Aberdeen Asset Management Inc. and Aberdeen Funds, et al.; Notice of Application, 58687-58691 [E8-23691]

Download as PDF Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices 58687 6811, or Marilyn Mann, Branch Chief, 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 Room, 100 F Street, NE., Washington, DC 20549–1520 (telephone (202) 551–5850). specific information, as well as portions of the Governors’ Decision, should remain confidential. In its Request, the Postal Service provides an analysis of the contract which, among other things, concludes that it is consistent with 39 U.S.C. 3633(a) and 39 CFR 3015.7(c). The analysis notes that the contract is not risk free, but concludes that the risks are manageable. See Attachment to Governors’ Decision. SECURITIES AND EXCHANGE COMMISSION II. Notice of Filings 1. The Trust, a Delaware statutory trust, is registered under the Act as an open-end management investment company and offers multiple series, each of which has its own distinct investment objectives and policies (‘‘Funds’’).1 The Trust currently offers 26 Funds. The Aberdeen Optimal Summary of the Application: Allocations Fund: Defensive; Aberdeen Applicants request an order that would Optimal Allocations Fund: Moderate; permit certain series of registered open- Aberdeen Optimal Allocations Fund: end management investment companies Moderate Growth; Aberdeen Optimal to acquire shares of other registered Allocations Fund: Growth; and open-end management investment Aberdeen Optimal Allocations Fund: companies and unit investment trusts Specialty (collectively, the ‘‘Optimal that are within or outside the same Allocation Funds’’) are the only Funds group of investment companies. that currently intend to rely on the Applicants: Aberdeen Funds (the requested relief. Shares of the Optimal ‘‘Trust’’) and Aberdeen Asset Allocation Funds are offered directly to Management Inc. (the ‘‘Adviser’’). the public and may be offered to Filing Dates: The application was insurance company separate accounts filed on May 8, 2008. Applicants have (‘‘Separate Accounts’’) that fund agreed to file an amendment during the variable annuity and variable life notice period, the substance of which is insurance contracts (‘‘Variable reflected herein. Contracts’’) issued by insurance Hearing or Notification of Hearing: An companies that are not affiliates of the order granting the application will be Adviser. The Separate Accounts may be issued unless the Commission orders a registered under the Act (‘‘Registered hearing. Interested persons may request Separate Accounts’’), or unregistered a hearing by writing to the thereunder (‘‘Unregistered Separate Commission’s Secretary and serving Accounts’’). applicants with a copy of the request, 2. The Adviser is a Delaware personally or by mail. Hearing requests corporation and a registered investment should be received by the Commission adviser under the Investment Advisers by 5:30 p.m. on October 27, 2008, and Act of 1940, and serves as investment should be accompanied by proof of adviser to each Fund. The Adviser is a service on applicants in the form of an wholly owned subsidiary of Aberdeen affidavit or, for lawyers, a certificate of Asset Management PLC. service. Hearing requests should state 3. Applicants request relief to permit: the nature of the writer’s interest, the (a) Certain Funds (each a ‘‘Fund of reason for the request, and the issues Funds’’) to acquire shares of registered contested. Persons who wish to be open-end management investment notified of a hearing may request 1 Applicants request that the order extend to any notification by writing to the future series of the Trust, and any other existing or Commission’s Secretary. future registered open-end management investment ADDRESSES: Secretary, U.S. Securities companies and their series that are part of the same and Exchange Commission, 100 F group of investment companies, as defined in section 12(d)(1)(G)(ii) of the Act, as the Trust and Street, NE., Washington, DC 20549– 1090; Applicants: Adviser, 1735 Market are, or may in the future be, advised by the Adviser or any other investment adviser controlling, Street, 37th Floor, Philadelphia, PA controlled by, or under common control with the 19103; Trust, 5 Tower Bridge, 300 Barr Adviser (included in the term, ‘‘Funds’’). The Trust is the only registered investment company that Harbor Drive, Ste. 300, West currently intends to rely on the requested order. Conshohocken, PA 19428. Any other entity that relies on the order in the FOR FURTHER INFORMATION CONTACT: Jean future will comply with the terms and conditions Minarick, Senior Counsel, at (202) 551– of the application. The Commission establishes Docket Nos. MC2008–8 and CP2008–26 for consideration of the Request pertaining to the Priority Mail Contract 1 product and the related contract. In keeping with practice, these dockets are addressed on a consolidated basis for purposes of this order; however, future filings should be made in the specific docket in which issues being addressed pertain. Interested persons may submit comments on whether the Postal Service’s filings in the captioned dockets are consistent with the policies of 39 U.S.C. 3632, 3633, or 3642. Comments are due no later than October 9, 2008. The public portions of these filings can be accessed via the Commission’s Web site (http:// www.prc.gov). The Commission appoints Michael Ravnitzky to serve as Public Representative in the captioned filings. III. Ordering Paragraphs mstockstill on PROD1PC66 with NOTICES It is ordered: 1. The Commission establishes Docket Nos. MC2008–8 and CP2008–26 for consideration of the matters raised in each docket. 2. The Commission, pursuant to 39 U.S.C. 505, appoints Michael Ravnitzky to serve as officer of the Commission (Public Representative) to represent the interests of the general public in these proceedings. 3. Comments by interested persons in these proceedings are due no later than October 9, 2008. 4. The Secretary shall arrange for publication of this order in the Federal Register. By the Commission. Steven W. Williams, Secretary. [FR Doc. E8–23733 Filed 10–6–08; 8:45 am] BILLING CODE 7710–FW–P VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 [Investment Company Act Release No. 28429; 812–13530] Aberdeen Asset Management Inc. and Aberdeen Funds, et al.; Notice of Application September 30, 2008. 