EQ Advisors Trust, et al.; Notice of Application, 33369-33374 [2010-14052]
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Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices
approved collection of information
discussed below.
Rules 7a–15 through 7a–37 (17 CFR
260.7a–15–260.7a–37) under the Trust
Indenture Act of 1939 set forth the
general requirements relating to
applications, statements and reports that
must be filed under the Act by issuers
of, and trustees to, qualified indentures
under the Act. The respondents are
persons and entities subject to the
requirements of the Trust Indenture Act.
Rules 7a–15 through 7a–37 are
disclosure guidelines and do not
directly result in any collection of
information. The Rules are assigned
only one burden hour for administrative
convenience.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Written comments regarding the
above information should be directed to
the following persons: (i) Desk Officer
for the Securities and Exchange
Commission, Office of Information and
Regulatory Affairs, Office of
Management and Budget, Room 10102,
New Executive Office Building,
Washington, DC 20503; or send an email to: Shagufta_Ahmed@omb.eop.gov;
and (ii) 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. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: June 7, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–14055 Filed 6–10–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29294; File No. 812–13706]
EQ Advisors Trust, et al.; Notice of
Application
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
June 4, 2010.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
12(d)(1)(A) and (B) of the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from section 17(a) of the Act
and under section 6(c) of the Act for an
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exemption from rule 12d1–2 under the
Act.
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Applicants’ Representations
1. Each Trust is organized as a
Delaware statutory trust. Each Trust is
SUMMARY: Summary of the Application:
registered under the Act as an open-end
Applicants request an order that would
management investment company and
(a) permit certain series of registered
offers multiple series (‘‘Funds’’).1 Each
open-end management investment
Trust is offered to (a) insurance
companies to acquire shares of other
company separate accounts registered
registered open-end management
under the Act (‘‘Registered Separate
investment companies and unit
Accounts’’) and insurance company
investment trusts (‘‘UITs’’) that are
separate accounts exempt from
within or outside the same group of
registration under the Act
investment companies, and (b) permit
(‘‘Unregistered Separate Accounts,’’ and
certain series of registered open-end
together with the Registered Separate
management investment companies
relying on rule 12d1–2 under the Act to Accounts, ‘‘Separate Accounts’’) in
connection with the variable life
invest in certain financial instruments.
insurance contracts and variable
Applicants: EQ Advisors Trust, AXA
annuity certificates and contracts
Premier VIP Trust (together with EQ
(‘‘Variable Contracts’’) issued by the
Advisors Trust, the ‘‘Trusts’’) and AXA
Manager and other affiliated or
Equitable Life Insurance Company (the
unaffiliated insurance companies, (b)
‘‘Manager’’).
retirement plans, including the 401(k)
DATES: Filing Dates: The application was
plan sponsored by the Manager and (c)
filed on September 29, 2009 and
series of each Trust. Certain Funds
amended on March 17, 2010 and June
pursue their investment objectives
3, 2010.
Hearing or Notification of Hearing: An through a master-feeder arrangement in
reliance on section 12(d)(1)(E) of the
order granting the application will be
Act.2
issued unless the Commission orders a
2. The Manager is a New York stock
hearing. Interested persons may request
life insurance company registered under
a hearing by writing to the
the Investment Advisers Act of 1940
Commission’s Secretary and serving
(‘‘Advisers Act’’) and serves as
applicants with a copy of the request,
investment adviser to the Trusts. The
personally or by mail. Hearing requests
Manager is a wholly owned subsidiary
should be received by the Commission
of AXA Financial, Inc., a holding
by 5:30 p.m. on June 29, 2010, and
company. AXA Financial, Inc., is a
should be accompanied by proof of
wholly owned subsidiary of AXA, a
service on applicants in the form of an
French holding company for an
affidavit or, for lawyers, a certificate of
international group of insurance and
service. Hearing requests should state
related financial services companies.
the nature of the writer’s interest, the
3. Applicants request relief to permit:
reason for the request, and the issues
(a) A Fund (a ‘‘Fund of Funds’’) to
contested. Persons who wish to be
acquire shares of registered open-end
notified of a hearing may request
management investment companies or
notification by writing to the
their series (the ‘‘Unaffiliated Investment
Commission’s Secretary.
Companies’’) and UITs that are not part
ADDRESSES: Secretary, Securities and
of the ‘‘same group of investment
Exchange Commission, 100 F Street,
companies’’ (as defined in section
NE., Washington, DC 20549–1090;
12(d)(1)(G)(ii) of the Act) as the Fund of
Applicants: c/o Steven M. Joenk, AXA
Funds (‘‘Unaffiliated Trusts,’’ and
Equitable Life Insurance Company, 1290
Avenue of the Americas, New York,
1 Applicants request that the order extend to any
New York 10104.
future series of the Trusts, and any other existing
FOR FURTHER INFORMATION CONTACT: John or future registered open-end management
investment companies and their series that are part
Yoder, Senior Counsel, at (202) 551–
of the same group of investment companies, as
6878, or Michael W. Mundt, Assistant
defined in section 12(d)(1)(G)(ii) of the Act, as the
Trusts and are, or may in the future be, advised by
Director, at (202) 551–6821 (Office of
the Manager or any other investment adviser
Investment Company Regulation,
controlling, controlled by, or under common
Division of Investment Management).
control with the Manager (included in the term,
‘‘Funds’’). All entities that currently intend to rely
SUPPLEMENTARY INFORMATION: The
on the requested order are named as applicants.
following is a summary of the
Any other entity that relies on the order in the
application. The complete application
future will comply with the terms and conditions
may be obtained via the Commission’s
of the application.
2 A Fund of Funds may not invest in an
Web site by searching for the file
Underlying Fund that operates as a feeder fund
number, or an applicant using the
unless the feeder fund is part of the same group of
Company name box, at https://
investment companies (as defined in section
www.sec.gov/search/search.htm or by
12(d)(1)(G)(ii) of the Act) as its corresponding
master fund.
calling (202) 551–8090.
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Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices
together with the Unaffiliated
Investment Companies, the ‘‘Unaffiliated
Funds’’); 3 (b) the Unaffiliated Funds,
their principal underwriters and any
broker or dealer registered under the
Securities Exchange Act of 1934
(‘‘Broker’’) to sell shares of the
Unaffiliated Funds to the Fund of
Funds; (c) the Funds of Funds to acquire
shares of other Funds in the ‘‘same
group of investment companies’’ (as
defined in section 12(d)(1)(G)(ii) of the
Act) as the Fund of Funds (collectively,
the ‘‘Affiliated Funds,’’ and together
with the Unaffiliated Funds, the
‘‘Underlying Funds’’); and (d) the
Affiliated Funds, their principal
underwriters and any Broker to sell
shares of the Affiliated Funds to the
Fund of Funds. Applicants also request
an order under sections 6(c) and 17(b)
of the Act to exempt applicants from
section 17(a) to the extent necessary to
permit Underlying Funds to sell their
shares to Funds of Funds and redeem
their shares from Funds of Funds.
4. Applicants also request an
exemption to the extent necessary to
permit Funds that invest in Underlying
Funds in reliance on section 12(d)(1)(G)
of the Act, and that are eligible to invest
in securities (as defined in section
2(a)(36) of the Act) in reliance on rule
12d1–2 under the Act (‘‘Same Group
Funds of Funds’’), to also invest, to the
extent consistent with their investment
objective, policies, strategies and
limitations, in financial instruments that
may not be securities within the
meaning of section 2(a)(36) of the Act
(‘‘Other Investments’’).
