The Dreyfus Corporation, et al.; Notice of Application, 39789-39793 [2013-15841]
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Federal Register / Vol. 78, No. 127 / Tuesday, July 2, 2013 / Notices
investment in which an ‘‘Affiliated CoInvestor’’ (as defined below) has
acquired or proposes to acquire the
same class of securities of the same
issuer, where the investment involves a
joint enterprise or other joint
arrangement within the meaning of rule
17d–1 in which such Fund and an
Affiliated Co-Investor are participants,
unless any such Affiliated Co-Investor,
prior to disposing of all or part of its
investment (a) gives such Manager
sufficient, but not less than one day’s,
notice of its intent to dispose of its
investment; and (b) refrains from
disposing of its investment unless such
Fund has the opportunity to dispose of
such Fund’s investment prior to or
concurrently with, and on the same
terms as, and pro rata with the Affiliated
Co-Investor. The term ‘‘Affiliated CoInvestor’’ with respect to any Fund
means any person who is: (a) An
‘‘affiliated person’’ (as such term is
defined in section 2(a)(3) of the Act) of
the Fund (other than a Third-Party Fund
or Third-Party Investor); (b) the Invesco
Group; (c) an officer or director of the
Invesco Group; or (d) an entity (other
than a Third-Party Fund) in which the
Manager acts as a general partner or has
a similar capacity to control the sale or
disposition of the entity’s securities.
The restrictions contained in this
condition, however, shall not be
deemed to limit or prevent the
disposition of an investment by an
Affiliated Co-Investor: (a) To its direct
or indirect wholly-owned subsidiary, to
any company (a ‘‘Parent’’) of which
such Affiliated Co-Investor is a direct or
indirect wholly-owned subsidiary or to
a direct or indirect wholly-owned
subsidiary of its Parent; (b) to immediate
family members, including step and
adoptive relationships, of such
Affiliated Co-Investor or a trust or other
investment vehicle established for any
Affiliated Co-Investor or any such
family member; (c) when the investment
is comprised of securities that are listed
on any national securities exchange
registered under section 6 of the 1934
Act, (d) when the investment is
comprised of securities that are national
market system securities pursuant to
section 11A(a)(2) of the 1934 Act and
rule 11A(a)(2)–1 under the 1934 Act; or
(e) when the investment is comprised of
government securities as defined in
section 2(a)(16) of the Act.
4. Each Fund and its Manager will
maintain and preserve, for the life of
such Fund and at least six years
thereafter, such accounts, books and
other documents as constitute the
record forming the basis for the audited
financial statements that are to be
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provided to the Participants in such
Fund, and each annual report of such
Fund required to be sent to such
Participants, and agree that all such
records will be subject to examination
by the Commission and its staff. Each
Fund will preserve the accounts, books
and other documents required to be
maintained in an easily accessible place
for at least the first two years.
5. The Manager of each Fund will
send to each Participant who had an
interest in any capital account of such
Fund, at any time during the fiscal year
then ended, Fund financial statements
audited by such Fund’s independent
accountants within 120 days after the
end of the fiscal year of each of the
Funds or as soon as practicable
thereafter. At the end of each fiscal year,
the Manager will make a valuation or
have a valuation made of all of the
assets of the Fund as of such fiscal year
end in a manner consistent with
customary practice with respect to the
valuation of assets of the kind held by
the Fund. In addition, as soon as
practicable after the end of each fiscal
year, the Manager of such Fund will
send a report to each person who was
a Participant in such Fund at any time
during the fiscal year then ended,
setting forth such tax information as
shall be necessary for the preparation by
the Participant of his, her or its federal
and state income tax returns and a
report of the investment activities of the
Fund during such year.
6. In any case where purchases or
sales are made by a Fund from or to an
entity affiliated with the Fund by reason
of a director, officer or employee of
Invesco Group (a) serving as an officer,
director, general partner or investment
adviser of the entity, or (b) having a 5%
or more investment in the entity, such
individual will not participate in such
Fund’s determination of whether or not
to effect such purchase or sale.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–15842 Filed 7–1–13; 8:45 am]
BILLING CODE 8011–01–P
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39789
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30580; File No. 812–13637]
The Dreyfus Corporation, et al.; Notice
of Application
June 26, 2013.
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:
Summary of Application:
Applicants request an order that would
amend and supersede a prior order (the
‘‘Non-Affiliated Sub-Adviser Order’’) 1
that permits them to enter into and
materially amend subadvisory
agreements for certain multi-managed
funds with non-affiliated sub-advisers
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-Advisers (as
defined below) and non-affiliated subadvisers without shareholder approval.
