DFA Investment Dimensions Group Inc., et al.; Notice of Application, 9438-9442 [E9-4604]
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9438
Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices
radiological plant effluents and has no
other environmental impact. Therefore,
there are no significant non-radiological
environmental impacts associated with
the proposed action.
Accordingly, the NRC concludes that
there are no significant environmental
impacts associated with the proposed
action.
Environmental Impacts of the
Alternatives to the Proposed Action
As an alternative to the proposed
action, the NRC staff considered denial
of the proposed action (i.e., the ‘‘noaction’’ alternative). Denial of the
application would result in no change
in current environmental impacts. The
environmental impacts of the proposed
action and the alternative action are
similar.
Alternative Use of Resources
The action does not involve the use of
any different resources than those
previously considered in the Final
Environmental Statement Related to the
Operation of Three Mile Island Nuclear
Station, Units 1 and 2, NUREG–0552,
dated December 1972.
Agencies and Persons Consulted
In accordance with its stated policy,
on January 30, 2009, the NRC staff
consulted with the Pennsylvania State
official, Michael Murphy of the
Pennsylvania State Department of
Environmental Protection, regarding the
environmental impact of the proposed
action. The State official had no
comments.
Finding of No Significant Impact
On the basis of the environmental
assessment, the NRC concludes that the
proposed action will not have a
significant effect on the quality of the
human environment. Accordingly, the
NRC has determined not to prepare an
environmental impact statement for the
proposed action.
For further details with respect to the
proposed action, see the licensee’s letter
dated February 4, 2008, as
supplemented on January 28, 2009,
ADAMS accession numbers
ML080350369 and ML090280577,
respectively. Documents may be
examined, and/or copied for a fee, at the
NRC’s Public Document Room (PDR),
located at One White Flint North, Public
File Area O1 F21, 11555 Rockville Pike
(first floor), Rockville, Maryland.
Publicly available records will be
accessible electronically from the
ADAMS Public Electronic Reading
Room on the Internet at the NRC Web
site, https://www.nrc.gov/reading-rm/
adams.html. Persons who do not have
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access to ADAMS or who encounter
problems in accessing the documents
located in ADAMS should contact the
NRC PDR Reference staff by telephone
at 1–800–397–4209 or 301–415–4737, or
send an e-mail to pdr@nrc.gov.
Dated at Rockville, Maryland, this 24th day
of February 2009.
For the Nuclear Regulatory Commission.
Peter Bamford,
Project Manager, Plant Licensing Branch I–
2, Division of Operating Reactor Licensing,
Office of Nuclear Reactor Regulation.
[FR Doc. E9–4565 Filed 3–3–09; 8:45 am]
BILLING CODE 7590–01–P
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
Notice of Meeting of the Industry Trade
Advisory Committee on Small and
Minority Business (ITAC–11)
AGENCY: Office of the United States
Trade Representative.
ACTION: Correcting Date of Notice of a
Partially Opened ITAC–11 Meeting
(Published in FR Volume 74, Page
8819).
SUMMARY: The correct date for The
Industry Trade Advisory Committee on
Small and Minority Business (ITAC–11)
published in Federal Register Volume
74 page 8819 is Monday, March 9, 2009.
The meeting will be closed to the public
from 9 a.m. to 12:30 p.m. and opened
to the public from 1 p.m. to 3:30 p.m.
DATES: The meeting is scheduled for
March 9, 2009, unless otherwise
notified.
The meeting will be held at
the U.S. Department of Commerce,
Room B41–A/B, located at 14th Street
and Constitution Avenue, NW.,
Washington, DC.
FOR FURTHER INFORMATION CONTACT:
Laura Hellstern, DFO for ITAC–11 at
(202) 482–3222, Department of
Commerce, 14th Street and Constitution
Avenue, NW., Washington, DC 20230.
SUPPLEMENTARY INFORMATION: During the
opened portion of the meeting the
following agenda items will be
considered.
• Status of U.S. Commercial Service
Activities for FY09.
• The TPCC Agencies and Their Role
in Export Promotion and Trade Policy.
ADDRESSES:
Christina R. Sevilla.
Acting Assistant U.S. Trade Representative
for Intergovernmental Affairs and Public
Liaison.
[FR Doc. E9–4611 Filed 3–3–09; 8:45 am]
BILLING CODE 3190–W9–P
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28637; 812–13541]
DFA Investment Dimensions Group
Inc., et al.; Notice of Application
February 26, 2009.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940 (the
‘‘Act’’) for 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.
The order
would permit certain management
investment companies and unit
investment trusts registered under the
Act to acquire shares of certain openend management investment companies
or unit investment trusts registered
under the Act that are outside of the
same group of investment companies as
the acquiring investment companies.
APPLICANTS: DFA Investment
Dimensions Group Inc. (‘‘DFAIDG’’),
Dimensional Emerging Markets Value
Fund Inc. (‘‘DEM’’), Dimensional
Investment Group Inc. (‘‘DIG’’), and The
DFA Investment Trust Company
(‘‘DFAITC,’’ and together with DFAIDG,
DEM, and DIG, the ‘‘Trusts’’) and
Dimensional Fund Advisors LP
(‘‘Advisor’’).
FILING DATES: The application was filed
on June 11, 2008, and amended on
December 8, 2008. Applicants have
agreed to file an amendment during the
notice period, the substance of which is
reflected in this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on March 23, 2009, 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–
SUMMARY OF THE APPLICATION:
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1090; Applicants, 2901 Via Fortuna,
Terrace V, Floor 2, Austin, TX 78746.