5. Consistent with its fiduciary
obligations under the Act, each Same
Group Fund of Fund’s board of trustees
will review the advisory fees charged by
the Same Group Fund of Fund’s
investment adviser to ensure that they
are based on services provided that are
in addition to, rather than duplicative
of, services provided pursuant to the
advisory agreement of any investment
company in which the Same Group
Fund of Funds may invest.
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Applicants’ Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act
prohibits a registered investment
company from acquiring shares of an
investment company if the securities
represent more than 3% of the total
outstanding voting stock of the acquired
3 Certain of the Unaffiliated Funds may be
registered under the Act as either UITs or open-end
management investment companies and have
obtained exemptions from the Commission
necessary to permit their shares to be listed and
traded on a national securities exchange at
negotiated prices (‘‘ETFs’’).
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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 shares of the investment company to
another investment company if the sale
will cause the acquiring company to
own more than 3% of the acquired
company’s voting stock, or if the sale
will cause more than 10% of the
acquired company’s voting stock to be
owned by investment companies
generally.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants seek an exemption under
section 12(d)(1)(J) of the Act from the
limitations of sections 12(d)(1)(A) and
(B) to the extent necessary to permit the
Funds of Funds to acquire shares of the
Underlying Funds in excess of the limits
set forth in section 12(d)(1)(A) of the Act
and to permit the Underlying Funds,
their principal underwriters and any
Broker to sell shares to the Funds of
Funds in excess of the limits set forth
in section 12(d)(1)(B) of the Act.
3. Applicants state that the proposed
arrangement will not give rise to the
policy concerns underlying sections
12(d)(1)(A) and (B), which include
concerns about undue influence by a
fund of funds or its affiliated persons
over underlying funds, excessive
layering of fees, and overly complex
fund structures. Accordingly, applicants
believe that the requested exemption is
consistent with the public interest and
the protection of investors.
4. Applicants state that the proposed
arrangement will not result in undue
influence by a Fund of Funds or its
affiliated persons over the Underlying
Funds. The concern about undue
influence does not arise in connection
with a Fund of Funds’ investment in the
Affiliated Funds, since they are part of
the same group of investment
companies. To limit the control that a
Fund of Funds or its affiliated persons
may have over an Unaffiliated Fund,
applicants propose a condition
prohibiting: (a) The Manager and any
person controlling, controlled by or
under common control with the
Manager, any investment company and
any issuer that would be an investment
company but for section 3(c)(1) or
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section 3(c)(7) of the Act advised or
sponsored by the Manager or any person
controlling, controlled by or under
common control with the Manager
(collectively, the ‘‘Group’’), and (b) any
investment adviser within the meaning
of section 2(a)(20)(B) of the Act to a
Fund of Funds (‘‘Subadviser’’), any
person controlling, controlled by or
under common control with the
Subadviser, and any investment
company or issuer that would be an
investment company but for section
3(c)(1) or 3(c)(7) of the Act (or portion
of such investment company or issuer)
advised or sponsored by the Subadviser
or any person controlling, controlled by
or under common control with the
Subadviser (collectively, the
‘‘Subadviser Group’’) from controlling
(individually or in the aggregate) an
Unaffiliated Fund within the meaning of
section 2(a)(9) of the Act.
5. Applicants further state that
condition 2 precludes a Fund of Funds,
the Manager, any Subadviser, promoter
or principal underwriter of a Fund of
Funds, and any person controlling,
controlled by or under common control
with any of those entities (each, a ‘‘Fund
of Funds Affiliate’’) from taking
advantage of an Unaffiliated Fund, with
respect to transactions between the
Fund of Funds or a Fund of Funds
Affiliate and the Unaffiliated Fund or
the Unaffiliated Fund’s investment
adviser(s), sponsor, promoter, principal
underwriter or any person controlling,
controlled by or under common control
with any of these entities (each, an
‘‘Unaffiliated Fund Affiliate’’). Condition
5 precludes a Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
adviser to an Unaffiliated Investment
Company or sponsor to an Unaffiliated
Trust) from causing an Unaffiliated
Fund to purchase a security in an
offering of securities during the
existence of any underwriting or selling
syndicate of which a principal
underwriter is an officer, director,
trustee, member of an advisory board,
investment adviser, Subadviser, or
employee of the Fund of Funds, or a
person of which any such officer,
director, trustee, investment adviser,
Subadviser, member of an advisory
board, or employee is an affiliated
person (each, an ‘‘Underwriting
Affiliate,’’ except any person whose
relationship to the Unaffiliated Fund is
covered by section 10(f) of the Act is not
an Underwriting Affiliate). An offering
of securities during the existence of any
underwriting or selling syndicate of
which a principal underwriter is an
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WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices
Underwriting Affiliate is an ‘‘Affiliated
Underwriting.’’
6. As an additional assurance that an
Unaffiliated Investment Company
understands the implications of an
investment by a Fund of Funds under
the requested order, prior to a Fund of
Funds’ investment in the Unaffiliated
Investment Company in excess of the
limit in section 12(d)(1)(A)(i), condition
8 requires that the Fund of Funds and
Unaffiliated Investment Company
execute an agreement stating, without
limitation, that their boards of directors
or trustees (‘‘Boards’’) and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order (‘‘Participation
Agreement’’). Applicants note that an
Unaffiliated Investment Company (other
than an ETF whose shares are
purchased by a Fund of Funds in the
secondary market) will retain the right
to reject an investment by a Fund of
Funds.4
7. Applicants do not believe that the
proposed arrangement will involve
excessive layering of fees. With respect
to investment advisory fees, applicants
state that, in connection with the
approval of any investment advisory
contract under section 15 of the Act, the
Board of each Fund of Funds, including
a majority of the trustees who are not
‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act (‘‘Independent
Trustees’’), will find that the advisory
fees charged under the advisory contract
are based on services provided that are
in addition to, rather than duplicative
of, services provided pursuant to any
Underlying Fund’s advisory contract(s).
Applicants further state that the
Manager will waive fees otherwise
payable to it by a Fund of Funds in an
amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Unaffiliated Investment Company
pursuant to rule 12b–1 under the Act)
received from an Unaffiliated Fund by
the Manager, or an affiliated person of
the Manager, other than any advisory
fees paid to the Manager or an affiliated
person of the Manager by an
Unaffiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Unaffiliated Fund.
8. Applicants state that with respect
to Registered Separate Accounts that
invest in a Fund of Funds, no sales load
will be charged at the Fund of Funds
4 An Unaffiliated Investment Company, including
an ETF, would retain its right to reject any initial
investment by a Fund of Funds in excess of the
limit in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement
with the Fund of Funds.
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level or at the Underlying Fund level.
Other sales charges and service fees, as
defined in Rule 2830 of the Conduct
Rules of the NASD (‘‘NASD Conduct
Rule 2830’’), if any, will only be charged
at the Fund of Funds level or at the
Underlying Fund level, not both. With
respect to other investments in a Fund
of Funds, any sales charges and/or
service fees charged with respect to
shares of the Fund of Funds will not
exceed the limits applicable to funds of
funds as set forth in NASD Conduct
Rule 2830.
