2830.
9. Applicants state that the proposed
arrangement will not create an overly
complex fund structure. Applicants note
that an Underlying Fund will be
prohibited from acquiring securities of
any investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
4 A Non-Affiliated Investment Company
(including an ETF) would retain its right to reject
any initial investment by a Fund of Funds in excess
of the limits in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement
with the Fund of Funds.
VerDate Aug<31>2005
16:20 Oct 03, 2007
Jkt 214001
in section 12(d)(1)(A), except in certain
circumstances identified in condition 10
below. Applicants also represent that a
Fund of Funds’ prospectus and sales
literature will contain concise, ‘‘plain
English’’ disclosure designed to inform
investors about the unique
characteristics of the proposed
arrangement, including its expense
structure and the additional expenses of
investing in Underlying Funds.5
B. Section 17(a)
10. Section 17(a) of the Act generally
prohibits sales or purchases of securities
between a registered investment
company and any affiliated person of
the company. Section 2(a)(3) of the Act
defines an ‘‘affiliated person’’ of another
person to include: (a) Any person
directly or indirectly owning,
controlling, or holding with power to
vote, 5% or more of the outstanding
voting securities of the other person; (b)
any person 5% or more of whose
outstanding voting securities are
directly or indirectly owned, controlled,
or held with power to vote by the other
person; and (c) any person directly or
indirectly controlling, controlled by, or
under common control with the other
person.
11. Applicants state that if a Funds of
Funds and an Affiliated Underlying
Fund were deemed to be under common
control, they would be affiliated persons
of each another. Applicants also state
that a Funds of Funds and an
Underlying Fund might be deemed to be
affiliated persons of one another if a
Fund of Funds acquires 5% or more of
an Underlying Fund’s outstanding
voting securities. In light of these
possible affiliations, section 17(a) could
prevent an Underlying Fund from
selling shares to and redeeming shares
from a Fund of Funds.6
12. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) The terms of the proposed
5 Each Fund of Funds also will comply with the
disclosure requirements concerning the aggregate
expenses of investing in Underlying Funds set forth
in Investment Company Act Release No. 27399
(June 20, 2006).
6 Applicants note that a Fund of Funds investing
in ETFs generally would purchase and sell shares
of an ETF through secondary market transactions at
market prices rather than through principal
transactions with the Underlying Fund. Applicants
would not rely on the requested relief from section
17(a) for such secondary market transactions. To the
extent that a Fund of Funds purchases or redeems
shares from an ETF that is an affiliated person of
the Fund of Funds in exchange for a basket of
specified securities as described in the application
for the exemptive order upon which the ETF relies,
applicants also request relief from section 17(a) for
those transactions.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
Section 6(c) of the Act permits the
Commission to exempt any person or
transactions from any provision of the
Act 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.
13. Applicants submit that the
proposed transactions satisfy the
standards for relief under sections 17(b)
and 6(c) of the Act as the terms are fair
and reasonable and do not involve
overreaching.7 Applicants note that the
terms upon which an Underlying Fund
will sell its shares to or purchase its
shares from a Fund of Funds will be
based on the net asset value of each
Underlying Fund. Applicants state that
the proposed arrangement will be
consistent with the policies of each
Fund of Funds and Underlying Fund,
and with the general purposes of the
Act.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The members of the Group will not
control (individually or in the aggregate)
a Non-Affiliated Underlying Fund
within the meaning of section 2(a)(9) of
the Act. The members of the Subadviser
Group will not control (individually or
in the aggregate) a Non-Affiliated
Underlying Fund within the meaning of
section 2(a)(9) of the Act. If, as a result
of a decrease in the outstanding voting
securities of a Non-Affiliated
Underlying Fund, the Group or the
Subadviser Group, each in the aggregate,
becomes a holder of more than 25% of
the outstanding voting securities of a
Non-Affiliated Underlying Fund, it will
vote its shares of the Non-Affiliated
Underlying Fund in the same
proportion as the vote of all other
holders of the Non-Affiliated
Underlying Fund’s shares. This
condition will not apply to the
7 Applicants acknowledge that receipt of any
compensation by (a) An affiliated person of a Fund
of Funds, or an affiliated person of such person, for
the purchase by the Fund of Funds of shares of an
Underlying Fund or (b) an affiliated person of an
Underlying Fund, or an affiliated person of such
person, for the sale by the Underlying Fund of its
shares to a Fund of Funds is subject to section 17(e)
of the Act. The Participation Agreement also will
include this acknowledgement.