FOR FURTHER INFORMATION CONTACT: Jill
Ehrlich, Attorney Adviser, at (202) 551–
6819, 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 at the Public
Reference Desk, U.S. Securities and
Exchange Commission, 100 F Street,
NE., Washington DC 20549–0102
(telephone (202) 551–5850).
Applicants’ Representations
1. The Trusts are open-end
management investment companies
registered under the Act and are each
comprised of separate series (each, a
‘‘Fund’’ and collectively the ‘‘Funds’’)
that pursue distinct investment
objectives and strategies. Each of
DFAIDG, DEM, and DIG is organized as
a Maryland corporation. DFAITC is
organized as a Delaware statutory trust.
Certain Funds pursue their investment
objectives through a master-feeder
arrangement in reliance on section
12(d)(1)(E) of the Act.1 The Advisor is
a Delaware limited partnership and is
registered as an investment adviser
under the Investment Advisers Act of
1940 (‘‘Advisers Act’’).2 The Advisor
serves as investment adviser to those
Funds that invest directly in portfolio
securities.
2. Applicants request relief to permit
registered management investment
companies (‘‘Investing Management
Companies’’) and registered unit
investment trusts (‘‘Investing Trusts,’’
and together with the Investing
Management Companies, ‘‘Funds of
Funds’’) that are not part of the same
‘‘group of investment companies,’’
within the meaning of section
12(d)(1)(G)(ii) of the Act, as the Trusts,
to acquire shares of the Funds in excess
of the limits in section 12(d)(1)(A) of the
Act, and to permit a Fund, any principal
underwriter for a Fund, and any broker
or dealer registered under the Securities
Exchange Act of 1934 (‘‘Broker’’) to sell
shares of a Fund to a Fund of Funds in
excess of the limits of section
1 A Fund of Funds (as defined below) may not
invest in a Fund that serves as a feeder Fund unless
the feeder Fund is part of the same group of
investment companies as its corresponding master
fund.
2 All references to the term ‘‘Advisor’’ herein
include successors-in-interest to the Advisor.
Successors-in-interest are limited to any entity
resulting from a reorganization of the Advisor into
another jurisdiction or a change in the type of
business organization.
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12(d)(1)(B) of the Act. Applicants
request that the relief apply to: (1) Each
open-end management investment
company or unit investment trust
registered under the Act that currently
or subsequently is part of the same
‘‘group of investment companies,’’
within the meaning of section
12(d)(1)(G)(ii) of the Act, as the Trusts
and is advised or sponsored by the
Advisor or any entity controlling,
controlled by, or under common control
with the Advisor (such open-end
management investment companies are
referred to as ‘‘Open-end Funds;’’ such
unit investment trusts are referred to as
‘‘UIT Funds;’’ and both Open-end Funds
and UIT Funds are included in the term
‘‘Funds’’); (2) each Fund of Funds that
enters into a Participation Agreement
(as defined below) with a Fund to
purchase shares of the Funds; and (3)
any principal underwriter to a Fund or
Broker selling shares of a Fund.3
3. Each Investing Management
Company will be advised by an
investment adviser within the meaning
of section 2(a)(20)(A) of the Act and
registered as an investment advisor
under the Advisers Act (‘‘Fund of Funds
Adviser’’). A Fund of Funds Adviser
may contract with an investment
adviser which meets the definition of
section 2(a)(20)(B) of the Act (a
‘‘Subadviser’’). Any Subadviser will be
registered as an investment adviser
under the Advisers Act. Each Investing
Trust will have a sponsor (‘‘Sponsor’’).
Applicants represent that to ensure that
Funds of Funds comply with the terms
and conditions of the requested relief, a
Fund of Funds must enter into a
participation agreement between a
Trust, on behalf of the relevant Funds,
and the Fund of Funds (‘‘Participation
Agreement’’) before investing in a Fund
beyond the limits imposed by section
12(d)(1)(A). The Participation
Agreement will require the Fund of
Funds to adhere to the terms and
conditions of the requested order. The
Participation Agreement will include an
acknowledgment from the Fund of
Funds that it may rely on the requested
order only to invest in the Funds and
not in any other registered investment
company.
4. Applicants state that the Funds will
offer Funds of Funds simple and
efficient investment vehicles to achieve
their asset allocation or diversification
objectives. Applicants state that the
3 All entities that currently intend to rely on the
requested order are named as applicants. Any other
entity that relies on the order in the future will
comply with the terms and conditions of the
application. A Fund of Funds may rely on the
requested order only to invest in the Funds and not
in any other registered investment company.
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9439
Funds also provide high quality,
professional investment program
alternatives to Funds of Funds that do
not have sufficient assets to operate
comparable funds.
Applicants’ Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in
relevant part, 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 from
selling the investment company’s shares
to another investment company if the
sale will cause the acquiring company
to own more than 3% of the acquired
company’s voting stock, or if the sale
will cause more than 10% of the
acquired company’s voting stock to be
owned by investment companies
generally.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants seek an exemption under
section 12(d)(1)(J) of the Act to permit
Funds of Funds to acquire shares of the
Funds in excess of the limits in section
12(d)(1)(A) of the Act, and a Fund, any
principal underwriter for a Fund and
any Broker to sell shares of a Fund to
a Fund of Funds in excess of the limits
of section 12(d)(1)(B) of the Act.
3. Applicants state that the proposed
arrangement and conditions will
adequately address the concerns
underlying the applicable limits in
sections 12(d)(1)(A) and (B) of the Act,
which include concerns about undue
influence by a fund of funds over
underlying funds, excessive layering of
fees, and overly complex fund
structures. Accordingly, applicants
believe that the requested exemption is
consistent with the public interest and
the protection of investors.
