RidgeWorth Funds and RidgeWorth Capital Management, Inc.; Notice of Application, 48927-48929 [2011-20102]
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Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
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• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2011–102 on the
subject line.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–20100 Filed 8–8–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29743; File No. 812–13860]
48927
551–6876, or Dalia Osman Blass, 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 is a Massachusetts
business trust registered under the Act
as an open-end management investment
August 3, 2011.
company and offers multiple series
AGENCY: Securities and Exchange
(each a ‘‘Fund’’).1
Paper Comments
Commission (‘‘Commission’’).
2. The Adviser, a Georgia corporation
ACTION: Notice of an application under
with its principal office in Atlanta,
• Send paper comments in triplicate
section 6(c) of the Investment Company serves as investment adviser to the
to Elizabeth M. Murphy, Secretary,
Act of 1940 (‘‘Act’’) for an exemption
Funds and is registered under the
Securities and Exchange Commission,
from section 15(a) of the Act and rule
Investment Advisers Act of 1940 (the
100 F Street, NE., Washington, DC
18f–2 under the Act.
‘‘Advisers Act’’) pursuant to an
20549–1090.
investment advisory agreement with the
SUMMARY OF THE APPLICATION:
Trust (‘‘Advisory Agreement’’). The
All submissions should refer to File
Applicants request an order that would
Adviser is a wholly owned subsidiary of
Number SR–NASDAQ–2011–102. This
permit them to enter into and materially SunTrust Banks, Inc. The Advisory
file number should be included on the
subject line if e-mail is used. To help the amend subadvisory agreements without Agreement was approved by the board
shareholder approval.
of trustees of the Trust (‘‘Board’’),2,
Commission process and review your
APPLICANTS: RidgeWorth Funds (the
including a majority of the trustees who
comments more efficiently, please use
are not ‘‘interested persons’’ (as defined
only one method. The Commission will ‘‘Trust’’) and RidgeWorth Capital
Management, Inc. (the ‘‘Adviser’’).
in section 2(a)(19) of the Act) of the
post all comments on the Commission’s
DATES: Filing Dates: The application was Trust or the Adviser (the ‘‘Independent
Internet Web site (https://www.sec.gov/
filed on January 20, 2011 and amended
Trustees’’) and was approved by the
rules/sro.shtml). Copies of the
on June 29, 2011.
initial shareholder of each Fund in the
submission, all subsequent
manner required by sections 15(a) and
HEARING OR NOTIFICATION OF HEARING:
amendments, all written statements
(c) of the Act and rule 18f–2 thereunder.
An order granting the application will
with respect to the proposed rule
be issued unless the Commission orders With respect to new Funds offered in
change that are filed with the
the future, the Advisory Agreement will
a hearing. Interested persons may
Commission, and all written
be approved by the initial shareholder
request a hearing by writing to the
communications relating to the
of the Fund in the manner required by
Commission’s Secretary and serving
proposed rule change between the
sections 15(a) and (c) of the Act and rule
applicants with a copy of the request,
Commission and any person, other than personally or by mail. Hearing requests
18f–2 thereunder. Applicants are not
those that may be withheld from the
seeking any exemptions from the
should be received by the Commission
public in accordance with the
provisions of the Act with respect to the
by 5:30 p.m. on August 29, 2011 and
provisions of 5 U.S.C. 552, will be
should be accompanied by proof of
1 Applicants request that any relief granted
available for Web site viewing and
service on applicants, in the form of an
pursuant to the application also apply to (a) All
printing in the Commission’s Public
affidavit or, for lawyers, a certificate of
other existing or future open-end management
Reference Room, 100 F Street, NE.,
service. Hearing requests should state
investment companies or series thereof that (i) are
Washington, DC 20549, on official
the nature of the writer’s interest, the
advised by the Adviser or any entity controlling,
controlled by or under common control with the
business days between the hours of 10
reason for the request, and the issues
Adviser or its successors (each such entity included
a.m. and 3 p.m. Copies of the filing also contested. Persons who wish to be
in the term ‘‘Adviser’’), (ii) are registered under the
notified of a hearing may request
will be available for inspection and
Act, (iii) use the manager of managers structure (as
notification by writing to the
copying at the principal office of the
described in the application), and (iv) comply with
the terms and conditions in the application (such
Commission’s Secretary.
