American Beacon Funds, et al.; Notice of Application, 75392-75395 [2013-29499]

Download as PDF emcdonald on DSK67QTVN1PROD with NOTICES 75392 Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices Commission staff can review, in the course of its compliance and examination functions, the basis for a board of director’s finding that the financial interest of an otherwise prohibited participant in a party to a transaction with a portfolio affiliate is not material. Based on staff discussions with fund representatives, we estimate that funds currently do not rely on the exemption from the term ‘‘financial interest’’ with respect to any interest that the fund’s board of directors (including a majority of the directors who are not interested persons of the fund) finds to be not material. Accordingly, we estimate that annually there will be no principal transactions under rule 17a–6 that will result in a collection of information. The Commission requests authorization to maintain an inventory of one burden hour to ease future renewals of rule 17a–6’s collection of information analysis should funds rely on this exemption to the term ‘‘financial interest’’ as defined in rule 17a–6. The estimate of burden hours is made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. Complying with this collection of information requirement is necessary to obtain the benefit of relying on rule 17a–6. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to Thomas Bayer/Chief Information Officer, Securities and Exchange Commission, C/O Remi Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312; or send an email to: PRA_ Mailbox@sec.gov. VerDate Mar<15>2010 17:00 Dec 10, 2013 Jkt 232001 Dated: December 5, 2013. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–29500 Filed 12–10–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 30819; 812–13825] American Beacon Funds, et al.; Notice of Application December 5, 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: 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. The order would supersede a prior order (‘‘Prior Order’’).1 APPLICANTS: American Beacon Funds and American Beacon Select Funds (collectively, the ‘‘Trusts’’) and American Beacon Advisors, Inc. (‘‘American Beacon’’ and collectively, ‘‘Applicants’’). DATES: Filing Dates: The application was filed on September 20, 2010, and amended on December 10, 2012, March 13, 2013 and November 1, 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 December 27, 2013, and should be accompanied by proof of service on the applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange SUMMARY OF APPLICATION: 1 Investment Company Act Rel. Nos. 21995 (May 30, 1996) (notice) and 22040 (Jun. 25, 1996) (order). PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants: 4151 Amon Carter Blvd., MD 2450, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at (202) 551–6811, or Daniele Marchesani, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s 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 Trust is organized as a Massachusetts business trust and is registered under the Act as an open-end management investment company. The Trusts currently offer separate series (each a ‘‘Fund’’), each of which has its own investment objectives, policies and restrictions.2 A Manager registered as an investment adviser under the Investment Advisers Act of 1940 (‘‘Advisers Act’’) will serve as the investment adviser to each Fund pursuant to a separate investment management agreement (each a ‘‘Management Agreement’’ and collectively, the ‘‘Management Agreements’’) with the Fund. Each Management Agreement was or will be approved by each respective Fund’s shareholders and the relevant Trust’s board of trustees (the ‘‘Board’’), including a majority of the trustees who are not ‘‘interested persons,’’ as defined in section 2(a)(19) of the Act, of the Trust or the Manager (‘‘Independent Trustees’’). The terms of each Management Agreement comply with sections 15(a) and 15(c) of the Act and 2 All existing registered investment companies that currently intend to rely on the order are named as Applicants. Applicants request relief with respect to the existing and future Funds of the Trusts and any other existing or future registered open-end management investment company or series thereof that: (a) Is advised by American Beacon or any entity controlling, controlled by, or under common control with American Beacon (each, a ‘‘Manager’’) or its successors; (b) uses the manager of managers structure described in the application; and (c) complies with the terms and conditions of the application (each a ‘‘Sub-Advised Fund’’ and collectively, the ‘‘Sub-Advised Funds’’). For purposes of the requested order, ‘‘successor’’ is limited to an entity or entities that result from a reorganization into another jurisdiction or a change in the type of business organization. If the name of any Sub-Advised Fund contains the name of a SubAdviser (as defined below), the name of the Manager that serves as the primary adviser to the Sub-Advised Fund will precede the name of the Sub-Adviser. E:\FR\FM\11DEN1.SGM 11DEN1 Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices emcdonald on DSK67QTVN1PROD with NOTICES rule 18f–2 under the Act. Applicants are not seeking any exemptions from the provisions of the Act with respect to the Management Agreements. 