Northern Lights Fund Trust, et al.; Notice of Application, 21048-21050 [2010-9285]
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Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Notices
60611. The agenda for this meeting
follows:
(1) Executive Committee Reports
The entire meeting will be open to the
public. The person to contact for more
information is Beatrice Ezerski,
Secretary to the Board, Phone No. 312–
751–4920.
Dated: April 19, 2010.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 2010–9421 Filed 4–20–10; 11:15 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
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Extension:
Securities Act Rule 477, OMB Control No.
3235–0550, SEC File No. 270–493.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 477 (17 CFR 230.477) under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.) sets forth procedures for
withdrawing a registration statement, an
amendment to a registration statement,
or any exhibits thereto. The rule
provides that if a registrant intends to
rely on the registered-to-private safe
harbor contained in Securities Act Rule
155, the registrant must affirmatively
state in the withdrawal application that
it plans to undertake a subsequent
private offering of its securities. Without
this statement, the Commission would
not be able to monitor a company’s
reliance on, and compliance with,
Securities Act Rule 155(c). The likely
respondents will be companies. We
estimate that approximately 300 issuers
will file Securities Act Rule 477
submissions annually at an estimated
one-hour per response for a total annual
burden of approximately 300 hours. We
estimate that 100% of the reporting
burden is prepared by the issuer.
Written comments are invited on: (a)
Whether this proposed collection of
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information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to:
PRA_Mailbox@sec.gov.
Dated: April 16, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–9269 Filed 4–21–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29208; 812–13651]
Northern Lights Fund Trust, et al.;
Notice of Application
April 16, 2010.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
SUMMARY: Summary of Application:
Applicants request an order that would
permit them to enter into and materially
amend subadvisory agreements without
shareholder approval and would grant
relief from certain disclosure
requirements.
Applicants: Northern Lights Fund
Trust (the ‘‘Trust’’) and CMG Capital
Management Group, Inc. (the
‘‘Adviser’’).
DATES: Filing Dates: The application was
filed on April 9, 2009 and amended on
September 28, 2009 and April 16, 2010.
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
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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 May 11, 2010, and
should be accompanied by proof of
service on the 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, 150 North
Radnor-Chester Road, Suite A120,
Radnor, PA 19087; Trust, 450 Wireless
Boulevard, Hauppauge, NY 11788–0132.
FOR FURTHER INFORMATION CONTACT:
Emerson S. Davis, Sr., Senior Counsel,
at (202) 551–6868, or Julia Kim Gilmer,
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 via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Trust, a Delaware statutory
trust, is registered under the Act as an
open-end management investment
company and offers approximately
forty-six series, including the CMG
Absolute Return Strategies Fund (‘‘CMG
Fund’’). The CMG Fund currently
employs six unaffiliated investment
subadvisers (each, a ‘‘Subadviser’’).1 The
Adviser is registered as an investment
adviser under the Investment Advisers
Act of 1940 (‘‘Advisers Act’’) and serves
as the investment adviser to the CMG
Fund pursuant to an investment
advisory agreement (‘‘Advisory
1 Applicants also request relief with respect to
existing and future series of the Trust and any other
existing or future registered open-end management
investment company or series thereof that: (a) Is
advised by the Adviser; (b) uses the manager of
managers structure described in the application;
and (c) complies with the terms and conditions of
this application (together with the CMG Fund, the
‘‘Funds’’ and each, individually, a ‘‘Fund.’’) The only
existing registered open-end management
investment company that currently intends to rely
on the requested order is named as an applicant. If
the name of any Fund contains the name of a
Subadviser, the name of the Adviser will precede
the name of the Subadviser.
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Agreement’’) with the Trust. The
Adviser will also serve as the
investment adviser to the other Funds.
The Advisory Agreement was approved
by the Trust’s board of trustees (together
with the board of directors or trustees of
any Fund if different, the ‘‘Board’’),
including a majority of the trustees who
are not ‘‘interested persons,’’ as defined
in section 2(a)(19) of the Act, of the
Trust or the Adviser (‘‘Independent
Trustees’’) and by the initial shareholder
of the CMG Fund.