Exchange. All comments received will
companies or series included in the term ‘‘Funds’’);
ADDRESSES: Secretary, U.S. Securities
be posted without change; the
and (b) the Adviser. Each existing entity that
and Exchange Commission, 100 F
Commission does not edit personal
currently intends to rely on the requested order is
named as an Applicant. Any existing or future
Street, NE., Washington, DC 20549–
identifying information from
1090. Applicants, 3333 Piedmont Road, entity that relies on the order in the future will do
submissions. You should submit only
so only in accordance with the terms and
NE., Suite 1500, Atlanta, GA 30305–
information that you wish to make
conditions in the application. If the name of any
1740.
Fund relying on the requested relief contains the
available publicly. All submissions
name of a Subadviser (defined below), the name
should refer to File Number SR–
FOR FURTHER INFORMATION CONTACT:
‘‘RidgeWorth’’ or other name being used by the
Deepak T. Pai, Senior Counsel, at (202)
NASDAQ–2011–102 and should be
Adviser will precede the name of the Subadviser.
2 The Board is also the board of each individual
submitted on or before August 30, 2011.
RidgeWorth Funds and RidgeWorth
Capital Management, Inc.; Notice of
Application
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requirements that the Advisory
Agreement be approved by the Board
and the shareholders of the relevant
Funds.
3. The Adviser, subject to the
oversight and authority of the Board, is
responsible for furnishing the overall
investment program for each Fund and
providing continuous investment
management for each Fund’s assets
pursuant to the Advisory Agreement.
For the investment management
services that it provides to each Fund,
the Adviser receives the fee specified in
the Advisory Agreement from each
Fund based on the Fund’s average daily
net assets. The Advisory Agreement
permits the Adviser to retain one or
more unaffiliated investment
subadvisers (each a ‘‘Subadviser’’), at
the Adviser’s own expense, subject to
the approval of the Fund’s Board,
including approval by a majority of its
Independent Trustees, for the purpose
of managing the investment of the assets
of one or more Funds.3 Each Subadviser
will be registered as an investment
adviser under the Advisers Act. Each
Subadviser will be responsible, subject
to the supervision of the Adviser and
the Board, for the purchase, retention
and sale of securities for the applicable
Fund. The Adviser will establish an
investment program for each Fund and
will select, supervise and evaluate the
Subadvisers who make the day-to-day
investment decisions for the Fund. The
Adviser will evaluate and recommend
Subadvisers to the Board and will
monitor and evaluate each Subadviser’s
investment programs, performance and
compliance. The Adviser will also
recommend to the Board whether
investment advisory agreements with a
Subadviser (‘‘Subadvisory Agreements’’)
should be renewed, modified or
terminated. The Adviser will
compensate each Subadviser out of the
fee paid to the Adviser under the
relevant Fund’s Advisory Agreement.
Neither the Trust nor any Fund will be
responsible for paying subadvisory fees
to any subadviser.
4. Applicants request an order to
permit the Adviser, subject to Board
approval, including a majority of the
Independent Trustees, to enter into and
materially amend Subadvisory
Agreements without shareholder
approval.
3 The Adviser has entered into subadvisory
agreements with subadvisers that are ‘‘affiliated
persons’’ (as defined in section 2(a)(3) of the Act)
of the Trust, a Fund or of the Adviser (other than
by reason of serving as a subadviser to one or more
of the Funds) (‘‘Affiliated Subadvisers’’) to assist
with monitoring and/or management of certain
markets with which the Affiliated Subadvisers have
expertise. The requested relief does not apply with
respect to existing or future Affiliated Subadvisers.
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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 a
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 the matter if the
Act requires shareholder approval.
