Ivy Funds, et al.;, 21305-21307 [2014-08526]

Download as PDF mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists. Documents submitted in adjudicatory proceedings will appear in the NRC’s electronic hearing docket, which is available to the public at https:// ehd1.nrc.gov/ehd/, unless excluded pursuant to an order of the Commission, or the presiding officer. Participants are requested not to include personal privacy information, such as social security numbers, home addresses, or home phone numbers in their filings, unless an NRC regulation or other law requires submission of such information. With respect to copyrighted works, participants are requested not to include copyrighted materials in their submission, except for limited excerpts that serve the purpose of the adjudicatory filings and would constitute a Fair Use application. If a person other than the Licensee requests a hearing, that person shall set forth with particularity the manner in which his interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.309(d) and (f). If a hearing is requested by a Licensee or an adversely affected person that meets the criteria above, the Commission will issue an Order designating the time and place of any hearings. If a hearing is held, the issue to be considered at such hearing shall be whether this Order should be sustained. In the absence of any request for a hearing, or written approval of an extension of time in which to request a hearing, the provisions specified in Section IV above shall be final 30 days from the date of issuance without further order or proceedings. If an extension of time for requesting a hearing has been approved, the provisions specified in Section IV shall be final when the extension expires if a hearing request has not been received. If payment has not been made by the time specified above, the matter may be referred to the Attorney General for further action, including collection. Dated at Rockville, Maryland, this 8th day of April 2014. For the Nuclear Regulatory Commission. Roy P. Zimmerman VerDate Mar<15>2010 18:06 Apr 14, 2014 Jkt 232001 21305 Director, Office of Enforcement. FOR FURTHER INFORMATION CONTACT: [FR Doc. 2014–08531 Filed 4–14–14; 8:45 am] Deepak T. Pai, Senior Counsel, at (202) 551–6876 or Mary Kay Frech, 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. BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 31013; File No. 812–14210] Ivy Funds, et al.; Notice of Application April 10, 2014. 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’ Representations 1. Ivy Trust, WR Trust, and Ivy VIP Trust are organized as Delaware statutory trusts and are registered under the Act as open-end management investment companies. Each Trust offers Summary of Application: Applicants multiple series (each a ‘‘Fund’’ and request an order that would permit them together the ‘‘Funds’’), each with its to enter into and materially amend own investment objectives, policies, and subadvisory agreements without restrictions.1 shareholder approval and would grant 2. IICO and WRIMCO, wholly owned relief from certain disclosure subsidiaries of Waddell & Reed requirements. Financial Inc., are registered as Applicants: Ivy Funds (‘‘Ivy Trust’’), investment advisers under the Waddell & Reed Advisors Funds (‘‘WR Investment Advisers Act of 1940 Trust’’), and Ivy Funds Variable (‘‘Advisers Act’’). IICO serves as the Insurance Portfolios (‘‘Ivy VIP Trust’’) investment adviser to each Fund of Ivy (each, a ‘‘Trust,’’ and collectively, the Trust and WRIMCO serves as ‘‘Trusts’’); Ivy Investment Management investment adviser to each Fund of WR Company (‘‘IICO’’), and Waddell & Reed Trust and Ivy VIP Trust. Each Adviser Investment Management Company serves as investment adviser to the (‘‘WRIMCO’’) (each, an ‘‘Adviser,’’ and Funds pursuant to an investment collectively, the ‘‘Advisers’’). advisory agreement between the Adviser DATES: Filing Dates: The application was and the applicable Trust (the ‘‘Advisory filed on September 10, 2013 and Agreements’’), approved by the board of amended on January 24, 2014 and April trustees of the applicable Trust (each a 3, 2014. ‘‘Board’’),2 including a majority of the Hearing or Notification of Hearing: An trustees who are not ‘‘interested order granting the application will be persons,’’ as defined in section 2(a)(19) issued unless the Commission orders a of the Act, of the Trust, the Adviser, or hearing. Interested persons may request any Subadviser (as defined below) (the a hearing by writing to the Commission’s Secretary and serving 1 Applicants also request relief with respect to applicants with a copy of the request, any future series of each Trust and any other existing or future registered open-end management personally or by mail. Hearing requests investment company or series thereof that: (a) Is should be received by the Commission advised by either of the Advisers, including any by 5:30 p.m. on May 5, 2014, and entity controlling, controlled by or under common control with either of the Advisers or their should be accompanied by proof of service on the applicants, in the form of successors (included in the term ‘‘Adviser’’); (b) uses the manager of managers structure (‘‘Manager an affidavit or, for lawyers, a certificate of Managers Structure’’) described in the of service. Hearing requests should state application; and (c) complies with the terms and conditions of the application. The only existing the nature of the writer’s interest, the registered open-end management investment reason for the request, and the issues companies that currently may rely on the requested contested. Persons who wish to be order are named as applicants. For purposes of the notified of a hearing may request requested order, ‘‘successor’’ is limited to any entity that results from a reorganization into another notification by writing to the jurisdiction or a change in the type of business Commission’s