Cash Account Trust, et al.; Notice of Application, 45381-45385 [2012-18558]
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Federal Register / Vol. 77, No. 147 / Tuesday, July 31, 2012 / Notices
In the case of a state beginning or
concluding a payable period in EB or
EUC08, the State Workforce Agency will
furnish a written notice of any change
in potential entitlement to each
individual who could establish, or had
established, eligibility for benefits (20
CFR 615.13(c)(1) and (c)(4)). Persons
who believe they may be entitled to
benefits under the EB or EUC08
program, or who wish to inquire about
their rights under the program, should
contact their State Workforce Agency.
FOR FURTHER INFORMATION CONTACT:
Scott Gibbons, U.S. Department of
Labor, Employment and Training
Administration, Office of
Unemployment Insurance, 200
Constitution Avenue NW., Frances
Perkins Bldg. Room S–4524,
Washington, DC 20210, telephone
number (202) 693–3008 (this is not a
toll-free number) or by email:
gibbons.scott@dol.gov.
Signed in Washington, DC, this 24th day of
July, 2012.
Jane Oates,
Assistant Secretary for Employment and
Training.
CONTACT PERSON FOR MORE INFORMATION:
Lester A. Heltzer, Executive Secretary,
(202) 273–1067.
Dated: July 26, 2012.
Lester A. Heltzer,
Executive Secretary.
[FR Doc. 2012–18688 Filed 7–27–12; 11:15 am]
BILLING CODE 7545–01–P
NUCLEAR REGULATORY
COMMISSION
Sunshine Act Meetings
AGENCY HOLDING THE MEETINGS: Nuclear
Regulatory Commission [NRC–2012–
0002].
DATES: Weeks of July 30, August 6, 13,
20, 27, September 3, 2012.
PLACE: Commissioners’ Conference
Room, 11555 Rockville Pike, Rockville,
Maryland.
STATUS: Public and Closed.
Week of July 30, 2012
There are no meetings scheduled for
the week of July 30, 2012.
[FR Doc. 2012–18535 Filed 7–30–12; 8:45 am]
Week of August 6, 2012—Tentative
BILLING CODE 4510–FW–P
The NRC provides reasonable
accommodation to individuals with
disabilities where appropriate. If you
need a reasonable accommodation to
participate in these public meetings, or
need this meeting notice or the
transcript or other information from the
public meetings in another format (e.g.
braille, large print), please notify Bill
Dosch, Chief, Work Life and Benefits
Branch, at 301–415–6200, TDD: 301–
415–2100, or by email at
william.dosch@nrc.gov. Determinations
on requests for reasonable
accommodation will be made on a caseby-case basis.
*
*
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*
This notice is distributed
electronically to subscribers. If you no
longer wish to receive it, or would like
to be added to the distribution, please
contact the Office of the Secretary,
Washington, DC 20555 (301–415–1969),
or send an email to
darlene.wright@nrc.gov.
Dated: July 26, 2012.
Rochelle C. Bavol,
Policy Coordinator, Office of the Secretary.
[FR Doc. 2012–18755 Filed 7–27–12; 4:15 pm]
Tuesday, August 7, 2012
NATIONAL LABOR RELATIONS
BOARD
Sunshine Act Meetings: August 2012
All meetings are held at
2:30 p.m.
Wednesday, August 1; Thursday,
August 2; Tuesday, August 7;
Wednesday, August 8; Thursday,
August 9; Tuesday, August 14;
Wednesday, August 15; Thursday,
August 16; Tuesday, August 21;
Wednesday, August 22; Thursday,
August 23; Tuesday, August 28;
Wednesday, August 29; Thursday,
August 30.
PLACE: Board Agenda Room, No. 11820,
1099 14th St. NW., Washington, DC
20570.
STATUS: Closed.
MATTERS TO BE CONSIDERED: Pursuant to
§ 102.139(a) of the Board’s Rules and
Regulations, the Board or a panel
thereof will consider ‘‘the issuance of a
subpoena, the Board’s participation in a
civil action or proceeding or an
arbitration, or the initiation, conduct, or
disposition * * * of particular
representation or unfair labor practice
proceedings under section 8, 9, or 10 of
the [National Labor Relations] Act, or
any court proceedings collateral or
ancillary thereto.’’ See also 5 U.S.C.
552b(c)(10).
TIME AND DATES:
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9:00 a.m. Briefing on the Status of
Lessons Learned from the
Fukushima Dai-ichi Accident
(Public Meeting) (Contact: John
Monninger, 301–415–0610).
This meeting will be webcast live at
the Web address—www.nrc.gov.
Week of August 13, 2012—Tentative
There are no meetings scheduled for
the week of August 13, 2012.
Week of August 20, 2012—Tentative
There are no meetings scheduled for
the week of August 20, 2012.
Week of August 27, 2012—Tentative
There are no meetings scheduled for
the week of August 27, 2012.
Week of September 3, 2012—Tentative
There are no meetings scheduled for
the week of September 3, 2012.
*
*
*
*
*
* The schedule for Commission
meetings is subject to change on short
notice. To verify the status of meetings,
call (recording)—301–415–1292.
Contact person for more information:
Rochelle Bavol, 301–415–1651.
*
*
*
*
*
The NRC Commission Meeting
Schedule can be found on the Internet
at: https://www.nrc.gov/public-involve/
public-meetings/schedule.html.
*
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*
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BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30151; File No. 812–13512]
Cash Account Trust, et al.; Notice of
Application
July 25, 2012.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
AGENCY:
Applicants
request an order that would amend and
supersede a prior order (the ‘‘NonAffiliated Sub-Advisor Order’’) 1 that
permits them to enter into and
materially amend subadvisory
agreements for certain multi-managed
funds with non-affiliated sub-advisors
without shareholder approval and
grants relief from certain disclosure
requirements. The requested order
would permit applicants to enter into,
and amend, such agreements with
Wholly-Owned Sub-Advisors (as
SUMMARY OF APPLICATION:
1 Cash Account Trust, et al., Investment Company
Act Release Nos. 29094 (Dec. 16, 2009) (notice) and
29109 (Jan. 12, 2010) (order).
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Federal Register / Vol. 77, No. 147 / Tuesday, July 31, 2012 / Notices
defined below) and non-affiliated subadvisors without shareholder approval.
APPLICANTS: Cash Account Trust, Cash
Management Portfolio, Cash Reserve
Fund, Inc., DWS Equity 500 Index
Portfolio, DWS Global/International
Fund, Inc., DWS Income Trust, DWS
Institutional Funds, DWS International
Fund, Inc., DWS Investment Trust, DWS
Investments VIT Funds, DWS Market
Trust, DWS Money Funds, DWS Money
Market Trust, DWS Municipal Trust,
DWS Portfolio Trust, DWS Securities
Trust, DWS State Tax-Free Income
Series, DWS Target Date Series, DWS
Target Fund, DWS Tax Free Trust, DWS
Value Series, Inc., DWS Variable Series
I, DWS Variable Series II, Investors Cash
Trust, Tax-Exempt California Money
Market Fund (each a ‘‘DWS Investment
Company’’ and collectively, the ‘‘DWS
Investment Companies’’), and Deutsche
Investment Management Americas Inc.