2. Section 6(c) of the Act provides that
the Commission may exempt any
person, security, or transaction or any
class or classes of persons, securities, or
transactions from any 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 the
necessary standards for the reasons
discussed below.
3. Applicants believe that the
shareholders expect the Adviser and the
Board to select the portfolio manager or
Subadviser for a Fund that is best suited
to achieve the Fund’s investment
objective. Applicants assert that, from
the perspective of the investor, the role
of the Subadvisers with respect to the
Funds utilizing the manager of
managers structure is substantially
equivalent to the role of the individual
portfolio managers employed by the
traditional investment company
advisory firms. In the absence of
exemptive relief from section 15(a) of
the Act, when a new Subadviser is
proposed for retention by a Fund or the
Trust on behalf of one or more of the
Funds, shareholders would be required
to approve the Subadvisory Agreement
with that Subadviser. Similarly, if an
existing Subadvisory Agreement were to
be amended in any material respect
(e.g., an increase in the subadvisory fee),
approval by the shareholders of the
affected Fund would be required. In
addition, a Fund would be prohibited
from continuing to retain an existing
Subadviser whose Subadvisory
Agreement had been ‘‘assigned’’ as a
result of a change of control of the
Subadviser unless shareholder approval
had been obtained. Applicants contend
that this process would be timeintensive, costly and slow and, in the
case of a poorly performing Subadviser
or one whose management team had
left, potentially harmful to a Fund and
its shareholders. Applicants also note
that the Advisory Agreement is and will
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remain fully subject to the requirements
of section 15(a) of the Act and, where
applicable, rule 18f–2 thereunder,
including the requirement for
shareholder voting.
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
order requested in the application, 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 that relies on the order
requested in the application will
disclose in its prospectus the existence,
substance, and effect of any order
granted pursuant to the application.
Each Fund relying on the order
requested in the application will hold
itself out to the public as utilizing the
manager of managers structure
described in the application. 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.
3. Within 90 days of the hiring of a
new Subadviser, the affected Fund
shareholders will be furnished all
information about the new Subadviser
that would be included in a proxy
statement. To meet this obligation, the
Fund will provide shareholders of the
affected Fund within 90 days of hiring
a new Subadviser with an information
statement meeting the requirements of
Regulation 14C, Schedule 14C, and Item
22 of Schedule 14A under the Securities
Exchange Act of 1934, as amended.
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,
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Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices
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. The Adviser will provide general
management services to each Fund that
is subadvised, including overall
supervisory responsibility for the
general management and investment of
the Fund’s assets, and, subject to review
and approval of the Board, will: (i) Set
each Fund’s overall investment
strategies; (ii) evaluate, select and
recommend Subadvisers to manage all
or a part of a Fund’s assets; (iii) allocate
and, when appropriate, reallocate a
Fund’s assets among one or more
Subadvisers; (iv) monitor and evaluate
the performance of Subadvisers; and (v)
implement procedures reasonably
designed to ensure that the Subadvisers
comply with the relevant Fund’s
investment objective, policies, and
restrictions.
8. 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.
9. 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.
Elizabeth M. Murphy,
Secretary.
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Applicant’s Representations
1. Applicant, a Delaware corporation,
is a business development company
[Investment Company Act Release No.
(‘‘BDC’’) within the meaning of section
29744; File No. 812–13853]
2(a)(48) of the Act.1 Applicant’s primary
American Capital, Ltd.; Notice of
business objectives are to increase its
Application
net operating income and net asset
value (‘‘NAV’’) by investing its assets in
August 3, 2011.
senior debt, subordinated debt, with and
AGENCY: Securities and Exchange
without detachable warrants, and equity
Commission (the ‘‘Commission’’).
of small to medium sized businesses
ACTION: Notice of an application for an
with attractive current yields and
order under section 61(a)(3)(B) of the
potential for equity appreciation.