E:\FR\FM\04OCN1.SGM
04OCN1
pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 72, No. 192 / Thursday, October 4, 2007 / Notices
Subadviser Group with respect to a
Non-Affiliated Underlying Fund for
which the Subadviser or a person
controlling, controlled by, or under
common control with the Subadviser,
acts as the investment adviser within
the meaning section 2(a)(20)(A) of the
Act (in the case of a Non-Affiliated
Investment Company) or as the sponsor
(in the case of a Non-Affiliated Trust).
2. No Fund of Funds or Fund Affiliate
will cause any existing or potential
investment by the Fund of Funds in a
Non-Affiliated Underlying Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund Affiliate and the NonAffiliated Underlying Fund or a NonAffiliated Fund Affiliate.
3. The Board of the Fund of Funds,
including a majority of the Independent
Trustees, will adopt procedures
reasonably designed to assure that the
Adviser and any Subadviser are
conducting the investment program of
the Fund of Funds without taking into
account any consideration received by
the Fund of Funds or a Fund Affiliate
from a Non-Affiliated Underlying Fund
or a Non-Affiliated Fund Affiliate in
connection with any services or
transactions.
4. Once an investment by a Fund of
Funds in the securities of a NonAffiliated Investment Company exceeds
the limit in section 12(d)(1)(A)(i) of the
Act, the board of directors or trustees of
the Non-Affiliated Investment
Company, including a majority of the
independent directors or trustees, will
determine that any consideration paid
by the Non-Affiliated Investment
Company to the Fund of Funds or a
Fund Affiliate Service Provider in
connection with any services or
transactions: (a) Is fair and reasonable in
relation to the nature and quality of the
services and benefits received by the
Non-Affiliated Investment Company; (b)
is within the range of consideration that
the Non-Affiliated Investment Company
would be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned. This
condition does not apply with respect to
any services or transactions between a
Non-Affiliated Investment Company
and its investment adviser(s), or any
person controlling, controlled by, or
under common control with such
investment adviser(s).
5. No Non-Affiliated Underlying Fund
will purchase a security in any
Affiliated Underwriting.
6. Before investing in a Non-Affiliated
Investment Company in excess of the
limit in section 12(d)(1)(A)(i) of the Act,
VerDate Aug<31>2005
16:20 Oct 03, 2007
Jkt 214001
the Fund of Funds and the NonAffiliated Investment Company will
execute a Participation Agreement
stating, without limitation, that their
boards of directors or trustees and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order. At the time of its
investment in shares of a Non-Affiliated
Investment Company in excess of the
limit in section 12(d)(1)(A)(i), the Fund
of Funds will notify the Non-Affiliated
Investment Company of the investment.
At such time, the Fund of Funds will
also transmit to the Non-Affiliated
Investment Company a list of the names
of each Fund Affiliate Service Provider.
The Fund of Funds will notify the NonAffiliated Investment Company of any
changes to the list of names as soon as
reasonably practicable after a change
occurs. The Non-Affiliated Investment
Company and the Fund of Funds will
maintain and preserve a copy of the
order, the Participation Agreement, and
the list with any updated information
for the duration of the investment and
for a period of not less than six years
thereafter, the first two years in an
easily accessible place.
7. Before approving any advisory
contract under section 15 of the Act, the
Board of the Fund of Funds, including
a majority of the Independent Trustees,
will find that the advisory fees charged
under the advisory contract will be
based on services provided that will be
in addition to, rather than duplicative
of, services provided under the advisory
contract(s) of any Underlying Fund in
which the Fund of Funds may invest.
These findings and the basis upon
which they are made will be recorded
fully in the minute books of the
appropriate Fund of Funds.