Secretary. organization. If the name of any Fund contains the ADDRESSES: Secretary, U.S. Securities name of a Subadviser (as defined below), the name and Exchange Commission, 100 F Street of the Adviser, or a trademark or trade name that is owned by the Adviser, will precede the name of NE., Washington, DC 20549–1090. the Subadviser. Applicants: Waddell & Reed Investment 2 The term ‘‘Board’’ also includes the board of Management Company, 6300 Lamar trustees or directors of a future Trust and future Fund, if different. Avenue, Overland Park, Kansas 66202. PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\15APN1.SGM 15APN1 mstockstill on DSK4VPTVN1PROD with NOTICES 21306 Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices ‘‘Independent Trustees’’) and by the initial shareholder of each of the Funds in the manner required by sections 15(a) and 15(c) of the Act and rule 18f-2 thereunder. Applicants are not seeking any exemptions from the provisions of the Act with respect to any Advisory Agreement. 3. Under the terms of the Advisory Agreements, each Adviser, subject to the oversight of the applicable Board, is responsible for the overall management of the Funds’ business affairs and selecting the Funds’ investments according to the Funds’ investment objectives, policies, and restrictions. For the investment advisory services that they provide to the Funds, the Advisers receive a fee from the Funds as specified in the Advisory Agreements. The Advisory Agreements also authorize the Advisers to retain one or more unaffiliated investment subadvisers (each, a ‘‘Subadviser’’), to be compensated by the Advisers for the purpose of managing the investment of the assets of the Funds. The Advisers have entered into subadvisory agreements (‘‘Subadvisory Agreements’’) with various Subadvisers to provide investment advisory services to certain Funds in each Trust.3 Each Subadviser is, and each future Subadviser will be, an ‘‘investment adviser,’’ as defined in section 2(a)(20)(B) of the Act, and registered as an investment adviser under the Advisers Act, or not subject to such registration. The Advisers will evaluate, allocate assets to, and oversee the Subadvisers, and make recommendations about their hiring, termination, and replacement to the applicable Board, at all times subject to the authority of that Board. The Adviser compensates each Subadviser out of the fee paid by a Fund to the Adviser under the Advisory Agreement. 4. Applicants request an order to permit the Advisers, subject to Board approval, to engage Subadvisers to manage all or a portion of the assets of a Fund pursuant to a Subadvisory Agreement and materially amend Subadvisory Agreements without obtaining shareholder approval. The requested relief will not extend to any Subadviser that is an ‘‘affiliated person,’’ as defined in section 2(a)(3) of the Act, of a Fund or the Adviser, other than by reason of serving as Subadviser to a Fund (‘‘Affiliated Subadviser’’). 5. Applicants also request an order exempting each Fund from certain disclosure provisions described below that may require the Funds to disclose 3 All existing Subadvisory Agreements comply with sections 15(a) and (c) of the Act and rule 18f2 thereunder. VerDate Mar<15>2010 18:06 Apr 14, 2014 Jkt 232001 fees paid by the Advisers to each Subadviser. Applicants seek an order to permit each Fund to disclose (as both a dollar amount and as a percentage of a Fund’s net assets) only: (a) The aggregate fees paid to its Adviser and any Affiliated Subadvisers; and (b) the aggregate fees paid to Subadvisers other than Affiliated Subadvisers (collectively, the ‘‘Aggregate Fee Disclosure’’). A Fund that employs an Affiliated Subadviser will provide separate disclosure of any fees paid to the Affiliated Subadviser. 6. The Funds 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 Subadviser is hired for any Fund, that Fund will send its shareholders either a Multi-Manager Notice or a Multi-Manager Notice and Multi-Manager Information Statement; 4 and (b) the Fund will make the MultiManager Information Statement available on the Web site identified in the Multi-Manager Notice no later than when the Multi-Manager Notice (or Multi-Manager Notice and MultiManager Information Statement) is first sent to shareholders, and will maintain it on that Web site for at least 90 days. 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. 4 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 Subadviser; (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 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. PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 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 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 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 provision 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 each Fund’s Adviser, subject to the review and approval of the Board, to select the Subadvisers who are best suited to achieve the Fund’s investment objective. Applicants assert that, from the perspective of the shareholder, the role of the Subadviser is substantially equivalent to the role of the individual portfolio managers employed by traditional investment company advisory firms. Applicants state that requiring shareholder approval of each Subadvisory Agreement would impose unnecessary delays and expenses on the Funds, and may preclude a Fund from acting promptly when the applicable Board and Adviser believe that a change would benefit the Fund and its E:\FR\FM\15APN1.SGM 15APN1 Federal Register / Vol. 79, No. 72 / Tuesday, April 15, 2014 / Notices shareholders. Applicants note that the Advisory Agreements and any Subadvisory Agreement with an Affiliated Subadviser (if any) will continue to be 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 Funds because it would improve the Advisers’ ability to negotiate the fees paid to Subadvisers. Applicants state that the Advisers may be able to negotiate rates that are below a Subadviser’s ‘‘posted’’ amounts, if the Adviser is not required to disclose the Subadvisers’ fees to the public. Applicants submit that the requested relief will encourage Subadvisers to negotiate lower subadvisory fees with the Advisers if the lower fees are not required to be made public. mstockstill on DSK4VPTVN1PROD with NOTICES Applicants’ Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 5 1. Before a Fund may rely on the requested order, the operation of the Fund in the manner described in the application will be approved by a majority of the Fund’s outstanding voting securities, as defined in the Act, or in the case of a Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the initial shareholder(s) before offering shares of that Fund to the public. 