Phoenix Equity Trust, et al.; Notice of Application, 52707-52709 [E8-20960]
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Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Notices
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reasonably provides for completion of
the transition within 3 years of the date
specified by the licensee in their letter
of intent to implement 10 CFR 50.48(c)
or other period granted by NRC;
(2) It was corrected or will be
corrected as a result of completing the
transition to 10 CFR 50.48(c). Also,
immediate corrective action and/or
compensatory measures are taken
within a reasonable time commensurate
with the risk significance of the issue
following identification (this action
should involve expanding the initiative,
as necessary, to identify other issues
caused by similar root causes);
(3) It was not likely to have been
previously identified by routine licensee
efforts such as normal surveillance or
quality assurance (QA) activities; and
(4) It was not willful.
The NRC may take enforcement action
when these conditions are not met or
when a violation that is associated with
a finding of high safety significance is
identified.
While the NRC may exercise
discretion for violations meeting the
required criteria where the licensee
failed to make a required report to the
NRC, a separate enforcement action will
normally be issued for the licensee’s
failure to make a required report.
B. Existing Identified Noncompliances
In addition, licensees may have
existing identified noncompliances that
could reasonably be corrected under 10
CFR 50.48(c). For these
noncompliances, the NRC is providing
enforcement discretion for the
implementation of corrective actions
until the licensee has transitioned to 10
CFR 50.48(c) provided that the
noncompliances meet all of the
following criteria:
(1) The licensee has entered the
noncompliance into their corrective
action program and implemented
appropriate compensatory measures;
(2) The noncompliance is not
associated with a finding that the
Reactor Oversight Process Significance
Determination Process would evaluate
as Red, or it would not be categorized
at Severity Level I;
(3) It was not willful; and
(4) The licensee submits a letter of
intent by December 31, 2005, stating its
intent to transition to 10 CFR 50.48(c).
After December 31, 2005, as
addressed in (4) above, this enforcement
discretion for implementation of
corrective actions for existing identified
noncompliances will not be available
and the requirements of 10 CFR 50.48(b)
(and any other requirements in fire
protection license conditions) will be
enforced in accordance with normal
VerDate Aug<31>2005
16:52 Sep 09, 2008
Jkt 214001
enforcement practices. However,
licensees that submit letters of intent to
transition to 10 CFR 50.48(c) with
existing noncompliances will have the
option to implement corrective actions
in accordance with the new
performance-based regulation. All other
elements of the assessment and
enforcement process will be exercised
even if the licensee submits its letter of
intent before the NRC issues its
enforcement action for existing
noncompliances.
Dated at Rockville, Maryland, this 4th day
of September, 2008.
For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. E8–20972 Filed 9–9–08; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28375; 812–13526]
Phoenix Equity Trust, et al.; Notice of
Application
September 3, 2008.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (the ‘‘Act’’) for an
exemption from section 15(a) of the Act
and rule 18f–2 under the Act.
AGENCY:
The requested
order would permit certain registered
open-end management investment
companies to enter into and materially
amend subadvisory agreements without
shareholder approval.
APPLICANTS: Phoenix Equity Trust,
Phoenix Insight Funds Trust, Phoenix
Institutional Mutual Funds, Phoenix
Opportunities Trust (the ‘‘Companies’’)
and Phoenix Investment Counsel, Inc.
(the ‘‘Advisor’’) (collectively, with the
Companies, ‘‘Applicants’’).
FILING DATES: The application was filed
on April 23, 2008, and amended on
September 2, 2008.
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 September 26, 2008 and
should be accompanied by proof of
service on applicants, in the form of an
SUMMARY OF APPLICATION:
PO 00000
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52707
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reasons 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.
Secretary, Commission, 100
F Street, NE., Washington, DC 20549–
1090. Applicants, One American Row,
P.O. Box 5056, Hartford, CT 06102–
5056.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel at
(202) 551–6990, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
The
following is a summary of the
application. The complete application
may be obtained for a fee from the
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549–1520 (telephone (202) 551–5850).