2. Under the terms of each Management Agreement, the Manager, subject to the oversight of the Board, has the primary responsibility for the management of the Funds in accordance with each Fund’s investment objective, policies and restrictions. For its services to each Fund, the Manager receives a management fee from that Fund as specified in the applicable Management Agreement. The terms of each Management Agreement also permit the Manager, subject to the approval of the relevant Board, including a majority of the Independent Trustees, and the shareholders of the applicable Fund (if required by applicable law), to delegate portfolio management responsibilities of all or a portion of the Fund to one or more sub-advisers (‘‘Sub-Advisers’’). The Manager has entered into subadvisory agreements (‘‘Sub-Advisory Agreements’’) with various SubAdvisers to provide investment advisory services to the Subadvised Funds.3 Each 3 As of the date of the application, the Manager had allocated investment responsibility for each Sub-Advised Fund as follows: (a) American Beacon Acadian Emerging Markets Managed Volatility Fund—Acadian Asset Management LLC; (b) American Beacon Balanced Fund—the Manager, Barrow, Hanley, Mewhinney & Strauss, LLC (‘‘Barrow’’), Brandywine Global Investment Management, LLC (‘‘Brandywine’’), and Hotchkis and Wiley Capital Management, LLC (‘‘Hotchkis’’); (c) American Beacon Bridgeway Large Cap Value Fund—Bridgeway Capital Management, Inc.; (d) American Beacon Earnest Partners Emerging Markets Equity Fund—EARNEST Partners, LLC; (e) American Beacon Emerging Markets Fund— Brandes Investment Partners, LP, Morgan Stanley Investment Management Inc., and The Boston Company Asset Management, LLC (‘‘TBCAM’’); (f) American Beacon Flexible Bond Fund— Brandywine, GAM International Management, Ltd., and Pacific Investment Management Company LLC; (g) American Beacon High Yield Bond Fund— Franklin Advisers, Inc., Logan Circle Partners, L.P., and PENN Capital Management Company, Inc.; (h) American Beacon Holland Large Cap Growth Fund—Holland Capital Management, LLC; (i) American Beacon Intermediate Bond Fund—the Manager and Barrow; (j) American Beacon International Equity Fund—Causeway Capital Management LLC, Lazard Asset Management LLC, and Templeton Investment Counsel, LLC; (k) American Beacon Large Cap Value Fund—Barrow, Brandywine, Hotchkis and Massachusetts Financial Services, Co.; (l) American Beacon Mid-Cap Value Fund—Barrow, Lee Munder Capital Group, LLC, and Pzena Investment Management, LLC; (m) American Beacon Retirement Income and Appreciation Fund—the Manager and Calamos Advisors, LLC; (n) American Beacon SGA Global Growth Fund—Sustainable Growth Advisers, LP; (o) American Beacon SiM High Yield Opportunities Fund—Strategic Income Management, LLC; (p) American Beacon Small Cap Value Fund—Barrow, Brandywine, Dreman Value Management, LLC, Hotchkis, Opus Capital Group, LLC and TBCAM; (q) American Beacon Small Cap Value II Fund— Dean Capital Management, LLC; Fox Asset Management LLC, and Signia Capital Management, VerDate Mar<15>2010 17:00 Dec 10, 2013 Jkt 232001 Sub-Adviser is, and each future SubAdviser will be, an investment adviser as defined in section 2(a)(20) of the Act as well as registered, or not subject to registration, with the Commission as an ‘‘investment adviser’’ under the Advisers Act. The Manager evaluates, allocates assets to and oversees the SubAdvisers, and makes recommendations about their hiring, termination and replacement to the relevant Board, at all times subject to the authority of the relevant Board. 3. Under each Management Agreement, the Manager receives a management fee (‘‘Management Fee’’) from each Fund. Currently, with respect to certain Sub-Advised Funds, the Management Fee is comprised of two components which are (a) a fee for the Manager, and (b) the applicable subadvisory compensation (‘‘Two Component Management Fee’’). For these Sub-Advised Funds, the Manager collects the fees from each Sub-Advised Fund and pays such fees to the applicable Sub-Advisers. For certain other Sub-Advised Funds, currently the Manager receives a one component Management Fee (‘‘Unitary Management Fee’’) and pays subadvisory compensation from the Management Fee. With respect to certain other SubAdvised Funds, the Management Fee is comprised solely of a fee for the Manager and those Sub-Advised Funds each pays the sub-advisory compensation directly to the SubAdviser pursuant to a Sub-Advisory Agreement among the Sub-Adviser, the Manager and the Fund (‘‘Tri-Party SubAdvisory Agreement’’). In the future, new Funds will compensate SubAdvisers pursuant to either a Tri-Party Sub-Advisory Agreement or a Unitary Management Fee arrangement.4 LLC; (r) American Beacon Stephens Mid-Cap Growth Fund—Stephens Investment Management Group, LLC (‘‘SIMG’’); (s) American Beacon Small Cap Growth Fund—SIMG; (t) American Beacon The London Company Income Equity Fund—The London Company of Virginia, LLC; (u) American Beacon Treasury Inflation Protected Securities Fund—NISA Investment Advisors, LLC and Standish Mellon Asset Management Company, LLC; (v) American Beacon Zebra Global Equity Fund— Zebra Capital Management, LLC (‘‘Zebra’’) and (w) American Beacon Zebra Small Cap Equity Fund— Zebra. 4 Promptly after the issuance of the requested order, the Manager intends to use its reasonable best efforts to cause the Board and each applicable Sub-Adviser that receives payment from the Manager pursuant to a Two Component Management Fee to agree to enter into a Tri-Party Sub-Advisory Agreement under which each such Sub-Adviser would be paid directly by such Fund as well as to make a corresponding change to the Management Agreement to eliminate the Two Component Management Fee. The changes will not result in any change in the nature or level of the actual investment advisory services provided to each Sub-Advised Fund or in any increase in the PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 75393 4. Applicants request an order to permit the Manager, subject to Board approval, to select certain Sub-Advisers to manage all or a portion of the assets of a Fund pursuant to a Sub-Advisory Agreement and materially amend SubAdvisory Agreements without obtaining shareholder approval. The requested order would supersede the Prior Order. The requested relief will not extend to any Sub-Adviser that is an affiliated person, as defined in section 2(a)(3) of the Act, of a Trust, a Fund or the Manager, other than by reason of serving as a Sub-Adviser to a Fund (‘‘Affiliated Sub-Adviser’’). 