Investment Company Act of 1940 (the
Applicant’s investment decisions are
‘‘Act’’).
made either by its board of directors (the
‘‘Board’’), based on recommendations of
Summary of Application: Applicant,
the executive officers of applicant, or,
American Capital, Ltd. requests an order
for investments that meet certain
approving a proposal to grant stock
objective criteria established by the
options to directors who are not also
Board, by the executive officers of
employees or officers of the applicant
applicant, under authority delegated by
(the ‘‘Non-employee Directors’’) under
the Board. Applicant does not have an
its 2010 Disinterested Director Stock
external investment adviser within the
Option Plan (the ‘‘Plan’’).
meaning of section 2(a)(20) of the Act.
DATES: Filing Dates: The application was
2. Applicant requests an order under
filed on December 21, 2010, and
section 61(a)(3)(B) of the Act approving
amended on July 22, 2011, and July 26,
its proposal to grant stock options under
2011.
the Plan to its Non-employee Directors.2
Hearing or Notification of Hearing: An Applicant has a nine member Board
order granting the application will be
with one current vacancy. Seven of the
issued unless the Commission orders a
eight current members of the Board are
hearing. Interested persons may request not ‘‘interested persons’’ (as defined in
a hearing by writing to the
section 2(a)(19) of the Act) of the
Commission’s Secretary and serving
applicant (‘‘Disinterested Directors’’).
applicant with a copy of the request,
All of the current Non-employee
personally or by mail. Hearing requests
Directors are Disinterested Directors.
should be received by the Commission
The Board approved the Plan at a
by 5:30 p.m. on August 29, 2011, and
meeting of the Board held on April 29,
should be accompanied by proof of
2010,3 and applicant’s stockholders
service on applicant, in the form of an
approved the Plan at the annual meeting
affidavit or, for lawyers, a certificate of
of stockholders held on September 15,
service. Hearing requests should state
2010.
the nature of the writer’s interest, the
3. Non-employee Directors are eligible
reason for the request, and the issues
to receive options under the Plan.4
contested. Persons who wish to be
Under the Plan, a maximum of
notified of a hearing may request
1,250,000 shares of applicant’s common
notification by writing to the
1 Section 2(a)(48) defines a BDC to be any closedCommission’s Secretary.
end investment company that operates for the
ADDRESSES: Secretary, U.S. Securities
purpose of making investments in securities
and Commission, 100 F Street, NE.,
described in sections 55(a)(1) through 55(a)(3) of the
Washington, DC 20549–1090;
Act and makes available significant managerial
assistance with respect to the issuers of such
Applicant, 2 Bethesda Metro Center,
securities.
14th Floor, Bethesda, Maryland 20814.
2 The Non-employee Directors receive a $100,000
FOR FURTHER INFORMATION CONTACT:
per year retainer payment and $3,000 for each
Deepak T. Pai, Senior Counsel, at (202)
Board or committee meeting or other designated
551–6876, or Dalia Osman Blass, Branch Board-related meeting attended, and reimbursement
for related expenses. Non-employee Directors who
Chief, at (202) 551–6821 (Division of
serve as the lead director of the Board receive an
Investment Management, Office of
additional $25,000 per year retainer and NonInvestment Company Regulation).
employee Directors who chair a committee of the
Board receive an additional $15,000 retainer per
SUPPLEMENTARY INFORMATION: The
year. Non-employee Directors who serve as
following is a summary of the
directors on the boards of portfolio companies also
application. The complete application
receive an annual retainer from applicant set at
$30,000 per board, in lieu of any payment from the
may be obtained via the Commission’s
portfolio company.
Web site by searching for the file
3 The Board approved amendments to the Plan on
number, or for an applicant using the
April 28, 2011, and July 21, 2011.
Company name box, at https://
4 The Plan would authorize the issuance of
www.sec.gov/search/search.htm, or by
options only to Non-Employee Directors and not to
employees or officers of applicant.
calling (202) 551–8090.
SECURITIES AND EXCHANGE
COMMISSION
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]]>Agencies
[Federal Register Volume 76, Number 153 (Tuesday, August 9, 2011)]
[Notices]
[Pages 48927-48929]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20102]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29743; File No. 812-13860]
RidgeWorth Funds and RidgeWorth Capital Management, Inc.; Notice
of Application
August 3, 2011.