8. The Adviser or Distributor will
waive fees otherwise payable to it by a
Fund of Funds in an amount at least
equal to any compensation (including
fees received pursuant to any plan
adopted by a Non-Affiliated Investment
Company under rule 12b–1 under the
Act) received from a Non-Affiliated
Underlying Fund by the Adviser, or an
affiliated person of the Adviser, other
than any advisory fees paid to the
Adviser or its affiliated person by the
Non-Affiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Non-Affiliated
Underlying Fund. Any Subadviser will
waive fees otherwise payable to the
Subadviser, directly or indirectly, by the
Fund of Funds in an amount at least
equal to any compensation received
from a Non-Affiliated Underlying Fund
by the Subadviser, or an affiliated
person of the Subadviser, other than any
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
56811
advisory fees paid to the Subadviser or
its affiliated person by the NonAffiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Non-Affiliated
Underlying Fund made at the direction
of the Subadviser. In the event that the
Subadviser waives fees, the benefit of
the waiver will be passed through to the
Fund of Funds.
9. Any sales charges and/or service
fees (as defined in NASD Conduct Rule
2830) charged with respect to shares of
a Fund of Funds will not exceed the
limits applicable to a fund of funds set
forth in NASD Conduct Rule 2830.
10. No Underlying Fund will acquire
securities of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
Act, except to the extent that such
Underlying Fund: (a) Receives securities
of another investment company as a
dividend or as a result of a plan of
reorganization of a company (other than
a plan devised for the purpose of
evading section 12(d)(1) of the Act); or
(b) acquires (or is deemed to have
acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund to (i)
Acquire securities of one or more
affiliated investment companies for
short-term cash management purposes,
or (ii) engage in interfund borrowing
and lending transactions.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–19631 Filed 10–3–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–28007; 812–13426]
Van Eck Associates Corporation, et al.;
Notice of Application
September 28, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application to amend
a prior order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of
the Act and rule 22c–1 under the Act,
under section 12(d)(1)(J) of the Act for
an exemption from sections 12(d)(1)(A)
and (B) of the Act, and under sections
6(c) and 17(b) of the Act for an
AGENCY:
E:\FR\FM\04OCN1.SGM
04OCN1
Agencies
[Federal Register Volume 72, Number 192 (Thursday, October 4, 2007)]
[Notices]
[Pages 56808-56811]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19631]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28008; 812-13232]
Fidelity Rutland Square Trust, et al.; Notice of Application
September 28, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under section 12(d)(1)(J) of
the Investment Company Act of 1940 (``Act'') for an exemption from
sections 12(d)(1)(A) and (B) of the Act, and under sections 6(c) and
17(b) of the Act for an exemption from section 17(a) of the Act.
-----------------------------------------------------------------------
Summary of the Application: Applicants request an order to permit
certain registered open-end management investment companies to acquire
shares of other registered open-end management investment companies and
unit investment trusts that are within and outside the same group of
investment companies.
Applicants: Fidelity Management & Research Company (``FMR''), Fidelity
Management Trust Company (``FMTC''), Strategic Advisers, Inc. (``SAI'')
(collectively, the ``Adviser''); Fidelity Distributors Corporation
(``FDC'') and National Financial Services LLC (``NFS'') (collectively,
the ``Distributor''); and Fidelity Rutland Square Trust (the
``Trust'').
Filing Dates: The application was filed on September 6, 2005, and
amended on September 27, 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 October 23, 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, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090; Applicants, 82 Devonshire Street,
Boston, MA 02109.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, or Michael W. Mundt, Assistant Director, at
(202) 551-6821 (Office of Investment Company Regulation, Division of
Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Desk, 100 F Street, NE., Washington, DC
20549-0102 (telephone (202) 551-5850).
Applicants' Representations
1. The Trust is a statutory trust organized under the laws of the
state of Delaware and is registered under the Act as an open-end
management investment company. The Trust currently offers three series
that intend to rely on the relief requested by the application: PAS
Small Cap Fund of Funds, PAS International Fund of Funds, and PAS U.S.
Opportunity Fund of Funds (``PAS Funds,'' and each a ``Fund of
Funds'').\1\ Each PAS Fund operates as a fund of funds and has its own
distinct investment objectives, policies and restrictions.