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. The Companies are open-end
management investment companies
registered under the Act. The
Companies, except Phoenix Insight
Funds Trust, are organized as statutory
trusts under Delaware law. Phoenix
Insight Funds Trust is organized as a
Massachusetts business trust under
Massachusetts law. The Companies
presently are comprised of fifty-three
separate series (each, a ‘‘Fund’’ and
collectively, the ‘‘Funds’’) each of which
has its own investment objectives,
policies, and restrictions.1
2. The Advisor, a Massachusetts
corporation, is registered under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’) and serves as
investment adviser to the Funds that use
1 Applicants also request relief with respect to
current or future series of the Companies and any
other registered open-end management investment
companies and their series that: (a) Are advised by
the Advisor or any entity controlling, controlled by
or under common control with the Advisor; (b) use
the management structure described in the
application; and (c) comply with the terms and
conditions of the application (‘‘Future Funds,’’
included in the term ‘‘Funds’’). Any existing entity
that currently intends to rely on the requested relief
is named as an Applicant. If a Fund has the name
of any Subadvisor (as defined below) in the Fund’s
name, the Fund’s name will be preceded by the
name of the Advisor (such as ‘‘Phoenix,’’ which is
the present identifying name the Advisor uses in
conducting its business) or the name of the entity
controlling, controlled by, or under common
control with the Advisor that serves as the primary
adviser to the Fund.
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Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Notices
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the management structure described in
the application.2
3. The Companies, on behalf of the
Funds, have entered into investment
advisory agreements with the Advisor
(the ‘‘Advisory Agreements’’). Each
Advisory Agreement requires approval
by shareholders of the applicable Fund
and by the Fund’s board of trustees (the
‘‘Board’’), including a majority of the
trustees who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act, of the Company or the
Advisor (the ‘‘Independent Trustees’’).
Under the Advisory Agreements, the
Advisor has primary responsibility for
management of the Funds, subject to
general oversight by the Board. The
Advisor also evaluates, selects, and
recommends to the Boards investment
management organizations
(‘‘Subadvisors’’) who have discretionary
authority to invest all or a portion of the
assets of a particular Fund pursuant to
a separate subadvisory agreement with
the Advisor (‘‘Subadvisory
Agreement’’). Each Subadvisor is, and
any future Subadvisor will be, registered
under the Advisers Act. The Advisor
receives management fees at annual
rates based on a percentage of the
applicable Fund’s average daily net
assets. Each Subadvisor will be paid
subadvisory fees by the Advisor out of
its fees from the Funds at rates
negotiated with the Subadvisor by the
Advisor and approved by the Boards.
4. The Advisor monitors and
evaluates the Subadvisors and
recommends to the Boards whether
Subadvisory Agreements should be
renewed, modified, or terminated.
Advisor assesses the continued ability
of the Subadvisor to meet the Fund’s
investment objective. The Advisor
monitors possible replacement
Subadvisors for a Fund so that any
transition can be recommended to the
Board and, if approved, can be effected
on a timely basis should a Subadvisor
change be warranted.
5. Applicants request an order to
permit the Advisor, subject to Board
2 Under a prior order, the Commission granted
relief to certain applicants, including Phoenix
Variable Advisors, Inc. (‘‘PVA’’), from the
provisions of section 15(a) of the Act and rule 18f–
2 under the Act. The Phoenix Edge Series Fund and
Phoenix Variable Advisors, Inc., Investment
Company Act Release Nos. 25655 (July 10, 2002)
(notice) and 25693 (August 6, 2002) (order) (‘‘Prior
Order’’). While Applicants are not named as
applicants to the Prior Order, Applicants rely on the
Prior Order due to a currently existing affiliation
with the applicants to the Prior Order. However, a
reorganization transaction expected to close in
September, 2008 will result in the Advisor no
longer being controlling, controlled by, or under
common control with PVA, thus making the Prior
Order inapplicable to Applicants and necessitating
the current request for relief.