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.
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Summary of the Application: Applicants request an order that would
permit them to enter into and materially amend subadvisory agreements
without shareholder approval.
Applicants: RidgeWorth Funds (the ``Trust'') and RidgeWorth Capital
Management, Inc. (the ``Adviser'').
DATES: Filing Dates: The application was filed on January 20, 2011 and
amended on June 29, 2011.
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 August 29, 2011 and should be accompanied by proof of service
on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants, 3333 Piedmont Road,
NE., Suite 1500, Atlanta, GA 30305-1740.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876, or Dalia Osman Blass, 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 is a Massachusetts business trust registered under the
Act as an open-end management investment company and offers multiple
series (each a ``Fund'').\1\
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\1\ Applicants request that any relief granted pursuant to the
application also apply to (a) All other existing or future open-end
management investment companies or series thereof that (i) are
advised by the Adviser or any entity controlling, controlled by or
under common control with the Adviser or its successors (each such
entity included in the term ``Adviser''), (ii) are registered under
the Act, (iii) use the manager of managers structure (as described
in the application), and (iv) comply with the terms and conditions
in the application (such companies or series included in the term
``Funds''); and (b) the Adviser. Each existing entity that currently
intends to rely on the requested order is named as an Applicant. Any
existing or future entity that relies on the order in the future
will do so only in accordance with the terms and conditions in the
application. If the name of any Fund relying on the requested relief
contains the name of a Subadviser (defined below), the name
``RidgeWorth'' or other name being used by the Adviser will precede
the name of the Subadviser.
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2. The Adviser, a Georgia corporation with its principal office in
Atlanta, serves as investment adviser to the Funds and is registered
under the Investment Advisers Act of 1940 (the ``Advisers Act'')
pursuant to an investment advisory agreement with the Trust (``Advisory
Agreement''). The Adviser is a wholly owned subsidiary of SunTrust
Banks, Inc. The Advisory Agreement was approved by the board of
trustees of the Trust (``Board''),\2\, 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 (the ``Independent
Trustees'') and was approved by the initial shareholder of each Fund in
the manner required by sections 15(a) and (c) of the Act and rule 18f-2
thereunder. With respect to new Funds offered in the future, the
Advisory Agreement will be approved by the initial shareholder of the
Fund in the manner required by sections 15(a) and (c) of the Act and
rule 18f-2 thereunder. Applicants are not seeking any exemptions from
the provisions of the Act with respect to the
[[Page 48928]]
requirements that the Advisory Agreement be approved by the Board and
the shareholders of the relevant Funds.
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\2\ The Board is also the board of each individual Fund.
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3. The Adviser, subject to the oversight and authority of the
Board, is responsible for furnishing the overall investment program for
each Fund and providing continuous investment management for each
Fund's assets pursuant to the Advisory Agreement. For the investment
management services that it provides to each Fund, the Adviser receives
the fee specified in the Advisory Agreement from each Fund based on the
Fund's average daily net assets. The Advisory Agreement permits the
Adviser to retain one or more unaffiliated investment subadvisers (each
a ``Subadviser''), at the Adviser's own expense, subject to the
approval of the Fund's Board, including approval by a majority of its
Independent Trustees, for the purpose of managing the investment of the
assets of one or more Funds.\3\ Each Subadviser will be registered as
an investment adviser under the Advisers Act. Each Subadviser will be
responsible, subject to the supervision of the Adviser and the Board,
for the purchase, retention and sale of securities for the applicable
Fund. The Adviser will establish an investment program for each Fund
and will select, supervise and evaluate the Subadvisers who make the
day-to-day investment decisions for the Fund. The Adviser will evaluate
and recommend Subadvisers to the Board and will monitor and evaluate
each Subadviser's investment programs, performance and compliance. The
Adviser will also recommend to the Board whether investment advisory
agreements with a Subadviser (``Subadvisory Agreements'') should be
renewed, modified or terminated. The Adviser will compensate each
Subadviser out of the fee paid to the Adviser under the relevant Fund's
Advisory Agreement. Neither the Trust nor any Fund will be responsible
for paying subadvisory fees to any subadviser.