---------------------------------------------------------------------------
\1\ Applicants request that the order extend to each registered
open-end management investment company or series thereof that is
part of the same group of investment companies, as defined in
section 12(d)(1)(G)(ii) of the Act as the Trust (each included in
the term ``Fund of Funds'') and advised by the Adviser or any
investment adviser controlling, controlled by, or under common
control with the Adviser (each included in the term ``Adviser'').
Each existing registered open-end management investment company that
currently intends to rely on the order is named as an applicant. Any
other existing or future registered open-end management investment
company that subsequently relies on the order will do so only in
accordance with the terms and conditions of the application.
---------------------------------------------------------------------------
2. SAI currently serves as the investment adviser to each PAS Fund.
FMR and SAI are investment advisers registered under the Investment
Advisers Act of 1940 (the ``Advisers Act''). FMTC is a ``bank'' within
the meaning of section 202(a)(2) of the Advisers Act and, accordingly,
is exempt from registration under the Advisers Act. Any future Adviser
will be registered under the Advisers Act or exempt from registration.
Each of FMR, FMTC, and SAI is a direct or indirect subsidiary of FMR
Corp., a Massachusetts corporation. FDC and NFS are broker-dealers
registered under the Securities Exchange Act of 1934 (``Exchange
Act''). Each of FDC and NFS is a direct or indirect subsidiary of FMR
Corp. FDC is currently the distributor of the PAS Funds.
3. Applicants request relief to permit: (a) A Fund of Funds to
acquire shares of registered open-end management investment companies
that are not part of the same ``group of investment companies'' (as
defined in section 12(d)(1)(G)(ii) of the Act) as the Fund of Funds
(the ``Non-Affiliated Investment Companies'') and unit investment
trusts (``UITs'') that are not part of the same group of investment
companies as the Fund of Funds (``Non-Affiliated Trusts,'' and together
with the Non-Affiliated Investment Companies, the ``Non-Affiliated
Underlying Funds''); (b) the Non-Affiliated Underlying Funds, their
principal underwriter and brokers and dealers registered under the
Exchange Act (``Brokers'') to sell such shares to the Fund of Funds;
(c) a Fund of Funds to acquire shares of certain other registered open-
end management investment companies advised by the Adviser or series
thereof and that are part of the same ``group of investment companies''
(as defined in section 12(d)(1)(G)(ii) of the Act) as the Fund of Funds
(``Affiliated Underlying Funds,'' and together with the Non-Affiliated
Underlying Funds, the ``Underlying Funds''); and (d) the Affiliated
Underlying Funds, their principal underwriter and Brokers to sell such
shares to the Fund of Funds.\2\ Certain of the Non-Affiliated
Underlying Funds
[[Page 56809]]
may be registered under the Act as either UITs or open-end management
investment companies and have received exemptive relief to permit their
shares to be listed and traded on a national securities exchange at
negotiated prices (``ETFs''). Each Fund of Funds also may invest in
stocks, bonds, money market instruments and other securities and
financial instruments that are consistent with its investment
objective.
---------------------------------------------------------------------------
\2\ With regard to purchases of shares of Non-Affiliated
Underlying Funds, the requested order would apply to purchases made
by a Fund of Funds only to the extent that the Fund of Funds could
not rely on the provisions of section 12(d)(1)(F) of the Act.
---------------------------------------------------------------------------
Applicants' Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act prohibits a registered investment
company from acquiring shares of an investment company if the
securities represent more than 3% of the total outstanding voting stock
of the acquired company, more than 5% of the total assets of the
acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter and
any broker or dealer from selling the shares of the investment company
to another investment company if the sale will cause the acquiring
company to own more than 3% of the acquired company's voting stock, or
if the sale will cause more than 10% of the acquired company's voting
stock to be owned by investment companies generally.
2. Section 12(d)(1)(J) 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 provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Applicants seek an exemption under section
12(d)(1)(J) of the Act to permit the Funds of Funds to acquire shares
of the Underlying Funds and to permit the Underlying Funds, their
principal underwriter and Brokers to sell shares to the Funds of Funds
beyond the limits set forth in sections 12(d)(1)(A) and (B) of the Act.