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. AGENCY: PO 00000 Frm 00159 Fmt 4703 Sfmt 4703 Applicants’ Representations E:\FR\FM\07OCN1.SGM 07OCN1 58688 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices companies (the ‘‘Unaffiliated Funds’’) and unit investment trusts (‘‘Unaffiliated Trusts,’’ and together with the Unaffiliated Funds, the ‘‘Unaffiliated Underlying Funds’’) that are not part of the same ‘‘group of investment companies’’ as defined in section 12(d)(1)(G)(ii) of the Act; (b) the Unaffiliated Funds, their principal underwriters and any broker or dealer (‘‘Broker’’) registered under the Securities Exchange Act of 1934 to sell their shares to the Fund of Funds; (c) the Funds of Funds to acquire shares of certain other Funds (the ‘‘Affiliated Funds,’’ and together with the Unaffiliated Underlying Funds, the ‘‘Underlying Funds’’); and (d) the Affiliated Funds, their principal underwriters and any Brokers to sell their shares to the Fund of Funds. Certain of the Unaffiliated Underlying Funds have obtained exemptions from the Commission to permit their shares to be listed and traded on a national securities exchange at negotiated prices (‘‘ETFs’’). Each Fund of Funds may also invest in other securities and financial instruments that are not issued by registered investment companies and are consistent with its investment objective and restrictions. Any investment adviser to a Fund of Funds that meets the definition of section 2(a)(20)(A) of the Act is referred to as ‘‘Fund of Funds’ Adviser.’’ mstockstill on PROD1PC66 with NOTICES Applicants’ Legal Analysis 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 VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 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 from the limitations of sections 12(d)(1)(A) and (B) to the extent necessary to permit the Funds of Funds to acquire shares of the Underlying Funds in excess of the limits set forth in section 12(d)(1)(A) of the Act and to permit the Unaffiliated Funds and Affiliated Funds, their principal underwriters and any Broker to sell their shares to the Funds of Funds in excess of the limits set forth in section 12(d)(1)(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 or its affiliated persons 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 Underlying Funds. The concern about undue influence does not arise in connection with a Fund of Funds’ investment in the Affiliated Funds, since they are part of the same group of investment companies. To limit the control that a Fund of Funds or its affiliated persons may have over an Unaffiliated Underlying Fund, applicants submit that: (a) The Fund of Funds’ Adviser and any person controlling, controlled by or under common control with the Fund of Funds’ Adviser, any investment company and any 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 Fund of Funds’ Adviser or any person controlling, controlled by or under common control with the Fund of Funds’ Adviser (collectively, the ‘‘Group’’); and (b) any investment adviser within the meaning of section 2(a)(20)(B) of the Act to a Fund of Funds (‘‘Fund of Funds’ Sub-Adviser’’), any person controlling, controlled by or under common control with the Fund of Funds’ Sub-Adviser, 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 Fund of Funds’ Sub-Adviser or any person controlling, controlled by or under common control with the Fund of Funds’ Sub-Adviser (collectively, the PO 00000 Frm 00160 Fmt 4703 Sfmt 4703 ‘‘Sub-Adviser Group’’) will not control (individually or in the aggregate) an Unaffiliated 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 or the Fund of Funds’ Adviser, any Fund of Funds’ Sub-Adviser, promoter or principal underwriter of a Fund of Funds, as well as any person controlling, controlled by, or under common control with any of those entities (each, a ‘‘Fund of Funds Affiliate’’) from taking advantage of an Unaffiliated Underlying Fund with respect to transactions between a Fund of Funds or a Fund of Funds Affiliate and the Unaffiliated Underlying Fund or its investment adviser(s), sponsor, promoter, and principal underwriter and any person controlling, controlled by or under common control with any of those entities (each, an ‘‘Unaffiliated Fund Affiliate’’). No Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Fund or sponsor to an Unaffiliated Trust) will cause an Unaffiliated Underlying Fund to purchase 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, trustee, advisory board member, Fund of Funds’ Adviser, Fund of Funds’ SubAdviser or employee of the Fund of Funds, or a person of which any such officer, director, trustee, Fund of Funds’ Adviser, Fund of Funds’ Sub-Adviser, member of an advisory board, or employee is an affiliated person (each, an ‘‘Underwriting Affiliate,’’ except any person whose relationship to the Unaffiliated Underlying Fund is covered by section 10(f) of the Act is not an Underwriting Affiliate). An offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an Underwriting Affiliate is an ‘‘Affiliated Underwriting.’’ 6. To further assure that an Unaffiliated Fund understands the implications of a Fund of Funds’ investment under the requested exemptive relief, prior to its investment in the shares of an Unaffiliated Fund in excess of the limit in section 12(d)(1)(A)(i) of the Act, a Fund of Funds and the Unaffiliated Fund will execute an agreement stating, without limitation, that their boards of directors or trustees (‘‘Boards’’) 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 an E:\FR\FM\07OCN1.SGM 07OCN1 mstockstill on PROD1PC66 with NOTICES Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices Unaffiliated Fund (other than an ETF whose shares are purchased by a Fund of Funds in the secondary market) will retain its right at all times to reject any investment by a Fund of Funds.2 7. Applicants do not believe that the proposed arrangement will involve excessive layering of fees. To assure that the advisory fees are not duplicative, applicants state that, in connection with the approval of any advisory contract under section 15 of the Act, the Board of each Fund of Funds, including a majority of the trustees who are not ‘‘interested persons,’’ as defined in section 2(a)(19) of the Act (‘‘Independent Trustees’’) will find that the advisory fees charged under the 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 a Fund of Funds’ Adviser 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 an Unaffiliated Fund pursuant to rule 12b–1 under the Act) received from an Unaffiliated Underlying Fund by the Fund of Funds’ Adviser, or an affiliated person of the Fund of Funds’ Adviser, other than any advisory fees paid to the Fund of Funds’ Adviser or an affiliated person of the Fund of Funds’Adviser by the Unaffiliated Underlying Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Underlying Fund. 8. Applicants state that with respect to Registered Separate Accounts that invest in a Fund of Funds, no sales load will be charged at the Fund of Funds level or at the Underlying Fund level. Other sales charges and service fees, as defined in Rule 2830 of the Conduct Rules of the National Association of Securities Dealers (‘‘NASD Conduct Rule 2830’’), will only be charged at the Fund of Funds level or at the Underlying Fund level, not both. With respect to other investments in a Fund of Funds, any sales charges and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to funds of funds set forth in NASD Conduct Rule 2830. 