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16:52 Sep 09, 2008
Jkt 214001
approval, to enter into and materially
amend Subadvisory Agreements
without shareholder approval. The
applicants will not enter into a
Subadvisory Agreement with any
Subadvisor that is an affiliated person,
as defined in section 2(a)(3) of the Act,
of the Companies or the Advisor, other
than by reason of serving as Subadvisor
to one or more Funds (‘‘Affiliated
Subadvisor’’), unless that agreement,
including the compensation to be paid
thereunder, has been separately
approved by the shareholders of each
Fund for which the Affiliated
Subadvisor will act as an investment
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 pursuant to 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 provision of the
Act, or from any rule thereunder, if and
to the extent that such exemption is
necessary or appropriate in the public
interest and consistent with the
protection of investors and the purposes
fairly intended by the policies and
provisions of the Act. Applicants
believe that their requested relief meets
this standard.
3. Applicants state that the Funds’
shareholders rely on the Advisor to
select the Subadvisors best suited to
achieve a Fund’s investment objectives.
Applicants assert that, from the
perspective of the investor, the role of
the Subadvisors is comparable to that of
individual portfolio managers employed
by traditional investment advisory
firms. Applicants contend that requiring
shareholder approval of Subadvisory
Agreements would impose costs and
unnecessary delays on the Funds and
may preclude the Advisor from acting
promptly in a manner considered
advisable by the Board. Applicants also
note that the Advisory Agreement will
remain subject to the shareholder
approval requirements in section 15(a)
of the Act and rule 18f–2 under the Act.
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Fmt 4703
Sfmt 4703
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The Advisor will not enter into a
Subadvisory Agreement with any
Affiliated Subadvisor without that
agreement, including the compensation
to be paid thereunder, being approved
by the shareholders of the applicable
Fund.
2. At all times, at least a majority of
the Boards will be Independent
Trustees, and the nomination of new or
additional Independent Trustees will be
at the discretion of the then-existing
Independent Trustees.
3. When a Subadvisor change is
proposed for a Fund with an Affiliated
Subadvisor, the Fund’s Board, including
a majority of the Independent Trustees,
will make a separate finding, reflected
in the Board minutes, that the change is
in the best interests of the Fund and its
shareholders and does not involve a
conflict of interest from which the
Advisor or the Affiliated Subadvisor
derives an inappropriate advantage.
4. Before a Fund may rely on the
requested order, the operation of the
Fund in the manner described in the
application will be approved by a
majority of the Fund’s outstanding
voting securities, as defined in the Act,
or, in the case of a Fund whose public
shareholders purchase shares on the
basis of a prospectus containing the
disclosure contemplated by condition 6
below, by the initial shareholder(s)
before offering shares of that Fund to the
public.
5. The Advisor will provide general
management services to the Companies
and their Funds, including overall
supervisory responsibility for the
general management and investment of
each Fund’s assets, and, subject to
review and approval by the Boards, will
(i) set the Fund’s overall investment
strategies; (ii) evaluate, select and
recommend Subadvisors to manage all
or part of a Fund’s assets; (iii) allocate
and, when appropriate, reallocate a
Fund’s assets among multiple
Subadvisors; (iv) monitor and evaluate
the performance of Subadvisors; and (v)
implement procedures reasonably
designed to ensure that the Subadvisors
comply with the relevant Fund’s
investment objective, policies and
restrictions.
6. Each Fund relying on the requested
order will disclose in its prospectus the
existence, substance, and effect of any
order granted pursuant to the
application. In addition, each Fund will
hold itself out to the public as
employing the management structure
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Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Notices
described in the application. The
prospectus will prominently disclose
that the Advisor has ultimate
responsibility (subject to oversight by
the Boards) to oversee the Subadvisors
and recommend their hiring,
termination and replacement.
7. No trustee or officer of a Company
or officer or director of the Advisor will
own directly or indirectly (other than
through a pooled investment vehicle
that is not controlled by that trustee,
director or officer) any interest in a
Subadvisor except for (i) ownership of
interests in the Advisor or any entity
that controls, is controlled by, or is
under common control with the
Advisor; or (ii) ownership of less than
1% of the outstanding securities of any
class of equity or debt of a publiclytraded company that is either a
Subadvisor or an entity that controls, is
controlled by or is under common
control with a Subadvisor.