5. Applicants also request an order exempting the Sub-Advised Funds from certain disclosure provisions described below that may require the Applicants to disclose fees paid by the Manager or a Sub-Advised Fund to each SubAdviser. Applicants seek an order to permit each Sub-Advised Fund to disclose (as a dollar amount and a percentage of each Sub-Advised Fund’s net assets): (a) The aggregate fees paid to the Manager and any Affiliated SubAdvisers; and (b) the aggregate fees paid to Sub-Advisers other than Affiliated Sub-Advisers (collectively, the ‘‘Aggregate Fee Disclosure’’). A Subadvised Fund that employs an Affiliated Sub-Adviser will provide separate disclosure of any fees paid to the Affiliated Sub-Adviser. 6. A Sub-Advised Fund 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 Fund, that Sub-Advised Fund will send its shareholders either a Multi-manager Notice or a Multimanager Notice and Information Statement; 5 and (b) the Sub-Advised total management and advisory fees payable by a Sub-Advised Fund. Applicants will not rely on the relief requested from section 15(a) of the Act until the Board has approved all such changes. 5 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 the 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 Funds. A ‘‘Multi-manager Information Statement’’ will meet the requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 14A under the E:\FR\FM\11DEN1.SGM Continued 11DEN1 75394 Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices emcdonald on DSK67QTVN1PROD with NOTICES Fund will make the Multi-manager Information Statement available on the Web site identified in the Multimanager 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. Applicants’ Legal Analysis 1. Section 15(a) of the Act provides, in relevant part, that it is unlawful for any person to act as an investment adviser to a registered investment company except pursuant to a written contract that has been approved by the vote of a majority of the company’s outstanding voting securities. Rule 18f– 2 under the Act provides that each series or class of stock in a series investment company affected by a matter must approve that matter if the Act requires shareholder approval. 2. Form N–1A is the registration statement used by open-end investment companies. Item 19(a)(3) of Form N–1A requires disclosure of the method and amount of the investment adviser’s compensation. 3. Rule 20a–1 under the Act requires proxies solicited with respect to an 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 fees,’’ a description of the ‘‘terms of the contract to be acted upon,’’ and, if a change in the advisory fee is proposed, the existing and proposed fees and the difference between the two fees. 4. Regulation S–X sets forth the requirements for financial statements required to be included as part of 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 may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provisions of the Act, or from any rule thereunder, if such Exchange Act for an information statement, except as modified by the requested order to permit Aggregate Fee Disclosure. Multi-manager Information Statements will be filed electronically with the Commission via the EDGAR system. VerDate Mar<15>2010 17:00 Dec 10, 2013 Jkt 232001 exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants state that the requested relief meets this standard for the reasons discussed below. 6. Applicants assert that the shareholders expect the Manager, subject to the review and approval of the Board, to select the Sub-Advisers who have distinguished themselves through successful performance in the particular market sectors in which the Sub-Advised Funds invest. Applicants assert that, from the perspective of the shareholder, the role of the Sub-Adviser is substantially equivalent to the role of the individual portfolio managers employed by an investment adviser to a traditional investment company. Applicants state that without the delay inherent in holding shareholder meetings, a Sub-Advised Fund will be able to act more quickly and with less expense to hire a Sub-Adviser regardless of the number of Sub-Advisers employed by the Sub-Advised Fund and materially amend a Sub-Advisory Agreement when the Board and the Manager believe that the appointment of a Sub-Adviser or the amendment of a Sub-Advisory Agreement would benefit the Sub-Advised Fund. Applicants note that each Management Agreement and any Sub-Advisory Agreement with an Affiliated Sub-Adviser (if any) will remain subject to the shareholder approval requirements of section 15(a) of the Act and rule 18f–2 under the Act. 7. Applicants assert that the requested disclosure relief would benefit shareholders of the Sub-Advised Funds because it would improve the Manager’s ability to negotiate the fees paid to SubAdvisers. Applicants state that the Adviser may be able to negotiate rates that are below a Sub-Adviser’s ‘‘posted’’ amounts, if the Adviser is not required to disclose the Sub-Advisers’ fees to the public. Applicants submit that the requested relief will encourage SubAdvisers to negotiate lower subadvisory fees with the Adviser if the lower fees are not required to be made public. Applicants’ Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. Before a Sub-Advised Fund may rely on the order requested in the application, the operation of the SubAdvised Fund in the manner described in the application will be approved by a majority of the Sub-Advised Fund’s outstanding voting securities as defined in the Act or, in the case of a Sub- PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 Advised Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the sole initial shareholder(s) before such Sub-Advised Fund’s shares are offered to the public. 