9. Applicants represent that each Fund of Funds will represent in the Participation Agreement that no insurance company sponsoring a 2 An Unaffiliated Fund, 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 18:23 Oct 06, 2008 Jkt 217001 Registered Separate Account funding Variable Contracts will be permitted to invest in the Fund of Funds unless the insurance company has certified to the Fund of Funds that the aggregate of all fees and charges associated with each contract that invests in the Fund of Funds, including fees and charges at the separate account, Fund of Funds, and Underlying Fund levels, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. 10. Applicants state that the proposed arrangement will not create an overly complex fund structure because no Underlying Fund will acquire securities of any other 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 in certain circumstances identified in condition 12 below. Applicants also represent that a Fund of Funds’ prospectus and sales literature will contain clear, concise, ‘‘plain English’’ disclosure designed to inform investors about the unique characteristics of the proposed arrangement, including, but not limited to, the expense structure and the additional expenses of investing in Underlying Funds. B. Section 17(a) 1. Section 17(a) of the Act generally prohibits sales or purchases of securities between a registered investment company and its affiliated persons or affiliated persons of such persons. 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. 2. Applicants state that the Funds of Funds and the Affiliated Funds may be deemed to be under common control of the Fund of Funds’ Adviser and therefore affiliated persons of one another. Applicants also state that a Fund of Funds and the Underlying Funds may be deemed to be affiliated persons of each other 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 PO 00000 Frm 00161 Fmt 4703 Sfmt 4703 58689 and redeeming shares from a Fund of Funds.3 3. 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 concerned; 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. 4. Applicants submit that the proposed transactions satisfy the requirements for relief under sections 17(b) and 6(c) of the Act as the terms are fair and reasonable and do not involve overreaching. Applicants state 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.4 Applicants also state that the proposed transactions 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 shall be subject to the following conditions: 1. The members of the Group will not control (individually or in the aggregate) an Unaffiliated Underlying Fund within the meaning of section 2(a)(9) of the Act. 3 Applicants acknowledge that receipt of 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 may be prohibited by section 17(e)(1) of the Act. The Participation Agreement also will include this acknowledgement. 4 Applicants note that a Fund of Funds generally would purchase and sell shares of an Unaffiliated Underlying Fund that operates as an ETF through secondary market transactions rather than through principal transactions with the Unaffiliated Underlying Fund. To the extent that a Fund of Funds purchases or redeems shares from an ETF that is an affiliated person, or an affiliated person of 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. E:\FR\FM\07OCN1.SGM 07OCN1 mstockstill on PROD1PC66 with NOTICES 58690 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices The members of a Sub-Adviser Group will not control (individually or in the aggregate) an Unaffiliated 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 an Unaffiliated Underlying Fund, the Group or a Sub-Adviser Group, each in the aggregate, becomes a holder of more than 25% of the outstanding voting securities of the Unaffiliated Underlying Fund, then the Group or the Sub-Adviser Group (except for any member of the Group or the SubAdviser Group that is a Separate Account) will vote its shares of the Unaffiliated Underlying Fund in the same proportion as the vote of all other holders of the Unaffiliated Underlying Fund’s shares. This condition will not apply to a Sub-Adviser Group with respect to an Unaffiliated Underlying Fund for which the Fund of Funds’ SubAdviser or a person controlling, controlled by, or under common control with the Fund of Funds’ Sub-Adviser acts as the investment adviser within the meaning section 2(a)(20)(A) of the Act (in the case of an Unaffiliated Fund) or as the sponsor (in the case of an Unaffiliated Trust). A Registered Separate Account will seek voting instructions from its Variable Contract holders and will vote its shares of an Unaffiliated Underlying Fund in accordance with the instructions received and will vote those shares for which no instructions were received in the same proportion as the shares for which instructions were received. An Unregistered Separate Account will either (i) vote its shares of the Unaffiliated Underlying Fund in the same proportion as the vote of all other holders of the Unaffiliated Underlying Fund’s shares; or (ii) seek voting instructions from its Variable Contract holders and vote its shares in accordance with the instructions received and vote those shares for which no instructions were received in the same proportion as the shares for which instructions were received. 2. No Fund of Funds or Fund of Funds Affiliate will cause any existing or potential investment by the Fund of Funds in an Unaffiliated Underlying Fund to influence the terms of any services or transactions between the Fund of Funds or a Fund of Funds Affiliate and the Unaffiliated Underlying Fund or an Unaffiliated Fund Affiliate. 3. The Board of each Fund of Funds, including a majority of the Independent Trustees, will adopt procedures reasonably designed to assure that the Funds of Funds’ Adviser and any Fund of Funds’ Sub-Adviser to the Fund of VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 Funds are conducting the investment program of the Fund of Funds without taking into account any consideration received by the Fund of Funds or Fund of Funds Affiliate from an Unaffiliated Underlying Fund or an Unaffiliated Fund Affiliate in connection with any services or transactions. 4. Once an investment by a Fund of Funds in the securities of an Unaffiliated Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Fund, including a majority of the Independent Trustees, will determine that any consideration paid by the Unaffiliated Fund to a Fund of Funds or a Fund of Funds Affiliate 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 Unaffiliated Fund; (b) is within the range of consideration that the Unaffiliated Fund 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 an Unaffiliated Fund and its investment adviser(s), or any person controlling, controlled by, or under common control with such investment adviser(s). 5. No Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Fund or sponsor to an Unaffiliated Trust) will cause an Unaffiliated Underlying Fund to purchase a security in any Affiliated Underwriting. 