(‘‘DIMA’’).
FILING DATES: The application was filed
on March 14, 2008, and amended on
July 30, 2009, October 2, 2009,
November 24, 2009, September 10,
2010, November 16, 2010, October 6,
2011, February 7, 2012, and July 23,
2012.
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 17, 2012, 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: Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
Applicants, Deutsche Investment
Management Americas Inc., 345 Park
Avenue, New York, New York 10154.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Attorney, at
(202) 551–6990, or Jennifer L. Sawin,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION:
The
following is a summary of the
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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 DWS Investment Company is
organized as a Massachusetts business
trust, a New York trust, or a Maryland
corporation and is registered with the
Commission as an open-end
management investment company
under the Act. Each DWS Investment
Company may offer one or more series
of shares (each a ‘‘Series’’ and
collectively, ‘‘Series’’) with its own
distinct investment objectives, policies
and restrictions.2 Each Series has, or
will have, as its investment adviser,
DIMA, or another investment adviser
controlling, controlled by or under
common control with DIMA or its
successors (each, an ‘‘Advisor’’ and,
collectively with the Series and the
DWS Investment Companies, the
‘‘Applicants’’).3 DIMA, a Delaware
corporation, is an indirect, whollyowned subsidiary of Deutsche Bank AG
(‘‘Deutsche Bank’’). Deutsche Bank is a
major global financial institution that is
engaged in a wide range of financial
services, including investment
management, mutual funds, retail,
private and commercial banking,
investment banking and insurance.4
2 The term ‘‘Series’’ also includes the DWS
Investment Companies listed above that do not offer
multiple series. Cash Management Portfolio and
DWS Equity 500 Index Portfolio are master funds
(each a ‘‘Master Fund’’) in a master-feeder structure
pursuant to section 12(d)(1)(E) of the Act. Certain
Series, as well as any future Series and any other
investment company or series thereof that is
advised by the Advisor, may invest substantially all
their assets into one of the Master Funds (each a
‘‘Feeder Fund’’). No Feeder Fund will engage any
sub-advisors other than through approving the
engagement of the applicable Master Fund’s subadvisors, if any.
3 Each Advisor is, or will be, registered with the
Commission as an investment adviser under the
Investment Advisers Act of 1940, as amended
(‘‘Advisers Act’’). For purposes of the requested
order, ‘‘successor’’ is limited to an entity that
results from a reorganization into another
jurisdiction or a change in the type of business
organization.
4 Applicants request that the relief apply to the
Applicants, as well as to any future Series and any
other existing or future registered open-end
management investment company or series thereof
that is advised by an Advisor, uses the multimanager structure described in the application, and
complies with the terms and conditions of the
application (‘‘Subadvised Series’’). All registered
open-end investment companies that currently
intend to rely on the requested order are named as
Applicants. All Series that currently are, or that
currently intend to be, Subadvised Series are
identified in the application. Any entity that relies
on the requested order will do so only in
accordance with the terms and conditions
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2. The Advisor serves as the
investment adviser to each Series
pursuant to an investment advisory
agreement with the applicable DWS
Investment Company (‘‘Investment
Management Agreement’’). The
Investment Management Agreement for
each existing Series was approved by
the board of trustees/directors of the
applicable DWS Investment Company
(the ‘‘Board’’), including a majority of
the members of the Board who are not
‘‘interested persons’’, as defined in
section 2(a)(19) of the Act, of the Series
or the Advisor (‘‘Independent Board
Members’’) and by the shareholders of
that Series as required by sections 15(a)
and 15(c) of the Act and rule 18f–2
thereunder. The terms of these
Investment Management Agreements
comply with section 15(a) of the Act.
Each other Investment Management
Agreement will comply with section
15(a) of the Act and will be similarly
approved.
3. Under the terms of each Investment
Management Agreement, the Advisor,
subject to the supervision of the
applicable Board, provides continuous
investment management of the assets of
each Series. The Advisor periodically
reviews a Series’ investment policies
and strategies and based on the need of
a particular Series may recommend
changes to the investment policies and
strategies of the Series for consideration
by the Board. For its services to each
Series under the applicable Investment
Management Agreement, the Advisor
receives an investment management fee
from that Series based on either the
average net assets of that Series or that
Series’ investment performance over a
particular period compared to a
benchmark. The terms of each
Investment Management Agreement
permit the Advisor, subject to the
approval of the applicable Board,
including a majority of the Independent
Board Members, and the shareholders of
the applicable Subadvised Series (if
required), to delegate portfolio
management responsibilities of all or a
portion of the assets of a Subadvised
Series to one or more sub-advisors.5
contained the application. The requested relief will
not extend to any sub-advisor, other than a WhollyOwned Sub-Advisor (as defined below), who is an
affiliated person, as defined in section 2(a)(3) of the
Act, of the Subadvised Series, of any Feeder Fund,
or of the Advisor, other than by reason of serving
as a sub-advisor to one or more of the Subadvised
Series (‘‘Affiliated Sub-Advisor’’).
5 As used herein, a ‘‘Sub-Advisor’’ is (1) an
indirect or direct ‘‘wholly-owned subsidiary’’ (as
such term is defined in the Act) of the Advisor for
that Series, or (2) a sister company of the Advisor
for that Series that is an indirect or direct ‘‘whollyowned subsidiary’’ (as such term is defined in the
Act) of the same company that, indirectly or
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4. Applicants request an order to
permit the Advisor, subject to the
approval of the Board, including a
majority of the Independent Board
Members, to, without obtaining
shareholder approval: (i) Select SubAdvisors to manage all or a portion of
the assets of a Series and enter into SubAdvisory Agreements (as defined below)
with the Sub-Advisors, and (ii)
materially amend Sub-Advisory
Agreements with the Sub-Advisors.6
5. Pursuant to each Investment
Management Agreement, the Advisor
has overall responsibility for the
management and investment of the
assets of each Subadvised Series; these
responsibilities include recommending
the removal or replacement of SubAdvisors, determining the portion of
that Subadvised Series’ assets to be
managed by any given Sub-Advisor and
reallocating those assets as necessary
from time to time. In accordance with
each Investment Management
Agreement, the Advisor will supervise
each Sub-Advisor in its performance of
its duties with a view to preventing
violations of the federal securities laws.