2. The prospectuses for each SubAdvised Fund will disclose the existence, substance, and effect of any order granted pursuant to the application. In addition, each SubAdvised Fund will hold itself out to the public as employing the manager-ofmanagers structure described in the application. The prospectus will prominently disclose that the Manager has ultimate responsibility, subject to oversight by the applicable Board, to oversee the Sub-Advisers and recommend their hiring, termination, and replacement. 3. The Manager will provide general management services to each SubAdvised Fund, including overall supervisory responsibility for the general management and investment of each Sub-Advised Fund’s assets and, subject to the review and approval of the applicable Board, will: (a) Set each Sub-Advised Fund’s overall investment strategies; (b) evaluate, select and recommend Sub-Advisers to manage all or a part of each Sub-Advised Fund’s assets; (c) allocate and, when appropriate, reallocate the assets of each Sub-Advised Fund among SubAdvisers; (d) monitor and evaluate the performance of the Sub-Advisers; and (e) implement procedures reasonably designed to ensure that the SubAdvisers comply with each SubAdvised Fund’s investment objective, policies and restrictions. 4. At all times, at least a majority of each Board will be Independent Trustees, and the nomination of new or additional Independent Trustees will be placed within the discretion of the thenexisting Independent Trustees. 5. The Manager will not enter into a Sub-Advisory Agreement with any Affiliated Sub-Adviser without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Sub-Advised Fund. 6. Whenever a Sub-Adviser change is proposed for a Sub-Advised Fund with an Affiliated Sub-Adviser, the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the applicable Board minutes, that such change is in the best interests of the Sub-Advised Fund and its shareholders, and does not involve a conflict of interest from which the Manager or Affiliated Sub-Adviser derives an inappropriate advantage. E:\FR\FM\11DEN1.SGM 11DEN1 emcdonald on DSK67QTVN1PROD with NOTICES Federal Register / Vol. 78, No. 238 / Wednesday, December 11, 2013 / Notices 7. No trustee or officer of a SubAdvised Fund or director or officer of the Manager, will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person), any interest in a SubAdviser except for ownership of interests in the Manager or any entity that controls, is controlled by or is under common control with the Manager; or ownership of less than 1% of the outstanding securities of any class of equity or debt securities of any 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. 8. Sub-Advised Funds will inform shareholders of the hiring of a new SubAdviser in reliance on the order within 90 days after the hiring of the new SubAdviser pursuant to the Modified Notice and Access Procedures. 9. In the event the Commission adopts a rule under the Act providing substantially similar relief to that in the order requested in the application, the requested order will expire on the effective date of that rule. 10. Independent legal counsel, as defined in rule 0–1(a)(6) under the Act, will be engaged to represent the Independent Trustees. The selection of such counsel will be within the discretion of the then-existing Independent Trustees. 11. Whenever a Sub-Adviser is hired or terminated, the Manager will provide the Board with information showing the expected impact on the profitability of the Manager. 12. The Manager will provide the Board, no less frequently than quarterly, with information about the profitability of the Manager on a per Sub-Advised Fund basis. The information will reflect the impact on profitability of the hiring or termination of any Sub-Adviser during the applicable quarter. 13. Each Sub-Advised Fund will disclose in its registration statement the Aggregate Fee Disclosure. 14. Any changes to a Sub-Advisory Agreement that would result in an increase in the total management and advisory fees payable by a Sub-Advised Fund will be required to be approved by the shareholders of the Sub-Advised Fund. For the Commission, by the Division of Investment Management, under delegated authority. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–29499 Filed 12–10–13; 8:45 am] BILLING CODE 8011–01–P VerDate Mar<15>2010 17:00 Dec 10, 2013 Jkt 232001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71005; File No. SR–CBOE– 2013–096] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Short Term Option Series Program December 6, 2013. I. Introduction On October 2, 2013, Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Exchange Rules 5.5(d) and 24.9(a)(2)(A) to make certain modifications to the Exchange’s Short Term Option Series Program (‘‘Weeklys Program’’). The proposed rule change was published for comment in the Federal Register on October 22, 2013.3 The Commission received no comment letters on the proposal. This order approves the proposed rule change, as modified by Amendment No. 1. II. Description of the Proposal The Exchange proposed to amend Exchange Rules 5.5(d) and 24.9(a)(2)(A) to: (i) Allow for the Exchange to list options in the Weeklys Progam (‘‘Weekly options’’) on each of the next five Fridays that are business days and are not Fridays in which monthly options series or quarterly options series expire (‘‘Short Term Option Expiration Dates’’) at one time; and (ii) state that additional series of Weekly options may be listed up to, and including on, the day of expiration. The proposed rule change would give the Exchange the ability to list a total of five Weekly options expirations at one time, not including monthly or quarterly option expirations. Currently, the Exchange’s rules provide that the Exchange may open for trading on any Thursday or Friday that is a business day (‘‘Short Term Option Opening Date’’) options expiring ‘‘on each of the next five consecutive Fridays that are 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 70685 (October 15, 2013), 78 FR 62858 (‘‘Notice’’). The Commission notes that on October 15, 2013, the Exchange submitted Amendment No. 1 to the proposed rule change to make certain amendments that removed the phrase ‘‘for each series’’ from the proposed rule language relating to Short Term Option Expiration Dates. 