6. The Board of an Unaffiliated Fund, including a majority of the Independent Trustees, will adopt procedures reasonably designed to monitor any purchases of securities by the Unaffiliated Fund in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of the Unaffiliated Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board of the Unaffiliated Fund will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Fund of Funds in the Unaffiliated Fund. The Board of the Unaffiliated Fund will consider, among other things: (a) Whether the purchases were consistent with the investment objectives and policies of the Unaffiliated Fund; (b) how the performance of securities purchased in an Affiliated Underwriting compares to the performance of PO 00000 Frm 00162 Fmt 4703 Sfmt 4703 comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and (c) whether the amount of securities purchased by the Unaffiliated Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board of an Unaffiliated Fund will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interests of shareholders. 7. Each Unaffiliated Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase from an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of an Unaffiliated Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate’s members, the terms of the purchase, and the information or materials upon which the determinations of the Board of the Unaffiliated Fund were made. 8. Prior to an investment in shares of an Unaffiliated Fund in excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated Fund will execute a Participation Agreement stating, without limitation, that their Boards 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 an Unaffiliated Fund in excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Fund of the investment. At such time, the Fund of Funds will also transmit to the Unaffiliated Fund a list of the names of each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds will notify the Unaffiliated Fund of any changes to the list as soon as reasonably practicable after a change occurs. The Unaffiliated Fund and the Fund of Funds will maintain and preserve a copy of the order, the Participation Agreement, and E:\FR\FM\07OCN1.SGM 07OCN1 mstockstill on PROD1PC66 with NOTICES Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices 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. 9. Prior to reliance on the requested order and subsequently in connection with the approval of any investment advisory contract under section 15 of the Act, the Board of each Fund of Funds, including a majority of the Independent Trustees, will find that the advisory fees charged under the advisory contract are based on services provided that are 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. Such finding, and the basis upon which the finding was made, will be recorded fully in the minute books of the appropriate Fund of Funds. 10. The Funds of Funds’ Adviser 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 an Unaffiliated Fund pursuant to rule 12b–1 under the Act) received from an Unaffiliated Underlying Fund by the Funds of Funds’ Adviser, or an affiliated person of the Fund of Funds’ Adviser, other than any advisory fees paid to the Fund of Funds’ Adviser or its affiliated person by the Unaffiliated Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Underlying Fund. Any Fund of Funds’ Sub-Adviser will waive fees otherwise payable to the Fund of Funds’ Sub-Adviser, directly or indirectly, by the Fund of Funds in an amount at least equal to any compensation received from an Unaffiliated Underlying Fund by the Fund of Funds’ Sub-Adviser, or an affiliated person of the Fund of Funds’ Sub-Adviser, other than any advisory fees paid to the Fund of Funds’ SubAdviser or its affiliated person by an Unaffiliated Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Underlying Fund made at the direction of the Fund of Funds’ Sub-Adviser. In the event that the Fund of Funds’ Sub-Adviser waives fees, the benefit of the waiver will be passed through to the Fund of Funds. 11. With respect to Registered Separate Accounts that invest in a Fund of Funds, no sales load will be charged at the Fund of Funds level or at the Underlying Fund level. Other sales charges and service fees, as defined in NASD Conduct Rule 2830, if any, will be charged at the Fund of Funds level or at the Underlying Fund level, not both. With respect to other investments in a Fund of Funds, any sales charges VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to funds of funds set forth in NASD Conduct Rule 2830. 12. No Underlying Fund will acquire securities of any other 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 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, Acting Secretary. [FR Doc. E8–23691 Filed 10–6–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. IC–28431; 812–13540] Eaton Vance Floating-Rate Income Trust, et al.; Notice of Application October 2, 2008. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of application for an order under section 6(c) of the Investment Company Act of 1940 (‘‘Act’’) for an exemption from sections 18(a)(1)(A) and (B) of the Act. AGENCY: Eaton Vance Floating-Rate Income Trust, Eaton Vance Senior Floating-Rate Trust, Eaton Vance Senior Income Trust, Eaton Vance Credit Opportunities Fund, and Eaton Vance Limited Duration Income Fund (each, a ‘‘Fund’’ and collectively, ‘‘Funds’’). SUMMARY OF APPLICATION: Applicants request an order (‘‘Order’’) granting an exemption from sections 18(a)(1)(A) and (B) of the Act for a two-year period immediately following the date of the Order. The Order would permit each Fund to issue debt securities subject to asset coverage of 200% that would be used to refinance all of the Fund’s APPLICANTS: PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 58691 issued and outstanding auction preferred shares (‘‘APS Shares’’). The Order also would permit each Fund to declare dividends or any other distributions on, or purchase, capital stock during the term of the Order, provided that any class of senior securities representing indebtedness has asset coverage of at least 200% after deducting the amount of such transaction. FILING DATES: The application was filed on June 10, 2008, and amended on July 2, 2008, July 29, 2008, and 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 October 22, 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 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: c/o Frederick S. Marius, Chief Legal Officer, Eaton Vance Management, 255 State Street, Boston, MA 02109. FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, at (202) 551–6812, or Janet M. Grossnickle, Assistant Director, at (202) 942–6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the SEC’s Public Reference Room, 100 F Street, NE., Washington, DC 20549–1520 (tel. 202–551–5850). Applicants’ Representations 1. Each of the Funds is organized as a Massachusetts business trust and is a closed-end management investment company registered under the Act. Each Fund is advised by Eaton Vance Management (‘‘Eaton Vance’’) and has issued and outstanding a class of common shares and a class of one or more series of APS Shares. E:\FR\FM\07OCN1.SGM 07OCN1