6. The Advisor has entered into subadvisory agreements with Sub-Advisors
(‘‘Sub-Advisory Agreements’’) to
provide investment management
services to the Subadvised Series.7 The
terms of each Sub-Advisory Agreement
comply fully with the requirements of
section 15(a) of the Act and were
approved by the applicable Board,
including a majority of the Independent
Board Members, and, to the extent that
the Non-Affiliated Sub-Advisor Order
did not apply, the shareholders of the
Subadvised Series in accordance with
sections 15(a) and 15(c) of the Act and
rule 18f–2 thereunder. The SubAdvisors, subject to the supervision of
the Advisor and oversight of the
directly, wholly owns the Advisor (each of (1) and
(2) a ‘‘Wholly-Owned Sub-Advisor’’ and
collectively, the ‘‘Wholly-Owned Sub-Advisors’’),
or (3) not an ‘‘affiliated person’’ (as such term is
defined in section 2(a)(3) of the Act) of the Series,
any Feeder Fund invested in a Series that is a
Master Fund, applicable DWS Investment
Company, or the Advisor, except to the extent that
an affiliation arises solely because the sub-adviser
serves as a sub-adviser to a Series (each a ‘‘NonAffiliated Sub-Advisor’’).
6 Shareholder approval will continue to be
required for any other sub-advisor change (not
otherwise permitted by rule or other action of the
Commission or staff) and material amendments to
an existing Sub-Advisory Agreement with any subadvisor other than a Non-Affiliated Sub-Advisor or
a Wholly-Owned Sub-Advisor (all such changes
referred to as ‘‘Ineligible Sub-Advisor Changes’’).
7 If the name of any Subadvised Series contains
the name of a Sub-advisor, the name of the Advisor
that serves as the primary adviser to the Subadvised
Series, or a trademark or trade name that is owned
by or publicly used to identity that Advisor, will
precede the name of the Sub-advisor.
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applicable Board, determine the
securities and other instruments to be
purchased or sold by a Subadvised
Series and place orders with brokers or
dealers that they select. The Advisor
will compensate each Sub-Advisor out
of the fee paid to the Advisor under the
relevant Investment Management
Agreement.
7. Subadvised Series will inform
shareholders of the hiring of a new SubAdvisor pursuant to the following
procedures (‘‘Modified Notice and
Access Procedures’’): (a) Within 90 days
after a new Sub-Advisor is hired for any
Subadvised Series, that Subadvised
Series will send its shareholders 8 either
a Multi-manager Notice or a Multimanager Notice and Multi-manager
Information Statement; 9 and (b) the
Subadvised Series will make the Multimanager Information Statement
available on the Web site identified in
the Multi-manager Notice no later than
when the Multi-manager Notice (or
Multi-manager Notice and Multimanager Information Statement) is first
sent to shareholders, and will maintain
it on that Web site for at least 90 days.
In the circumstances described in the
application, a proxy solicitation to
approve the appointment of new SubAdvisors provides no more meaningful
information to shareholders than the
proposed Multi-manager Information
Statement. Applicants state that each
Board would comply with the
requirements of sections 15(a) and 15(c)
of the Act before entering into or
amending Sub-Advisory Agreements.
8. Applicants also request an order
exempting the Subadvised Series from
certain disclosure obligations that may
8 If the Subadvised Series is a Master Fund, for
purposes of the Modified Notice and Access
Procedures, ‘‘shareholders’’ include both the
shareholders of the applicable Master Fund and the
shareholders of its Feeder Funds.
9 A ‘‘Multi-manager Notice’’ will be modeled on
a Notice of Internet Availability as defined in rule
14a–16 under the Securities Exchange Act of 1934
(‘‘Exchange Act’’), and specifically will, among
other things: (a) Summarize the relevant
information regarding the new Sub-Advisor; (b)
inform shareholders that the Multi-manager
Information Statement is available on a Web site;
(c) provide the Web site address; (d) state the time
period during which the Multi-manager Information
Statement will remain available on that Web site;
(e) provide instructions for accessing and printing
the Multi-manager Information Statement; and (f)
instruct the shareholder that a paper or email copy
of the Multi-manager Information Statement may be
obtained, without charge, by contacting the
Subadvised Series.
A ‘‘Multi-manager Information Statement’’ will
meet the requirements of Regulation 14C, Schedule
14C and Item 22 of Schedule 14A under the
Exchange Act for an information statement, except
as modified by the order to permit Aggregate Fee
Disclosure, as defined below. Multi-manager
Information Statements will be filed with the
Commission via the EDGAR system.
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require the Applicants to disclose fees
paid by the Advisor to each SubAdvisor. Applicants seek relief to
permit each Subadvised Series to
disclose (as a dollar amount and a
percentage of the Subadvised Series’ net
assets): (a) The aggregate fees paid to the
Advisor and any Wholly-Owned SubAdvisors; (b) the aggregate fees paid to
Non-Affiliated Sub-Advisors; and (c) the
fee paid to each Affiliated Sub-Advisor
(collectively, the ‘‘Aggregate Fee
Disclosure’’).10
Applicants’ Legal Analysis
1. Section 15(a) of the Act states, in
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, which
contract, whether with such registered
company or with an investment adviser
of such registered company, has been
approved by the vote of a majority of the
outstanding voting securities of such
registered company.’’ Rule 18f–2 under
the Act states that any ‘‘matter required
to be submitted * * * to the holders of
the outstanding voting securities of a
series company shall not be deemed to
have been effectively acted upon unless
approved by the holders of a majority of
the outstanding voting securities of each
class or series of stock affected by such
matter.’’ Further, rule 18(f)–2(c)(1)
under the Act provides that a vote to
approve an investment advisory
contract required by section 15(a) of the
Act ‘‘shall be deemed to be effectively
acted upon with respect to any class or
series of securities of such [registered
investment] company if a majority of the
outstanding voting securities of such
class or series vote for the approval of
such matter.’’
2. Form N–1A is the registration
statement used by open-end investment
companies. Item 19(a)(3) of Form N–1A
requires a registered investment
company to disclose in its statement of
additional information the method of
computing the ‘‘advisory fee payable’’
by the investment company, including
the total dollar amounts that the
investment company ‘‘paid to the
adviser (aggregated with amounts paid
to affiliated advisers, if any), and any
advisers who are not affiliated persons
of the adviser, under the investment
advisory contract for the last three fiscal
years.’’
3. Rule 20a–1 under the Act requires
proxies solicited with respect to a
registered investment company to
10 Applicants request that, for any Subadvised
Series that is a Master Fund, this relief also permit
any Feeder Fund invested in that Master Fund to
disclose Aggregate Fee Disclosure.
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comply with Schedule 14A under the
Exchange Act. Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
Schedule 14A, taken together, require a
proxy statement for a shareholder
meeting at which the advisory contract
will be voted upon to include the ‘‘rate
of compensation of the investment
adviser,’’ the ‘‘aggregate amount of the
investment adviser’s fee,’’ a description
of the ‘‘terms of the contract to be acted
upon,’’ and, if a change in the advisory
fee is proposed, the existing and
proposed fees and the difference
between the two fees.