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\3\ The Adviser has entered into subadvisory agreements with
subadvisers that are ``affiliated persons'' (as defined in section
2(a)(3) of the Act) of the Trust, a Fund or of the Adviser (other
than by reason of serving as a subadviser to one or more of the
Funds) (``Affiliated Subadvisers'') to assist with monitoring and/or
management of certain markets with which the Affiliated Subadvisers
have expertise. The requested relief does not apply with respect to
existing or future Affiliated Subadvisers.
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4. Applicants request an order to permit the Adviser, subject to
Board approval, including a majority of the Independent Trustees, to
enter into and materially amend Subadvisory Agreements without
shareholder approval.
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 a 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 the matter if the Act requires shareholder approval.
2. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction or any class or classes of
persons, securities, or transactions from any 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 the necessary
standards for the reasons discussed below.
3. Applicants believe that the shareholders expect the Adviser and
the Board to select the portfolio manager or Subadviser for a Fund that
is best suited to achieve the Fund's investment objective. Applicants
assert that, from the perspective of the investor, the role of the
Subadvisers with respect to the Funds utilizing the manager of managers
structure is substantially equivalent to the role of the individual
portfolio managers employed by the traditional investment company
advisory firms. In the absence of exemptive relief from section 15(a)
of the Act, when a new Subadviser is proposed for retention by a Fund
or the Trust on behalf of one or more of the Funds, shareholders would
be required to approve the Subadvisory Agreement with that Subadviser.
Similarly, if an existing Subadvisory Agreement were to be amended in
any material respect (e.g., an increase in the subadvisory fee),
approval by the shareholders of the affected Fund would be required. In
addition, a Fund would be prohibited from continuing to retain an
existing Subadviser whose Subadvisory Agreement had been ``assigned''
as a result of a change of control of the Subadviser unless shareholder
approval had been obtained. Applicants contend that this process would
be time-intensive, costly and slow and, in the case of a poorly
performing Subadviser or one whose management team had left,
potentially harmful to a Fund and its shareholders. Applicants also
note that the Advisory Agreement is and will remain fully subject to
the requirements of section 15(a) of the Act and, where applicable,
rule 18f-2 thereunder, including the requirement for shareholder
voting.
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 order requested in the
application, 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 that relies on the order requested in the application
will disclose in its prospectus the existence, substance, and effect of
any order granted pursuant to the application. Each Fund relying on the
order requested in the application will hold itself out to the public
as utilizing the manager of managers structure described in the
application. 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.
3. Within 90 days of the hiring of a new Subadviser, the affected
Fund shareholders will be furnished all information about the new
Subadviser that would be included in a proxy statement. To meet this
obligation, the Fund will provide shareholders of the affected Fund
within 90 days of hiring a new Subadviser with an information statement
meeting the requirements of Regulation 14C, Schedule 14C, and Item 22
of Schedule 14A under the Securities Exchange Act of 1934, as amended.
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,
[[Page 48929]]
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. The Adviser will provide general management services to each
Fund that is subadvised, including overall supervisory responsibility
for the general management and investment of the Fund's assets, and,
subject to review and approval of the Board, will: (i) Set each Fund's
overall investment strategies; (ii) evaluate, select and recommend
Subadvisers to manage all or a part of a Fund's assets; (iii) allocate
and, when appropriate, reallocate a Fund's assets among one or more
Subadvisers; (iv) monitor and evaluate the performance of Subadvisers;
and (v) implement procedures reasonably designed to ensure that the
Subadvisers comply with the relevant Fund's investment objective,
policies, and restrictions.
8. 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.
9. 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.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20102 Filed 8-8-11; 8:45 am]
BILLING CODE 8011-01-P