2. Each Fund relying on the requested order will disclose in its prospectus the existence, substance, and effect of any order granted pursuant to the application. Each Fund will hold itself out to the public as utilizing the Manager of Managers Structure. The prospectus will prominently disclose that the Adviser has ultimate responsibility (subject to oversight by the Board) to oversee the Subadvisers and recommend their hiring, termination, and replacement. 3. Each Fund will inform shareholders of the hiring of a new Subadviser within 90 days after the hiring of the new Subadviser pursuant to the Modified Notice and Access Procedures. 4. The Advisers will not enter into a subadvisory agreement with any Affiliated Subadviser without such agreement, including the compensation to be paid thereunder, being approved 5 Applicants will only comply with conditions 9, 10, and 11 if they rely on the fee disclosure relief that would allow them to provide Aggregate Fee Disclosure. VerDate Mar<15>2010 18:06 Apr 14, 2014 Jkt 232001 by the shareholders of the applicable Fund. 5. At all times, at least a majority of each Trust’s Board will be Independent Trustees, and the nomination of new or additional Independent Trustees will be placed within the discretion of the thenexisting Independent Trustees. 6. Whenever a subadviser change is proposed for a Fund with an Affiliated Subadviser, the applicable Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the Board minutes, that such change is in the best interests of the Fund and its shareholders, and does not involve a conflict of interest from which the applicable Adviser or the Affiliated Subadviser derives an inappropriate advantage. 7. The Advisers will provide general management services to the Funds, including overall supervisory responsibility for the general management and investment of each Fund’s assets, and, subject to review and approval of the applicable Board, will: (a) Set each Fund’s overall investment strategies; (b) evaluate, select and recommend Subadvisers to manage all or a part of each Fund’s assets; (c) allocate and, when appropriate, reallocate each Fund’s assets among one or more Subadvisers; (d) monitor and evaluate the performance of Subadvisers; and (e) implement procedures reasonably designed to ensure that the Subadvisers comply with each Fund’s investment objective, policies and restrictions. 8. No trustee or officer of the Trusts or the Funds, or director, manager or officer of the Advisers, will own, directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person), any interest in a Subadviser, except for (a) ownership of interests in the Advisers or any entity that controls, is controlled by, or is under common control with the Advisers, or (b) ownership of less than 1% of the outstanding securities of any class of equity or debt of any publicly traded company that is either a Subadviser or an entity that controls, is controlled by or is under common control with a Subadviser. 9. Whenever a Subadviser is hired or terminated, the Adviser will provide the Board with information showing the expected impact on the profitability of the Adviser. 10. Each Fund relying on the requested order will disclose in its registration statement the Aggregate Fee Disclosure. 11. Each Adviser will provide the Board, no less frequently than quarterly, PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 21307 with information about the profitability of the Adviser on a per-Fund basis. The information will reflect the impact on profitability of the hiring or termination of any Subadviser during the applicable quarter. 12. 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. 13. 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. 14. Any new Subadvisory Agreement or any amendment to a Fund’s existing Advisory Agreement or Subadvisory Agreement that directly or indirectly results in an increase in the aggregate advisory fee rate payable by the Fund will be submitted to the Fund’s shareholders for approval. For the Commission, by the Division of Investment Management, under delegated authority. Jill M. Peterson, Assistant Secretary. [FR Doc. 2014–08526 Filed 4–14–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold a Closed Meeting on Thursday, April 17, 2014 at 2:00 p.m. Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the Closed Meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or her designee, has certified that, in her opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR 200.402(a)(3), (5), (7), 9(ii) and (10), permit consideration of the scheduled matter at the Closed Meeting. Commissioner Gallagher, as duty officer, voted to consider the items listed for the Closed Meeting in closed session. The subject matter of the Closed Meeting will be: Institution and settlement of injunctive actions; E:\FR\FM\15APN1.SGM 15APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 72 (Tuesday, April 15, 2014)]
[Notices]
[Pages 21305-21307]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08526]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31013; File No. 812-14210]