4. Regulation S–X sets forth the
requirements for financial statements
required to be included as part of a
registered investment company’s
registration statement and shareholder
reports filed with the Commission.
Sections 6–07(2)(a), (b), and (c) of
Regulation S–X require a registered
investment company to include in its
financial statement information about
the investment advisory fees.
5. Section 6(c) of the Act provides that
the Commission by order upon
application may conditionally or
unconditionally 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 their requested relief meets
this standard for the reasons discussed
below.
6. Applicants assert that the
shareholders expect the Advisor, subject
to review and approval of the applicable
Board, to select the Sub-Advisors who
are in the best position to achieve the
Subadvised Series’ investment
objective. Applicants assert that, from
the perspective of the shareholder, the
role of the Sub-Advisors is substantially
equivalent to the role of the individual
portfolio managers employed by an
investment adviser to a traditional
investment company. Applicants
believe that permitting the Advisor to
perform the duties for which the
shareholders of the Subadvised Series
are paying the Advisor—the selection,
supervision and evaluation of the SubAdvisors—without incurring
unnecessary delays or expenses is
appropriate in the interest of the
Subadvised Series’ shareholders and
will allow such Subadvised Series to
operate more efficiently. Applicants
state that each Investment Management
Agreement will continue to be fully
subject to section 15(a) of the Act and
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rule 18f–2 under the Act and approved
by the applicable Board, including a
majority of the Independent Board
Members, in the manner required by
sections 15(a) and 15(c) of the Act.
Applicants are not seeking an
exemption with respect to the
Investment Management Agreements.
7. Applicants assert that disclosure of
the individual fees that the Advisor
would pay to the Sub-Advisors of
Subadvised Series that operate under
the multi-manager structure described
in the application would not serve any
meaningful purpose. Applicants
contend that the primary reasons for
requiring disclosure of individual fees
paid to Sub-Advisors are to inform
shareholders of expenses to be charged
by a particular Subadvised Series and to
enable shareholders to compare the fees
to those of other comparable investment
companies. Applicants believe that the
requested relief satisfies these objectives
because the advisory fee paid to the
Advisor will be fully disclosed and,
therefore, shareholders will know what
the Subadvised Series’ fees and
expenses are and will be able to
compare the advisory fees a Subadvised
Series is charged to those of other
investment companies. Applicants
assert that the requested disclosure
relief would benefit shareholders of the
Subadvised Series because it would
improve the Advisor’s ability to
negotiate the fees paid to Sub-Advisors.
Applicants state that the Advisor may
be able to negotiate rates that are below
a Sub-Advisor’s ‘‘posted’’ amounts if the
Advisor is not required to disclose the
Sub-Advisors’ fees to the public.
Applicants submit that the relief
requested to use Aggregate Fee
Disclosure will encourage Sub-Advisors
to negotiate lower subadvisory fees with
the Advisor if the lower fees are not
required to be made public.
8. For the reasons discussed above,
Applicants submit that the requested
relief meets the standards for relief
under section 6(c) of the Act. Applicants
state that the operation of the
Subadvised Series in the manner
described in the application must be
approved by shareholders of a
Subadvised Series before that
Subadvised Series may rely on the
requested relief. In addition, Applicants
state that the proposed conditions to the
requested relief are designed to address
any potential conflicts of interest,
including any posed by the use of
Wholly-owned Sub-Advisors, and
provide that shareholders are informed
when new Sub-Advisors are hired.
Applicants assert that conditions 6, 7,
10 and 11 are designed to provide the
Board with sufficient independence and
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
the resources and information it needs
to monitor and address any conflicts of
interest with affiliated person of the
Advisor, including Wholly-Owned SubAdvisors. Applicants state that,
accordingly, they believe the requested
relief 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’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Before a Subadvised Series may
rely on the order requested in the
application, the operation of the
Subadvised Series in the manner
described in the application, including
the hiring of Wholly-Owned SubAdvisors, will be, or has been, approved
by a majority of the Subadvised Series’
outstanding voting securities as defined
in the Act, which in the case of a Master
Fund will include voting instructions
provided by shareholders of the Feeder
Funds investing in such Master Fund or
other voting arrangements that comply
with section 12(d)(1)(E)(iii)(aa) of the
Act, or, in the case of a new Subadvised
Series whose public shareholders
purchase shares on the basis of a
prospectus containing the disclosure
contemplated by condition 2 below, by
the sole initial shareholder before
offering the Subadvised Series’ shares to
the public. Before relying on the
requested relief, each Subadvised Series
that sought and obtained shareholder
approval to operate in the manner
described in the application prior to the
date of the requested order and
subsequently sold shares based on a
prospectus that did not comply with
condition 2 below will provide its
shareholders with at least 30 days prior
written notice of (a) the substance and
effect of the relief sought in the
application, and (b) the fact that the
Subadvised Series intends to employ
the multi-manager structure described
in the application.
2. The prospectus for each
Subadvised Series, and in the case of a
Master Fund relying on the requested
relief, the prospectus for each Feeder
Fund investing in such Master Fund,
will disclose the existence, substance,
and effect of any order granted pursuant
to the application. Each Subadvised
Series (and any such Feeder Fund) will
hold itself out to the public as
employing the multi-manager structure
described in the application. Each
prospectus will prominently disclose
that the Advisor has the ultimate
responsibility, subject to oversight by
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the applicable Board, to oversee the
Sub-Advisors and recommend their
hiring, termination and replacement.
3. The Advisor will provide general
management services to a Subadvised
Series, including overall supervisory
responsibility for the general
management and investment of the
Subadvised Series’ assets. Subject to
review and approval of the applicable
Board, the Advisor will (a) set a
Subadvised Series’ overall investment
strategies, (b) evaluate, select, and
recommend Sub-Advisors to manage all
or a portion of a Subadvised Series’
assets, and (c) implement procedures
reasonably designed to ensure that SubAdvisors comply with a Subadvised
Series’ investment objective, policies
and restrictions. Subject to review by
the applicable Board, the Advisor will
(a) when appropriate, allocate and
reallocate a Subadvised Series’ assets
among multiple Sub-Advisors; and (b)
monitor and evaluate the performance
of Sub-Advisors.
4. A Subadvised Series will not make
any Ineligible Sub-Advisor Changes
without the approval of the
shareholders of the applicable
Subadvised Series, which in the case of
a Master Fund will include voting
instructions provided by shareholders of
the Feeder Fund investing in such
Master Fund or other voting
arrangements that comply with section
12(d)(1)(E)(iii)(aa) of the Act.
5. Subadvised Series will inform
shareholders, and if the Subadvised
Series is a Master Fund, shareholders of
any Feeder Funds, of the hiring of a new
Sub-Advisor within 90 days after the
hiring of a new Sub-Advisor pursuant to
the Modified Notice and Access
Procedures.