Agencies

[Federal Register Volume 73, Number 195 (Tuesday, October 7, 2008)]
[Notices]
[Pages 58687-58691]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23691]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28429; 812-13530]


Aberdeen Asset Management Inc. and Aberdeen Funds, et al.; Notice 
of Application

September 30, 2008.
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.

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    Summary of the Application: Applicants request an order that would 
permit certain series of registered open-end management investment 
companies to acquire shares of other registered open-end management 
investment companies and unit investment trusts that are within or 
outside the same group of investment companies.
    Applicants: Aberdeen Funds (the ``Trust'') and Aberdeen Asset 
Management Inc. (the ``Adviser'').
    Filing Dates: The application was filed on May 8, 2008. Applicants 
have agreed to file an amendment during the notice period, the 
substance of which is reflected herein.
    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 27, 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 reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090; Applicants: Adviser, 1735 
Market Street, 37th Floor, Philadelphia, PA 19103; Trust, 5 Tower 
Bridge, 300 Barr Harbor Drive, Ste. 300, West Conshohocken, PA 19428.

FOR FURTHER INFORMATION CONTACT: Jean Minarick, Senior Counsel, at 
(202) 551-6811, or Marilyn Mann, Branch Chief, 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 Room, 100 F Street, NE., Washington, DC 
20549-1520 (telephone (202) 551-5850).

Applicants' Representations

    1. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company and offers multiple 
series, each of which has its own distinct investment objectives and 
policies (``Funds'').\1\ The Trust currently offers 26 Funds. The 
Aberdeen Optimal Allocations Fund: Defensive; Aberdeen Optimal 
Allocations Fund: Moderate; Aberdeen Optimal Allocations Fund: Moderate 
Growth; Aberdeen Optimal Allocations Fund: Growth; and Aberdeen Optimal 
Allocations Fund: Specialty (collectively, the ``Optimal Allocation 
Funds'') are the only Funds that currently intend to rely on the 
requested relief. Shares of the Optimal Allocation Funds are offered 
directly to the public and may be offered to insurance company separate 
accounts (``Separate Accounts'') that fund variable annuity and 
variable life insurance contracts (``Variable Contracts'') issued by 
insurance companies that are not affiliates of the Adviser. The 
Separate Accounts may be registered under the Act (``Registered 
Separate Accounts''), or unregistered thereunder (``Unregistered 
Separate Accounts'').
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    \1\ Applicants request that the order extend to any future 
series of the Trust, and any other existing or future registered 
open-end management investment companies and their series that are 
part of the same group of investment companies, as defined in 
section 12(d)(1)(G)(ii) of the Act, as the Trust and are, or may in 
the future be, advised by the Adviser or any other investment 
adviser controlling, controlled by, or under common control with the 
Adviser (included in the term, ``Funds''). The Trust is the only 
registered investment company that currently intends to rely on the 
requested order. Any other entity that relies on the order in the 
future will comply with the terms and conditions of the application.
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    2. The Adviser is a Delaware corporation and a registered 
investment adviser under the Investment Advisers Act of 1940, and 
serves as investment adviser to each Fund. The Adviser is a wholly 
owned subsidiary of Aberdeen Asset Management PLC.
    3. Applicants request relief to permit: (a) Certain Funds (each a 
``Fund of Funds'') to acquire shares of registered open-end management 
investment

[[Page 58688]]

companies (the ``Unaffiliated Funds'') and unit investment trusts 
(``Unaffiliated Trusts,'' and together with the Unaffiliated Funds, the 
``Unaffiliated Underlying Funds'') that are not part of the same 
``group of investment companies'' as defined in section 12(d)(1)(G)(ii) 
of the Act; (b) the Unaffiliated Funds, their principal underwriters 
and any broker or dealer (``Broker'') registered under the Securities 
Exchange Act of 1934 to sell their shares to the Fund of Funds; (c) the 
Funds of Funds to acquire shares of certain other Funds (the 
``Affiliated Funds,'' and together with the Unaffiliated Underlying 
Funds, the ``Underlying Funds''); and (d) the Affiliated Funds, their 
principal underwriters and any Brokers to sell their shares to the Fund 
of Funds. Certain of the Unaffiliated Underlying Funds have obtained 
exemptions from the Commission to permit their shares to be listed and 
traded on a national securities exchange at negotiated prices 
(``ETFs''). Each Fund of Funds may also invest in other securities and 
financial instruments that are not issued by registered investment 
companies and are consistent with its investment objective and 
restrictions. Any investment adviser to a Fund of Funds that meets the 
definition of section 2(a)(20)(A) of the Act is referred to as ``Fund 
of Funds' Adviser.''