8. Within 90 days of the hiring of any
new Subadvisor, shareholders of the
Fund will be furnished all information
about the new Subadvisor that would be
included in a proxy statement,
including any change in shareholder
disclosure caused by the addition of the
new Subadvisor. To meet this condition,
the Funds will provide shareholders
with an information statement meeting
the requirements of Regulation 14C,
Schedule 14C, and Item 22 of Schedule
14A under the Securities Exchange Act
of 1934.
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,
Acting Secretary.
[FR Doc. E8–20960 Filed 9–9–08; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
September 3, 2008.
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, September 11, 2008 at 1
p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
Jkt 214001
BILLING CODE 8010–01–P
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Delete Obsolete CBOE
Rule 15.10
SECURITIES AND EXCHANGE
COMMISSION
16:52 Sep 09, 2008
Dated: September 4, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–20957 Filed 9–9–08; 8:45 am]
[Release No. 34–58455; File No. SR–CBOE–
2008–94]
BILLING CODE 8010–01–P
VerDate Aug<31>2005
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matters at the Closed
Meeting.
Commissioner Casey, as duty officer,
voted to consider the items listed for the
Closed Meeting in closed session.
The subject matter of the Closed
Meeting scheduled for Thursday,
September 11, 2008 will be:
Formal orders of investigation;
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings of an
enforcement nature;
Amicus consideration; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
29, 2008, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
substantially prepared by the Exchange.
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00070
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Sfmt 4703
52709
The Exchange filed the proposal as a
‘‘non-controversial’’ proposed rule
change pursuant to Section
19(b)(3)(A)(iii) of the Act 3 and Rule
19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete
obsolete Rule 15.10, Reporting
Requirements Applicable to Short Sales
in Nasdaq National Market. The text of
the rule proposal is available on the
Exchange’s Web site (https://
www.cboe.org/legal), at the Exchange’s
Office of the Secretary and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBOE Rule 15.10, Reporting
Requirements Applicable to Short Sales
in Nasdaq National Market, was
adopted several years ago to coordinate
CBOE’s rules with the NASD’s Rules of
Fair Practice relating to a bid test
applicable to short sales in National
Market (‘‘NM’’) securities traded
through Nasdaq.5 In 2007, the
Commission adopted an amendment to
eliminate Rule 10a–1 and to add Rule
201 of Regulation SHO under the Act,
to provide that no price test, including
any price test of any self-regulatory
organization (‘‘SRO’’), shall apply to
short sales in any security.6 Rule 201
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 See Securities and Exchange Act Release No.
34632 (September 2, 1994), 59 FR 46999 (September
13, 1994) (SR–CBOE–94–10).
6 See Securities Exchange Act Release No. 34–
55970, 72 FR 36348 (July 3, 2007) (File No. S7–21–
06).
4 17
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]]>Agencies
[Federal Register Volume 73, Number 176 (Wednesday, September 10, 2008)]
[Notices]
[Pages 52707-52709]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-20960]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28375; 812-13526]
Phoenix Equity Trust, et al.; Notice of Application
September 3, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from section 15(a)
of the Act and rule 18f-2 under the Act.
-----------------------------------------------------------------------
Summary of Application: The requested order would permit certain
registered open-end management investment companies to enter into and
materially amend subadvisory agreements without shareholder approval.
Applicants: Phoenix Equity Trust, Phoenix Insight Funds Trust, Phoenix
Institutional Mutual Funds, Phoenix Opportunities Trust (the
``Companies'') and Phoenix Investment Counsel, Inc. (the ``Advisor'')
(collectively, with the Companies, ``Applicants'').
Filing Dates: The application was filed on April 23, 2008, and amended
on September 2, 2008.
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 September 26, 2008 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 reasons 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, Commission, 100 F Street, NE., Washington, DC
20549-1090. Applicants, One American Row, P.O. Box 5056, Hartford, CT
06102-5056.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel at
(202) 551-6990, or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the Commission's Public Reference Room, 100 F Street, NE., Washington,
DC 20549-1520 (telephone (202) 551-5850).