9. Applicants represent that each
Fund of Funds will represent in the
Participation Agreement that no
insurance company sponsoring a
Registered Separate Account funding
Variable Contracts will be permitted to
invest in the Fund of Funds unless the
insurance company has certified to the
Fund of Funds that the aggregate of all
fees and charges associated with each
contract that invests in the Fund of
Funds, including fees and charges at the
Separate Account, Fund of Funds, and
Underlying Fund levels, are reasonable
in relation to the services rendered, the
expenses expected to be incurred, and
the risks assumed by the insurance
company.
10. Applicants state that the proposed
arrangement will not create an overly
complex fund structure. Applicants note
that an Underlying Fund will be
prohibited from acquiring securities of
any investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A), except to the
extent that such Underlying 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 Underlying Fund to: (i)
acquire securities of one or more
investment companies for short-term
cash management purposes, or (ii)
engage in interfund borrowing and
lending transactions.
B. Section 17(a)
1. Section 17(a) of the Act generally
prohibits sales or purchases of securities
between a registered investment
company and its affiliated persons or
affiliated persons of such persons.
Section 2(a)(3) of the Act defines an
‘‘affiliated person’’ of another person to
include (a) any person directly or
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33371
indirectly owning, controlling, or
holding with power to vote, 5% or more
of the outstanding voting securities of
the other person; (b) any person 5% or
more of whose outstanding voting
securities are directly or indirectly
owned, controlled, or held with power
to vote by the other person; and (c) any
person directly or indirectly controlling,
controlled by, or under common control
with the other person.
2. Applicants state that the Funds of
Funds and the Affiliated Funds may be
deemed to be under common control
and therefore affiliated persons of one
another. Applicants also state that the
Funds of Funds and the Underlying
Funds may be deemed to be affiliated
persons of one another if a Fund of
Funds acquires 5% or more of an
Underlying Fund’s outstanding voting
securities. In light of these possible
affiliations, section 17(a) could prevent
an Underlying Fund from selling shares
to and redeeming shares from a Fund of
Funds.5
3. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company 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.
4. Applicants submit that the
proposed transactions satisfy the
standards for relief under sections 17(b)
and 6(c) of the Act, as the terms are fair
and reasonable and do not involve
overreaching. Applicants state that the
terms upon which an Underlying Fund
will sell its shares to or purchase its
shares from a Fund of Funds will be
based on the net asset value of each
5 Applicants acknowledge that receipt of any
compensation by (a) an affiliated person of a Funds
of Funds, or an affiliated person of such person, for
the purchase by the Fund of Funds of shares of an
Underlying Fund or (b) an affiliated person of an
Underlying Fund, or an affiliated person of such
person, for the sale by the Underlying Fund of its
shares to a Fund of Funds may be prohibited by
section 17(e)(1) of the Act. The Participation
Agreement also will include this acknowledgement.
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Underlying Fund.6 Applicants also state
that the proposed transactions will be
consistent with the policies of each
Fund of Funds and Underlying Fund,
and with the general purposes of the
Act.
C. Other Investments by Same Group
Funds of Funds
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
1. Section 12(d)(1)(G) of the Act
provides that section 12(d)(1) will not
apply to securities of an acquired
company purchased by an acquiring
company if: (i) The acquiring company
and acquired company are part of the
same group of investment companies;
(ii) the acquiring company holds only
securities of acquired companies that
are part of the same group of investment
companies, government securities, and
short-term paper; (iii) the aggregate sales
loads and distribution-related fees of the
acquiring company and the acquired
company are not excessive under rules
adopted pursuant to section 22(b) or
section 22(c) of the Act by a securities
association registered under section 15A
of the Exchange Act or by the
Commission; and (iv) the acquired
company has a policy that prohibits it
from acquiring securities of registered
open-end management investment
companies or registered unit investment
trusts in reliance on section 12(d)(1)(F)
or (G) of the Act.
2. Rule 12d1–2 under the Act permits
a registered open-end investment
company or a registered unit investment
trust that relies on section 12(d)(1)(G) of
the Act to acquire, in addition to
securities issued by another registered
investment company in the same group
of investment companies, government
securities, and short-term paper: (1)
Securities issued by an investment
company that is not in the same group
of investment companies, when the
acquisition is in reliance on section
12(d)(1)(A) or 12(d)(1)(F) of the Act; (2)
securities (other than securities issued
by an investment company); and (3)
securities issued by a money market
fund, when the investment is in reliance
on rule 12d1–1 under the Act. For the
purposes of rule 12d1–2, ‘‘securities’’
6 Applicants note that a Fund of Funds generally
would purchase and sell shares of an Underlying
Fund that operates as an ETF through secondary
market transactions at market prices rather than
through principal transactions with the Underlying
Fund at net asset value. Applicants would not rely
on the requested relief from section 17(a) for such
secondary market transactions. To the extent that a
Fund of Funds purchases or redeems shares from
an ETF that is an affiliated person of the Fund of
Funds in exchange for a basket of specified
securities as described in the application for the
exemptive order upon which the ETF relies,
applicants also request relief from section 17(a) of
the Act for those in-kind transactions.
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means any security as defined in section
2(a)(36) of the Act.
3. Applicants state that the proposed
arrangement would comply with the
provisions of rule 12d1–2 under the Act,
but for the fact that the Same Group
Funds of Funds may invest a portion of
their assets in Other Investments.
Applicants request an order under
section 6(c) of the Act for an exemption
from rule 12d1–2(a) to allow the Same
Group Funds of Funds to invest in
Other Investments. Applicants assert
that permitting the Same Group Funds
of Funds to invest in Other Investments
as described in the application would
not raise any of the concerns that the
requirements of section 12(d)(1) were
designed to address.
Applicants’ Conditions
Applicants agree that the order
granting the requested relief shall be
subject to the following conditions:
Investments in Underlying Funds by
Funds of Funds
1. The members of the Group will not
control (individually or in the aggregate)
an Unaffiliated 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) an Unaffiliated Fund within
the meaning of section 2(a)(9) of the Act.
If, as a result of a decrease in the
outstanding voting securities of an
Unaffiliated Fund, the Group or a
Subadviser Group, each in the aggregate,
becomes a holder of more than 25% of
the outstanding voting securities of the
Unaffiliated Fund, then the Group or the
Subadviser Group (except for any
member of the Group or the Subadviser
Group that is a Separate Account) will
vote its shares of the Unaffiliated Fund
in the same proportion as the vote of all
other holders of the Unaffiliated Fund’s
shares. This condition will not apply to
a Subadviser Group with respect to an
Unaffiliated 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 Unaffiliated Investment
Company) or the sponsor (in the case of
an Unaffiliated Trust). A Registered
Separate Account will seek voting
instructions from its Variable Contract
holders and will vote its shares of an
Unaffiliated Fund in accordance with
the instructions received and will vote
those shares for which no instructions
were received in the same proportion as
the shares for which instructions were
received. An Unregistered Separate
Account will either (i) vote its shares of
PO 00000
Frm 00135
Fmt 4703
Sfmt 4703
the Unaffiliated Fund in the same
proportion as the vote of all other
holders of the Unaffiliated Fund’s
shares; or (ii) seek voting instructions
from its Variable Contract holders and
vote its shares in accordance with the
instructions received and vote those
shares for which no instructions were
received in the same proportion as the
shares for which instructions were
received.
2. No Fund of Funds or Fund of
Funds Affiliate will cause any existing
or potential investment by the Fund of
Funds in an Unaffiliated Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund of Funds Affiliate and the
Unaffiliated Fund or an Unaffiliated
Fund Affiliate.