Applicants' Legal Analysis

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 from the limitations of sections 12(d)(1)(A) and 
(B) to the extent necessary to permit the Funds of Funds to acquire 
shares of the Underlying Funds in excess of the limits set forth in 
section 12(d)(1)(A) of the Act and to permit the Unaffiliated Funds and 
Affiliated Funds, their principal underwriters and any Broker to sell 
their shares to the Funds of Funds in excess of the limits set forth in 
section 12(d)(1)(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 or its 
affiliated persons 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 Underlying Funds. The concern about undue influence does not arise 
in connection with a Fund of Funds' investment in the Affiliated Funds, 
since they are part of the same group of investment companies. To limit 
the control that a Fund of Funds or its affiliated persons may have 
over an Unaffiliated Underlying Fund, applicants submit that: (a) The 
Fund of Funds' Adviser and any person controlling, controlled by or 
under common control with the Fund of Funds' Adviser, any investment 
company and any 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 Fund of Funds' Adviser or any person controlling, controlled by or 
under common control with the Fund of Funds' Adviser (collectively, the 
``Group''); and (b) any investment adviser within the meaning of 
section 2(a)(20)(B) of the Act to a Fund of Funds (``Fund of Funds' 
Sub-Adviser''), any person controlling, controlled by or under common 
control with the Fund of Funds' Sub-Adviser, 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 Fund of Funds' Sub-Adviser or any person 
controlling, controlled by or under common control with the Fund of 
Funds' Sub-Adviser (collectively, the ``Sub-Adviser Group'') will not 
control (individually or in the aggregate) an Unaffiliated 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 or the Fund of Funds' Adviser, any Fund of Funds' Sub-Adviser, 
promoter or principal underwriter of a Fund of Funds, as well as any 
person controlling, controlled by, or under common control with any of 
those entities (each, a ``Fund of Funds Affiliate'') from taking 
advantage of an Unaffiliated Underlying Fund with respect to 
transactions between a Fund of Funds or a Fund of Funds Affiliate and 
the Unaffiliated Underlying Fund or its investment adviser(s), sponsor, 
promoter, and principal underwriter and any person controlling, 
controlled by or under common control with any of those entities (each, 
an ``Unaffiliated Fund Affiliate''). No Fund of Funds or Fund of Funds 
Affiliate (except to the extent it is acting in its capacity as an 
investment adviser to an Unaffiliated Fund or sponsor to an 
Unaffiliated Trust) will cause an Unaffiliated Underlying Fund to 
purchase 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, trustee, advisory board member, 
Fund of Funds' Adviser, Fund of Funds' Sub-Adviser or employee of the 
Fund of Funds, or a person of which any such officer, director, 
trustee, Fund of Funds' Adviser, Fund of Funds' Sub-Adviser, member of 
an advisory board, or employee is an affiliated person (each, an 
``Underwriting Affiliate,'' except any person whose relationship to the 
Unaffiliated Underlying Fund is covered by section 10(f) of the Act is 
not an Underwriting Affiliate). An offering of securities during the 
existence of any underwriting or selling syndicate of which a principal 
underwriter is an Underwriting Affiliate is an ``Affiliated 
Underwriting.''
    6. To further assure that an Unaffiliated Fund understands the 
implications of a Fund of Funds' investment under the requested 
exemptive relief, prior to its investment in the shares of an 
Unaffiliated Fund in excess of the limit in section 12(d)(1)(A)(i) of 
the Act, a Fund of Funds and the Unaffiliated Fund will execute an 
agreement stating, without limitation, that their boards of directors 
or trustees (``Boards'') 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 an

[[Page 58689]]

Unaffiliated Fund (other than an ETF whose shares are purchased by a 
Fund of Funds in the secondary market) will retain its right at all 
times to reject any investment by a Fund of Funds.\2\
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    \2\ An Unaffiliated Fund, 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.
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    7. Applicants do not believe that the proposed arrangement will 
involve excessive layering of fees. To assure that the advisory fees 
are not duplicative, applicants state that, in connection with the 
approval of any advisory contract under section 15 of the Act, the 
Board of each Fund of Funds, including a majority of the trustees who 
are not ``interested persons,'' as defined in section 2(a)(19) of the 
Act (``Independent Trustees'') will find that the advisory fees charged 
under the 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 a Fund of Funds' Adviser 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 an 
Unaffiliated Fund pursuant to rule 12b-1 under the Act) received from 
an Unaffiliated Underlying Fund by the Fund of Funds' Adviser, or an 
affiliated person of the Fund of Funds' Adviser, other than any 
advisory fees paid to the Fund of Funds' Adviser or an affiliated 
person of the Fund of Funds'Adviser by the Unaffiliated Underlying 
Fund, in connection with the investment by the Fund of Funds in the 
Unaffiliated Underlying Fund.
    8. Applicants state that with respect to Registered Separate 
Accounts that invest in a Fund of Funds, no sales load will be charged 
at the Fund of Funds level or at the Underlying Fund level. Other sales 
charges and service fees, as defined in Rule 2830 of the Conduct Rules 
of the National Association of Securities Dealers (``NASD Conduct Rule 
2830''), will only be charged at the Fund of Funds level or at the 
Underlying Fund level, not both. With respect to other investments in a 
Fund of Funds, any sales charges and/or service fees charged with 
respect to shares of a Fund of Funds will not exceed the limits 
applicable to funds of funds set forth in NASD Conduct Rule 2830.
    9. Applicants represent that each Fund of Funds will represent in 
the Participation Agreement that no insurance company sponsoring a 
Registered Separate Account funding Variable Contracts will be 
permitted to invest in the Fund of Funds unless the insurance company 
has certified to the Fund of Funds that the aggregate of all fees and 
charges associated with each contract that invests in the Fund of 
Funds, including fees and charges at the separate account, Fund of 
Funds, and Underlying Fund levels, are reasonable in relation to the 
services rendered, the expenses expected to be incurred, and the risks 
assumed by the insurance company.
    10. Applicants state that the proposed arrangement will not create 
an overly complex fund structure because no Underlying Fund will 
acquire securities of any other 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 in certain 
circumstances identified in condition 12 below. Applicants also 
represent that a Fund of Funds' prospectus and sales literature will 
contain clear, concise, ``plain English'' disclosure designed to inform 
investors about the unique characteristics of the proposed arrangement, 
including, but not limited to, the expense structure and the additional 
expenses of investing in Underlying Funds.