2 17 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 75395 business days.’’ 4 Because a Friday expiration may coincide with an existing expiration of a monthly or quarterly series of an option in the same class as the Weekly options series, the current requirement that the Fridays be consecutive may mean that the Exchange cannot open five Short Term Option Expiration Dates because of existing monthly or quarterly expirations. The proposed rule change would allow the Exchange to open the five Weekly options expirations closest to the Short Term Option Opening Date, not including monthly or quarterly option expirations. The proposed rule change also adds language to Rules 5.5(d) and 24.9(a)(2)(A) to state that additional series of Weekly options may be added up to, and including on, the expiration date of the series.5 Currently, Exchange rules state that the Exchange ‘‘may open up to 20 initial series for each option class that participates in the Short Term Option Series Program’’ and ‘‘up to 10 additional series for each option class that participates in the Short Term Option Series Program.’’ 6 However, the Exchange’s rules are silent on when series may be added. Therefore, the Exchange is proposing to add language stating that additional Weekly options series may be added up to and on the day of expiration. The Exchange asserts that the proposed revisions to the Weeklys Program will permit the Exchange to meet increased customer demand and provide market participants with the ability to hedge in a greater number of option classes and series.7 In addition, the Exchange stated that it believes that, given the short lifespan of Weekly options, the ability to list new series of options intraday is appropriate.8 III. Discussion and Commission Findings After careful review of the proposed rule change, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities 4 See Exchange Rules 5.5(d) and 24.9(a)(2)(A). Exchange also proposed to add language stating that the proposed provisions in Rules 5.5(d)(4) and 24.9(a)(2)(A)(iv) will not contradict current provisions in CBOE Rules. More specifically, the proposed provisions would not contradict 5.5.04 and 24.9.01(c) respectively. The Exchange stated that it believes this addition will eliminate any confusion about when additional series may be added in the Weeklys Program in comparison to other Exchange listing programs. 6 See Exchange Rules 5.5(d)(3), 5.5.(d)(4), 24.9(a)(2)(A)(iii), and 24.9(a)(2)(A)(iv). 7 See Notice, supra note 3 at 62859. 8 See id. 5 The E:\FR\FM\11DEN1.SGM 11DEN1

Agencies

[Federal Register Volume 78, Number 238 (Wednesday, December 11, 2013)]
[Notices]
[Pages 75392-75395]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29499]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30819; 812-13825]


American Beacon Funds, et al.; Notice of Application

December 5, 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.

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Summary of Application: Applicants request an order that would permit 
them to enter into and materially amend subadvisory agreements without 
shareholder approval and would grant relief from certain disclosure 
requirements. The order would supersede a prior order (``Prior 
Order'').\1\
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    \1\ Investment Company Act Rel. Nos. 21995 (May 30, 1996) 
(notice) and 22040 (Jun. 25, 1996) (order).

Applicants: American Beacon Funds and American Beacon Select Funds 
(collectively, the ``Trusts'') and American Beacon Advisors, Inc. 
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(``American Beacon'' and collectively, ``Applicants'').

DATES:  Filing Dates: The application was filed on September 20, 2010, 
and amended on December 10, 2012, March 13, 2013 and November 1, 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 December 27, 2013, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit or, for lawyers, 
a certificate of service. Hearing requests should state the nature of 
the writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
4151 Amon Carter Blvd., MD 2450, Fort Worth, TX 76155.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
(202) 551-6811, or Daniele Marchesani, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's 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 Trust is organized as a Massachusetts business trust and is 
registered under the Act as an open-end management investment company. 
The Trusts currently offer separate series (each a ``Fund''), each of 
which has its own investment objectives, policies and restrictions.\2\ 
A Manager registered as an investment adviser under the Investment 
Advisers Act of 1940 (``Advisers Act'') will serve as the investment 
adviser to each Fund pursuant to a separate investment management 
agreement (each a ``Management Agreement'' and collectively, the 
``Management Agreements'') with the Fund. Each Management Agreement was 
or will be approved by each respective Fund's shareholders and the 
relevant Trust's board of trustees (the ``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act, of the Trust or the Manager 
(``Independent Trustees''). The terms of each Management Agreement 
comply with sections 15(a) and 15(c) of the Act and

[[Page 75393]]

rule 18f-2 under the Act. Applicants are not seeking any exemptions 
from the provisions of the Act with respect to the Management 
Agreements.