3. Applicants state that the proposed arrangement will not give
rise to the policy concerns underlying sections 12(d)(1)(A) and (B),
which include concerns about undue influence by a fund of funds over
underlying funds, excessive layering of fees, and overly complex fund
structures. Accordingly, applicants believe that the requested
exemption is consistent with the public interest and the protection of
investors.
4. Applicants state that the proposed arrangement will not result
in undue influence by a Fund of Funds or its affiliated persons over
the Non-Affiliated Underlying Funds. The concern about undue influence
does not arise in connection with a Fund of Funds' investment in the
Affiliated Underlying Funds, since they are part of the same group of
investment companies. To limit the control that a Fund of Funds may
have over a Non-Affiliated Underlying Fund, applicants propose a
condition prohibiting: (a) The Adviser and any person controlling,
controlled by or under common control with the Adviser, any investment
company or issuer that would be an investment company but for section
3(c)(1) or section 3(c)(7) of the Act, advised or sponsored by the
Adviser or any person controlling, controlled by or under common
control with the Adviser (collectively, the ``Group''), and (b) any
investment adviser to a Fund of Funds within the meaning of section
2(a)(20)(B) of the Act (``Subadviser''), any person controlling,
controlled by or under common control with the Subadviser, and any
investment company or issuer that would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act (or portion of such
investment company or issuer) advised or sponsored by the Subadviser or
any person controlling, controlled by or under common control with the
Subadviser (collectively, the ``Subadviser Group'') from controlling
(individually or in the aggregate) a Non-Affiliated Underlying Fund
within the meaning of section 2(a)(9) of the Act.
5. Applicants further state that condition 2 below precludes a Fund
of Funds and its Adviser, Subadviser, promoter, principal underwriter
and any person controlling, controlled by or under common control with
any of these entities (each, a ``Fund Affiliate'') from causing any
existing or potential investment by the Fund of Funds in a Non-
Affiliated Underlying Fund to influence the terms of any services or
transactions between the Fund of Funds or a Fund Affiliate and the Non-
Affiliated Underlying Fund or its investment adviser(s), sponsor,
promoter, principal underwriter and any person controlling, controlled
by or under common control with any of these entities (each, a ``Non-
Affiliated Fund Affiliate''). Non-Affiliated Underlying Funds will be
prohibited from purchasing a security in an offering of securities
during the existence of any underwriting or selling syndicate of which
a principal underwriter is an officer, director, member of an advisory
board, Adviser, Subadviser, or employee of the Fund of Funds, or a
person of which any such officer, director, member of an advisory
board, Adviser, Subadviser, or employee is an affiliated person (each,
an ``Underwriting Affiliate,'' except any person whose relationship to
the Non-Affiliated Underlying Fund is covered by section 10(f) of the
Act is not an Underwriting Affiliate). An offering of securities during
the existence of an underwriting or selling syndicate of which a
principal underwriter is an Underwriting Affiliate is an ``Affiliated
Underwriting.''
6. Applicants also propose a condition that once an investment by a
Fund of Funds in the securities of a Non-Affiliated Investment Company
exceeds the limit in section 12(d)(1)(A)(i) of the Act, the board of
directors or trustees of the Non-Affiliated Investment Company,
including a majority of the independent directors or trustees, will
determine that any consideration paid by the Non-Affiliated Investment
Company to the Fund of Funds or a Fund Affiliate Service Provider \3\
in connection with any services or transactions: (a) Is fair and
reasonable in relation to the nature and quality of the services and
benefits received by the Non-Affiliated Investment Company; (b) is
within the range of consideration that the Non-Affiliated Investment
Company would be required to pay to another unaffiliated entity in
connection with the same services or transactions; and (c) does not
involve overreaching on the part of any person concerned.