6. At all times, at least a majority of
the applicable Board will be
Independent Board Members, and the
selection and nomination of new or
additional Independent Board Members
will be placed within the discretion of
the then-existing Independent Board
Members.
7. Independent Legal Counsel, as
defined in rule 0–1(a)(6) under the Act,
will be engaged to represent the
Independent Board Members. The
selection of such counsel will be within
the discretion of the then-existing
Independent Board Members.
8. The Advisor will provide the
applicable board, no less frequently
than quarterly, with information about
the profitability of the Advisor on a per
Subadvised Series basis. The
information will reflect the impact on
profitability of the hiring or termination
of any sub-advisor during the applicable
quarter.
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16:48 Jul 30, 2012
Jkt 226001
9. Whenever a sub-advisor is hired or
terminated, the Advisor will provide the
applicable Board with information
showing the expected impact on the
profitability of the Advisor.
10. Whenever a sub-advisor change is
proposed for a Subadvised Series with
an Affiliated Sub-Advisor or a WhollyOwned Sub-Advisor, the applicable
Board, including a majority of the
Independent Board Members, will make
a separate finding, reflected in the
applicable Board minutes, that such
change is in the best interests of the
Subadvised Series and its shareholders,
and if the Subadvised Series is a Master
Fund, the best interests of any
applicable Feeder Funds and their
respective shareholders, and does not
involve a conflict of interest from which
the Advisor or the Affiliated SubAdvisor or Wholly-Owned Sub-Advisor
derives an inappropriate advantage.
11. No Board member or officer of a
Subadvised Series, or of a Feeder Fund
that invests in a Subadvised Series that
is a Master Fund, or director, manager,
or officer of the Advisor, will own
directly or indirectly (other than
through a pooled investment vehicle
that is not controlled by such person),
any interest in a sub-advisor, except for
ownership of interests in the Advisor or
any entity, except a Wholly-Owned SubAdvisor, that controls, is controlled by,
or is under common control with the
Advisor.
12. Each Subadvised Series and any
Feeder Fund that invests in a
Subadvised Series that is a Master Fund
will disclose the Aggregate Fee
Disclosure in its registration statement.
13. In the event the Commission
adopts a rule under the Act providing
substantially similar relief to that
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.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–18558 Filed 7–30–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30150; 812–13616–09]
Capital Research and Management
Company, et al.; Notice of Application
July 25, 2012.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
PO 00000
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45385
Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940, as
amended (‘‘Act’’) for an exemption from
section 15(a) of the Act and rule 18f–2
under the Act, as well as from certain
disclosure requirements.
ACTION:
Summary of the Application:
Applicants request an order that would
permit them to enter into and materially
amend subadvisory agreements without
shareholder approval and would grant
relief from certain disclosure
requirements.
Applicants: AMCAP Fund, American
Balanced Fund, American Funds
Fundamental Investors, American
Funds Global Balanced Fund, The
American Funds Income Series,
American Funds Insurance Series,
American Funds Money Market Fund,
American Funds Mortgage Fund,
American Funds Portfolio Series,
American Funds Short-Term TaxExempt Bond Fund, American Funds
Target Date Retirement Series, American
Funds Tax-Exempt Fund of New York,
The American Funds Tax-Exempt Series
I, The American Funds Tax-Exempt
Series II, American High-Income
Municipal Bond Fund, American HighIncome Trust, American Mutual Fund,
The Bond Fund of America, Capital
Income Builder, Capital World Bond
Fund, Capital World Growth and
Income Fund Inc., EuroPacific Growth
Fund, The Growth Fund of America,
Inc., The Income Fund of America,
Intermediate Bond Fund of America,
International Growth and Income Fund,
The Investment Company of America,
Limited Term Tax-Exempt Bond Fund
of America, The New Economy Fund,
New Perspective Fund, Inc., New World
Fund, Inc., Short-Term Bond Fund of
America, SMALLCAP World Fund, Inc.,
The Tax-Exempt Bond Fund of America,
and Washington Mutual Investors Fund
(the ‘‘Investment Companies’’) and
Capital Research and Management
Company (‘‘CRMC’’).
Filing Dates: The application was
filed on December 19, 2008, and
amended on August 5, 2009, April 15,
2010, December 16, 2011, April 19,
2012, and July 13, 2012.
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 17, 2012 and
should be accompanied by proof of
service on applicants, in the form of an
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]]>Agencies
[Federal Register Volume 77, Number 147 (Tuesday, July 31, 2012)]
[Notices]
[Pages 45381-45385]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18558]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30151; File No. 812-13512]
Cash Account Trust, et al.; Notice of Application
July 25, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act and rule 18f-2 under the Act, as well as from certain
disclosure requirements.
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Summary of Application: Applicants request an order that would amend
and supersede a prior order (the ``Non-Affiliated Sub-Advisor Order'')
\1\ that permits them to enter into and materially amend subadvisory
agreements for certain multi-managed funds with non-affiliated sub-
advisors without shareholder approval and grants relief from certain
disclosure requirements. The requested order would permit applicants to
enter into, and amend, such agreements with Wholly-Owned Sub-Advisors
(as
[[Page 45382]]
defined below) and non-affiliated sub-advisors without shareholder
approval.
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\1\ Cash Account Trust, et al., Investment Company Act Release
Nos. 29094 (Dec. 16, 2009) (notice) and 29109 (Jan. 12, 2010)
(order).
Applicants: Cash Account Trust, Cash Management Portfolio, Cash Reserve
Fund, Inc., DWS Equity 500 Index Portfolio, DWS Global/International
Fund, Inc., DWS Income Trust, DWS Institutional Funds, DWS
International Fund, Inc., DWS Investment Trust, DWS Investments VIT
Funds, DWS Market Trust, DWS Money Funds, DWS Money Market Trust, DWS
Municipal Trust, DWS Portfolio Trust, DWS Securities Trust, DWS State
Tax-Free Income Series, DWS Target Date Series, DWS Target Fund, DWS
Tax Free Trust, DWS Value Series, Inc., DWS Variable Series I, DWS
Variable Series II, Investors Cash Trust, Tax-Exempt California Money
Market Fund (each a ``DWS Investment Company'' and collectively, the
``DWS Investment Companies''), and Deutsche Investment Management
---------------------------------------------------------------------------
Americas Inc. (``DIMA'').
Filing Dates: The application was filed on March 14, 2008, and amended
on July 30, 2009, October 2, 2009, November 24, 2009, September 10,
2010, November 16, 2010, October 6, 2011, February 7, 2012, and July
23, 2012.