3. The Board of each Fund of Funds,
including a majority of the Independent
Trustees, will adopt procedures
reasonably designed to assure that the
Manager and any Subadviser are
conducting the investment program of
the Fund of Funds without taking into
account any consideration received by
the Fund of Funds or a Fund of Funds
Affiliate from an Unaffiliated Fund or
an Unaffiliated Fund Affiliate in
connection with any services or
transactions.
4. Once an investment by a Fund of
Funds in the securities of an
Unaffiliated Investment Company
exceeds the limit of section
12(d)(1)(A)(i) of the Act, the Board of
the Unaffiliated Investment Company,
including a majority of the Independent
Trustees, will determine that any
consideration paid by the Unaffiliated
Investment Company to a Fund of
Funds or a Fund of Funds Affiliate in
connection with any services or
transactions: (a) Is fair and reasonable in
relation to the nature and quality of the
services and benefits received by the
Unaffiliated Investment Company; (b) is
within the range of consideration that
the Unaffiliated Investment Company
would be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned. This
condition will not apply with respect to
any services or transactions between an
Unaffiliated Investment Company and
its investment adviser(s), or any person
controlling, controlled by, or under
common control with such investment
adviser(s).
5. No Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
adviser to an Unaffiliated Investment
Company or sponsor to an Unaffiliated
Trust) will cause an Unaffiliated Fund
E:\FR\FM\11JNN1.SGM
11JNN1
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices
to purchase a security in any Affiliated
Underwriting.
6. The Board of an Unaffiliated
Investment Company, including a
majority of the Independent Trustees,
will adopt procedures reasonably
designed to monitor any purchases of
securities by the Unaffiliated Investment
Company in an Affiliated Underwriting
once an investment by a Fund of Funds
in the securities of the Unaffiliated
Investment Company exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly
from an Underwriting Affiliate. The
Board of the Unaffiliated Investment
Company will review these purchases
periodically, but no less frequently than
annually, to determine whether the
purchases were influenced by the
investment by the Fund of Funds in the
Unaffiliated Investment Company. The
Board of the Unaffiliated Investment
Company will consider, among other
things: (a) Whether the purchases were
consistent with the investment
objectives and policies of the
Unaffiliated Investment Company; (b)
how the performance of securities
purchased in an Affiliated Underwriting
compares to the performance of
comparable securities purchased during
a comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (c)
whether the amount of securities
purchased by the Unaffiliated
Investment Company in Affiliated
Underwritings and the amount
purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board of an Unaffiliated Investment
Company will take any appropriate
actions based on its review, including,
if appropriate, the institution of
procedures designed to assure that
purchases of securities in Affiliated
Underwritings are in the best interests
of shareholders.
7. Each Unaffiliated Investment
Company 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 an Affiliated Underwriting
once an investment by a Fund of Funds
in the securities of an Unaffiliated
Investment Company exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
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15:04 Jun 10, 2010
Jkt 220001
setting forth (a) the party from whom
the securities were acquired, (b) the
identity of the underwriting syndicate’s
members, (c) the terms of the purchase,
and (d) the information or materials
upon which the determinations of the
Board of the Unaffiliated Investment
Company were made.
8. Prior to its investment in shares of
an Unaffiliated Investment Company in
excess of the limit of section
12(d)(1)(A)(i) of the Act, the Fund of
Funds and the Unaffiliated Investment
Company will execute a Participation
Agreement stating, without limitation,
that their Boards and their investment
advisers understand the terms and
conditions of the order and agree to
fulfill their responsibilities under the
order. At the time of its investment in
shares of an Unaffiliated Investment
Company in excess of the limit set forth
in section 12(d)(1)(A)(i), a Fund of
Funds will notify the Unaffiliated
Investment Company of the investment.
At such time, the Fund of Funds will
also transmit to the Unaffiliated
Investment Company a list of the names
of each Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Unaffiliated
Investment Company of any changes to
the list as soon as reasonably practicable
after a change occurs. The Unaffiliated
Investment Company and the Fund of
Funds will maintain and preserve a
copy of the order, the Participation
Agreement and the list with any
updated information for the duration of
the investment and for a period of not
less than six years thereafter, the first
two years in an easily accessible place.
9. Before approving any advisory
contract under section 15 of the Act, the
Board of each Fund of Funds, including
a majority of the Independent Trustees,
shall find that the advisory fees charged
under the advisory contract are based on
services provided that are in addition to,
rather than duplicative of, services
provided under the advisory contract(s)
of any Underlying Fund in which the
Fund of Funds may invest. Such
finding, and the basis upon which the
finding was made, will be recorded fully
in the minute books of the appropriate
Fund of Funds.
10. The Manager will waive fees
otherwise payable to it by a Fund of
Funds in an amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Unaffiliated Investment Company
pursuant to rule 12b–1 under the Act)
received from an Unaffiliated Fund by
the Manager, or an affiliated person of
the Manager, other than any advisory
fees paid to the Manager or its affiliated
person by an Unaffiliated Investment
PO 00000
Frm 00136
Fmt 4703
Sfmt 4703
33373
Company, in connection with the
investment by the Fund of Funds in the
Unaffiliated Fund. Any Subadviser will
waive fees otherwise payable to the
Subadviser, directly or indirectly, by the
Fund of Funds in an amount at least
equal to any compensation received by
the Subadviser, or an affiliated person of
the Subadviser, from an Unaffiliated
Fund, other than any advisory fees paid
to the Subadviser or an affiliated person
of the Subadviser by an Unaffiliated
Investment Company, in connection
with the investment by the Fund of
Funds in the Unaffiliated Fund made at
the direction of the Subadviser. In the
event that the Subadviser waives fees,
the benefit of the waiver will be passed
through to the Fund of Funds.
11. With respect to Registered
Separate Accounts that invest in a Fund
of Funds, no sales load will be charged
at the Fund of Funds level or at the
Underlying Fund level. Other sales
charges and service fees, as defined in
NASD Conduct Rule 2830, if any, will
only be charged at the Fund of Funds
level or at the Underlying Fund level,
not both. With respect to other
investments in a Fund of Funds, any
sales charges and/or service fees
charged with respect to shares of a Fund
of Funds will not exceed the limits
applicable to funds of funds set forth in
NASD Conduct Rule 2830.
12. No Underlying Fund will acquire
securities of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section
12(d)(1)(A) of the Act, except to the
extent that such Underlying Fund: (a)
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 Underlying Fund to: (i)
Acquire securities of one or more
investment companies for short-term
cash management purposes, or (ii)
engage in interfund borrowing and
lending transactions.
Other Investments by Same Group
Funds of Funds
13. The Applicants will comply with
all provisions of rule 12d1–2 under the
Act, except for paragraph (a)(2) to the
extent that it restricts any Same Group
Fund of Funds from investing in Other
Investments as described in the
application.
E:\FR\FM\11JNN1.SGM
11JNN1
33374
Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange has designated this proposal
as one establishing or changing a due,
fee, or other charge imposed by CBOE
under Section 19(b)(3)(A)(ii) of the Act 3
and Rule 19b–4(f)(2) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–14052 Filed 6–10–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on June 16, 2010 at 10 a.m., in the
Auditorium, Room L–002.