APPLICANTS: BNY Mellon Funds Trust
(‘‘BNY Mellon Funds’’), Strategic Funds,
Inc. (‘‘Strategic Funds’’), The Dreyfus/
Laurel Funds, Inc. (‘‘Dreyfus/Laurel
Funds’’) (each, an ‘‘Investment
Company’’ and together, the
‘‘Investment Companies’’) and The
Dreyfus Corporation (‘‘Dreyfus’’).
DATES: Filing Dates: The application was
filed on March 2, 2009, and amended on
April 14, 2009, December 27, 2012, May
1, 2013 and June 21, 2013.
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 July 22, 2013, 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
SUMMARY:
1 Strategic Funds, Inc., et al., Investment
Company Act Release Nos. 29064 (Nov. 30, 2009)
(notice) and 29097 (Dec. 23, 2009) (order).
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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, 200 Park Avenue, New
York, New York 10166.
FOR FURTHER INFORMATION CONTACT:
Emerson S. Davis, Sr., Senior Attorney,
at (202) 551–6868, or Daniele
Marchesani, Branch Chief, at (202) 551–
6821 (Division of Investment
Management, Exemptive Applications
Office).
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.
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Applicants’ Representations
1. Each Investment Company is
organized as a Massachusetts business
trust or a Maryland corporation and is
registered with the Commission as an
open-end management investment
company under the Act. Each
Investment Company offers one or more
series of shares (each a ‘‘Series’’ and
collectively, ‘‘Series’’) with its own
distinct investment objectives, policies
and restrictions. Each Series has, or will
have, as its investment adviser, Dreyfus
or another investment adviser
controlling, controlled by or under
common control with Dreyfus or its
successors (each, an ‘‘Adviser’’ and,
collectively with the Series and the
Investment Companies, the
‘‘Applicants’’).2 Dreyfus, a New York
corporation, is a wholly-owned
subsidiary and the primary mutual fund
business of The Bank of New York
Mellon Corporation, a global financial
services company focused on helping
clients manage and service their
financial assets, operating in 36
countries and serving more than 100
markets.3
2 Each Adviser 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 reorganization into another jurisdiction
or a change in the type of business organization.
3 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 Adviser, uses the multimanager structure described in the application, and
complies with the terms and conditions of the
application (‘‘Sub-Advised Series’’). All registered
open-end investment companies that currently
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2. The Adviser serves as the
investment adviser to each Series
pursuant to an investment advisory
agreement with the applicable
Investment Company (‘‘Investment
Management Agreement’’). The
Investment Management Agreement for
each existing Series was approved by
the board of trustees/directors of the
applicable 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 Adviser (‘‘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 the 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 Adviser,
subject to the supervision of the
applicable Board, provides continuous
investment management of the assets of
each Series.4 The Adviser provides
investment management of each Series’
portfolio in accordance with the
investment objectives and policies of
the Series. For its services to each Series
under the applicable Investment
Management Agreement, the Adviser
receives an investment management fee
intend to rely on the requested order are named as
Applicants. All Series that currently are, or that
currently intend to be, Sub-Advised 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-adviser, other than a WhollyOwned Sub-Adviser, who is an affiliated person, as
defined in Section 2(a)(3) of the 1940 Act, of the
Sub-Advised Series or of the Adviser, other than by
reason of serving as a sub-adviser to one or more
of the Sub-Advised Series or another investment
company registered under the 1940 Act for which
the Adviser serves as investment adviser
(‘‘Affiliated Sub-Adviser’’).
4 The Adviser may engage EACM Advisors LLC
(‘‘EACM’’), its affiliate and an investment adviser
registered under the Advisers Act, or any other
affiliated or non-affiliated entity registered as an
investment adviser under the Advisers Act (each, a
‘‘Portfolio Allocation Manager’’) to assist the
Adviser in evaluating and recommending SubAdvisers for a Sub-Advised Series and
recommending the portion of a Sub-Advised Series’
assets to be managed by each Sub-Adviser, as well
as monitoring and evaluating the performance of
Sub-Advisers for a Sub-Advised Series and
recommending whether a Sub-Adviser should be
terminated by a Sub-Advised Series. However, it is
the Adviser’s overall responsibility to select, subject
to the review and approval of the Board, one or
more Sub-Advisers to manage all or part of a SubAdvised Series’ assets, determine what portion of
that Sub-Advised Series’ assets to be managed by
any given Sub-Adviser, review the Sub-Advisers’
performance and recommend whether Sub-Advisers
should be terminated.