4. Applicants believe that neither a
Fund of Funds nor a Fund of Funds
Affiliate would be able to exert undue
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Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices
influence over the Funds.4 To limit the
control that a Fund of Funds may have
over a Fund, applicants propose a
condition prohibiting the Fund of Funds
Adviser or Sponsor, any person
controlling, controlled by, or under
common control with the Fund of
Funds Adviser or Sponsor, 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
that is advised or sponsored by the
Fund of Funds Adviser or Sponsor, or
any person controlling, controlled by, or
under common control with the Fund of
Funds Adviser or Sponsor (‘‘Fund of
Funds Advisory Group’’) from
controlling (individually or in the
aggregate) a Fund within the meaning of
section 2(a)(9) of the Act. The same
prohibition would apply to each
Subadviser, any person controlling,
controlled by or under common control
with the Subadviser, and any
investment company or issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
(or portion of such investment company
or issuer) advised or sponsored by the
Subadviser or any person controlling,
controlled by or under common control
with the Subadviser (‘‘Subadviser
Group’’). Applicants propose other
conditions to limit the potential for
undue influence over the Funds,
including that 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 Open-end
Fund or sponsor to a UIT Fund) will
cause a Fund to purchase a security in
an offering of securities during the
existence of an underwriting or selling
syndicate of which a principal
underwriter is an Underwriting Affiliate
(‘‘Affiliated Underwriting’’). An
‘‘Underwriting Affiliate’’ is a principal
underwriter in any underwriting or
selling syndicate that is an officer,
director, member of an advisory board,
Fund of Funds Adviser, Subadviser,
Sponsor, or employee of the Fund of
Funds, or a person of which any such
officer, director, member of an advisory
board, Fund of Funds Adviser,
Subadviser, Sponsor or employee is an
affiliated person; however any person
whose relationship to a Fund is covered
4 A ‘‘Fund of Funds Affiliate’’ is defined as a
Fund of Funds Adviser, Subadviser, Sponsor,
promoter, or a principal underwriter of a Fund of
Funds, and any person controlling, controlled by,
or under common control with any of those entities.
A ‘‘Fund Affiliate’’ is defined as an investment
adviser, sponsor, promoter, or principal
underwriter of a Fund, and any person controlling,
controlled by, or under common control with any
of those entities.
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by section 10(f) of the Act is not an
Underwriting Affiliate.
5. Applicants do not believe that the
proposed arrangement will involve
excessive layering of fees. The board of
directors or trustees of each Investing
Management Company, including a
majority of the directors or trustees who
are not ‘‘interested persons’’ (within the
meaning of section 2(a)(19) of the Act)
(‘‘Disinterested Trustees’’), will find that
the advisory fees charged under the
advisory contract are based on services
provided that will be in addition to,
rather than duplicative of, the services
provided under the advisory contract(s)
of any Open-end Fund in which the
Investing Management Company may
invest. In addition, a Fund of Funds
Adviser or trustee or Sponsor of a Fund
of Funds will waive fees otherwise
payable to it by the Fund of Funds in
an amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Open-end Fund under rule 12b–1 under
the Act) received from a Fund by the
Fund of Funds Adviser, trustee, or
Sponsor, or an affiliated person of the
Fund of Funds Adviser, trustee, or
Sponsor, other than any advisory fees
paid to the Fund of Funds Adviser,
trustee, or Sponsor, or its affiliated
person by an Open-end Fund, in
connection with the investment by the
Fund of Funds in the Fund. Applicants
also 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
Fund level.5 Other sales charges and
service fees, as defined in Rule 2830 of
the NASD Conduct Rules (‘‘Rule 2830’’),
if any, will only be charged at the Fund
of Funds level or at the 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 the Fund of Funds will not
exceed the limits applicable to a fund of
funds as set forth in Rule 2830.
6. Applicants submit that the
proposed arrangement will not create an
overly complex fund structure.
Applicants propose condition 12 to
ensure that the proposed structure will
not result in unnecessary complexity.
5 Applicants represent that a Fund of Funds will
represent in the Participation Agreement that no
insurance company sponsoring a registered separate
account 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
Fund levels, will be reasonable in relation to the
services rendered, the expenses expected to be
incurred, and the risks assumed by the insurance
company.
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Applicants also note that a Fund
reserves the right to reject any
investment by a Fund of 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 any affiliated person of
the company. Section 2(a)(3) of the Act
defines an ‘‘affiliated person’’ of another
person to include 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. Applicants
seek relief from section 17(a) to permit
a Fund that is an affiliated person, or an
affiliated person of an affiliated person,
of a Fund of Funds to sell its shares to
and redeem its shares from a Fund of
Funds.6
2. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned, (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved, and (c)
the proposed transaction is consistent
with the general purposes of the Act.
Section 6(c) of the Act permits the
Commission to exempt any person or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Applicants submit that the
proposed arrangement satisfies the
standards for relief under sections 17(b)
and 6(c) of the Act.
3. Applicants believe that any
proposed transactions directly between
Funds and a Fund of Funds will be
consistent with the policies of each
Fund and such Fund of Funds. The
Participation Agreement will require
any Fund of Funds that purchases
shares from a Fund to represent that the
purchase of shares from the Fund by a
Fund of Funds will be accomplished in
compliance with the investment
restrictions of the Fund of Funds and
will be consistent with the investment
6 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 a
Fund or (b) an affiliated person of a Fund, or an
affiliated person of such person, for the sale by the
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
acknowledgment.