2. Under the terms of the Advisory
Agreement, the Adviser is responsible
for the overall management of the CMG
Fund’s business affairs and selecting the
CMG Fund’s investments in accordance
with its investment objectives, policies
and restrictions. For the investment
management services that it provides to
the CMG Fund, the Adviser receives the
fee specified in the Advisory
Agreement. The Advisory Agreement
also permits the Adviser to retain one or
more subadvisers for the purpose of
managing the investments of the CMG
Fund. Pursuant to this authority, the
Adviser has entered into investment
subadvisory agreements (‘‘Subadvisory
Agreements’’) with six Subadvisers to
provide investment advisory services to
the CMG Fund. Each Subadviser is and
each future Subadviser will be
registered as an investment adviser
under the Advisers Act. The Adviser
will supervise, evaluate and allocate
assets to the Subadvisers, and make
recommendations to the Board about
their hiring, retention or release, at all
times subject to the authority of the
Board. The Adviser will compensate
each Subadviser out of the fees paid to
the Adviser under the Advisory
Agreement.
3. Applicants request an order to
permit the Adviser, subject to Board
approval, to enter into and materially
amend Subadvisory Agreements
without obtaining shareholder approval.
The requested relief will not extend to
any subadviser that is an affiliated
person, as defined in section 2(a)(3) of
the Act, of the Trust, a Fund or the
Adviser, other than by reason of serving
as a subadviser to one or more of the
Funds (‘‘Affiliated Subadviser’’).
4. Applicants also request an
exemption from the various disclosure
provisions described below that may
require the Funds to disclose fees paid
by the Adviser to the Subadvisers. An
exemption is requested to permit a Fund
to disclose (as both a dollar amount and
as a percentage of each Fund’s net
assets): (a) The aggregate fees paid to the
Adviser and any Affiliated Subadvisers;
and (b) the aggregate fees paid to
Subadvisers (collectively, ‘‘Aggregate
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Fee Disclosure’’). Any Fund that
employs an Affiliated Subadviser will
provide separate disclosure of any fees
paid to the Affiliated Subadviser.
Applicants’ Legal Analysis
1. Section 15(a) of the Act provides,
in relevant part, that it is unlawful for
any person to act as an investment
adviser to a registered investment
company except pursuant to a written
contract that has been approved by the
vote of a majority of the company’s
outstanding voting securities. Rule 18f2 under the Act provides that each
series or class of stock in a series
investment company affected by a
matter must approve that matter if the
Act requires shareholder approval.
2. Form N–1A is the registration
statement used by open-end investment
companies. Item 14(a)(3) of Form N–1A
requires disclosure of the method and
amount of the investment adviser’s
compensation.2
3. Rule 20a–1 under the Act requires
proxies solicited with respect to an
investment company to comply with
Schedule 14A under the Securities
Exchange Act of 1934 (‘‘1934 Act’’).
Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8)
and 22(c)(9) of Schedule 14A, taken
together, require a proxy statement for a
shareholder meeting at which the
advisory contract will be voted upon to
include the ‘‘rate of compensation of the
investment adviser,’’ the ‘‘aggregate
amount of the investment adviser’s
fees,’’ a description of the ‘‘terms of the
contract to be acted upon,’’ and, if a
change in the advisory fee is proposed,
the existing and proposed fees and the
difference between the two fees.
4. Regulation S–X sets forth the
requirements for financial statements
required to be included as part of
investment company registration
statements and shareholder reports filed
with the Commission. Sections 6–
07(2)(a), (b) and (c) of Regulation S–X
require that investment companies
include in their financial statements
information about investment advisory
fees.
5. Section 6(c) of the Act provides that
the Commission may exempt any
person, security, or transaction or any
class or classes of persons, securities, or
transactions from any provisions of the
Act, or from any rule thereunder, if such
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
2 Form N–1A was recently amended by the
Commission, effective March 31, 2009, and Item
14(a)(3) should be read to refer to Item 19(a)(3) for
each Fund when that Fund begins using the revised
form.
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21049
and provisions of the Act. Applicants
state that the requested relief meets this
standard for the reasons discussed
below.
6. Applicants assert that the
shareholders are relying on the
Adviser’s experience to select one or
more Subadvisers best suited to achieve
a Fund’s investment objectives.
Applicants assert that, from the
perspective of the investor, the role of
the Subadvisers is comparable to that of
the individual portfolio managers
employed by the Adviser. Applicants
state that requiring shareholder
approval of each Subadvisory
Agreement would impose costs and
unnecessary delays on the Funds, and
may preclude the Adviser from acting
promptly in a manner considered
advisable by the Board. Applicants note
that the Advisory Agreement and any
Subadvisory Agreement with an
Affiliated Subadviser will remain
subject to section 15(a) of the Act and
rule 18f–2 under the Act.