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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. Each Investment
Management Agreement permits the
Adviser, subject to the approval of the
applicable Board, including a majority
of the Independent Board Members, to
enter into investment sub-advisory
agreements with one or more SubAdvisers to manage all or a portion of
the assets of a Sub-Advised Series.5
4. Applicants request an order to
permit the Adviser, subject to the
approval of the Board, including a
majority of the Independent Board
Members, to, without obtaining
shareholder approval: (i) Select SubAdvisers to manage all or a portion of
the assets of a Series and enter into SubAdvisory Agreements (as defined below)
with the Sub-Advisers, and (ii)
materially amend Sub-Advisory
Agreements with the Sub-Advisers.6
5. Pursuant to each Investment
Management Agreement, the Adviser
has overall responsibility for the
management and investment of the
assets of each Sub-Advised Series; these
responsibilities include recommending
the removal or replacement of SubAdvisers, determining the portion of
that Sub-Advised Series’ assets to be
managed by any given Sub-Adviser and
reallocating those assets as necessary
from time to time.7
6. The Adviser has entered into subadvisory agreements with Sub-Advisers
(‘‘Sub-Advisory Agreements’’) to
provide investment management
services to the Sub-Advised Series.8 The
5 As used herein, a ‘‘Sub-Adviser’’ is (1) an
indirect or direct ‘‘wholly-owned subsidiary’’ (as
such term is defined in the Act) of the Adviser for
that Series, or (2) a sister company of the Adviser
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
directly, wholly owns the Adviser (each of (1) and
(2) a ‘‘Wholly-Owned Sub-Adviser’’ and
collectively, the ‘‘Wholly-Owned Sub-Advisers’’),
or (3) not an ‘‘affiliated person’’ (as such term is
defined in section 2(a)(3) of the Act) of the Series,
applicable Investment Company, or the Adviser,
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-Adviser’’).
6 Shareholder approval will continue to be
required for any other sub-adviser 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 subadviser other than a Non-Affiliated Sub-Adviser or
a Wholly-Owned Sub-Adviser (all such changes
referred to as ‘‘Ineligible Sub-Adviser Changes’’).
7 The Adviser has entered into an agreement with
EACM to act as Portfolio Allocation Manager in
respect of Dreyfus Select Managers Small Cap
Growth Fund and Dreyfus Select Managers Small
Cap Value Fund.
8 If the name of any Sub-Advised Series contains
the name of a Sub-adviser, the name of the Adviser
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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-Adviser Order
did not apply, the shareholders of the
Sub-Advised Series in accordance with
sections 15(a) and 15(c) of the Act and
rule 18f–2 thereunder. The SubAdvisers, subject to the supervision of
the Adviser and oversight of the
applicable Board, make the day-to-day
investment decisions for the SubAdvised Series. The Adviser will
compensate each Sub-Adviser out of the
fee paid to the Adviser under the
relevant Investment Management
Agreement.
7. Sub-Advised Series will inform
shareholders of the hiring of a new SubAdviser pursuant to the following
procedures (‘‘Modified Notice and
Access Procedures’’): (a) Within 90 days
after a new Sub-Adviser is hired for any
Sub-Advised Series, that Sub-Advised
Series will send its shareholders either
a Multi-manager Notice or a Multimanager Notice and Multi-manager
Information Statement; 9 and (b) the
Sub-Advised 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 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 SubAdvisers provides no more meaningful
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
Adviser, will precede the name of the Sub-Adviser.
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-Adviser; (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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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 Sub-Advised Series from
certain disclosure obligations that may
require the Applicants to disclose fees
paid by the Adviser to each SubAdviser.10 Applicants seek relief to
permit each Sub-Advised Series to
disclose (as a dollar amount and a
percentage of the Sub-Advised Series’
net assets): (a) The aggregate fees paid
to the Adviser and any Wholly-Owned
Sub-Advisers; (b) the aggregate fees paid
to Non-Affiliated Sub-Advisers; and (c)
the fee paid to each Affiliated SubAdviser (collectively, the ‘‘Aggregate
Fee Disclosure’’).
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
10 Applicants are not requesting any relief with
respect to any fee paid to the Portfolio Allocation
Managers.
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39791
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
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 Adviser, subject
to review and approval of the applicable
Board, to select the Sub-Advisers who
are in the best position to achieve the
Sub-Advised Series’ investment
objective. Applicants assert that, from
the perspective of the shareholder, the
role of the Sub-Advisers 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 Adviser to
perform the duties for which the
shareholders of the Sub-Advised Series
are paying the Adviser—the selection,
supervision and evaluation of the Sub-
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Advisers—without incurring
unnecessary delays or expenses is
appropriate in the interest of the SubAdvised Series’ shareholders and will
allow such Sub-Advised 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 or
any agreement with a Portfolio
Allocation Manager.