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Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices
policies set forth in the Fund of Fund’s
registration statement.
4. Applicants state that the terms of
the arrangement are fair and reasonable
and do not involve overreaching.
Applicants note that all shares of the
Funds sold and redeemed by the Funds
will be sold and redeemed at net asset
value as required by rule 22c–1 under
the Act. Applicants also state that the
proposed arrangement is consistent with
the policies and provisions of the Act.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The members of a Fund of Funds
Advisory Group will not control
(individually or in the aggregate) a Fund
within the meaning of section 2(a)(9) of
the Act. The members of a Subadviser
Group will not control (individually or
in the aggregate) a Fund within the
meaning of section 2(a)(9) of the Act. If,
as a result of a decrease in the
outstanding voting securities of a Fund,
the Fund of Funds Advisory Group or
the Subadviser Group, each in the
aggregate, becomes a holder of more
than 25% of the outstanding voting
securities of a Fund, it (except for any
member of the Fund of Funds Advisory
Group or Subadviser Group that is a
separate account) will vote its shares of
the Fund in the same proportion as the
vote of all other holders of the Fund’s
shares. This condition does not apply to
the Subadviser Group with respect to a
Fund for which the Subadviser or a
person controlling, controlled by, or
under common control with the
Subadviser acts as the investment
adviser within the meaning of section
2(a)(20)(A) of the Act (in the case of an
Open-end Fund) or as the sponsor (in
the case of a UIT Fund). A registered
separate account will seek voting
instructions from its contract holders
and will vote its shares 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 (a) vote its shares of the Fund in
the same proportion as the vote of all
other holders of the Fund’s shares, or (b)
seek voting instructions from its
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
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Funds in shares of a Fund to influence
the terms of any services or transactions
between the Funds of Funds or a Fund
of Funds Affiliate and the Fund or a
Fund Affiliate.
3. The board of directors or trustees of
an Investing Management Company,
including a majority of the Disinterested
Trustees, will adopt procedures
reasonably designed to assure that the
Fund of Funds Adviser and any
Subadviser are conducting the
investment program of the Investing
Management Company without taking
into account any consideration received
by the Investing Management Company
or a Fund of Funds Affiliate from a
Fund or a Fund Affiliate in connection
with any services or transactions.
4. Once an investment by a Fund of
Funds in the securities of an Open-end
Fund exceeds the limit in section
12(d)(1)(A)(i) of the Act, the board of
trustees of the Open-end Fund
(‘‘Board’’), including a majority of the
Disinterested Trustees, will determine
that any consideration paid by the
Open-end 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 Open-end
Fund, (b) is within the range of
consideration that the Open-end 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
Open-end 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 Open-end Fund or sponsor
to a UIT Fund) will cause a Fund to
purchase a security in any Affiliated
Underwriting.
6. The Board of an Open-end Fund,
including a majority of the Disinterested
Trustees, will adopt procedures
reasonably designed to monitor any
purchases of securities by an Open-end
Fund in an Affiliated Underwriting once
an investment by a Fund of Funds in the
securities of the Open-end Fund
exceeds the limit in section
12(d)(1)(A)(i) of the Act, including any
purchases made directly from an
Underwriting Affiliate. The Board of the
Open-end Fund will review these
purchases periodically, but no less
frequently than annually, to determine
whether the purchases were influenced
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9441
by the investment by the Fund of Funds
in the Open-end Fund. The Board of the
Open-end Fund will consider, among
other things, (a) whether the purchases
were consistent with the investment
objectives and policies of the Open-end
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 Open-end
Fund in Affiliated Underwritings and
the amount purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board of the Open-end 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 Open-end 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 in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in Affiliated Underwritings
once an investment by a Fund of Funds
in the securities of an Open-end Fund
exceeds the limit in 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
Open-end Fund were made.
8. Before investing in a Fund in
excess of the limits in section
12(d)(1)(A), the Fund of Funds and the
Fund will execute a Participation
Agreement stating without limitation
that their boards of directors or trustees
and their investment advisers, or
sponsors and trustees, as applicable,
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
Open-end Fund in excess of the limit in
section 12(d)(1)(A)(i), a Fund of Funds
will notify the Open-end Fund of the
investment. At such time, the Fund of
Funds will also transmit to the Openend Fund a list of the names of each
E:\FR\FM\04MRN1.SGM
04MRN1
9442
Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices
Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Open-end Fund of
any changes to the list of the names as
soon as reasonably practicable after a
change occurs. The Fund and the Fund
of Funds will maintain and preserve a
copy of the order, the Participation
Agreement and, in the case of an Openend Fund, 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. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company,
including a majority of the Disinterested
Trustees, will find that the advisory fees
charged under such advisory contract
are based on services provided that will
be in addition to, rather than
duplicative of, the services provided
under the advisory contract(s) of any
Open-end Fund in which the Investing
Management Company may invest.
These findings and their basis will be
recorded fully in the minute books of
the appropriate Investing Management
Company.
10. A Fund of Funds Adviser, or
trustee, or Sponsor of a Fund of Funds,
as applicable, will waive fees otherwise
payable to it by the Fund of Funds in
an amount at least equal to any
compensation (including fees received
from any plan adopted by an Open-end
Fund under rule 12b–1 under the Act)
received from a Fund by the Fund of
Funds Adviser, trustee or Sponsor, or an
affiliated person of the Fund of Funds
Adviser, trustee or Sponsor, other than
any advisory fees paid to the Fund of
Funds Adviser, trustee or Sponsor, or its
affiliated person, by an Open-end Fund,
in connection with the investment by
the Fund of Funds in the Fund. Any
Subadviser will waive fees otherwise
payable to the Subadviser, directly or
indirectly, by the Investing Management
Company in an amount at least equal to
any compensation received from a Fund
by the Subadviser, or an affiliated
person of the Subadviser, other than any
advisory fees paid to the Subadviser or
its affiliated person by an Open-end
Fund, in connection with the
investment by the Investing
Management Company in the Fund
made at the direction of the Subadviser.