---------------------------------------------------------------------------
\3\ A ``Fund Affiliate Service Provider'' is the Adviser, any
Subadviser, promoter or principal underwriter of the Fund of Funds,
and any person controlling, controlled by or under common control
with any of these entities, provided that (i) such person would
reasonably be expected to be in a position to provide services of a
securities-related nature (that is, investment advisory, brokerage,
distribution, transfer agency, administration, participant
recordkeeping or shareholder services) to a Non-Affiliated
Underlying Fund, or (ii) if such person is not described by clause
(i), to the actual knowledge of the Adviser, any Subadviser,
promoter or principal underwriter of the Fund of Funds, such person
currently has or is reasonably expected to begin having a material
business relationship with a Non-Affiliated Underlying Fund.
---------------------------------------------------------------------------
7. To further assure that a Non-Affiliated Investment Company
understands the implications of an investment by a Fund of Funds under
the requested order, prior to a Fund of Funds' investment in a Non-
Affiliated Investment Company in excess of the limit in section
12(d)(1)(A)(i) of the Act, the Fund of Funds and Non-Affiliated
Investment Company will execute an agreement stating, without
limitation,
[[Page 56810]]
that their boards of directors or trustees and their investment
advisers understand the terms and conditions of the order and agree to
fulfill their responsibilities under the order (``Participation
Agreement''). Applicants note that a Non-Affiliated Underlying Fund
(other than an ETF whose shares are purchased by a Fund of Funds in the
secondary market) will retain the right to reject an investment from a
Fund of Funds.\4\
---------------------------------------------------------------------------
\4\ A Non-Affiliated Investment Company (including an ETF) would
retain its right to reject any initial investment by a Fund of Funds
in excess of the limits in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement with the Fund of
Funds.
---------------------------------------------------------------------------
8. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. With respect to investment advisory
fees, applicants state that, prior to approving any investment advisory
contract under section 15 of the Act, the board of trustees of the Fund
of Funds (the ``Board''), including a majority of the trustees who are
not ``interested persons,'' as defined in section 2(a)(19) of the Act
(the ``Independent Trustees''), will find that the investment advisory
fees charged under the Fund of Fund's investment advisory contract are
based on services provided that are in addition to, rather than
duplicative of, services provided pursuant to any Underlying Fund's
advisory contract(s). Applicants further state that the Adviser or
Distributor will waive fees otherwise payable to it by a Fund of Funds
in an amount at least equal to any compensation (including fees
received pursuant to any plan adopted by a Non-Affiliated Investment
Company under rule 12b-1 under the Act) received from a Non-Affiliated
Underlying Fund by the Adviser, or an affiliated person of the Adviser,
other than any advisory fees paid to the Adviser or its affiliated
person by the Non-Affiliated Investment Company, in connection with the
investment by the Fund of Funds in the Non-Affiliated Underlying Fund.
Applicants also state that any sales charges and/or service fees, as
defined in Rule 2830 of the Conduct Rules of the NASD (``NASD Conduct
Rule 2830''), charged with respect to shares of a Fund of Funds will
not exceed the limits applicable to a funds of funds set forth in NASD
Conduct Rule 2830.
9. Applicants state that the proposed arrangement will not create
an overly complex fund structure. Applicants note that an Underlying
Fund will be prohibited from acquiring securities of any investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A), except in
certain circumstances identified in condition 10 below. Applicants also
represent that a Fund of Funds' prospectus and sales literature will
contain concise, ``plain English'' disclosure designed to inform
investors about the unique characteristics of the proposed arrangement,
including its expense structure and the additional expenses of
investing in Underlying Funds.\5\
---------------------------------------------------------------------------
\5\ Each Fund of Funds also will comply with the disclosure
requirements concerning the aggregate expenses of investing in
Underlying Funds set forth in Investment Company Act Release No.
27399 (June 20, 2006).
---------------------------------------------------------------------------
B. Section 17(a)
10. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and any
affiliated person of the company. Section 2(a)(3) of the Act defines an
``affiliated person'' of another person to include: (a) Any person
directly or indirectly owning, controlling, or holding with power to
vote, 5% or more of the outstanding voting securities of the other
person; (b) any person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with
power to vote by the other person; and (c) any person directly or
indirectly controlling, controlled by, or under common control with the
other person.