7. Applicants assert that disclosure of
the individual fees that the Adviser
would pay to the Sub-Advisers 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-Advisers are to inform
shareholders of expenses to be charged
by a particular Sub-Advised 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 Adviser will be fully
disclosed and, therefore, shareholders
will know what the Sub-Advised 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 relief would
benefit shareholders of the Sub-Advised
Series because it would improve the
Adviser’s ability to negotiate the fees
paid to Sub-Advisers. The Adviser’s
ability to negotiate with the various
Sub-Advisers would be adversely
affected by public disclosure of fees
paid to each Sub-Adviser. If the Adviser
is not required to disclose the SubAdvisers’ fees to the public, the Adviser
may be able to negotiate rates that are
below a Sub-Adviser’s ‘‘posted’’
amounts. Applicants submit that the
relief will also encourage Sub-Advisers
to negotiate lower sub-advisory fees
with the Adviser 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 Sub-Advised Series
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before that Sub-Advised 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 SubAdvisers, and provide that shareholders
are informed when Sub-Advisers 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 Adviser, including
Wholly-Owned Sub-Advisers.
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: 11
1. Before a Sub-Advised 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-Advisers, will be,
or has been, approved by a majority of
the Sub-Advised Series’ outstanding
voting securities as defined in the Act,
or, in the case of a new Sub-Advised
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 Sub-Advised Series’ shares
to the public.
2. The prospectus for each SubAdvised Series will disclose the
existence, substance, and effect of any
order granted pursuant to the
application. Each Sub-Advised Series
will hold itself out to the public as
employing the multi-manager structure
described in the application. Each
prospectus will prominently disclose
that the Adviser has the ultimate
responsibility, subject to oversight by
the applicable Board, to oversee the
Sub-Advisers and recommend their
hiring, termination and replacement.
3. The Adviser will provide general
management services to a Sub-Advised
Series, including overall supervisory
responsibility for the general
management and investment of the Sub11 Applicants will only comply with conditions 8,
9 and 12 if they rely on the relief that would allow
them to provide Aggregate Fee Disclosure.
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
Advised Series’ assets. Subject to review
and approval of the applicable Board,
the Adviser will (a) set a Sub-Advised
Series’ overall investment strategies, (b)
evaluate, select, and recommend SubAdvisers to manage all or a portion of
a Sub-Advised Series’ assets, and (c)
implement procedures reasonably
designed to ensure that Sub-Advisers
comply with a Sub-Advised Series’
investment objective, policies and
restrictions. Subject to review by the
applicable Board, the Adviser will (a)
when appropriate, allocate and
reallocate a Sub-Advised Series’ assets
among multiple Sub-Advisers; and (b)
monitor and evaluate the performance
of Sub-Advisers.
4. A Sub-Advised Series will not
make any Ineligible Sub-Adviser
Changes without the approval of the
shareholders of the applicable SubAdvised Series.
5. Sub-Advised Series will inform
shareholders of the hiring of a new SubAdviser within 90 days after the hiring
of the new Sub-Adviser 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 Adviser will provide the
applicable Board, no less frequently
than quarterly, with information about
the profitability of the Adviser on a per
Sub-Advised Series basis. The
information will reflect the impact on
profitability of the hiring or termination
of any sub-adviser during the applicable
quarter.
9. Whenever a Sub-Adviser is hired or
terminated, the Adviser will provide the
applicable Board with information
showing the expected impact on the
profitability of the Adviser.
10. Whenever a Sub-Adviser change is
proposed for a Sub-Advised Series with
an Affiliated Sub-Adviser or a WhollyOwned Sub-Adviser, 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
Sub-Advised Series and its
shareholders, and does not involve a
conflict of interest from which the
E:\FR\FM\02JYN1.SGM
02JYN1
Federal Register / Vol. 78, No. 127 / Tuesday, July 2, 2013 / Notices
Adviser or the Affiliated Sub-Adviser or
Wholly-Owned Sub-Adviser derives an
inappropriate advantage.
11. No board member or officer of a
Sub-Advised Series, 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 Sub-Adviser, except for
(i) ownership of interests in the Adviser
or any entity, except a Wholly-Owned
Sub-Adviser, that controls, is controlled
by, or is under common control with the
Adviser; or (ii) ownership of less than
1% of the outstanding securities of any
class of equity or debt of a publicly
traded company that is either a SubAdviser or an entity that controls, is
controlled by, or is under common
control with a Sub-Adviser.
12. Each Sub-Advised Series 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. 2013–15841 Filed 7–1–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30568; 812–14080]
ETF Issuer Solutions Inc., et al.; Notice
of Application
June 26, 2013.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d) and 22(e) of the
Act and rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
(a)(2) of the Act, and under section
12(d)(1)(J) of the Act for an exemption
from sections 12(d)(1)(A) and (B) of the
Act.
tkelley on DSK3SPTVN1PROD with NOTICES
AGENCY:
ETF Issuer Solutions Inc.