In the event that the Subadviser waives
fees, the benefit of the waiver will be
passed through to the Investing
Management Company.
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 Fund
VerDate Nov<24>2008
15:08 Mar 03, 2009
Jkt 217001
level. Other sales charges and service
fees, as defined in Rule 2830, if any,
will only be charged at the Fund of
Funds level or at the 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 the Fund of Funds will not
exceed the limits applicable to a fund of
funds as set forth in Rule 2830.
12. No Fund will acquire securities of
any investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent that the Fund (a) acquires
such securities in compliance with
section 12(d)(1)(E) of the Act; (b)
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 (c) acquires (or is deemed
to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such 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,
Deputy Secretary.
[FR Doc. E9–4604 Filed 3–3–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28638; 812–13441]
IndexIQ ETF Trust, et al.; Notice of
Application
February 27, 2009.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under Section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from Sections
2(a)(32), 5(a)(1), 22(d), and 22(e) of the
Act and rule 22c–1 under the Act; and
under Sections 6(c) and 17(b) of the Act
for an exemption from Sections 17(a)(1)
and (a)(2) of the Act; and under Section
12(d)(1)(J) for an exemption from
Sections 12(d)(1)(A) and (B) of the Act.
APPLICANTS: IndexIQ ETF Trust
(‘‘Trust’’), IndexIQ Advisors LLC
PO 00000
Frm 00061
Fmt 4703
Sfmt 4703
(‘‘Advisor’’) and ALPS Distributors, Inc.
(‘‘Distributor’’).
SUMMARY OF APPLICATION: Applicants
request an order that permits: (a) Series
of certain open-end management
investment companies to issue shares
(‘‘Shares’’) redeemable in large
aggregations (‘‘Creation Units’’); (b)
secondary market transactions in Shares
to occur at negotiated market prices; (c)
certain series to pay redemption
proceeds, under certain circumstances,
more than seven days after the tender of
Shares for redemption; (d) certain
affiliated persons of the series to deposit
securities into, and receive securities
from, the series in connection with the
purchase and redemption of Creation
Units; and (e) certain registered
management investment companies and
unit investment trusts outside of the
same group of investment companies as
the series to acquire Shares of certain
series.
FILING DATES: The application was filed
on October 23, 2007 and amended on
August 1, 2008, November 19, 2008,
January 28, 2009 and February 12, 2009.
Applicants have agreed to file an
amendment during the notice period,
the substance of which is reflected in
this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on March 19, 2009, 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: Gregory Bassuk,
IndexIQ ETF Trust and IndexIQ
Advisors LLC, 800 Westchester Avenue,
Suite N–611, Rye Brook, NY 10573;
ALPS Distributors, Inc., c/o Thomas A.
Carter, 1290 Broadway, Suite 1100,
Denver, CO 80203.
FOR FURTHER INFORMATION CONTACT: Jean
E. Minarick, Senior Counsel at (202)
551–6811 or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Division of
Investment Management, Office of
Investment Company Regulation).
E:\FR\FM\04MRN1.SGM
04MRN1
]]>Agencies
[Federal Register Volume 74, Number 41 (Wednesday, March 4, 2009)]
[Notices]
[Pages 9438-9442]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-4604]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28637; 812-13541]
DFA Investment Dimensions Group Inc., et al.; Notice of
Application
February 26, 2009.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 12(d)(1)(J)
of the Investment Company Act of 1940 (the ``Act'') for 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: The order would permit certain management
investment companies and unit investment trusts registered under the
Act to acquire shares of certain open-end management investment
companies or unit investment trusts registered under the Act that are
outside of the same group of investment companies as the acquiring
investment companies.
Applicants: DFA Investment Dimensions Group Inc. (``DFAIDG''),
Dimensional Emerging Markets Value Fund Inc. (``DEM''), Dimensional
Investment Group Inc. (``DIG''), and The DFA Investment Trust Company
(``DFAITC,'' and together with DFAIDG, DEM, and DIG, the ``Trusts'')
and Dimensional Fund Advisors LP (``Advisor'').
Filing Dates: The application was filed on June 11, 2008, and amended
on December 8, 2008. Applicants have agreed to file an amendment during
the notice period, the substance of which is reflected in this notice.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on March 23, 2009, 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-
[[Page 9439]]
1090; Applicants, 2901 Via Fortuna, Terrace V, Floor 2, Austin, TX
78746.
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Attorney Adviser, at
(202) 551-6819, 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 at the
Public Reference Desk, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington DC 20549-0102 (telephone (202) 551-5850).
Applicants' Representations
1. The Trusts are open-end management investment companies
registered under the Act and are each comprised of separate series
(each, a ``Fund'' and collectively the ``Funds'') that pursue distinct
investment objectives and strategies. Each of DFAIDG, DEM, and DIG is
organized as a Maryland corporation. DFAITC is organized as a Delaware
statutory trust. Certain Funds pursue their investment objectives
through a master-feeder arrangement in reliance on section 12(d)(1)(E)
of the Act.\1\ The Advisor is a Delaware limited partnership and is
registered as an investment adviser under the Investment Advisers Act
of 1940 (``Advisers Act'').\2\ The Advisor serves as investment adviser
to those Funds that invest directly in portfolio securities.