The subject matter of the Open
Meeting will be: The Commission will
consider whether to propose
amendments to rules 156 and 482 under
the Securities Act of 1933 and rule 34b–
1 under the Investment Company Act of
1940 to address concerns that have been
raised about target date retirement fund
names and marketing materials.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: June 8, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010–14148 Filed 6–9–10; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62227; File No. SR–CBOE–
2010–050]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Fees
Schedule
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
June 4, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 21,
2010, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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15:04 Jun 10, 2010
Jkt 220001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule to establish fees for
transactions in all S&P 500 Dividend
Index options, regardless of the
specified accrual period. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.org/Legal), on the
Commission’s Web site at https://
www.sec.gov, at the Exchange’s Office of
the Secretary and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in Sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange previously received
approval to list options on the S&P 500
Dividend Index, which represents the
accumulated ex-dividend amounts of all
S&P 500 Index component securities
over a specified accrual period (e.g.,
quarterly, semi-annually, annually), and
recently approval to list options on the
S&P 500 Annual Dividend Index with
an applied scaling factor of 1.5 The
3 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
5 See Securities Exchange Act Release Nos. 61136
(December 10, 2009), 74 FR 66711 (December 16,
2009) (SR–CBOE–2009–022) and 62023 (May 3,
2010), 75 FR 25899 (May 10, 2010) (SR–CBOE–
2010–039).
4 17
PO 00000
Frm 00137
Fmt 4703
Sfmt 4703
Exchange currently lists S&P 500
Dividend Index (‘‘DVS’’) options with a
specified quarterly accrual period and
will begin listing options on the S&P
500 Annual Dividend Index on May 25,
2010.
The purposes [sic] of this filing is to
amend the CBOE Fees Schedule to
extend the existing fees for transactions
in DVS options to all options on the S&P
500 Dividend Index, regardless of the
specified accrual period.6 Currently the
established transaction fees for DVS
options are as follows:
• $0.20 per contract for Market-Maker
and Designated Primary Market-Maker
transactions;7
• $0.20 per contract for member firm
proprietary transactions;
• $0.40 per contract for manually
executed broker-dealer transactions;
• $0.40 per contract for electronically
executed broker-dealer transactions;
• $0.40 per contract for voluntary
professional transactions;
• $0.40 per contract for professional
transactions;
• $0.40 per contract for customer
transactions; and
• $0.10 per contract CFLEX surcharge
fee.
The Exchange also assesses a $.10 per
contract surcharge fee on all non-public
customer transactions in DVS options to
help the Exchange recoup license fees
the Exchange pays to the reporting
authority. Further, the Exchange’s
Liquidity Provider Sliding Scale applies
to transaction fees in DVS options, but
the Exchange’s marketing fee 8 does not
apply.
To affect the current proposal, the
Exchange proposes to replace all
references to ‘‘DVS’’ in the CBOE Fees
Schedule with a reference to ‘‘S&P 500
Dividend Index.’’ The transaction fees
for options on the ‘‘S&P 500 Dividend
Index’’ will apply to all options on the
S&P 500 Dividend Index regardless of
the specified accrual period (e.g.,
quarterly, semi-annually, annually).
The Exchange believes the rule
change will further the Exchange’s goal
of introducing new products to the
marketplace that are competitively
priced.9 Also, the Exchange states that
the surcharge fee on all non-public
customer transactions in options on the
S&P 500 Dividend Index is to help the
6 See Securities Exchange Act Release No. 61295
(January 6, 2010), 75 FR 2166 (January 14, 2010)
(SR–CBOE–2009–098) (filing establishing
transaction fees for DVS options).
7 This is the standard rate that is subject to the
Liquidity Provider Sliding Scale as set forth in
Footnote 10 to the Fees Schedule.
8 See Footnote 6 of the Fees Schedule.
9 Linkage order fees are inapplicable for options
on CBOE’s proprietary products.
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]]>Agencies
[Federal Register Volume 75, Number 112 (Friday, June 11, 2010)]
[Notices]
[Pages 33369-33374]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14052]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29294; File No. 812-13706]
EQ Advisors Trust, et al.; Notice of Application
June 4, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under section 12(d)(1)(J) of
the Investment Company Act of 1940 (``Act'') for an exemption from
sections 12(d)(1)(A) and (B) of the Act, under sections 6(c) and 17(b)
of the Act for an exemption from section 17(a) of the Act and under
section 6(c) of the Act for an exemption from rule 12d1-2 under the
Act.
-----------------------------------------------------------------------
SUMMARY: Summary of the Application: Applicants request an order that
would (a) permit certain series of registered open-end management
investment companies to acquire shares of other registered open-end
management investment companies and unit investment trusts (``UITs'')
that are within or outside the same group of investment companies, and
(b) permit certain series of registered open-end management investment
companies relying on rule 12d1-2 under the Act to invest in certain
financial instruments.
Applicants: EQ Advisors Trust, AXA Premier VIP Trust (together with
EQ Advisors Trust, the ``Trusts'') and AXA Equitable Life Insurance
Company (the ``Manager'').
DATES: Filing Dates: The application was filed on September 29, 2009
and amended on March 17, 2010 and June 3, 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 June 29, 2010, and should be accompanied by proof of
service on applicants in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090; Applicants: c/o Steven M. Joenk, AXA
Equitable Life Insurance Company, 1290 Avenue of the Americas, New
York, New York 10104.
FOR FURTHER INFORMATION CONTACT: John Yoder, Senior Counsel, at (202)
551-6878, or Michael W. Mundt, Assistant Director, at (202) 551-6821
(Office of Investment Company Regulation, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained 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. Each Trust is organized as a Delaware statutory trust. Each
Trust is registered under the Act as an open-end management investment
company and offers multiple series (``Funds'').\1\ Each Trust is
offered to (a) insurance company separate accounts registered under the
Act (``Registered Separate Accounts'') and insurance company separate
accounts exempt from registration under the Act (``Unregistered
Separate Accounts,'' and together with the Registered Separate
Accounts, ``Separate Accounts'') in connection with the variable life
insurance contracts and variable annuity certificates and contracts
(``Variable Contracts'') issued by the Manager and other affiliated or
unaffiliated insurance companies, (b) retirement plans, including the
401(k) plan sponsored by the Manager and (c) series of each Trust.
Certain Funds pursue their investment objectives through a master-
feeder arrangement in reliance on section 12(d)(1)(E) of the Act.\2\
---------------------------------------------------------------------------
\1\ Applicants request that the order extend to any future
series of the Trusts, and any other existing or future registered
open-end management investment companies and their series that are
part of the same group of investment companies, as defined in
section 12(d)(1)(G)(ii) of the Act, as the Trusts and are, or may in
the future be, advised by the Manager or any other investment
adviser controlling, controlled by, or under common control with the
Manager (included in the term, ``Funds''). 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.
\2\ A Fund of Funds may not invest in an Underlying Fund that
operates as a feeder fund unless the feeder fund is part of the same
group of investment companies (as defined in section 12(d)(1)(G)(ii)
of the Act) as its corresponding master fund.
---------------------------------------------------------------------------
2. The Manager is a New York stock life insurance company
registered under the Investment Advisers Act of 1940 (``Advisers Act'')
and serves as investment adviser to the Trusts. The Manager is a wholly
owned subsidiary of AXA Financial, Inc., a holding company. AXA
Financial, Inc., is a wholly owned subsidiary of AXA, a French holding
company for an international group of insurance and related financial
services companies.