(‘‘ETFis’’), ETF Actively Managed Trust
(‘‘Trust) and ETF Distributors LLC
(‘‘Distributor’’).
APPLICANTS:
VerDate Mar<15>2010
16:48 Jul 01, 2013
Jkt 229001
Applicants
request an order that permits: (a)
Actively-managed series of certain
open-end management investment
companies to issue shares (‘‘Shares’’)
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Shares to occur at
negotiated market prices; (c) certain
series to pay redemption proceeds,
under certain circumstances, more than
seven days from the tender of Shares for
redemption; (d) certain affiliated
persons of the series to deposit
securities into, and receive securities
from, the series in connection with the
purchase and redemption of Creation
Units; and (e) certain registered
management investment companies and
unit investment trusts outside of the
same group of investment companies as
the series to acquire Shares.
SUMMARY OF APPLICATION:
The application was filed
on September 28, 2012, and amended
on March 8, 2013 and June 19, 2013.
FILING DATES:
An
order granting the requested relief 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 July 22, 2013, 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.
HEARING OR NOTIFICATION OF HEARING:
Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
Applicants, 501 Madison Avenue, Suite
501, New York, NY 10022.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
David J. Marcinkus, Attorney-Advisor,
at (202) 551–6882 or Dalia Blass,
Assistant Director, at (202) 551–6821
(Division of Investment Management,
Exemptive Applications Office).
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.
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
39793
Applicants’ Representations
1. The Trust is a statutory trust
organized under the laws of the State of
Delaware, and will be registered with
the Commission as an open-end
management investment company. The
Trust will initially offer one activelymanaged investment series (the ‘‘Initial
Fund’’). Applicants currently intend to
name the Initial Fund the Manna U.S.
Equity Enhanced Dividend Income
Fund.
2. ETFis, a Delaware corporation, will
serve as investment adviser to the Initial
Fund. An Advisor (as defined below)
may enter into sub-advisory agreements
with investment advisers to act as subadvisers (each a ‘‘Subadvisor’’) with
respect to the Funds (as defined below).
Each Advisor will be registered as an
‘‘investment adviser’’ under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’). Any Subadvisor will
be registered under the Advisers Act, or
not subject to registration. The
Distributor, a Delaware limited liability
company, serves as the principal
underwriter and distributor for each of
the Funds. The Distributor is currently
in the process of registering as a brokerdealer under the Securities Exchange
Act of 1934 (‘‘Exchange Act’’), and
neither the Trust nor the Initial Fund
will commence operations prior to the
Distributor becoming registered. The
Distributor is an affiliated person of
ETFis within the meaning of Section
2(a)(3)(C) of the Act.1
3. Applicants request that the order
apply to the Initial Fund and any future
series of the Trust or of any other openend management companies or series
thereof that utilizes active management
investment strategies (‘‘Future Funds’’).
Any Future Fund will (a) be advised by
ETFis or an entity controlling,
controlled by, or under common control
with ETFis (each, an ‘‘Advisor’’), and (b)
comply with the terms and conditions
of the application.2 The Initial Fund and
Future Funds together are the ‘‘Funds.’’
Each Fund will consist of a portfolio of
securities (including fixed income
securities and/or equity securities),
currencies, assets and other positions
(‘‘Portfolio Instruments’’). If a Fund
invests in derivatives, then (i) the
1 Applicants request that the order also apply to
any other future principal underwriter and
distributor to Future Funds (each, a ‘‘Future
Distributor’’), provided that any such Future
Distributor complies with the terms and conditions
of the application.
2 All entities that currently intend to rely on the
order are named as applicants. Any other entity that
relies on the order in the future will comply with
the terms and conditions of the application. An
Investing Fund (as defined below) may rely on the
order only to invest in Funds and not in any other
registered investment company.
E:\FR\FM\02JYN1.SGM
02JYN1
]]>Agencies
[Federal Register Volume 78, Number 127 (Tuesday, July 2, 2013)]
[Notices]
[Pages 39789-39793]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15841]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30580; File No. 812-13637]
The Dreyfus Corporation, et al.; Notice of Application
June 26, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act and rule 18f-2 under the Act, as well as from certain
disclosure requirements.
-----------------------------------------------------------------------
SUMMARY: Summary of Application: Applicants request an order that
would amend and supersede a prior order (the ``Non-Affiliated Sub-
Adviser Order'') \1\ that permits them to enter into and materially
amend subadvisory agreements for certain multi-managed funds with non-
affiliated sub-advisers 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-Advisers (as defined below) and non-affiliated sub-advisers without
shareholder approval.