7. Applicants assert that many
Subadvisers use a ‘‘posted’’ rate
schedule to set their fees. Applicants
state that, while Subadvisers are willing
to negotiate fees lower than those posted
in the schedule, they are reluctant to do
so where the fees are disclosed to other
prospective and existing customers.
Applicants submit that the requested
relief will allow the Adviser to negotiate
more effectively with each Subadviser.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Before a Fund may rely on the
requested order, the operation of the
Fund in the manner described in the
application will be approved by a
majority of the Fund’s outstanding
voting securities, as defined in the Act,
or in the case of a Fund whose public
shareholders purchase shares on the
basis of a prospectus containing the
disclosure contemplated by condition 2
below, by the initial shareholder(s)
before offering shares of that Fund to the
public.
2. Each Fund relying on the requested
order will disclose in its prospectus the
existence, substance, and effect of any
order granted pursuant to this
application. Each Fund will hold itself
out to the public as utilizing a multimanager investment approach (the
‘‘Manager of Managers Structure’’). The
prospectus will prominently disclose
that the Adviser has ultimate
responsibility (subject to oversight by
the Board) to oversee the Subadvisers
and recommend their hiring,
termination, and replacement.
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3. Within 90 days of the hiring of a
new Subadviser, Fund shareholders will
be furnished all information about the
new Subadviser that would be included
in a proxy statement, except as modified
to permit Aggregate Fee Disclosure. This
information will include Aggregate Fee
Disclosure and any change in disclosure
caused by the addition of the new
Subadviser. To meet this obligation,
each Fund will provide shareholders
within 90 days of the hiring of a new
Subadviser an information statement
meeting the requirements of Regulation
14C, Schedule 14C and Item 22 of
Schedule 14A under the 1934 Act,
except as modified by the order to
permit Aggregate Fee Disclosure.
4. The Adviser will not enter into a
Subadvisory Agreement with any
Affiliated Subadviser without such
agreement, including the compensation
to be paid thereunder, being approved
by the shareholders of the applicable
Fund.
5. At all times, at least a majority of
the Board will be Independent Trustees,
and the nomination of new or additional
Independent Trustees will be placed
within the discretion of the thenexisting Independent Trustees.
6. Whenever a subadviser change is
proposed for a Fund with an Affiliated
Subadviser, the Board, including a
majority of the Independent Trustees,
will make a separate finding, reflected
in the applicable Board minutes, that
such change is in the best interests of
the Fund and its shareholders, and does
not involve a conflict of interest from
which the Adviser or the Affiliated
Subadviser derives an inappropriate
advantage.
7. Independent legal counsel, as
defined in rule 0–1(a)(6) under the Act,
will be engaged to represent the
Independent Trustees. The selection of
such counsel will be within the
discretion of the then-existing
Independent Trustees.
8. The Adviser will provide the
Board, no less frequently than quarterly,
with information about the profitability
of the Adviser on a per Fund basis. The
information will reflect the impact on
profitability of the hiring or termination
of any subadviser during the applicable
quarter.
9. Whenever a subadviser is hired or
terminated, the Adviser will provide the
Board with information showing the
expected impact on the profitability of
the Adviser.
10. The Adviser will provide general
management services to each Fund,
including overall supervisory
responsibility for the general
management and investment of each
Fund’s assets and, subject to review and
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approval of the Board, will: (a) Set each
Fund’s overall investment strategies; (b)
evaluate, select and recommend
Subadvisers to manage all or a part of
each Fund’s assets; (c) allocate and,
when appropriate, reallocate each
Fund’s assets among one or more
Subadvisers; (d) monitor and evaluate
the performance of Subadvisers; and (e)
implement procedures reasonably
designed to ensure that the Subadvisers
comply with each Fund’s investment
objective, policies and restrictions.
11. No trustee or officer of the Trust
or a Fund, or director, manager, or
officer of the Adviser, will own directly
or indirectly (other than through a
pooled investment vehicle that is not
controlled by such person), any interest
in a Subadviser, except for (a)
ownership of interests in the Adviser or
any entity that controls, is controlled by,
or is under common control with the
Adviser or (b) ownership of less than
1% of the outstanding securities of any
class of equity or debt of any publicly
traded company that is either a
Subadviser or an entity that controls, is
controlled by, or is under common
control with a Subadviser.