3. Applicants request relief to permit: (a) A Fund (a ``Fund of
Funds'') to acquire shares of registered open-end management investment
companies or their series (the ``Unaffiliated Investment Companies'')
and UITs that are not part of the ``same group of investment
companies'' (as defined in section 12(d)(1)(G)(ii) of the Act) as the
Fund of Funds (``Unaffiliated Trusts,'' and
[[Page 33370]]
together with the Unaffiliated Investment Companies, the ``Unaffiliated
Funds''); \3\ (b) the Unaffiliated Funds, their principal underwriters
and any broker or dealer registered under the Securities Exchange Act
of 1934 (``Broker'') to sell shares of the Unaffiliated Funds to the
Fund of Funds; (c) the Funds of Funds to acquire shares of other Funds
in the ``same group of investment companies'' (as defined in section
12(d)(1)(G)(ii) of the Act) as the Fund of Funds (collectively, the
``Affiliated Funds,'' and together with the Unaffiliated Funds, the
``Underlying Funds''); and (d) the Affiliated Funds, their principal
underwriters and any Broker to sell shares of the Affiliated Funds to
the Fund of Funds. Applicants also request an order under sections 6(c)
and 17(b) of the Act to exempt applicants from section 17(a) to the
extent necessary to permit Underlying Funds to sell their shares to
Funds of Funds and redeem their shares from Funds of Funds.
---------------------------------------------------------------------------
\3\ Certain of the Unaffiliated Funds may be registered under
the Act as either UITs or open-end management investment companies
and have obtained exemptions from the Commission necessary to permit
their shares to be listed and traded on a national securities
exchange at negotiated prices (``ETFs'').
---------------------------------------------------------------------------
4. Applicants also request an exemption to the extent necessary to
permit Funds that invest in Underlying Funds in reliance on section
12(d)(1)(G) of the Act, and that are eligible to invest in securities
(as defined in section 2(a)(36) of the Act) in reliance on rule 12d1-2
under the Act (``Same Group Funds of Funds''), to also invest, to the
extent consistent with their investment objective, policies, strategies
and limitations, in financial instruments that may not be securities
within the meaning of section 2(a)(36) of the Act (``Other
Investments'').
5. Consistent with its fiduciary obligations under the Act, each
Same Group Fund of Fund's board of trustees will review the advisory
fees charged by the Same Group Fund of Fund's investment adviser to
ensure that they are based on services provided that are in addition
to, rather than duplicative of, services provided pursuant to the
advisory agreement of any investment company in which the Same Group
Fund of Funds may invest.
Applicants' Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act prohibits a registered investment
company from acquiring shares of an investment company if the
securities represent more than 3% of the total outstanding voting stock
of the acquired company, more than 5% of the total assets of the
acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter and
any Broker from selling the shares of the investment company to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or if the sale
will cause more than 10% of the acquired company's voting stock to be
owned by investment companies generally.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or transaction, or any class or classes of
persons, securities or transactions, from any provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Applicants seek an exemption under section
12(d)(1)(J) of the Act from the limitations of sections 12(d)(1)(A) and
(B) to the extent necessary to permit the Funds of Funds to acquire
shares of the Underlying Funds in excess of the limits set forth in
section 12(d)(1)(A) of the Act and to permit the Underlying Funds,
their principal underwriters and any Broker to sell shares to the Funds
of Funds in excess of the limits set forth in section 12(d)(1)(B) of
the Act.
3. Applicants state that the proposed arrangement will not give
rise to the policy concerns underlying sections 12(d)(1)(A) and (B),
which include concerns about undue influence by a fund of funds or its
affiliated persons over underlying funds, excessive layering of fees,
and overly complex fund structures. Accordingly, applicants believe
that the requested exemption is consistent with the public interest and
the protection of investors.
4. Applicants state that the proposed arrangement will not result
in undue influence by a Fund of Funds or its affiliated persons over
the Underlying Funds. The concern about undue influence does not arise
in connection with a Fund of Funds' investment in the Affiliated Funds,
since they are part of the same group of investment companies. To limit
the control that a Fund of Funds or its affiliated persons may have
over an Unaffiliated Fund, applicants propose a condition prohibiting:
(a) The Manager and any person controlling, controlled by or under
common control with the Manager, any investment company and any issuer
that would be an investment company but for section 3(c)(1) or section
3(c)(7) of the Act advised or sponsored by the Manager or any person
controlling, controlled by or under common control with the Manager
(collectively, the ``Group''), and (b) any investment adviser within
the meaning of section 2(a)(20)(B) of the Act to a Fund of Funds
(``Subadviser''), any person controlling, controlled by or under common
control with the Subadviser, and any investment company or issuer that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act (or portion of such investment company or issuer) advised or
sponsored by the Subadviser or any person controlling, controlled by or
under common control with the Subadviser (collectively, the
``Subadviser Group'') from controlling (individually or in the
aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9)
of the Act.
5. Applicants further state that condition 2 precludes a Fund of
Funds, the Manager, any Subadviser, promoter or principal underwriter
of a Fund of Funds, and any person controlling, controlled by or under
common control with any of those entities (each, a ``Fund of Funds
Affiliate'') from taking advantage of an Unaffiliated Fund, with
respect to transactions between the Fund of Funds or a Fund of Funds
Affiliate and the Unaffiliated Fund or the Unaffiliated Fund's
investment adviser(s), sponsor, promoter, principal underwriter or any
person controlling, controlled by or under common control with any of
these entities (each, an ``Unaffiliated Fund Affiliate''). Condition 5
precludes a Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an
Unaffiliated Investment Company or sponsor to an Unaffiliated Trust)
from causing an Unaffiliated Fund to purchase a security in an offering
of securities during the existence of any underwriting or selling
syndicate of which a principal underwriter is an officer, director,
trustee, member of an advisory board, investment adviser, Subadviser,
or employee of the Fund of Funds, or a person of which any such
officer, director, trustee, investment adviser, Subadviser, member of
an advisory board, or employee is an affiliated person (each, an
``Underwriting Affiliate,'' except any person whose relationship to the
Unaffiliated Fund is covered by section 10(f) of the Act is not an
Underwriting Affiliate). An offering of securities during the existence
of any underwriting or selling syndicate of which a principal
underwriter is an
[[Page 33371]]
Underwriting Affiliate is an ``Affiliated Underwriting.''
6. As an additional assurance that an Unaffiliated Investment
Company understands the implications of an investment by a Fund of
Funds under the requested order, prior to a Fund of Funds' investment
in the Unaffiliated Investment Company in excess of the limit in
section 12(d)(1)(A)(i), condition 8 requires that the Fund of Funds and
Unaffiliated Investment Company execute an agreement stating, without
limitation, that their boards of directors or trustees (``Boards'') and
their investment advisers understand the terms and conditions of the
order and agree to fulfill their responsibilities under the order
(``Participation Agreement''). Applicants note that an Unaffiliated
Investment Company (other than an ETF whose shares are purchased by a
Fund of Funds in the secondary market) will retain the right to reject
an investment by a Fund of Funds.\4\
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\4\ An Unaffiliated Investment Company, including an ETF, would
retain its right to reject any initial investment by a Fund of Funds
in excess of the limit in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement with the Fund of
Funds.