B. Section 17(a)

    1. Section 17(a) of the Act generally prohibits sales or purchases 
of securities between a registered investment company and its 
affiliated persons or affiliated persons of such persons. 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.
    2. Applicants state that the Funds of Funds and the Affiliated 
Funds may be deemed to be under common control of the Fund of Funds' 
Adviser and therefore affiliated persons of one another. Applicants 
also state that a Fund of Funds and the Underlying Funds may be deemed 
to be affiliated persons of each other 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.\3\
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    \3\ Applicants acknowledge that receipt of 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 may be prohibited 
by section 17(e)(1) of the Act. The Participation Agreement also 
will include this acknowledgement.
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    3. 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 concerned; 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.
    4. Applicants submit that the proposed transactions satisfy the 
requirements for relief under sections 17(b) and 6(c) of the Act as the 
terms are fair and reasonable and do not involve overreaching. 
Applicants state 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.\4\ Applicants also 
state that the proposed transactions will be consistent with the 
policies of each Fund of Funds and Underlying Fund, and with the 
general purposes of the Act.
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    \4\ Applicants note that a Fund of Funds generally would 
purchase and sell shares of an Unaffiliated Underlying Fund that 
operates as an ETF through secondary market transactions rather than 
through principal transactions with the Unaffiliated Underlying 
Fund. To the extent that a Fund of Funds purchases or redeems shares 
from an ETF that is an affiliated person, or an affiliated person of 
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.
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Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. The members of the Group will not control (individually or in 
the aggregate) an Unaffiliated Underlying Fund within the meaning of 
section 2(a)(9) of the Act.

[[Page 58690]]

 The members of a Sub-Adviser Group will not control (individually or 
in the aggregate) an Unaffiliated 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 an Unaffiliated Underlying Fund, the 
Group or a Sub-Adviser Group, each in the aggregate, becomes a holder 
of more than 25% of the outstanding voting securities of the 
Unaffiliated Underlying Fund, then the Group or the Sub-Adviser Group 
(except for any member of the Group or the Sub-Adviser Group that is a 
Separate Account) will vote its shares of the Unaffiliated Underlying 
Fund in the same proportion as the vote of all other holders of the 
Unaffiliated Underlying Fund's shares. This condition will not apply to 
a Sub-Adviser Group with respect to an Unaffiliated Underlying Fund for 
which the Fund of Funds' Sub-Adviser or a person controlling, 
controlled by, or under common control with the Fund of Funds' Sub-
Adviser acts as the investment adviser within the meaning section 
2(a)(20)(A) of the Act (in the case of an Unaffiliated Fund) or as the 
sponsor (in the case of an Unaffiliated Trust).
    A Registered Separate Account will seek voting instructions from 
its Variable Contract holders and will vote its shares of an 
Unaffiliated Underlying Fund in accordance with the instructions 
received and will vote those shares for which no instructions were 
received in the same proportion as the shares for which instructions 
were received. An Unregistered Separate Account will either (i) vote 
its shares of the Unaffiliated Underlying Fund in the same proportion 
as the vote of all other holders of the Unaffiliated Underlying Fund's 
shares; or (ii) seek voting instructions from its Variable Contract 
holders and vote its shares in accordance with the instructions 
received and vote those shares for which no instructions were received 
in the same proportion as the shares for which instructions were 
received.
    2. No Fund of Funds or Fund of Funds Affiliate will cause any 
existing or potential investment by the Fund of Funds in an 
Unaffiliated Underlying Fund to influence the terms of any services or 
transactions between the Fund of Funds or a Fund of Funds Affiliate and 
the Unaffiliated Underlying Fund or an Unaffiliated Fund Affiliate.
    3. The Board of each Fund of Funds, including a majority of the 
Independent Trustees, will adopt procedures reasonably designed to 
assure that the Funds of Funds' Adviser and any Fund of Funds' Sub-
Adviser to the Fund of Funds are conducting the investment program of 
the Fund of Funds without taking into account any consideration 
received by the Fund of Funds or Fund of Funds Affiliate from an 
Unaffiliated Underlying Fund or an Unaffiliated Fund Affiliate in 
connection with any services or transactions.
    4. Once an investment by a Fund of Funds in the securities of an 
Unaffiliated Fund exceeds the limit of section 12(d)(1)(A)(i) of the 
Act, the Board of the Unaffiliated Fund, including a majority of the 
Independent Trustees, will determine that any consideration paid by the 
Unaffiliated Fund to a Fund of Funds or a Fund of Funds Affiliate 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 Unaffiliated Fund; (b) is within the range of 
consideration that the Unaffiliated Fund 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 an Unaffiliated Fund and its 
investment adviser(s), or any person controlling, controlled by, or 
under common control with such investment adviser(s).
    5. No Fund of Funds or Fund of Funds Affiliate (except to the 
extent it is acting in its capacity as an investment adviser to an 
Unaffiliated Fund or sponsor to an Unaffiliated Trust) will cause an 
Unaffiliated Underlying Fund to purchase a security in any Affiliated 
Underwriting.
    6. The Board of an Unaffiliated Fund, including a majority of the 
Independent Trustees, will adopt procedures reasonably designed to 
monitor any purchases of securities by the Unaffiliated Fund in an 
Affiliated Underwriting once an investment by a Fund of Funds in the 
securities of the Unaffiliated Fund exceeds the limit of section 
12(d)(1)(A)(i) of the Act, including any purchases made directly from 
an Underwriting Affiliate. The Board of the Unaffiliated Fund will 
review these purchases periodically, but no less frequently than 
annually, to determine whether the purchases were influenced by the 
investment by the Fund of Funds in the Unaffiliated Fund. The Board of 
the Unaffiliated Fund will consider, among other things: (a) Whether 
the purchases were consistent with the investment objectives and 
policies of the Unaffiliated Fund; (b) how the performance of 
securities purchased in an Affiliated Underwriting compares to the 
performance of comparable securities purchased during a comparable 
period of time in underwritings other than Affiliated Underwritings or 
to a benchmark such as a comparable market index; and (c) whether the 
amount of securities purchased by the Unaffiliated Fund in Affiliated 
Underwritings and the amount purchased directly from an Underwriting 
Affiliate have changed significantly from prior years. The Board of an 
Unaffiliated Fund will take any appropriate actions based on its 
review, including, if appropriate, the institution of procedures 
designed to assure that purchases of securities in Affiliated 
Underwritings are in the best interests of shareholders.
    7. Each Unaffiliated Fund will maintain and preserve permanently in 
an easily accessible place a written copy of the procedures described 
in the preceding condition, and any modifications to such procedures, 
and will maintain and preserve for a period of not less than six years 
from the end of the fiscal year in which any purchase from an 
Affiliated Underwriting occurred, the first two years in an easily 
accessible place, a written record of each purchase of securities in an 
Affiliated Underwriting once an investment by a Fund of Funds in the 
securities of an Unaffiliated Fund exceeds the limit of section 
12(d)(1)(A)(i) of the Act, setting forth from whom the securities were 
acquired, the identity of the underwriting syndicate's members, the 
terms of the purchase, and the information or materials upon which the 
determinations of the Board of the Unaffiliated Fund were made.
    8. Prior to an investment in shares of an Unaffiliated Fund in 
excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of 
Funds and the Unaffiliated Fund will execute a Participation Agreement 
stating, without limitation, that their Boards 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 an Unaffiliated Fund in excess of the limit in 
section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated 
Fund of the investment. At such time, the Fund of Funds will also 
transmit to the Unaffiliated Fund a list of the names of each Fund of 
Funds Affiliate and Underwriting Affiliate. The Fund of Funds will 
notify the Unaffiliated Fund of any changes to the list as soon as 
reasonably practicable after a change occurs. The Unaffiliated Fund and 
the Fund of Funds will maintain and preserve a copy of the order, the 
Participation Agreement, and