12. Each Fund will disclose in its
registration statement the Aggregate Fee
Disclosure.
13. In the event the Commission
adopts a rule under the Act providing
substantially similar relief to that in the
order requested in the application, the
requested order will expire on the
effective date of that rule.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–9285 Filed 4–21–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
V–GPO, Inc., Valesc Holdings, Inc.,
Venture Stores, Inc., Vertigo Theme
Parks, Inc. (f/k/a Snap2 Corp.),
Videolan Technologies, Inc.,
VisionGateway, Inc., Vital Health
Technologies, Inc. (n/k/a Caribbean
American Health Resorts), and
VoiceNet, Inc.; Order of Suspension of
Trading
April 20, 2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of V–GPO, Inc.
because it has not filed any periodic
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reports since the period ended
September 30, 2006.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Valesc
Holdings, Inc. because it has not filed
any periodic reports since the period
ended June 30, 2003.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Venture
Stores, Inc. because it has not filed any
periodic reports since the period ended
October 25, 1997.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Vertigo
Theme Parks, Inc. (f/k/a Snap2 Corp.)
because it has not filed any periodic
reports since the period ended June 30,
2005.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Videolan
Technologies, Inc. because it has not
filed any periodic reports since the
period ended September 30, 1997.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of
VisionGateway, Inc. because it has not
filed any periodic reports since the
period ended July 31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Vital Health
Technologies, Inc. (n/k/a Caribbean
American Health Resorts) because it has
not filed any periodic reports since the
period ended September 30, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of VoiceNet,
Inc. because it has not filed any periodic
reports since the period ended
September 30, 2001.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the
securities of the above-listed companies
is suspended for the period from 9:30
a.m. EDT on April 20, 2010, through
11:59 p.m. EDT on May 3, 2010.
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]]>Agencies
[Federal Register Volume 75, Number 77 (Thursday, April 22, 2010)]
[Notices]
[Pages 21048-21050]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-9285]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29208; 812-13651]
Northern Lights Fund Trust, et al.; Notice of Application
April 16, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act and rule 18f-2 under the Act, as well as from certain
disclosure requirements.
-----------------------------------------------------------------------
SUMMARY: Summary of Application: Applicants request an order that
would permit them to enter into and materially amend subadvisory
agreements without shareholder approval and would grant relief from
certain disclosure requirements.
Applicants: Northern Lights Fund Trust (the ``Trust'') and CMG
Capital Management Group, Inc. (the ``Adviser'').
DATES: Filing Dates: The application was filed on April 9, 2009 and
amended on September 28, 2009 and April 16, 2010.
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 May 11, 2010, and should be accompanied by proof of
service on the 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, 150 North
Radnor-Chester Road, Suite A120, Radnor, PA 19087; Trust, 450 Wireless
Boulevard, Hauppauge, NY 11788-0132.
FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel,
at (202) 551-6868, or Julia Kim Gilmer, 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 via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. The Trust, a Delaware statutory trust, is registered under the
Act as an open-end management investment company and offers
approximately forty-six series, including the CMG Absolute Return
Strategies Fund (``CMG Fund''). The CMG Fund currently employs six
unaffiliated investment subadvisers (each, a ``Subadviser'').\1\ The
Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940 (``Advisers Act'') and serves as the investment
adviser to the CMG Fund pursuant to an investment advisory agreement
(``Advisory
[[Page 21049]]
Agreement'') with the Trust. The Adviser will also serve as the
investment adviser to the other Funds. The Advisory Agreement was
approved by the Trust's board of trustees (together with the board of
directors or trustees of any Fund if different, the ``Board''),
including a majority of the trustees who are not ``interested
persons,'' as defined in section 2(a)(19) of the Act, of the Trust or
the Adviser (``Independent Trustees'') and by the initial shareholder
of the CMG Fund.
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\1\ Applicants also request relief with respect to existing and
future series of the Trust and any other existing or future
registered open-end management investment company or series thereof
that: (a) Is advised by the Adviser; (b) uses the manager of
managers structure described in the application; and (c) complies
with the terms and conditions of this application (together with the
CMG Fund, the ``Funds'' and each, individually, a ``Fund.'') The
only existing registered open-end management investment company that
currently intends to rely on the requested order is named as an
applicant. If the name of any Fund contains the name of a
Subadviser, the name of the Adviser will precede the name of the
Subadviser.