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 17, 2012, 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: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants,
Deutsche Investment Management Americas Inc., 345 Park Avenue, New
York, New York 10154.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Attorney,
at (202) 551-6990, or Jennifer L. Sawin, 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. Each DWS Investment Company is organized as a Massachusetts
business trust, a New York trust, or a Maryland corporation and is
registered with the Commission as an open-end management investment
company under the Act. Each DWS Investment Company may offer one or
more series of shares (each a ``Series'' and collectively, ``Series'')
with its own distinct investment objectives, policies and
restrictions.\2\ Each Series has, or will have, as its investment
adviser, DIMA, or another investment adviser controlling, controlled by
or under common control with DIMA or its successors (each, an
``Advisor'' and, collectively with the Series and the DWS Investment
Companies, the ``Applicants'').\3\ DIMA, a Delaware corporation, is an
indirect, wholly-owned subsidiary of Deutsche Bank AG (``Deutsche
Bank''). Deutsche Bank is a major global financial institution that is
engaged in a wide range of financial services, including investment
management, mutual funds, retail, private and commercial banking,
investment banking and insurance.\4\
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\2\ The term ``Series'' also includes the DWS Investment
Companies listed above that do not offer multiple series. Cash
Management Portfolio and DWS Equity 500 Index Portfolio are master
funds (each a ``Master Fund'') in a master-feeder structure pursuant
to section 12(d)(1)(E) of the Act. Certain Series, as well as any
future Series and any other investment company or series thereof
that is advised by the Advisor, may invest substantially all their
assets into one of the Master Funds (each a ``Feeder Fund''). No
Feeder Fund will engage any sub-advisors other than through
approving the engagement of the applicable Master Fund's sub-
advisors, if any.
\3\ Each Advisor is, or will be, registered with the Commission
as an investment adviser under the Investment Advisers Act of 1940,
as amended (``Advisers Act''). For purposes of the requested order,
``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization.
\4\ Applicants request that the relief apply to the Applicants,
as well as to any future Series and any other existing or future
registered open-end management investment company or series thereof
that is advised by an Advisor, uses the multi-manager structure
described in the application, and complies with the terms and
conditions of the application (``Subadvised Series''). All
registered open-end investment companies that currently intend to
rely on the requested order are named as Applicants. All Series that
currently are, or that currently intend to be, Subadvised Series are
identified in the application. Any entity that relies on the
requested order will do so only in accordance with the terms and
conditions contained the application. The requested relief will not
extend to any sub-advisor, other than a Wholly-Owned Sub-Advisor (as
defined below), who is an affiliated person, as defined in section
2(a)(3) of the Act, of the Subadvised Series, of any Feeder Fund, or
of the Advisor, other than by reason of serving as a sub-advisor to
one or more of the Subadvised Series (``Affiliated Sub-Advisor'').
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2. The Advisor serves as the investment adviser to each Series
pursuant to an investment advisory agreement with the applicable DWS
Investment Company (``Investment Management Agreement''). The
Investment Management Agreement for each existing Series was approved
by the board of trustees/directors of the applicable DWS Investment
Company (the ``Board''), including a majority of the members of the
Board who are not ``interested persons'', as defined in section
2(a)(19) of the Act, of the Series or the Advisor (``Independent Board
Members'') and by the shareholders of that Series as required by
sections 15(a) and 15(c) of the Act and rule 18f-2 thereunder. The
terms of these Investment Management Agreements comply with section
15(a) of the Act. Each other Investment Management Agreement will
comply with section 15(a) of the Act and will be similarly approved.
3. Under the terms of each Investment Management Agreement, the
Advisor, subject to the supervision of the applicable Board, provides
continuous investment management of the assets of each Series. The
Advisor periodically reviews a Series' investment policies and
strategies and based on the need of a particular Series may recommend
changes to the investment policies and strategies of the Series for
consideration by the Board. For its services to each Series under the
applicable Investment Management Agreement, the Advisor receives an
investment management fee from that Series based on either the average
net assets of that Series or that Series' investment performance over a
particular period compared to a benchmark. The terms of each Investment
Management Agreement permit the Advisor, subject to the approval of the
applicable Board, including a majority of the Independent Board
Members, and the shareholders of the applicable Subadvised Series (if
required), to delegate portfolio management responsibilities of all or
a portion of the assets of a Subadvised Series to one or more sub-
advisors.\5\
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\5\ As used herein, a ``Sub-Advisor'' is (1) an indirect or
direct ``wholly-owned subsidiary'' (as such term is defined in the
Act) of the Advisor for that Series, or (2) a sister company of the
Advisor for that Series that is an indirect or direct ``wholly-owned
subsidiary'' (as such term is defined in the Act) of the same
company that, indirectly or directly, wholly owns the Advisor (each
of (1) and (2) a ``Wholly-Owned Sub-Advisor'' and collectively, the
``Wholly-Owned Sub-Advisors''), or (3) not an ``affiliated person''
(as such term is defined in section 2(a)(3) of the Act) of the
Series, any Feeder Fund invested in a Series that is a Master Fund,
applicable DWS Investment Company, or the Advisor, except to the
extent that an affiliation arises solely because the sub-adviser
serves as a sub-adviser to a Series (each a ``Non-Affiliated Sub-
Advisor'').
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[[Page 45383]]
4. Applicants request an order to permit the Advisor, subject to
the approval of the Board, including a majority of the Independent
Board Members, to, without obtaining shareholder approval: (i) Select
Sub-Advisors to manage all or a portion of the assets of a Series and
enter into Sub-Advisory Agreements (as defined below) with the Sub-
Advisors, and (ii) materially amend Sub-Advisory Agreements with the
Sub-Advisors.\6\
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\6\ Shareholder approval will continue to be required for any
other sub-advisor change (not otherwise permitted by rule or other
action of the Commission or staff) and material amendments to an
existing Sub-Advisory Agreement with any sub-advisor other than a
Non-Affiliated Sub-Advisor or a Wholly-Owned Sub-Advisor (all such
changes referred to as ``Ineligible Sub-Advisor Changes'').
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5. Pursuant to each Investment Management Agreement, the Advisor
has overall responsibility for the management and investment of the
assets of each Subadvised Series; these responsibilities include
recommending the removal or replacement of Sub-Advisors, determining
the portion of that Subadvised Series' assets to be managed by any
given Sub-Advisor and reallocating those assets as necessary from time
to time. In accordance with each Investment Management Agreement, the
Advisor will supervise each Sub-Advisor in its performance of its
duties with a view to preventing violations of the federal securities
laws.
6. The Advisor has entered into sub-advisory agreements with Sub-
Advisors (``Sub-Advisory Agreements'') to provide investment management
services to the Subadvised Series.\7\ The terms of each Sub-Advisory
Agreement comply fully with the requirements of section 15(a) of the
Act and were approved by the applicable Board, including a majority of
the Independent Board Members, and, to the extent that the Non-
Affiliated Sub-Advisor Order did not apply, the shareholders of the
Subadvised Series in accordance with sections 15(a) and 15(c) of the
Act and rule 18f-2 thereunder. The Sub-Advisors, subject to the
supervision of the Advisor and oversight of the applicable Board,
determine the securities and other instruments to be purchased or sold
by a Subadvised Series and place orders with brokers or dealers that
they select. The Advisor will compensate each Sub-Advisor out of the
fee paid to the Advisor under the relevant Investment Management
Agreement.