---------------------------------------------------------------------------
\1\ Strategic Funds, Inc., et al., Investment Company Act
Release Nos. 29064 (Nov. 30, 2009) (notice) and 29097 (Dec. 23,
2009) (order).
Applicants: BNY Mellon Funds Trust (``BNY Mellon Funds''), Strategic
Funds, Inc. (``Strategic Funds''), The Dreyfus/Laurel Funds, Inc.
(``Dreyfus/Laurel Funds'') (each, an ``Investment Company'' and
together, the ``Investment Companies'') and The Dreyfus Corporation
---------------------------------------------------------------------------
(``Dreyfus'').
DATES: Filing Dates: The application was filed on March 2, 2009, and
amended on April 14, 2009, December 27, 2012, May 1, 2013 and June 21,
2013.
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 July 22, 2013, 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
[[Page 39790]]
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,
200 Park Avenue, New York, New York 10166.
FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior
Attorney, at (202) 551-6868, or Daniele Marchesani, Branch Chief, at
(202) 551-6821 (Division of Investment Management, Exemptive
Applications Office).
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 Investment Company is organized as a Massachusetts business
trust or a Maryland corporation and is registered with the Commission
as an open-end management investment company under the Act. Each
Investment Company offers one or more series of shares (each a
``Series'' and collectively, ``Series'') with its own distinct
investment objectives, policies and restrictions. Each Series has, or
will have, as its investment adviser, Dreyfus or another investment
adviser controlling, controlled by or under common control with Dreyfus
or its successors (each, an ``Adviser'' and, collectively with the
Series and the Investment Companies, the ``Applicants'').\2\ Dreyfus, a
New York corporation, is a wholly-owned subsidiary and the primary
mutual fund business of The Bank of New York Mellon Corporation, a
global financial services company focused on helping clients manage and
service their financial assets, operating in 36 countries and serving
more than 100 markets.\3\
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\2\ Each Adviser 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
reorganization into another jurisdiction or a change in the type of
business organization.
\3\ 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 Adviser, uses the multi-manager structure
described in the application, and complies with the terms and
conditions of the application (``Sub-Advised 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, Sub-Advised 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-adviser, other than a Wholly-Owned Sub-Adviser,
who is an affiliated person, as defined in Section 2(a)(3) of the
1940 Act, of the Sub-Advised Series or of the Adviser, other than by
reason of serving as a sub-adviser to one or more of the Sub-Advised
Series or another investment company registered under the 1940 Act
for which the Adviser serves as investment adviser (``Affiliated
Sub-Adviser'').
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2. The Adviser serves as the investment adviser to each Series
pursuant to an investment advisory agreement with the applicable
Investment Company (``Investment Management Agreement''). The
Investment Management Agreement for each existing Series was approved
by the board of trustees/directors of the applicable 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 Adviser (``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 the 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
Adviser, subject to the supervision of the applicable Board, provides
continuous investment management of the assets of each Series.\4\ The
Adviser provides investment management of each Series' portfolio in
accordance with the investment objectives and policies of the Series.
For its services to each Series under the applicable Investment
Management Agreement, the Adviser 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. Each Investment Management Agreement permits
the Adviser, subject to the approval of the applicable Board, including
a majority of the Independent Board Members, to enter into investment
sub-advisory agreements with one or more Sub-Advisers to manage all or
a portion of the assets of a Sub-Advised Series.\5\
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\4\ The Adviser may engage EACM Advisors LLC (``EACM''), its
affiliate and an investment adviser registered under the Advisers
Act, or any other affiliated or non-affiliated entity registered as
an investment adviser under the Advisers Act (each, a ``Portfolio
Allocation Manager'') to assist the Adviser in evaluating and
recommending Sub-Advisers for a Sub-Advised Series and recommending
the portion of a Sub-Advised Series' assets to be managed by each
Sub-Adviser, as well as monitoring and evaluating the performance of
Sub-Advisers for a Sub-Advised Series and recommending whether a
Sub-Adviser should be terminated by a Sub-Advised Series. However,
it is the Adviser's overall responsibility to select, subject to the
review and approval of the Board, one or more Sub-Advisers to manage
all or part of a Sub-Advised Series' assets, determine what portion
of that Sub-Advised Series' assets to be managed by any given Sub-
Adviser, review the Sub-Advisers' performance and recommend whether
Sub-Advisers should be terminated.
\5\ As used herein, a ``Sub-Adviser'' is (1) an indirect or
direct ``wholly-owned subsidiary'' (as such term is defined in the
Act) of the Adviser for that Series, or (2) a sister company of the
Adviser 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 Adviser (each
of (1) and (2) a ``Wholly-Owned Sub-Adviser'' and collectively, the
``Wholly-Owned Sub-Advisers''), or (3) not an ``affiliated person''
(as such term is defined in section 2(a)(3) of the Act) of the
Series, applicable Investment Company, or the Adviser, 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-
Adviser'').