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    \2\ All existing registered investment companies that currently 
intend to rely on the order are named as Applicants. Applicants 
request relief with respect to the existing and future Funds of the 
Trusts and any other existing or future registered open-end 
management investment company or series thereof that: (a) Is advised 
by American Beacon or any entity controlling, controlled by, or 
under common control with American Beacon (each, a ``Manager'') or 
its successors; (b) uses the manager of managers structure described 
in the application; and (c) complies with the terms and conditions 
of the application (each a ``Sub-Advised Fund'' and collectively, 
the ``Sub-Advised Funds''). For purposes of the requested order, 
``successor'' is limited to an entity or entities that result from a 
reorganization into another jurisdiction or a change in the type of 
business organization. If the name of any Sub-Advised Fund contains 
the name of a Sub-Adviser (as defined below), the name of the 
Manager that serves as the primary adviser to the Sub-Advised Fund 
will precede the name of the Sub-Adviser.
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    2. Under the terms of each Management Agreement, the Manager, 
subject to the oversight of the Board, has the primary responsibility 
for the management of the Funds in accordance with each Fund's 
investment objective, policies and restrictions. For its services to 
each Fund, the Manager receives a management fee from that Fund as 
specified in the applicable Management Agreement. The terms of each 
Management Agreement also permit the Manager, subject to the approval 
of the relevant Board, including a majority of the Independent 
Trustees, and the shareholders of the applicable Fund (if required by 
applicable law), to delegate portfolio management responsibilities of 
all or a portion of the Fund to one or more sub-advisers (``Sub-
Advisers''). The Manager has entered into sub-advisory agreements 
(``Sub-Advisory Agreements'') with various Sub-Advisers to provide 
investment advisory services to the Subadvised Funds.\3\ Each Sub-
Adviser is, and each future Sub-Adviser will be, an investment adviser 
as defined in section 2(a)(20) of the Act as well as registered, or not 
subject to registration, with the Commission as an ``investment 
adviser'' under the Advisers Act. The Manager evaluates, allocates 
assets to and oversees the Sub-Advisers, and makes recommendations 
about their hiring, termination and replacement to the relevant Board, 
at all times subject to the authority of the relevant Board.
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    \3\ As of the date of the application, the Manager had allocated 
investment responsibility for each Sub-Advised Fund as follows: (a) 
American Beacon Acadian Emerging Markets Managed Volatility Fund--
Acadian Asset Management LLC; (b) American Beacon Balanced Fund--the 
Manager, Barrow, Hanley, Mewhinney & Strauss, LLC (``Barrow''), 
Brandywine Global Investment Management, LLC (``Brandywine''), and 
Hotchkis and Wiley Capital Management, LLC (``Hotchkis''); (c) 
American Beacon Bridgeway Large Cap Value Fund--Bridgeway Capital 
Management, Inc.; (d) American Beacon Earnest Partners Emerging 
Markets Equity Fund--EARNEST Partners, LLC; (e) American Beacon 
Emerging Markets Fund--Brandes Investment Partners, LP, Morgan 
Stanley Investment Management Inc., and The Boston Company Asset 
Management, LLC (``TBCAM''); (f) American Beacon Flexible Bond 
Fund--Brandywine, GAM International Management, Ltd., and Pacific 
Investment Management Company LLC; (g) American Beacon High Yield 
Bond Fund--Franklin Advisers, Inc., Logan Circle Partners, L.P., and 
PENN Capital Management Company, Inc.; (h) American Beacon Holland 
Large Cap Growth Fund--Holland Capital Management, LLC; (i) American 
Beacon Intermediate Bond Fund--the Manager and Barrow; (j) American 
Beacon International Equity Fund--Causeway Capital Management LLC, 
Lazard Asset Management LLC, and Templeton Investment Counsel, LLC; 
(k) American Beacon Large Cap Value Fund--Barrow, Brandywine, 
Hotchkis and Massachusetts Financial Services, Co.; (l) American 
Beacon Mid-Cap Value Fund--Barrow, Lee Munder Capital Group, LLC, 
and Pzena Investment Management, LLC; (m) American Beacon Retirement 
Income and Appreciation Fund--the Manager and Calamos Advisors, LLC; 
(n) American Beacon SGA Global Growth Fund--Sustainable Growth 
Advisers, LP; (o) American Beacon SiM High Yield Opportunities 
Fund--Strategic Income Management, LLC; (p) American Beacon Small 
Cap Value Fund--Barrow, Brandywine, Dreman Value Management, LLC, 
Hotchkis, Opus Capital Group, LLC and TBCAM; (q) American Beacon 
Small Cap Value II Fund--Dean Capital Management, LLC; Fox Asset 
Management LLC, and Signia Capital Management, LLC; (r) American 
Beacon Stephens Mid-Cap Growth Fund--Stephens Investment Management 
Group, LLC (``SIMG''); (s) American Beacon Small Cap Growth Fund--
SIMG; (t) American Beacon The London Company Income Equity Fund--The 
London Company of Virginia, LLC; (u) American Beacon Treasury 
Inflation Protected Securities Fund--NISA Investment Advisors, LLC 
and Standish Mellon Asset Management Company, LLC; (v) American 
Beacon Zebra Global Equity Fund--Zebra Capital Management, LLC 
(``Zebra'') and (w) American Beacon Zebra Small Cap Equity Fund--
Zebra.