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\7\ If the name of any Subadvised Series contains the name of a
Sub-advisor, the name of the Advisor that serves as the primary
adviser to the Subadvised Series, or a trademark or trade name that
is owned by or publicly used to identity that Advisor, will precede
the name of the Sub-advisor.
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7. Subadvised Series will inform shareholders of the hiring of a
new Sub-Advisor pursuant to the following procedures (``Modified Notice
and Access Procedures''): (a) Within 90 days after a new Sub-Advisor is
hired for any Subadvised Series, that Subadvised Series will send its
shareholders \8\ either a Multi-manager Notice or a Multi-manager
Notice and Multi-manager Information Statement; \9\ and (b) the
Subadvised Series will make the Multi-manager Information Statement
available on the Web site identified in the Multi-manager Notice no
later than when the Multi-manager Notice (or Multi-manager Notice and
Multi-manager Information Statement) is first sent to shareholders, and
will maintain it on that Web site for at least 90 days. In the
circumstances described in the application, a proxy solicitation to
approve the appointment of new Sub-Advisors provides no more meaningful
information to shareholders than the proposed Multi-manager Information
Statement. Applicants state that each Board would comply with the
requirements of sections 15(a) and 15(c) of the Act before entering
into or amending Sub-Advisory Agreements.
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\8\ If the Subadvised Series is a Master Fund, for purposes of
the Modified Notice and Access Procedures, ``shareholders'' include
both the shareholders of the applicable Master Fund and the
shareholders of its Feeder Funds.
\9\ A ``Multi-manager Notice'' will be modeled on a Notice of
Internet Availability as defined in rule 14a-16 under the Securities
Exchange Act of 1934 (``Exchange Act''), and specifically will,
among other things: (a) Summarize the relevant information regarding
the new Sub-Advisor; (b) inform shareholders that the Multi-manager
Information Statement is available on a Web site; (c) provide the
Web site address; (d) state the time period during which the Multi-
manager Information Statement will remain available on that Web
site; (e) provide instructions for accessing and printing the Multi-
manager Information Statement; and (f) instruct the shareholder that
a paper or email copy of the Multi-manager Information Statement may
be obtained, without charge, by contacting the Subadvised Series.
A ``Multi-manager Information Statement'' will meet the
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule
14A under the Exchange Act for an information statement, except as
modified by the order to permit Aggregate Fee Disclosure, as defined
below. Multi-manager Information Statements will be filed with the
Commission via the EDGAR system.
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8. Applicants also request an order exempting the Subadvised Series
from certain disclosure obligations that may require the Applicants to
disclose fees paid by the Advisor to each Sub-Advisor. Applicants seek
relief to permit each Subadvised Series to disclose (as a dollar amount
and a percentage of the Subadvised Series' net assets): (a) The
aggregate fees paid to the Advisor and any Wholly-Owned Sub-Advisors;
(b) the aggregate fees paid to Non-Affiliated Sub-Advisors; and (c) the
fee paid to each Affiliated Sub-Advisor (collectively, the ``Aggregate
Fee Disclosure'').\10\
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\10\ Applicants request that, for any Subadvised Series that is
a Master Fund, this relief also permit any Feeder Fund invested in
that Master Fund to disclose Aggregate Fee Disclosure.
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Applicants' Legal Analysis
1. Section 15(a) of the Act states, in 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, which
contract, whether with such registered company or with an investment
adviser of such registered company, has been approved by the vote of a
majority of the outstanding voting securities of such registered
company.'' Rule 18f-2 under the Act states that any ``matter required
to be submitted * * * to the holders of the outstanding voting
securities of a series company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of
the outstanding voting securities of each class or series of stock
affected by such matter.'' Further, rule 18(f)-2(c)(1) under the Act
provides that a vote to approve an investment advisory contract
required by section 15(a) of the Act ``shall be deemed to be
effectively acted upon with respect to any class or series of
securities of such [registered investment] company if a majority of the
outstanding voting securities of such class or series vote for the
approval of such matter.''
2. Form N-1A is the registration statement used by open-end
investment companies. Item 19(a)(3) of Form N-1A requires a registered
investment company to disclose in its statement of additional
information the method of computing the ``advisory fee payable'' by the
investment company, including the total dollar amounts that the
investment company ``paid to the adviser (aggregated with amounts paid
to affiliated advisers, if any), and any advisers who are not
affiliated persons of the adviser, under the investment advisory
contract for the last three fiscal years.''
3. Rule 20a-1 under the Act requires proxies solicited with respect
to a registered investment company to
[[Page 45384]]
comply with Schedule 14A under the Exchange Act. Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together,
require a proxy statement for a shareholder meeting at which the
advisory contract will be voted upon to include the ``rate of
compensation of the investment adviser,'' the ``aggregate amount of the
investment adviser's fee,'' a description of the ``terms of the
contract to be acted upon,'' and, if a change in the advisory fee is
proposed, the existing and proposed fees and the difference between the
two fees.
4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require
a registered investment company to include in its financial statement
information about the investment advisory fees.
5. Section 6(c) of the Act provides that the Commission by order
upon application may conditionally or unconditionally 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 their requested relief meets this standard for
the reasons discussed below.
6. Applicants assert that the shareholders expect the Advisor,
subject to review and approval of the applicable Board, to select the
Sub-Advisors who are in the best position to achieve the Subadvised
Series' investment objective. Applicants assert that, from the
perspective of the shareholder, the role of the Sub-Advisors is
substantially equivalent to the role of the individual portfolio
managers employed by an investment adviser to a traditional investment
company. Applicants believe that permitting the Advisor to perform the
duties for which the shareholders of the Subadvised Series are paying
the Advisor--the selection, supervision and evaluation of the Sub-
Advisors--without incurring unnecessary delays or expenses is
appropriate in the interest of the Subadvised Series' shareholders and
will allow such Subadvised Series to operate more efficiently.
Applicants state that each Investment Management Agreement will
continue to be fully subject to section 15(a) of the Act and rule 18f-2
under the Act and approved by the applicable Board, including a
majority of the Independent Board Members, in the manner required by
sections 15(a) and 15(c) of the Act. Applicants are not seeking an
exemption with respect to the Investment Management Agreements.