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2. Under the terms of the Advisory Agreement, the Adviser is
responsible for the overall management of the CMG Fund's business
affairs and selecting the CMG Fund's investments in accordance with its
investment objectives, policies and restrictions. For the investment
management services that it provides to the CMG Fund, the Adviser
receives the fee specified in the Advisory Agreement. The Advisory
Agreement also permits the Adviser to retain one or more subadvisers
for the purpose of managing the investments of the CMG Fund. Pursuant
to this authority, the Adviser has entered into investment subadvisory
agreements (``Subadvisory Agreements'') with six Subadvisers to provide
investment advisory services to the CMG Fund. Each Subadviser is and
each future Subadviser will be registered as an investment adviser
under the Advisers Act. The Adviser will supervise, evaluate and
allocate assets to the Subadvisers, and make recommendations to the
Board about their hiring, retention or release, at all times subject to
the authority of the Board. The Adviser will compensate each Subadviser
out of the fees paid to the Adviser under the Advisory Agreement.
3. Applicants request an order to permit the Adviser, subject to
Board approval, to enter into and materially amend Subadvisory
Agreements without obtaining shareholder approval. The requested relief
will not extend to any subadviser that is an affiliated person, as
defined in section 2(a)(3) of the Act, of the Trust, a Fund or the
Adviser, other than by reason of serving as a subadviser to one or more
of the Funds (``Affiliated Subadviser'').
4. Applicants also request an exemption from the various disclosure
provisions described below that may require the Funds to disclose fees
paid by the Adviser to the Subadvisers. An exemption is requested to
permit a Fund to disclose (as both a dollar amount and as a percentage
of each Fund's net assets): (a) The aggregate fees paid to the Adviser
and any Affiliated Subadvisers; and (b) the aggregate fees paid to
Subadvisers (collectively, ``Aggregate Fee Disclosure''). Any Fund that
employs an Affiliated Subadviser will provide separate disclosure of
any fees paid to the Affiliated Subadviser.
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except pursuant to a written contract that has been
approved by the vote of a majority of the company's outstanding voting
securities. Rule 18f-2 under the Act provides that each series or class
of stock in a series investment company affected by a matter must
approve that matter if the Act requires shareholder approval.
2. Form N-1A is the registration statement used by open-end
investment companies. Item 14(a)(3) of Form N-1A requires disclosure of
the method and amount of the investment adviser's compensation.\2\
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\2\ Form N-1A was recently amended by the Commission, effective
March 31, 2009, and Item 14(a)(3) should be read to refer to Item
19(a)(3) for each Fund when that Fund begins using the revised form.
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3. Rule 20a-1 under the Act requires proxies solicited with respect
to an investment company to comply with Schedule 14A under the
Securities Exchange Act of 1934 (``1934 Act''). Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together,
require a proxy statement for a shareholder meeting at which the
advisory contract will be voted upon to include the ``rate of
compensation of the investment adviser,'' the ``aggregate amount of the
investment adviser's fees,'' a description of the ``terms of the
contract to be acted upon,'' and, if a change in the advisory fee is
proposed, the existing and proposed fees and the difference between the
two fees.
4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of investment company
registration statements and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b) and (c) of Regulation S-X require
that investment companies include in their financial statements
information about investment advisory fees.
5. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction or any class or classes of
persons, securities, or transactions from any provisions of the Act, or
from any rule thereunder, if such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors
and the purposes fairly intended by the policy and provisions of the
Act. Applicants state that the requested relief meets this standard for
the reasons discussed below.
6. Applicants assert that the shareholders are relying on the
Adviser's experience to select one or more Subadvisers best suited to
achieve a Fund's investment objectives. Applicants assert that, from
the perspective of the investor, the role of the Subadvisers is
comparable to that of the individual portfolio managers employed by the
Adviser. Applicants state that requiring shareholder approval of each
Subadvisory Agreement would impose costs and unnecessary delays on the
Funds, and may preclude the Adviser from acting promptly in a manner
considered advisable by the Board. Applicants note that the Advisory
Agreement and any Subadvisory Agreement with an Affiliated Subadviser
will remain subject to section 15(a) of the Act and rule 18f-2 under
the Act.