[[Page 58691]]

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.
    9. Prior to reliance on the requested order and subsequently in 
connection with the approval of any investment advisory contract under 
section 15 of the Act, the Board of each Fund of Funds, including a 
majority of the Independent Trustees, will find that the advisory fees 
charged under the advisory contract are based on services provided that 
are 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. Such finding, and the basis upon which the finding 
was made, will be recorded fully in the minute books of the appropriate 
Fund of Funds.
    10. The Funds of Funds' Adviser 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 
an Unaffiliated Fund pursuant to rule 12b-1 under the Act) received 
from an Unaffiliated Underlying Fund by the Funds of Funds' Adviser, or 
an affiliated person of the Fund of Funds' Adviser, other than any 
advisory fees paid to the Fund of Funds' Adviser or its affiliated 
person by the Unaffiliated Fund, in connection with the investment by 
the Fund of Funds in the Unaffiliated Underlying Fund. Any Fund of 
Funds' Sub-Adviser will waive fees otherwise payable to the Fund of 
Funds' Sub-Adviser, directly or indirectly, by the Fund of Funds in an 
amount at least equal to any compensation received from an Unaffiliated 
Underlying Fund by the Fund of Funds' Sub-Adviser, or an affiliated 
person of the Fund of Funds' Sub-Adviser, other than any advisory fees 
paid to the Fund of Funds' Sub-Adviser or its affiliated person by an 
Unaffiliated Fund, in connection with the investment by the Fund of 
Funds in the Unaffiliated Underlying Fund made at the direction of the 
Fund of Funds' Sub-Adviser. In the event that the Fund of Funds' Sub-
Adviser waives fees, the benefit of the waiver will be passed through 
to the Fund of Funds.
    11. With respect to Registered Separate Accounts that invest in a 
Fund of Funds, no sales load will be charged at the Fund of Funds level 
or at the Underlying Fund level. Other sales charges and service fees, 
as defined in NASD Conduct Rule 2830, if any, will be charged at the 
Fund of Funds level or at the Underlying Fund level, not both. With 
respect to other investments in a Fund of Funds, any sales charges and/
or service fees charged with respect to shares of a Fund of Funds will 
not exceed the limits applicable to funds of funds set forth in NASD 
Conduct Rule 2830.
    12. No Underlying Fund will acquire securities of any other 
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 
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,
Acting Secretary.
 [FR Doc. E8-23691 Filed 10-6-08; 8:45 am]
BILLING CODE 8011-01-P