---------------------------------------------------------------------------
\1\ A Fund of Funds (as defined below) may not invest in a Fund
that serves as a feeder Fund unless the feeder Fund is part of the
same group of investment companies as its corresponding master fund.
\2\ All references to the term ``Advisor'' herein include
successors-in-interest to the Advisor. Successors-in-interest are
limited to any entity resulting from a reorganization of the Advisor
into another jurisdiction or a change in the type of business
organization.
---------------------------------------------------------------------------
2. Applicants request relief to permit registered management
investment companies (``Investing Management Companies'') and
registered unit investment trusts (``Investing Trusts,'' and together
with the Investing Management Companies, ``Funds of Funds'') that are
not part of the same ``group of investment companies,'' within the
meaning of section 12(d)(1)(G)(ii) of the Act, as the Trusts, to
acquire shares of the Funds in excess of the limits in section
12(d)(1)(A) of the Act, and to permit a Fund, any principal underwriter
for a Fund, and any broker or dealer registered under the Securities
Exchange Act of 1934 (``Broker'') to sell shares of a Fund to a Fund of
Funds in excess of the limits of section 12(d)(1)(B) of the Act.
Applicants request that the relief apply to: (1) Each open-end
management investment company or unit investment trust registered under
the Act that currently or subsequently is part of the same ``group of
investment companies,'' within the meaning of section 12(d)(1)(G)(ii)
of the Act, as the Trusts and is advised or sponsored by the Advisor or
any entity controlling, controlled by, or under common control with the
Advisor (such open-end management investment companies are referred to
as ``Open-end Funds;'' such unit investment trusts are referred to as
``UIT Funds;'' and both Open-end Funds and UIT Funds are included in
the term ``Funds''); (2) each Fund of Funds that enters into a
Participation Agreement (as defined below) with a Fund to purchase
shares of the Funds; and (3) any principal underwriter to a Fund or
Broker selling shares of a Fund.\3\
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\3\ All entities that currently intend to rely on the requested
order are named as applicants. Any other entity that relies on the
order in the future will comply with the terms and conditions of the
application. A Fund of Funds may rely on the requested order only to
invest in the Funds and not in any other registered investment
company.
---------------------------------------------------------------------------
3. Each Investing Management Company will be advised by an
investment adviser within the meaning of section 2(a)(20)(A) of the Act
and registered as an investment advisor under the Advisers Act (``Fund
of Funds Adviser''). A Fund of Funds Adviser may contract with an
investment adviser which meets the definition of section 2(a)(20)(B) of
the Act (a ``Subadviser''). Any Subadviser will be registered as an
investment adviser under the Advisers Act. Each Investing Trust will
have a sponsor (``Sponsor''). Applicants represent that to ensure that
Funds of Funds comply with the terms and conditions of the requested
relief, a Fund of Funds must enter into a participation agreement
between a Trust, on behalf of the relevant Funds, and the Fund of Funds
(``Participation Agreement'') before investing in a Fund beyond the
limits imposed by section 12(d)(1)(A). The Participation Agreement will
require the Fund of Funds to adhere to the terms and conditions of the
requested order. The Participation Agreement will include an
acknowledgment from the Fund of Funds that it may rely on the requested
order only to invest in the Funds and not in any other registered
investment company.
4. Applicants state that the Funds will offer Funds of Funds simple
and efficient investment vehicles to achieve their asset allocation or
diversification objectives. Applicants state that the Funds also
provide high quality, professional investment program alternatives to
Funds of Funds that do not have sufficient assets to operate comparable
funds.
Applicants' Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in relevant part, 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 from selling the investment company's shares to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or if the sale
will cause more than 10% of the acquired company's voting stock to be
owned by investment companies generally.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or transaction, or any class or classes of
persons, securities or transactions, from any provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Applicants seek an exemption under section
12(d)(1)(J) of the Act to permit Funds of Funds to acquire shares of
the Funds in excess of the limits in section 12(d)(1)(A) of the Act,
and a Fund, any principal underwriter for a Fund and any Broker to sell
shares of a Fund to a Fund of Funds in excess of the limits of section
12(d)(1)(B) of the Act.
3. Applicants state that the proposed arrangement and conditions
will adequately address the concerns underlying the applicable limits
in sections 12(d)(1)(A) and (B) of the Act, which include concerns
about undue influence by a fund of funds over underlying funds,
excessive layering of fees, and overly complex fund structures.
Accordingly, applicants believe that the requested exemption is
consistent with the public interest and the protection of investors.