11. Applicants state that if a Funds of Funds and an Affiliated
Underlying Fund were deemed to be under common control, they would be
affiliated persons of each another. Applicants also state that a Funds
of Funds and an Underlying Fund might be deemed to be affiliated
persons of one another if a Fund of Funds acquires 5% or more of an
Underlying Fund's outstanding voting securities. In light of these
possible affiliations, section 17(a) could prevent an Underlying Fund
from selling shares to and redeeming shares from a Fund of Funds.\6\
---------------------------------------------------------------------------
\6\ Applicants note that a Fund of Funds investing in ETFs
generally would purchase and sell shares of an ETF through secondary
market transactions at market prices rather than through principal
transactions with the Underlying Fund. Applicants would not rely on
the requested relief from section 17(a) for such secondary market
transactions. To the extent that a Fund of Funds purchases or
redeems shares from an ETF that is an affiliated person of the Fund
of Funds in exchange for a basket of specified securities as
described in the application for the exemptive order upon which the
ETF relies, applicants also request relief from section 17(a) for
those transactions.
---------------------------------------------------------------------------
12. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
it finds that (a) The terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act. Section
6(c) of the Act permits the Commission to exempt any person or
transactions from any provision of the Act 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.
13. Applicants submit that the proposed transactions satisfy the
standards for relief under sections 17(b) and 6(c) of the Act as the
terms are fair and reasonable and do not involve overreaching.\7\
Applicants note that the terms upon which an Underlying Fund will sell
its shares to or purchase its shares from a Fund of Funds will be based
on the net asset value of each Underlying Fund. Applicants state that
the proposed arrangement will be consistent with the policies of each
Fund of Funds and Underlying Fund, and with the general purposes of the
Act.
---------------------------------------------------------------------------
\7\ Applicants acknowledge that receipt of any compensation by
(a) An affiliated person of a Fund of Funds, or an affiliated person
of such person, for the purchase by the Fund of Funds of shares of
an Underlying Fund or (b) an affiliated person of an Underlying
Fund, or an affiliated person of such person, for the sale by the
Underlying Fund of its shares to a Fund of Funds is subject to
section 17(e) of the Act. The Participation Agreement also will
include this acknowledgement.
---------------------------------------------------------------------------
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The members of the Group will not control (individually or in
the aggregate) a Non-Affiliated Underlying Fund within the meaning of
section 2(a)(9) of the Act. The members of the Subadviser Group will
not control (individually or in the aggregate) a Non-Affiliated
Underlying Fund within the meaning of section 2(a)(9) of the Act. If,
as a result of a decrease in the outstanding voting securities of a
Non-Affiliated Underlying Fund, the Group or the Subadviser Group, each
in the aggregate, becomes a holder of more than 25% of the outstanding
voting securities of a Non-Affiliated Underlying Fund, it will vote its
shares of the Non-Affiliated Underlying Fund in the same proportion as
the vote of all other holders of the Non-Affiliated Underlying Fund's
shares. This condition will not apply to the
[[Page 56811]]
Subadviser Group with respect to a Non-Affiliated Underlying Fund for
which the Subadviser or a person controlling, controlled by, or under
common control with the Subadviser, acts as the investment adviser
within the meaning section 2(a)(20)(A) of the Act (in the case of a
Non-Affiliated Investment Company) or as the sponsor (in the case of a
Non-Affiliated Trust).
2. No Fund of Funds or Fund Affiliate will cause any existing or
potential investment by the Fund of Funds in a Non-Affiliated
Underlying Fund to influence the terms of any services or transactions
between the Fund of Funds or a Fund Affiliate and the Non-Affiliated
Underlying Fund or a Non-Affiliated Fund Affiliate.
3. The Board of the Fund of Funds, including a majority of the
Independent Trustees, will adopt procedures reasonably designed to
assure that the Adviser and any Subadviser are conducting the
investment program of the Fund of Funds without taking into account any
consideration received by the Fund of Funds or a Fund Affiliate from a
Non-Affiliated Underlying Fund or a Non-Affiliated Fund Affiliate in
connection with any services or transactions.