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7. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. With respect to investment advisory
fees, applicants state that, in connection with the approval of any
investment advisory contract under section 15 of the Act, the Board of
each Fund of Funds, including a majority of the trustees who are not
``interested persons,'' as defined in section 2(a)(19) of the Act
(``Independent Trustees''), will find that the advisory fees charged
under the advisory contract are based on services provided that are in
addition to, rather than duplicative of, services provided pursuant to
any Underlying Fund's advisory contract(s). Applicants further state
that the Manager will waive fees otherwise payable to it by a Fund of
Funds in an amount at least equal to any compensation (including fees
received pursuant to any plan adopted by an Unaffiliated Investment
Company pursuant to rule 12b-1 under the Act) received from an
Unaffiliated Fund by the Manager, or an affiliated person of the
Manager, other than any advisory fees paid to the Manager or an
affiliated person of the Manager by an Unaffiliated Investment Company,
in connection with the investment by the Fund of Funds in the
Unaffiliated Fund.
8. Applicants state that with respect to Registered Separate
Accounts that invest in a Fund of Funds, no sales load will be charged
at the Fund of Funds level or at the Underlying Fund level. Other sales
charges and service fees, as defined in Rule 2830 of the Conduct Rules
of the NASD (``NASD Conduct Rule 2830''), if any, will only be charged
at the Fund of Funds level or at the Underlying Fund level, not both.
With respect to other investments in a Fund of Funds, any sales charges
and/or service fees charged with respect to shares of the Fund of Funds
will not exceed the limits applicable to funds of funds as set forth in
NASD Conduct Rule 2830.
9. Applicants represent that each Fund of Funds will represent in
the Participation Agreement that no insurance company sponsoring a
Registered Separate Account funding Variable Contracts will be
permitted to invest in the Fund of Funds unless the insurance company
has certified to the Fund of Funds that the aggregate of all fees and
charges associated with each contract that invests in the Fund of
Funds, including fees and charges at the Separate Account, Fund of
Funds, and Underlying Fund levels, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by the insurance company.
10. Applicants state that the proposed arrangement will not create
an overly complex fund structure. Applicants note that an Underlying
Fund will be prohibited from acquiring securities of any investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A), except to the
extent that such Underlying 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 Underlying Fund
to: (i) acquire securities of one or more investment companies for
short-term cash management purposes, or (ii) engage in interfund
borrowing and lending transactions.
B. Section 17(a)
1. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and its
affiliated persons or affiliated persons of such persons. Section
2(a)(3) of the Act defines an ``affiliated person'' of another person
to include (a) any person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting
securities of the other person; (b) any person 5% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote by the other person; and (c) any
person directly or indirectly controlling, controlled by, or under
common control with the other person.
2. Applicants state that the Funds of Funds and the Affiliated
Funds may be deemed to be under common control and therefore affiliated
persons of one another. Applicants also state that the Funds of Funds
and the Underlying Funds may be deemed to be affiliated persons of one
another if a Fund of Funds acquires 5% or more of an Underlying Fund's
outstanding voting securities. In light of these possible affiliations,
section 17(a) could prevent an Underlying Fund from selling shares to
and redeeming shares from a Fund of Funds.\5\
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\5\ Applicants acknowledge that receipt of any compensation by
(a) an affiliated person of a Funds of Funds, or an affiliated
person of such person, for the purchase by the Fund of Funds of
shares of an Underlying Fund or (b) an affiliated person of an
Underlying Fund, or an affiliated person of such person, for the
sale by the Underlying Fund of its shares to a Fund of Funds may be
prohibited by section 17(e)(1) of the Act. The Participation
Agreement also will include this acknowledgement.
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3. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
it finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company 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.
4. Applicants submit that the proposed transactions satisfy the
standards for relief under sections 17(b) and 6(c) of the Act, as the
terms are fair and reasonable and do not involve overreaching.
Applicants state that the terms upon which an Underlying Fund will sell
its shares to or purchase its shares from a Fund of Funds will be based
on the net asset value of each
[[Page 33372]]
Underlying Fund.\6\ Applicants also state that the proposed
transactions will be consistent with the policies of each Fund of Funds
and Underlying Fund, and with the general purposes of the Act.
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\6\ Applicants note that a Fund of Funds generally would
purchase and sell shares of an Underlying Fund that operates as an
ETF through secondary market transactions at market prices rather
than through principal transactions with the Underlying Fund at net
asset value. Applicants would not rely on the requested relief from
section 17(a) for such secondary market transactions. To the extent
that a Fund of Funds purchases or redeems shares from an ETF that is
an affiliated person of the Fund of Funds in exchange for a basket
of specified securities as described in the application for the
exemptive order upon which the ETF relies, applicants also request
relief from section 17(a) of the Act for those in-kind transactions.
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C. Other Investments by Same Group Funds of Funds
1. Section 12(d)(1)(G) of the Act provides that section 12(d)(1)
will not apply to securities of an acquired company purchased by an
acquiring company if: (i) The acquiring company and acquired company
are part of the same group of investment companies; (ii) the acquiring
company holds only securities of acquired companies that are part of
the same group of investment companies, government securities, and
short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not
excessive under rules adopted pursuant to section 22(b) or section
22(c) of the Act by a securities association registered under section
15A of the Exchange Act or by the Commission; and (iv) the acquired
company has a policy that prohibits it from acquiring securities of
registered open-end management investment companies or registered unit
investment trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
2. Rule 12d1-2 under the Act permits a registered open-end
investment company or a registered unit investment trust that relies on
section 12(d)(1)(G) of the Act to acquire, in addition to securities
issued by another registered investment company in the same group of
investment companies, government securities, and short-term paper: (1)
Securities issued by an investment company that is not in the same
group of investment companies, when the acquisition is in reliance on
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other
than securities issued by an investment company); and (3) securities
issued by a money market fund, when the investment is in reliance on
rule 12d1-1 under the Act. For the purposes of rule 12d1-2,
``securities'' means any security as defined in section 2(a)(36) of the
Act.
3. Applicants state that the proposed arrangement would comply with
the provisions of rule 12d1-2 under the Act, but for the fact that the
Same Group Funds of Funds may invest a portion of their assets in Other
Investments. Applicants request an order under section 6(c) of the Act
for an exemption from rule 12d1-2(a) to allow the Same Group Funds of
Funds to invest in Other Investments. Applicants assert that permitting
the Same Group Funds of Funds to invest in Other Investments as
described in the application would not raise any of the concerns that
the requirements of section 12(d)(1) were designed to address.
Applicants' Conditions
Applicants agree that the order granting the requested relief shall
be subject to the following conditions:
Investments in Underlying Funds by Funds of Funds
1. The members of the Group will not control (individually or in
the aggregate) an Unaffiliated 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) an Unaffiliated Fund within the
meaning of section 2(a)(9) of the Act. If, as a result of a decrease in
the outstanding voting securities of an Unaffiliated Fund, the Group or
a Subadviser Group, each in the aggregate, becomes a holder of more
than 25% of the outstanding voting securities of the Unaffiliated Fund,
then the Group or the Subadviser Group (except for any member of the
Group or the Subadviser Group that is a Separate Account) will vote its
shares of the Unaffiliated Fund in the same proportion as the vote of
all other holders of the Unaffiliated Fund's shares. This condition
will not apply to a Subadviser Group with respect to an Unaffiliated
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 Unaffiliated Investment Company) or the sponsor (in the case
of an Unaffiliated Trust). A Registered Separate Account will seek
voting instructions from its Variable Contract holders and will vote
its shares of an Unaffiliated Fund in accordance with the instructions
received and will vote those shares for which no instructions were
received in the same proportion as the shares for which instructions
were received. An Unregistered Separate Account will either (i) vote
its shares of the Unaffiliated Fund in the same proportion as the vote
of all other holders of the Unaffiliated Fund's shares; or (ii) seek
voting instructions from its Variable Contract holders and vote its
shares in accordance with the instructions received and vote those
shares for which no instructions were received in the same proportion
as the shares for which instructions were received.