7. Applicants assert that disclosure of the individual fees that
the Advisor would pay to the Sub-Advisors of Subadvised Series that
operate under the multi-manager structure described in the application
would not serve any meaningful purpose. Applicants contend that the
primary reasons for requiring disclosure of individual fees paid to
Sub-Advisors are to inform shareholders of expenses to be charged by a
particular Subadvised Series and to enable shareholders to compare the
fees to those of other comparable investment companies. Applicants
believe that the requested relief satisfies these objectives because
the advisory fee paid to the Advisor will be fully disclosed and,
therefore, shareholders will know what the Subadvised Series' fees and
expenses are and will be able to compare the advisory fees a Subadvised
Series is charged to those of other investment companies. Applicants
assert that the requested disclosure relief would benefit shareholders
of the Subadvised Series because it would improve the Advisor's ability
to negotiate the fees paid to Sub-Advisors. Applicants state that the
Advisor may be able to negotiate rates that are below a Sub-Advisor's
``posted'' amounts if the Advisor is not required to disclose the Sub-
Advisors' fees to the public. Applicants submit that the relief
requested to use Aggregate Fee Disclosure will encourage Sub-Advisors
to negotiate lower subadvisory fees with the Advisor if the lower fees
are not required to be made public.
8. For the reasons discussed above, Applicants submit that the
requested relief meets the standards for relief under section 6(c) of
the Act. Applicants state that the operation of the Subadvised Series
in the manner described in the application must be approved by
shareholders of a Subadvised Series before that Subadvised Series may
rely on the requested relief. In addition, Applicants state that the
proposed conditions to the requested relief are designed to address any
potential conflicts of interest, including any posed by the use of
Wholly-owned Sub-Advisors, and provide that shareholders are informed
when new Sub-Advisors are hired. Applicants assert that conditions 6,
7, 10 and 11 are designed to provide the Board with sufficient
independence and the resources and information it needs to monitor and
address any conflicts of interest with affiliated person of the
Advisor, including Wholly-Owned Sub-Advisors. Applicants state that,
accordingly, they believe the requested relief 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' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Subadvised Series may rely on the order requested in
the application, the operation of the Subadvised Series in the manner
described in the application, including the hiring of Wholly-Owned Sub-
Advisors, will be, or has been, approved by a majority of the
Subadvised Series' outstanding voting securities as defined in the Act,
which in the case of a Master Fund will include voting instructions
provided by shareholders of the Feeder Funds investing in such Master
Fund or other voting arrangements that comply with section
12(d)(1)(E)(iii)(aa) of the Act, or, in the case of a new Subadvised
Series whose public shareholders purchase shares on the basis of a
prospectus containing the disclosure contemplated by condition 2 below,
by the sole initial shareholder before offering the Subadvised Series'
shares to the public. Before relying on the requested relief, each
Subadvised Series that sought and obtained shareholder approval to
operate in the manner described in the application prior to the date of
the requested order and subsequently sold shares based on a prospectus
that did not comply with condition 2 below will provide its
shareholders with at least 30 days prior written notice of (a) the
substance and effect of the relief sought in the application, and (b)
the fact that the Subadvised Series intends to employ the multi-manager
structure described in the application.
2. The prospectus for each Subadvised Series, and in the case of a
Master Fund relying on the requested relief, the prospectus for each
Feeder Fund investing in such Master Fund, will disclose the existence,
substance, and effect of any order granted pursuant to the application.
Each Subadvised Series (and any such Feeder Fund) will hold itself out
to the public as employing the multi-manager structure described in the
application. Each prospectus will prominently disclose that the Advisor
has the ultimate responsibility, subject to oversight by
[[Page 45385]]
the applicable Board, to oversee the Sub-Advisors and recommend their
hiring, termination and replacement.
3. The Advisor will provide general management services to a
Subadvised Series, including overall supervisory responsibility for the
general management and investment of the Subadvised Series' assets.
Subject to review and approval of the applicable Board, the Advisor
will (a) set a Subadvised Series' overall investment strategies, (b)
evaluate, select, and recommend Sub-Advisors to manage all or a portion
of a Subadvised Series' assets, and (c) implement procedures reasonably
designed to ensure that Sub-Advisors comply with a Subadvised Series'
investment objective, policies and restrictions. Subject to review by
the applicable Board, the Advisor will (a) when appropriate, allocate
and reallocate a Subadvised Series' assets among multiple Sub-Advisors;
and (b) monitor and evaluate the performance of Sub-Advisors.
4. A Subadvised Series will not make any Ineligible Sub-Advisor
Changes without the approval of the shareholders of the applicable
Subadvised Series, which in the case of a Master Fund will include
voting instructions provided by shareholders of the Feeder Fund
investing in such Master Fund or other voting arrangements that comply
with section 12(d)(1)(E)(iii)(aa) of the Act.
5. Subadvised Series will inform shareholders, and if the
Subadvised Series is a Master Fund, shareholders of any Feeder Funds,
of the hiring of a new Sub-Advisor within 90 days after the hiring of a
new Sub-Advisor pursuant to the Modified Notice and Access Procedures.
6. At all times, at least a majority of the applicable Board will
be Independent Board Members, and the selection and nomination of new
or additional Independent Board Members will be placed within the
discretion of the then-existing Independent Board Members.
7. Independent Legal Counsel, as defined in rule 0-1(a)(6) under
the Act, will be engaged to represent the Independent Board Members.
The selection of such counsel will be within the discretion of the
then-existing Independent Board Members.
8. The Advisor will provide the applicable board, no less
frequently than quarterly, with information about the profitability of
the Advisor on a per Subadvised Series basis. The information will
reflect the impact on profitability of the hiring or termination of any
sub-advisor during the applicable quarter.
9. Whenever a sub-advisor is hired or terminated, the Advisor will
provide the applicable Board with information showing the expected
impact on the profitability of the Advisor.
10. Whenever a sub-advisor change is proposed for a Subadvised
Series with an Affiliated Sub-Advisor or a Wholly-Owned Sub-Advisor,
the applicable Board, including a majority of the Independent Board
Members, will make a separate finding, reflected in the applicable
Board minutes, that such change is in the best interests of the
Subadvised Series and its shareholders, and if the Subadvised Series is
a Master Fund, the best interests of any applicable Feeder Funds and
their respective shareholders, and does not involve a conflict of
interest from which the Advisor or the Affiliated Sub-Advisor or
Wholly-Owned Sub-Advisor derives an inappropriate advantage.
11. No Board member or officer of a Subadvised Series, or of a
Feeder Fund that invests in a Subadvised Series that is a Master Fund,
or director, manager, or officer of the Advisor, will own directly or
indirectly (other than through a pooled investment vehicle that is not
controlled by such person), any interest in a sub-advisor, except for
ownership of interests in the Advisor or any entity, except a Wholly-
Owned Sub-Advisor, that controls, is controlled by, or is under common
control with the Advisor.
12. Each Subadvised Series and any Feeder Fund that invests in a
Subadvised Series that is a Master Fund will disclose the Aggregate Fee
Disclosure in its registration statement.
13. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that 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.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18558 Filed 7-30-12; 8:45 am]
BILLING CODE 8011-01-P