---------------------------------------------------------------------------
4. Applicants request an order to permit the Adviser, subject to
the approval of the Board, including a majority of the Independent
Board Members, to, without obtaining shareholder approval: (i) Select
Sub-Advisers to manage all or a portion of the assets of a Series and
enter into Sub-Advisory Agreements (as defined below) with the Sub-
Advisers, and (ii) materially amend Sub-Advisory Agreements with the
Sub-Advisers.\6\
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\6\ Shareholder approval will continue to be required for any
other sub-adviser 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-adviser other than a
Non-Affiliated Sub-Adviser or a Wholly-Owned Sub-Adviser (all such
changes referred to as ``Ineligible Sub-Adviser Changes'').
---------------------------------------------------------------------------
5. Pursuant to each Investment Management Agreement, the Adviser
has overall responsibility for the management and investment of the
assets of each Sub-Advised Series; these responsibilities include
recommending the removal or replacement of Sub-Advisers, determining
the portion of that Sub-Advised Series' assets to be managed by any
given Sub-Adviser and reallocating those assets as necessary from time
to time.\7\
---------------------------------------------------------------------------
\7\ The Adviser has entered into an agreement with EACM to act
as Portfolio Allocation Manager in respect of Dreyfus Select
Managers Small Cap Growth Fund and Dreyfus Select Managers Small Cap
Value Fund.
---------------------------------------------------------------------------
6. The Adviser has entered into sub-advisory agreements with Sub-
Advisers (``Sub-Advisory Agreements'') to provide investment management
services to the Sub-Advised Series.\8\ The
[[Page 39791]]
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-Adviser Order did not apply, the
shareholders of the Sub-Advised Series in accordance with sections
15(a) and 15(c) of the Act and rule 18f-2 thereunder. The Sub-Advisers,
subject to the supervision of the Adviser and oversight of the
applicable Board, make the day-to-day investment decisions for the Sub-
Advised Series. The Adviser will compensate each Sub-Adviser out of the
fee paid to the Adviser under the relevant Investment Management
Agreement.
---------------------------------------------------------------------------
\8\ If the name of any Sub-Advised Series contains the name of a
Sub-adviser, the name of the Adviser that serves as the primary
adviser to the Sub-Advised Series, or a trademark or trade name that
is owned by or publicly used to identity that Adviser, will precede
the name of the Sub-Adviser.
---------------------------------------------------------------------------
7. Sub-Advised Series will inform shareholders of the hiring of a
new Sub-Adviser pursuant to the following procedures (``Modified Notice
and Access Procedures''): (a) Within 90 days after a new Sub-Adviser is
hired for any Sub-Advised Series, that Sub-Advised Series will send its
shareholders either a Multi-manager Notice or a Multi-manager Notice
and Multi-manager Information Statement; \9\ and (b) the Sub-Advised
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-Advisers 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.
---------------------------------------------------------------------------
\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-Adviser; (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 Sub-Advised 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.
---------------------------------------------------------------------------
8. Applicants also request an order exempting the Sub-Advised
Series from certain disclosure obligations that may require the
Applicants to disclose fees paid by the Adviser to each Sub-
Adviser.\10\ Applicants seek relief to permit each Sub-Advised Series
to disclose (as a dollar amount and a percentage of the Sub-Advised
Series' net assets): (a) The aggregate fees paid to the Adviser and any
Wholly-Owned Sub-Advisers; (b) the aggregate fees paid to Non-
Affiliated Sub-Advisers; and (c) the fee paid to each Affiliated Sub-
Adviser (collectively, the ``Aggregate Fee Disclosure'').
---------------------------------------------------------------------------
\10\ Applicants are not requesting any relief with respect to
any fee paid to the Portfolio Allocation Managers.
---------------------------------------------------------------------------
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 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 Adviser,
subject to review and approval of the applicable Board, to select the
Sub-Advisers who are in the best position to achieve the Sub-Advised
Series' investment objective. Applicants assert that, from the
perspective of the shareholder, the role of the Sub-Advisers 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 Adviser to perform the
duties for which the shareholders of the Sub-Advised Series are paying
the Adviser--the selection, supervision and evaluation of the Sub-
[[Page 39792]]
Advisers--without incurring unnecessary delays or expenses is
appropriate in the interest of the Sub-Advised Series' shareholders and
will allow such Sub-Advised 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 or any
agreement with a Portfolio Allocation Manager.