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    3. Under each Management Agreement, the Manager receives a 
management fee (``Management Fee'') from each Fund. Currently, with 
respect to certain Sub-Advised Funds, the Management Fee is comprised 
of two components which are (a) a fee for the Manager, and (b) the 
applicable subadvisory compensation (``Two Component Management Fee''). 
For these Sub-Advised Funds, the Manager collects the fees from each 
Sub-Advised Fund and pays such fees to the applicable Sub-Advisers. For 
certain other Sub-Advised Funds, currently the Manager receives a one 
component Management Fee (``Unitary Management Fee'') and pays 
subadvisory compensation from the Management Fee. With respect to 
certain other Sub-Advised Funds, the Management Fee is comprised solely 
of a fee for the Manager and those Sub-Advised Funds each pays the sub-
advisory compensation directly to the Sub-Adviser pursuant to a Sub-
Advisory Agreement among the Sub-Adviser, the Manager and the Fund 
(``Tri-Party Sub-Advisory Agreement''). In the future, new Funds will 
compensate Sub-Advisers pursuant to either a Tri-Party Sub-Advisory 
Agreement or a Unitary Management Fee arrangement.\4\
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    \4\ Promptly after the issuance of the requested order, the 
Manager intends to use its reasonable best efforts to cause the 
Board and each applicable Sub-Adviser that receives payment from the 
Manager pursuant to a Two Component Management Fee to agree to enter 
into a Tri-Party Sub-Advisory Agreement under which each such Sub-
Adviser would be paid directly by such Fund as well as to make a 
corresponding change to the Management Agreement to eliminate the 
Two Component Management Fee. The changes will not result in any 
change in the nature or level of the actual investment advisory 
services provided to each Sub-Advised Fund or in any increase in the 
total management and advisory fees payable by a Sub-Advised Fund. 
Applicants will not rely on the relief requested from section 15(a) 
of the Act until the Board has approved all such changes.
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    4. Applicants request an order to permit the Manager, subject to 
Board approval, to select certain Sub-Advisers to manage all or a 
portion of the assets of a Fund pursuant to a Sub-Advisory Agreement 
and materially amend Sub-Advisory Agreements without obtaining 
shareholder approval. The requested order would supersede the Prior 
Order. The requested relief will not extend to any Sub-Adviser that is 
an affiliated person, as defined in section 2(a)(3) of the Act, of a 
Trust, a Fund or the Manager, other than by reason of serving as a Sub-
Adviser to a Fund (``Affiliated Sub-Adviser'').
    5. Applicants also request an order exempting the Sub-Advised Funds 
from certain disclosure provisions described below that may require the 
Applicants to disclose fees paid by the Manager or a Sub-Advised Fund 
to each Sub-Adviser. Applicants seek an order to permit each Sub-
Advised Fund to disclose (as a dollar amount and a percentage of each 
Sub-Advised Fund's net assets): (a) The aggregate fees paid to the 
Manager and any Affiliated Sub-Advisers; and (b) the aggregate fees 
paid to Sub-Advisers other than Affiliated Sub-Advisers (collectively, 
the ``Aggregate Fee Disclosure''). A Subadvised Fund that employs an 
Affiliated Sub-Adviser will provide separate disclosure of any fees 
paid to the Affiliated Sub-Adviser.
    6. A Sub-Advised Fund 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 Fund, that Sub-Advised Fund will send its 
shareholders either a Multi-manager Notice or a Multi-manager Notice 
and Information Statement; \5\ and (b) the Sub-Advised

[[Page 75394]]

Fund 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.
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    \5\ 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 the 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 Funds.
    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 requested order to permit Aggregate Fee Disclosure. 
Multi-manager Information Statements will be filed electronically 
with the Commission via the EDGAR system.
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Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 19(a)(3) of Form N-1A requires disclosure of 
the method and amount of the investment adviser's compensation.
    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to an 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 fees,'' a description of 
the ``terms of the contract to be acted upon,'' and, if a change in the 
advisory fee is proposed, the existing and proposed fees and the 
difference between the two fees.
    4. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of 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 may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants state that the requested relief meets this standard for 
the reasons discussed below.