2. No Fund of Funds or Fund of Funds Affiliate will cause any
existing or potential investment by the Fund of Funds in an
Unaffiliated Fund to influence the terms of any services or
transactions between the Fund of Funds or a Fund of Funds Affiliate and
the Unaffiliated Fund or an Unaffiliated Fund Affiliate.
3. The Board of each Fund of Funds, including a majority of the
Independent Trustees, will adopt procedures reasonably designed to
assure that the Manager and any Subadviser are conducting the
investment program of the Fund of Funds without taking into account any
consideration received by the Fund of Funds or a Fund of Funds
Affiliate from an Unaffiliated Fund or an Unaffiliated Fund Affiliate
in connection with any services or transactions.
4. Once an investment by a Fund of Funds in the securities of an
Unaffiliated Investment Company exceeds the limit of section
12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Investment
Company, including a majority of the Independent Trustees, will
determine that any consideration paid by the Unaffiliated Investment
Company to a Fund of Funds or a Fund of Funds Affiliate in connection
with any services or transactions: (a) Is fair and reasonable in
relation to the nature and quality of the services and benefits
received by the Unaffiliated Investment Company; (b) is within the
range of consideration that the Unaffiliated Investment Company would
be required to pay to another unaffiliated entity in connection with
the same services or transactions; and (c) does not involve
overreaching on the part of any person concerned. This condition will
not apply with respect to any services or transactions between an
Unaffiliated Investment Company and its investment adviser(s), or any
person controlling, controlled by, or under common control with such
investment adviser(s).
5. No Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an
Unaffiliated Investment Company or sponsor to an Unaffiliated Trust)
will cause an Unaffiliated Fund
[[Page 33373]]
to purchase a security in any Affiliated Underwriting.
6. The Board of an Unaffiliated Investment Company, including a
majority of the Independent Trustees, will adopt procedures reasonably
designed to monitor any purchases of securities by the Unaffiliated
Investment Company in an Affiliated Underwriting once an investment by
a Fund of Funds in the securities of the Unaffiliated Investment
Company exceeds the limit of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly from an Underwriting Affiliate.
The Board of the Unaffiliated Investment Company will review these
purchases periodically, but no less frequently than annually, to
determine whether the purchases were influenced by the investment by
the Fund of Funds in the Unaffiliated Investment Company. The Board of
the Unaffiliated Investment Company will consider, among other things:
(a) Whether the purchases were consistent with the investment
objectives and policies of the Unaffiliated Investment Company; (b) how
the performance of securities purchased in an Affiliated Underwriting
compares to the performance of comparable securities purchased during a
comparable period of time in underwritings other than Affiliated
Underwritings or to a benchmark such as a comparable market index; and
(c) whether the amount of securities purchased by the Unaffiliated
Investment Company in Affiliated Underwritings and the amount purchased
directly from an Underwriting Affiliate have changed significantly from
prior years. The Board of an Unaffiliated Investment Company will take
any appropriate actions based on its review, including, if appropriate,
the institution of procedures designed to assure that purchases of
securities in Affiliated Underwritings are in the best interests of
shareholders.
7. Each Unaffiliated Investment Company 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 an Affiliated Underwriting once an investment by a Fund
of Funds in the securities of an Unaffiliated Investment Company
exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth
(a) the party from whom the securities were acquired, (b) the identity
of the underwriting syndicate's members, (c) the terms of the purchase,
and (d) the information or materials upon which the determinations of
the Board of the Unaffiliated Investment Company were made.
8. Prior to its investment in shares of an Unaffiliated Investment
Company in excess of the limit of section 12(d)(1)(A)(i) of the Act,
the Fund of Funds and the Unaffiliated Investment Company will execute
a Participation Agreement stating, without limitation, that their
Boards and their investment advisers understand the terms and
conditions of the order and agree to fulfill their responsibilities
under the order. At the time of its investment in shares of an
Unaffiliated Investment Company in excess of the limit set forth in
section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated
Investment Company of the investment. At such time, the Fund of Funds
will also transmit to the Unaffiliated Investment Company a list of the
names of each Fund of Funds Affiliate and Underwriting Affiliate. The
Fund of Funds will notify the Unaffiliated Investment Company of any
changes to the list as soon as reasonably practicable after a change
occurs. The Unaffiliated Investment Company and the Fund of Funds will
maintain and preserve a copy of the order, the Participation Agreement
and the list with any updated information for the duration of the
investment and for a period of not less than six years thereafter, the
first two years in an easily accessible place.
9. Before approving any advisory contract under section 15 of the
Act, the Board of each Fund of Funds, including a majority of the
Independent Trustees, shall find that the advisory fees charged under
the advisory contract are based on services provided that are in
addition to, rather than duplicative of, services provided under the
advisory contract(s) of any Underlying Fund in which the Fund of Funds
may invest. Such finding, and the basis upon which the finding was
made, will be recorded fully in the minute books of the appropriate
Fund of Funds.
10. The Manager will waive fees otherwise payable to it by a Fund
of Funds in an amount at least equal to any compensation (including
fees received pursuant to any plan adopted by an Unaffiliated
Investment Company pursuant to rule 12b-1 under the Act) received from
an Unaffiliated Fund by the Manager, or an affiliated person of the
Manager, other than any advisory fees paid to the Manager or its
affiliated person by an Unaffiliated Investment Company, in connection
with the investment by the Fund of Funds in the Unaffiliated Fund. Any
Subadviser will waive fees otherwise payable to the Subadviser,
directly or indirectly, by the Fund of Funds in an amount at least
equal to any compensation received by the Subadviser, or an affiliated
person of the Subadviser, from an Unaffiliated Fund, other than any
advisory fees paid to the Subadviser or an affiliated person of the
Subadviser by an Unaffiliated Investment Company, in connection with
the investment by the Fund of Funds in the Unaffiliated Fund made at
the direction of the Subadviser. In the event that the Subadviser
waives fees, the benefit of the waiver will be passed through to the
Fund of Funds.
11. With respect to Registered Separate Accounts that invest in a
Fund of Funds, no sales load will be charged at the Fund of Funds level
or at the Underlying Fund level. Other sales charges and service fees,
as defined in NASD Conduct Rule 2830, if any, will only be charged at
the Fund of Funds level or at the Underlying Fund level, not both. With
respect to other investments in a Fund of Funds, any sales charges and/
or service fees charged with respect to shares of a Fund of Funds will
not exceed the limits applicable to funds of funds set forth in NASD
Conduct Rule 2830.
12. No Underlying Fund will acquire securities of any other
investment company or company relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained in section 12(d)(1)(A) of the
Act, except to the extent that such Underlying Fund: (a) 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 Underlying Fund to: (i) Acquire securities of one or
more investment companies for short-term cash management purposes, or
(ii) engage in interfund borrowing and lending transactions.
Other Investments by Same Group Funds of Funds
13. The Applicants will comply with all provisions of rule 12d1-2
under the Act, except for paragraph (a)(2) to the extent that it
restricts any Same Group Fund of Funds from investing in Other
Investments as described in the application.
[[Page 33374]]
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14052 Filed 6-10-10; 8:45 am]
BILLING CODE 8010-01-P