4. Applicants believe that neither a Fund of Funds nor a Fund of
Funds Affiliate would be able to exert undue
[[Page 9440]]
influence over the Funds.\4\ To limit the control that a Fund of Funds
may have over a Fund, applicants propose a condition prohibiting the
Fund of Funds Adviser or Sponsor, any person controlling, controlled
by, or under common control with the Fund of Funds Adviser or Sponsor,
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 that is advised
or sponsored by the Fund of Funds Adviser or Sponsor, or any person
controlling, controlled by, or under common control with the Fund of
Funds Adviser or Sponsor (``Fund of Funds Advisory Group'') from
controlling (individually or in the aggregate) a Fund within the
meaning of section 2(a)(9) of the Act. The same prohibition would apply
to each Subadviser, any person controlling, controlled by or under
common control with the Subadviser, and any investment company or
issuer that would be an investment company but for section 3(c)(1) or
3(c)(7) of the Act (or portion of such investment company or issuer)
advised or sponsored by the Subadviser or any person controlling,
controlled by or under common control with the Subadviser (``Subadviser
Group''). Applicants propose other conditions to limit the potential
for undue influence over the Funds, including that 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 Open-end Fund or sponsor to a
UIT Fund) will cause a Fund to purchase a security in an offering of
securities during the existence of an underwriting or selling syndicate
of which a principal underwriter is an Underwriting Affiliate
(``Affiliated Underwriting''). An ``Underwriting Affiliate'' is a
principal underwriter in any underwriting or selling syndicate that is
an officer, director, member of an advisory board, Fund of Funds
Adviser, Subadviser, Sponsor, or employee of the Fund of Funds, or a
person of which any such officer, director, member of an advisory
board, Fund of Funds Adviser, Subadviser, Sponsor or employee is an
affiliated person; however any person whose relationship to a Fund is
covered by section 10(f) of the Act is not an Underwriting Affiliate.
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\4\ A ``Fund of Funds Affiliate'' is defined as a Fund of Funds
Adviser, Subadviser, Sponsor, promoter, or a principal underwriter
of a Fund of Funds, and any person controlling, controlled by, or
under common control with any of those entities. A ``Fund
Affiliate'' is defined as an investment adviser, sponsor, promoter,
or principal underwriter of a Fund, and any person controlling,
controlled by, or under common control with any of those entities.
---------------------------------------------------------------------------
5. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. The board of directors or trustees
of each Investing Management Company, including a majority of the
directors or trustees who are not ``interested persons'' (within the
meaning of section 2(a)(19) of the Act) (``Disinterested Trustees''),
will find that the advisory fees charged under the advisory contract
are based on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contract(s) of
any Open-end Fund in which the Investing Management Company may invest.
In addition, a Fund of Funds Adviser or trustee or Sponsor of a Fund of
Funds will waive fees otherwise payable to it by the Fund of Funds in
an amount at least equal to any compensation (including fees received
pursuant to any plan adopted by an Open-end Fund under rule 12b-1 under
the Act) received from a Fund by the Fund of Funds Adviser, trustee, or
Sponsor, or an affiliated person of the Fund of Funds Adviser, trustee,
or Sponsor, other than any advisory fees paid to the Fund of Funds
Adviser, trustee, or Sponsor, or its affiliated person by an Open-end
Fund, in connection with the investment by the Fund of Funds in the
Fund. Applicants also 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 Fund level.\5\ Other sales charges
and service fees, as defined in Rule 2830 of the NASD Conduct Rules
(``Rule 2830''), if any, will only be charged at the Fund of Funds
level or at the 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 the Fund of Funds will not exceed the limits
applicable to a fund of funds as set forth in Rule 2830.
---------------------------------------------------------------------------
\5\ Applicants represent that a Fund of Funds will represent in
the Participation Agreement that no insurance company sponsoring a
registered separate account 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 Fund levels,
will be reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the
insurance company.
---------------------------------------------------------------------------
6. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants propose condition 12 to
ensure that the proposed structure will not result in unnecessary
complexity. Applicants also note that a Fund reserves the right to
reject any investment by a Fund of 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 any
affiliated person of the company. Section 2(a)(3) of the Act defines an
``affiliated person'' of another person to include 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.
Applicants seek relief from section 17(a) to permit a Fund that is an
affiliated person, or an affiliated person of an affiliated person, of
a Fund of Funds to sell its shares to and redeem its shares from a Fund
of Funds.\6\
---------------------------------------------------------------------------
\6\ 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 a
Fund or (b) an affiliated person of a Fund, or an affiliated person
of such person, for the sale by the 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 acknowledgment.
---------------------------------------------------------------------------
2. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
it finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned, (b) the proposed transaction is consistent with the policies
of each registered investment company involved, and (c) the proposed
transaction is consistent with the general purposes of the Act. Section
6(c) of the Act permits the Commission to exempt any person or
transactions from any provision of the Act if such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act. Applicants submit that the proposed
arrangement satisfies the standards for relief under sections 17(b) and
6(c) of the Act.
3. Applicants believe that any proposed transactions directly
between Funds and a Fund of Funds will be consistent with the policies
of each Fund and such Fund of Funds. The Participation Agreement will
require any Fund of Funds that purchases shares from a Fund to
represent that the purchase of shares from the Fund by a Fund of Funds
will be accomplished in compliance with the investment restrictions of
the Fund of Funds and will be consistent with the investment
[[Page 9441]]
policies set forth in the Fund of Fund's registration statement.
4. Applicants state that the terms of the arrangement are fair and
reasonable and do not involve overreaching. Applicants note that all
shares of the Funds sold and redeemed by the Funds will be sold and
redeemed at net asset value as required by rule 22c-1 under the Act.
Applicants also state that the proposed arrangement is consistent with
the policies and provisions of the Act.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The members of a Fund of Funds Advisory Group will not control
(individually or in the aggregate) a Fund within the meaning of section
2(a)(9) of the Act. The members of a Subadviser Group will not control
(individually or in the aggregate) a Fund within the meaning of section
2(a)(9) of the Act. If, as a result of a decrease in the outstanding
voting securities of a Fund, the Fund of Funds Advisory Group or the
Subadviser Group, each in the aggregate, becomes a holder of more than
25% of the outstanding voting securities of a Fund, it (except for any
member of the Fund of Funds Advisory Group or Subadviser Group that is
a separate account) will vote its shares of the Fund in the same
proportion as the vote of all other holders of the Fund's shares. This
condition does not apply to the Subadviser Group with respect to a Fund
for which the Subadviser or a person controlling, controlled by, or
under common control with the Subadviser acts as the investment adviser
within the meaning of section 2(a)(20)(A) of the Act (in the case of an
Open-end Fund) or as the sponsor (in the case of a UIT Fund). A
registered separate account will seek voting instructions from its
contract holders and will vote its shares 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 (a) vote its shares of the Fund in the same proportion as the
vote of all other holders of the Fund's shares, or (b) seek voting
instructions from its 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 shares of a
Fund to influence the terms of any services or transactions between the
Funds of Funds or a Fund of Funds Affiliate and the Fund or a Fund
Affiliate.