    6. Applicants assert that the shareholders expect the Manager, 
subject to the review and approval of the Board, to select the Sub-
Advisers who have distinguished themselves through successful 
performance in the particular market sectors in which the Sub-Advised 
Funds invest. Applicants assert that, from the perspective of the 
shareholder, the role of the Sub-Adviser is substantially equivalent to 
the role of the individual portfolio managers employed by an investment 
adviser to a traditional investment company. Applicants state that 
without the delay inherent in holding shareholder meetings, a Sub-
Advised Fund will be able to act more quickly and with less expense to 
hire a Sub-Adviser regardless of the number of Sub-Advisers employed by 
the Sub-Advised Fund and materially amend a Sub-Advisory Agreement when 
the Board and the Manager believe that the appointment of a Sub-Adviser 
or the amendment of a Sub-Advisory Agreement would benefit the Sub-
Advised Fund. Applicants note that each Management Agreement and any 
Sub-Advisory Agreement with an Affiliated Sub-Adviser (if any) will 
remain subject to the shareholder approval requirements of section 
15(a) of the Act and rule 18f-2 under the Act.
    7. Applicants assert that the requested disclosure relief would 
benefit shareholders of the Sub-Advised Funds because it would improve 
the Manager's ability to negotiate the fees paid to Sub-Advisers. 
Applicants state that the Adviser may be able to negotiate rates that 
are below a Sub-Adviser's ``posted'' amounts, if the Adviser is not 
required to disclose the Sub-Advisers' fees to the public. Applicants 
submit that the requested relief will encourage Sub-Advisers to 
negotiate lower subadvisory fees with the Adviser if the lower fees are 
not required to be made public.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Sub-Advised Fund may rely on the order requested in the 
application, the operation of the Sub-Advised Fund in the manner 
described in the application will be approved by a majority of the Sub-
Advised Fund's outstanding voting securities as defined in the Act or, 
in the case of a Sub-Advised Fund whose public shareholders purchase 
shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the sole initial shareholder(s) 
before such Sub-Advised Fund's shares are offered to the public.
    2. The prospectuses for each Sub-Advised Fund will disclose the 
existence, substance, and effect of any order granted pursuant to the 
application. In addition, each Sub-Advised Fund will hold itself out to 
the public as employing the manager-of-managers structure described in 
the application. The prospectus will prominently disclose that the 
Manager has ultimate responsibility, subject to oversight by the 
applicable Board, to oversee the Sub-Advisers and recommend their 
hiring, termination, and replacement.
    3. The Manager will provide general management services to each 
Sub-Advised Fund, including overall supervisory responsibility for the 
general management and investment of each Sub-Advised Fund's assets 
and, subject to the review and approval of the applicable Board, will: 
(a) Set each Sub-Advised Fund's overall investment strategies; (b) 
evaluate, select and recommend Sub-Advisers to manage all or a part of 
each Sub-Advised Fund's assets; (c) allocate and, when appropriate, 
reallocate the assets of each Sub-Advised Fund among Sub-Advisers; (d) 
monitor and evaluate the performance of the Sub-Advisers; and (e) 
implement procedures reasonably designed to ensure that the Sub-
Advisers comply with each Sub-Advised Fund's investment objective, 
policies and restrictions.
    4. At all times, at least a majority of each Board will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
    5. The Manager will not enter into a Sub-Advisory Agreement with 
any Affiliated Sub-Adviser without such agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Sub-Advised Fund.
    6. Whenever a Sub-Adviser change is proposed for a Sub-Advised Fund 
with an Affiliated Sub-Adviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
applicable Board minutes, that such change is in the best interests of 
the Sub-Advised Fund and its shareholders, and does not involve a 
conflict of interest from which the Manager or Affiliated Sub-Adviser 
derives an inappropriate advantage.

[[Page 75395]]

    7. No trustee or officer of a Sub-Advised Fund or director or 
officer of the Manager, 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 ownership of 
interests in the Manager or any entity that controls, is controlled by 
or is under common control with the Manager; or ownership of less than 
1% of the outstanding securities of any class of equity or debt 
securities of any 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.
    8. Sub-Advised Funds will inform shareholders of the hiring of a 
new Sub-Adviser in reliance on the order within 90 days after the 
hiring of the new Sub-Adviser pursuant to the Modified Notice and 
Access Procedures.
    9. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.
    10. Independent legal counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Trustees. The 
selection of such counsel will be within the discretion of the then-
existing Independent Trustees.
    11. Whenever a Sub-Adviser is hired or terminated, the Manager will 
provide the Board with information showing the expected impact on the 
profitability of the Manager.
    12. The Manager will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Manager on a 
per Sub-Advised Fund basis. The information will reflect the impact on 
profitability of the hiring or termination of any Sub-Adviser during 
the applicable quarter.
    13. Each Sub-Advised Fund will disclose in its registration 
statement the Aggregate Fee Disclosure.
    14. Any changes to a Sub-Advisory Agreement that would result in an 
increase in the total management and advisory fees payable by a Sub-
Advised Fund will be required to be approved by the shareholders of the 
Sub-Advised Fund.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29499 Filed 12-10-13; 8:45 am]
BILLING CODE 8011-01-P
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