7. Applicants assert that many Subadvisers use a ``posted'' rate
schedule to set their fees. Applicants state that, while Subadvisers
are willing to negotiate fees lower than those posted in the schedule,
they are reluctant to do so where the fees are disclosed to other
prospective and existing customers. Applicants submit that the
requested relief will allow the Adviser to negotiate more effectively
with each Subadviser.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Fund may rely on the requested order, the operation of
the Fund in the manner described in the application will be approved by
a majority of the Fund's outstanding voting securities, as defined in
the Act, or in the case of a Fund whose public shareholders purchase
shares on the basis of a prospectus containing the disclosure
contemplated by condition 2 below, by the initial shareholder(s) before
offering shares of that Fund to the public.
2. Each Fund relying on the requested order will disclose in its
prospectus the existence, substance, and effect of any order granted
pursuant to this application. Each Fund will hold itself out to the
public as utilizing a multi-manager investment approach (the ``Manager
of Managers Structure''). The prospectus will prominently disclose that
the Adviser has ultimate responsibility (subject to oversight by the
Board) to oversee the Subadvisers and recommend their hiring,
termination, and replacement.
[[Page 21050]]
3. Within 90 days of the hiring of a new Subadviser, Fund
shareholders will be furnished all information about the new Subadviser
that would be included in a proxy statement, except as modified to
permit Aggregate Fee Disclosure. This information will include
Aggregate Fee Disclosure and any change in disclosure caused by the
addition of the new Subadviser. To meet this obligation, each Fund will
provide shareholders within 90 days of the hiring of a new Subadviser
an information statement meeting the requirements of Regulation 14C,
Schedule 14C and Item 22 of Schedule 14A under the 1934 Act, except as
modified by the order to permit Aggregate Fee Disclosure.
4. The Adviser will not enter into a Subadvisory Agreement with any
Affiliated Subadviser without such agreement, including the
compensation to be paid thereunder, being approved by the shareholders
of the applicable Fund.
5. At all times, at least a majority of the Board will be
Independent Trustees, and the nomination of new or additional
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
6. Whenever a subadviser change is proposed for a Fund with an
Affiliated Subadviser, the Board, including a majority of the
Independent Trustees, will make a separate finding, reflected in the
applicable Board minutes, that such change is in the best interests of
the Fund and its shareholders, and does not involve a conflict of
interest from which the Adviser or the Affiliated Subadviser derives an
inappropriate advantage.
7. Independent legal counsel, as defined in rule 0-1(a)(6) under
the Act, will be engaged to represent the Independent Trustees. The
selection of such counsel will be within the discretion of the then-
existing Independent Trustees.
8. The Adviser will provide the Board, no less frequently than
quarterly, with information about the profitability of the Adviser on a
per Fund basis. The information will reflect the impact on
profitability of the hiring or termination of any subadviser during the
applicable quarter.
9. Whenever a subadviser is hired or terminated, the Adviser will
provide the Board with information showing the expected impact on the
profitability of the Adviser.
10. The Adviser will provide general management services to each
Fund, including overall supervisory responsibility for the general
management and investment of each Fund's assets and, subject to review
and approval of the Board, will: (a) Set each Fund's overall investment
strategies; (b) evaluate, select and recommend Subadvisers to manage
all or a part of each Fund's assets; (c) allocate and, when
appropriate, reallocate each Fund's assets among one or more
Subadvisers; (d) monitor and evaluate the performance of Subadvisers;
and (e) implement procedures reasonably designed to ensure that the
Subadvisers comply with each Fund's investment objective, policies and
restrictions.
11. No trustee or officer of the Trust or a Fund, or director,
manager, or officer of the Adviser, will own directly or indirectly
(other than through a pooled investment vehicle that is not controlled
by such person), any interest in a Subadviser, except for (a) ownership
of interests in the Adviser or any entity that controls, is controlled
by, or is under common control with the Adviser or (b) ownership of
less than 1% of the outstanding securities of any class of equity or
debt of any publicly traded company that is either a Subadviser or an
entity that controls, is controlled by, or is under common control with
a Subadviser.
12. Each Fund will disclose in its registration statement the
Aggregate Fee Disclosure.
13. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that in the order requested
in the application, the requested order will expire on the effective
date of that rule.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-9285 Filed 4-21-10; 8:45 am]
BILLING CODE 8011-01-P