Applicants' Representations
1. The Companies are open-end management investment companies
registered under the Act. The Companies, except Phoenix Insight Funds
Trust, are organized as statutory trusts under Delaware law. Phoenix
Insight Funds Trust is organized as a Massachusetts business trust
under Massachusetts law. The Companies presently are comprised of
fifty-three separate series (each, a ``Fund'' and collectively, the
``Funds'') each of which has its own investment objectives, policies,
and restrictions.\1\
---------------------------------------------------------------------------
\1\ Applicants also request relief with respect to current or
future series of the Companies and any other registered open-end
management investment companies and their series that: (a) Are
advised by the Advisor or any entity controlling, controlled by or
under common control with the Advisor; (b) use the management
structure described in the application; and (c) comply with the
terms and conditions of the application (``Future Funds,'' included
in the term ``Funds''). Any existing entity that currently intends
to rely on the requested relief is named as an Applicant. If a Fund
has the name of any Subadvisor (as defined below) in the Fund's
name, the Fund's name will be preceded by the name of the Advisor
(such as ``Phoenix,'' which is the present identifying name the
Advisor uses in conducting its business) or the name of the entity
controlling, controlled by, or under common control with the Advisor
that serves as the primary adviser to the Fund.
---------------------------------------------------------------------------
2. The Advisor, a Massachusetts corporation, is registered under
the Investment Advisers Act of 1940 (``Advisers Act'') and serves as
investment adviser to the Funds that use
[[Page 52708]]
the management structure described in the application.\2\
---------------------------------------------------------------------------
\2\ Under a prior order, the Commission granted relief to
certain applicants, including Phoenix Variable Advisors, Inc.
(``PVA''), from the provisions of section 15(a) of the Act and rule
18f-2 under the Act. The Phoenix Edge Series Fund and Phoenix
Variable Advisors, Inc., Investment Company Act Release Nos. 25655
(July 10, 2002) (notice) and 25693 (August 6, 2002) (order) (``Prior
Order''). While Applicants are not named as applicants to the Prior
Order, Applicants rely on the Prior Order due to a currently
existing affiliation with the applicants to the Prior Order.
However, a reorganization transaction expected to close in
September, 2008 will result in the Advisor no longer being
controlling, controlled by, or under common control with PVA, thus
making the Prior Order inapplicable to Applicants and necessitating
the current request for relief.
---------------------------------------------------------------------------
3. The Companies, on behalf of the Funds, have entered into
investment advisory agreements with the Advisor (the ``Advisory
Agreements''). Each Advisory Agreement requires approval by
shareholders of the applicable Fund and by the Fund's board of trustees
(the ``Board''), including a majority of the trustees who are not
``interested persons,'' as defined in section 2(a)(19) of the Act, of
the Company or the Advisor (the ``Independent Trustees''). Under the
Advisory Agreements, the Advisor has primary responsibility for
management of the Funds, subject to general oversight by the Board. The
Advisor also evaluates, selects, and recommends to the Boards
investment management organizations (``Subadvisors'') who have
discretionary authority to invest all or a portion of the assets of a
particular Fund pursuant to a separate subadvisory agreement with the
Advisor (``Subadvisory Agreement''). Each Subadvisor is, and any future
Subadvisor will be, registered under the Advisers Act. The Advisor
receives management fees at annual rates based on a percentage of the
applicable Fund's average daily net assets. Each Subadvisor will be
paid subadvisory fees by the Advisor out of its fees from the Funds at
rates negotiated with the Subadvisor by the Advisor and approved by the
Boards.
4. The Advisor monitors and evaluates the Subadvisors and
recommends to the Boards whether Subadvisory Agreements should be
renewed, modified, or terminated. Advisor assesses the continued
ability of the Subadvisor to meet the Fund's investment objective. The
Advisor monitors possible replacement Subadvisors for a Fund so that
any transition can be recommended to the Board and, if approved, can be
effected on a timely basis should a Subadvisor change be warranted.
5. Applicants request an order to permit the Advisor, subject to
Board approval, to enter into and materially amend Subadvisory
Agreements without shareholder approval. The applicants will not enter
into a Subadvisory Agreement with any Subadvisor that is an affiliated
person, as defined in section 2(a)(3) of the Act, of the Companies or
the Advisor, other than by reason of serving as Subadvisor to one or
more Funds (``Affiliated Subadvisor''), unless that agreement,
including the compensation to be paid thereunder, has been separately
approved by the shareholders of each Fund for which the Affiliated
Subadvisor will act as an investment 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 pursuant to 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 provision of the Act, or
from any rule thereunder, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the
policies and provisions of the Act. Applicants believe that their
requested relief meets this standard.