7. Applicants assert that disclosure of the individual fees that
the Adviser would pay to the Sub-Advisers of Sub-Advised 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-Advisers are to inform shareholders of expenses to be charged by a
particular Sub-Advised 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 Adviser will be fully disclosed and,
therefore, shareholders will know what the Sub-Advised Series' fees and
expenses are and will be able to compare the advisory fees a Sub-
Advised Series is charged to those of other investment companies.
Applicants assert that the requested relief would benefit shareholders
of the Sub-Advised Series because it would improve the Adviser's
ability to negotiate the fees paid to Sub-Advisers. The Adviser's
ability to negotiate with the various Sub-Advisers would be adversely
affected by public disclosure of fees paid to each Sub-Adviser. If the
Adviser is not required to disclose the Sub-Advisers' fees to the
public, the Adviser may be able to negotiate rates that are below a
Sub-Adviser's ``posted'' amounts. Applicants submit that the relief
will also encourage Sub-Advisers to negotiate lower sub-advisory fees
with the Adviser 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 Sub-Advised Series
in the manner described in the application must be approved by
shareholders of a Sub-Advised Series before that Sub-Advised 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-Advisers, and provide that shareholders are informed
when Sub-Advisers 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 Adviser, including
Wholly-Owned Sub-Advisers. 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: \11\
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\11\ Applicants will only comply with conditions 8, 9 and 12 if
they rely on the relief that would allow them to provide Aggregate
Fee Disclosure.
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1. Before a Sub-Advised Series may rely on the order requested in
the application, the operation of the Sub-Advised Series in the manner
described in the application, including the hiring of Wholly-Owned Sub-
Advisers, will be, or has been, approved by a majority of the Sub-
Advised Series' outstanding voting securities as defined in the Act,
or, in the case of a new Sub-Advised 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 Sub-Advised Series' shares to the public.
2. The prospectus for each Sub-Advised Series will disclose the
existence, substance, and effect of any order granted pursuant to the
application. Each Sub-Advised Series will hold itself out to the public
as employing the multi-manager structure described in the application.
Each prospectus will prominently disclose that the Adviser has the
ultimate responsibility, subject to oversight by the applicable Board,
to oversee the Sub-Advisers and recommend their hiring, termination and
replacement.
3. The Adviser will provide general management services to a Sub-
Advised Series, including overall supervisory responsibility for the
general management and investment of the Sub-Advised Series' assets.
Subject to review and approval of the applicable Board, the Adviser
will (a) set a Sub-Advised Series' overall investment strategies, (b)
evaluate, select, and recommend Sub-Advisers to manage all or a portion
of a Sub-Advised Series' assets, and (c) implement procedures
reasonably designed to ensure that Sub-Advisers comply with a Sub-
Advised Series' investment objective, policies and restrictions.
Subject to review by the applicable Board, the Adviser will (a) when
appropriate, allocate and reallocate a Sub-Advised Series' assets among
multiple Sub-Advisers; and (b) monitor and evaluate the performance of
Sub-Advisers.
4. A Sub-Advised Series will not make any Ineligible Sub-Adviser
Changes without the approval of the shareholders of the applicable Sub-
Advised Series.
5. Sub-Advised Series will inform shareholders of the hiring of a
new Sub-Adviser within 90 days after the hiring of the new Sub-Adviser
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 Adviser will provide the applicable Board, no less
frequently than quarterly, with information about the profitability of
the Adviser on a per Sub-Advised Series basis. The information will
reflect the impact on profitability of the hiring or termination of any
sub-adviser during the applicable quarter.
9. Whenever a Sub-Adviser is hired or terminated, the Adviser will
provide the applicable Board with information showing the expected
impact on the profitability of the Adviser.
10. Whenever a Sub-Adviser change is proposed for a Sub-Advised
Series with an Affiliated Sub-Adviser or a Wholly-Owned Sub-Adviser,
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 Sub-
Advised Series and its shareholders, and does not involve a conflict of
interest from which the
[[Page 39793]]
Adviser or the Affiliated Sub-Adviser or Wholly-Owned Sub-Adviser
derives an inappropriate advantage.
11. No board member or officer of a Sub-Advised Series, 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 Sub-Adviser, except for
(i) ownership of interests in the Adviser or any entity, except a
Wholly-Owned Sub-Adviser, that controls, is controlled by, or is under
common control with the Adviser; or (ii) ownership of less than 1% of
the outstanding securities of any class of equity or debt of a publicly
traded company that is either a Sub-Adviser or an entity that controls,
is controlled by, or is under common control with a Sub-Adviser.
12. Each Sub-Advised Series 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. 2013-15841 Filed 7-1-13; 8:45 am]
BILLING CODE 8011-01-P