4. Once an investment by a Fund of Funds in the securities of a
Non-Affiliated Investment Company exceeds the limit in section
12(d)(1)(A)(i) of the Act, the board of directors or trustees of the
Non-Affiliated Investment Company, including a majority of the
independent directors or trustees, will determine that any
consideration paid by the Non-Affiliated Investment Company to the Fund
of Funds or a Fund Affiliate Service Provider in connection with any
services or transactions: (a) Is fair and reasonable in relation to the
nature and quality of the services and benefits received by the Non-
Affiliated Investment Company; (b) is within the range of consideration
that the Non-Affiliated Investment Company would be required to pay to
another unaffiliated entity in connection with the same services or
transactions; and (c) does not involve overreaching on the part of any
person concerned. This condition does not apply with respect to any
services or transactions between a Non-Affiliated Investment Company
and its investment adviser(s), or any person controlling, controlled
by, or under common control with such investment adviser(s).
5. No Non-Affiliated Underlying Fund will purchase a security in
any Affiliated Underwriting.
6. Before investing in a Non-Affiliated Investment Company in
excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of
Funds and the Non-Affiliated Investment Company will execute a
Participation Agreement stating, without limitation, that their boards
of directors or trustees and their investment advisers understand the
terms and conditions of the order and agree to fulfill their
responsibilities under the order. At the time of its investment in
shares of a Non-Affiliated Investment Company in excess of the limit in
section 12(d)(1)(A)(i), the Fund of Funds will notify the Non-
Affiliated Investment Company of the investment. At such time, the Fund
of Funds will also transmit to the Non-Affiliated Investment Company a
list of the names of each Fund Affiliate Service Provider. The Fund of
Funds will notify the Non-Affiliated Investment Company of any changes
to the list of names as soon as reasonably practicable after a change
occurs. The Non-Affiliated Investment Company and the Fund of Funds
will maintain and preserve a copy of the order, the Participation
Agreement, and the list with any updated information for the duration
of the investment and for a period of not less than six years
thereafter, the first two years in an easily accessible place.
7. Before approving any advisory contract under section 15 of the
Act, the Board of the Fund of Funds, including a majority of the
Independent Trustees, will find that the advisory fees charged under
the advisory contract will be based on services provided that will be
in addition to, rather than duplicative of, services provided under the
advisory contract(s) of any Underlying Fund in which the Fund of Funds
may invest. These findings and the basis upon which they are made will
be recorded fully in the minute books of the appropriate Fund of Funds.
8. The Adviser or Distributor will waive fees otherwise payable to
it by a Fund of Funds in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by a Non-
Affiliated Investment Company under rule 12b-1 under the Act) received
from a Non-Affiliated Underlying Fund by the Adviser, or an affiliated
person of the Adviser, other than any advisory fees paid to the Adviser
or its affiliated person by the Non-Affiliated Investment Company, in
connection with the investment by the Fund of Funds in the Non-
Affiliated Underlying Fund. Any Subadviser will waive fees otherwise
payable to the Subadviser, directly or indirectly, by the Fund of Funds
in an amount at least equal to any compensation received from a Non-
Affiliated Underlying Fund by the Subadviser, or an affiliated person
of the Subadviser, other than any advisory fees paid to the Subadviser
or its affiliated person by the Non-Affiliated Investment Company, in
connection with the investment by the Fund of Funds in the Non-
Affiliated Underlying Fund made at the direction of the Subadviser. In
the event that the Subadviser waives fees, the benefit of the waiver
will be passed through to the Fund of Funds.
9. Any sales charges and/or service fees (as defined in NASD
Conduct Rule 2830) charged with respect to shares of a Fund of Funds
will not exceed the limits applicable to a fund of funds set forth in
NASD Conduct Rule 2830.
10. No Underlying Fund will acquire securities of any investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A) of the Act,
except to the extent that such Underlying Fund: (a) Receives securities
of another investment company as a dividend or as a result of a plan of
reorganization of a company (other than a plan devised for the purpose
of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed
to have acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting such Underlying Fund to
(i) Acquire securities of one or more affiliated investment companies
for short-term cash management purposes, or (ii) engage in interfund
borrowing and lending transactions.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-19631 Filed 10-3-07; 8:45 am]
BILLING CODE 8011-01-P