3. Applicants state that the Funds' shareholders rely on the
Advisor to select the Subadvisors best suited to achieve a Fund's
investment objectives. Applicants assert that, from the perspective of
the investor, the role of the Subadvisors is comparable to that of
individual portfolio managers employed by traditional investment
advisory firms. Applicants contend that requiring shareholder approval
of Subadvisory Agreements would impose costs and unnecessary delays on
the Funds and may preclude the Advisor from acting promptly in a manner
considered advisable by the Board. Applicants also note that the
Advisory Agreement will remain subject to the shareholder approval
requirements in section 15(a) of the Act and rule 18f-2 under the Act.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The Advisor will not enter into a Subadvisory Agreement with any
Affiliated Subadvisor without that agreement, including the
compensation to be paid thereunder, being approved by the shareholders
of the applicable Fund.
2. At all times, at least a majority of the Boards will be
Independent Trustees, and the nomination of new or additional
Independent Trustees will be at the discretion of the then-existing
Independent Trustees.
3. When a Subadvisor change is proposed for a Fund with an
Affiliated Subadvisor, the Fund's Board, including a majority of the
Independent Trustees, will make a separate finding, reflected in the
Board minutes, that the change is in the best interests of the Fund and
its shareholders and does not involve a conflict of interest from which
the Advisor or the Affiliated Subadvisor derives an inappropriate
advantage.
4. Before a Fund may rely on the requested order, the operation of
the Fund in the manner described in the application will be approved by
a majority of the Fund's outstanding voting securities, as defined in
the Act, or, in the case of a Fund whose public shareholders purchase
shares on the basis of a prospectus containing the disclosure
contemplated by condition 6 below, by the initial shareholder(s) before
offering shares of that Fund to the public.
5. The Advisor will provide general management services to the
Companies and their Funds, including overall supervisory responsibility
for the general management and investment of each Fund's assets, and,
subject to review and approval by the Boards, will (i) set the Fund's
overall investment strategies; (ii) evaluate, select and recommend
Subadvisors to manage all or part of a Fund's assets; (iii) allocate
and, when appropriate, reallocate a Fund's assets among multiple
Subadvisors; (iv) monitor and evaluate the performance of Subadvisors;
and (v) implement procedures reasonably designed to ensure that the
Subadvisors comply with the relevant Fund's investment objective,
policies and restrictions.
6. Each Fund relying on the requested order will disclose in its
prospectus the existence, substance, and effect of any order granted
pursuant to the application. In addition, each Fund will hold itself
out to the public as employing the management structure
[[Page 52709]]
described in the application. The prospectus will prominently disclose
that the Advisor has ultimate responsibility (subject to oversight by
the Boards) to oversee the Subadvisors and recommend their hiring,
termination and replacement.
7. No trustee or officer of a Company or officer or director of the
Advisor will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by that trustee, director or
officer) any interest in a Subadvisor except for (i) ownership of
interests in the Advisor or any entity that controls, is controlled by,
or is under common control with the Advisor; or (ii) ownership of less
than 1% of the outstanding securities of any class of equity or debt of
a publicly-traded company that is either a Subadvisor or an entity that
controls, is controlled by or is under common control with a
Subadvisor.
8. Within 90 days of the hiring of any new Subadvisor, shareholders
of the Fund will be furnished all information about the new Subadvisor
that would be included in a proxy statement, including any change in
shareholder disclosure caused by the addition of the new Subadvisor. To
meet this condition, the Funds will provide shareholders with an
information statement meeting the requirements of Regulation 14C,
Schedule 14C, and Item 22 of Schedule 14A under the Securities Exchange
Act of 1934.
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,
Acting Secretary.
[FR Doc. E8-20960 Filed 9-9-08; 8:45 am]
BILLING CODE 8010-01-P