3. The board of directors or trustees of an Investing Management
Company, including a majority of the Disinterested Trustees, will adopt
procedures reasonably designed to assure that the Fund of Funds Adviser
and any Subadviser are conducting the investment program of the
Investing Management Company without taking into account any
consideration received by the Investing Management Company or a Fund of
Funds Affiliate from a Fund or a Fund Affiliate in connection with any
services or transactions.
4. Once an investment by a Fund of Funds in the securities of an
Open-end Fund exceeds the limit in section 12(d)(1)(A)(i) of the Act,
the board of trustees of the Open-end Fund (``Board''), including a
majority of the Disinterested Trustees, will determine that any
consideration paid by the Open-end 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 Open-end Fund, (b) is within the
range of consideration that the Open-end 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 Open-end 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
Open-end Fund or sponsor to a UIT Fund) will cause a Fund to purchase a
security in any Affiliated Underwriting.
6. The Board of an Open-end Fund, including a majority of the
Disinterested Trustees, will adopt procedures reasonably designed to
monitor any purchases of securities by an Open-end Fund in an
Affiliated Underwriting once an investment by a Fund of Funds in the
securities of the Open-end Fund exceeds the limit in section
12(d)(1)(A)(i) of the Act, including any purchases made directly from
an Underwriting Affiliate. The Board of the Open-end 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 Open-end Fund. The Board of the Open-end Fund
will consider, among other things, (a) whether the purchases were
consistent with the investment objectives and policies of the Open-end
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
Open-end Fund in Affiliated Underwritings and the amount purchased
directly from an Underwriting Affiliate have changed significantly from
prior years. The Board of the Open-end 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 Open-end 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 in an Affiliated
Underwriting occurred, the first two years in an easily accessible
place, a written record of each purchase of securities in Affiliated
Underwritings once an investment by a Fund of Funds in the securities
of an Open-end Fund exceeds the limit in 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 Open-end Fund were made.
8. Before investing in a Fund in excess of the limits in section
12(d)(1)(A), the Fund of Funds and the Fund will execute a
Participation Agreement stating without limitation that their boards of
directors or trustees and their investment advisers, or sponsors and
trustees, as applicable, 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 Open-end Fund in excess of
the limit in section 12(d)(1)(A)(i), a Fund of Funds will notify the
Open-end Fund of the investment. At such time, the Fund of Funds will
also transmit to the Open-end Fund a list of the names of each
[[Page 9442]]
Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds
will notify the Open-end Fund of any changes to the list of the names
as soon as reasonably practicable after a change occurs. The Fund and
the Fund of Funds will maintain and preserve a copy of the order, the
Participation Agreement and, in the case of an Open-end Fund, 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. Before approving any advisory contract under section 15 of the
Act, the board of directors or trustees of each Investing Management
Company, including a majority of the Disinterested Trustees, will find
that the advisory fees charged under such advisory contract are based
on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contract(s) of
any Open-end Fund in which the Investing Management Company may invest.
These findings and their basis will be recorded fully in the minute
books of the appropriate Investing Management Company.
10. A Fund of Funds Adviser, or trustee, or Sponsor of a Fund of
Funds, as applicable, will waive fees otherwise payable to it by the
Fund of Funds in an amount at least equal to any compensation
(including fees received from any plan adopted by an Open-end Fund
under rule 12b-1 under the Act) received from a Fund by the Fund of
Funds Adviser, trustee or Sponsor, or an affiliated person of the Fund
of Funds Adviser, trustee or Sponsor, other than any advisory fees paid
to the Fund of Funds Adviser, trustee or Sponsor, or its affiliated
person, by an Open-end Fund, in connection with the investment by the
Fund of Funds in the Fund. Any Subadviser will waive fees otherwise
payable to the Subadviser, directly or indirectly, by the Investing
Management Company in an amount at least equal to any compensation
received from a Fund by the Subadviser, or an affiliated person of the
Subadviser, other than any advisory fees paid to the Subadviser or its
affiliated person by an Open-end Fund, in connection with the
investment by the Investing Management Company in the Fund made at the
direction of the Subadviser. In the event that the Subadviser waives
fees, the benefit of the waiver will be passed through to the Investing
Management Company.
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 Fund level. Other sales charges and service fees, as defined
in Rule 2830, if any, will only be charged at the Fund of Funds level
or at the 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 the Fund of Funds will not exceed the limits
applicable to a fund of funds as set forth in Rule 2830.
12. No Fund will acquire securities of any investment company or
company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section 12(d)(1)(A) of the Act, except to the
extent that the Fund (a) acquires such securities in compliance with
section 12(d)(1)(E) of the Act; (b) 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 (c) acquires (or is deemed
to have acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting such 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,
Deputy Secretary.
[FR Doc. E9-4604 Filed 3-3-09; 8:45 am]
BILLING CODE 8011-01-P