Ivy Funds, et al.; Notice of Application

April 10, 2014.
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 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.
    Applicants: Ivy Funds (``Ivy Trust''), Waddell & Reed Advisors 
Funds (``WR Trust''), and Ivy Funds Variable Insurance Portfolios 
(``Ivy VIP Trust'') (each, a ``Trust,'' and collectively, the 
``Trusts''); Ivy Investment Management Company (``IICO''), and Waddell 
& Reed Investment Management Company (``WRIMCO'') (each, an 
``Adviser,'' and collectively, the ``Advisers'').

DATES: Filing Dates: The application was filed on September 10, 2013 
and amended on January 24, 2014 and April 3, 2014.
    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 May 5, 2014, 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:  Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants: Waddell & Reed 
Investment Management Company, 6300 Lamar Avenue, Overland Park, Kansas 
66202.

FOR FURTHER INFORMATION CONTACT:  Deepak T. Pai, Senior Counsel, at 
(202) 551-6876 or Mary Kay Frech, 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. Ivy Trust, WR Trust, and Ivy VIP Trust are organized as Delaware 
statutory trusts and are registered under the Act as open-end 
management investment companies. Each Trust offers multiple series 
(each a ``Fund'' and together the ``Funds''), each with its own 
investment objectives, policies, and restrictions.\1\
---------------------------------------------------------------------------

    \1\ Applicants also request relief with respect to any future 
series of each Trust and any other existing or future registered 
open-end management investment company or series thereof that: (a) 
Is advised by either of the Advisers, including any entity 
controlling, controlled by or under common control with either of 
the Advisers or their successors (included in the term ``Adviser''); 
(b) uses the manager of managers structure (``Manager of Managers 
Structure'') described in the application; and (c) complies with the 
terms and conditions of the application. The only existing 
registered open-end management investment companies that currently 
may rely on the requested order are named as applicants. For 
purposes of the requested order, ``successor'' is limited to any 
entity that results from a reorganization into another jurisdiction 
or a change in the type of business organization. If the name of any 
Fund contains the name of a Subadviser (as defined below), the name 
of the Adviser, or a trademark or trade name that is owned by the 
Adviser, will precede the name of the Subadviser.
---------------------------------------------------------------------------

    2. IICO and WRIMCO, wholly owned subsidiaries of Waddell & Reed 
Financial Inc., are registered as investment advisers under the 
Investment Advisers Act of 1940 (``Advisers Act''). IICO serves as the 
investment adviser to each Fund of Ivy Trust and WRIMCO serves as 
investment adviser to each Fund of WR Trust and Ivy VIP Trust. Each 
Adviser serves as investment adviser to the Funds pursuant to an 
investment advisory agreement between the Adviser and the applicable 
Trust (the ``Advisory Agreements''), approved by the board of trustees 
of the applicable Trust (each a ``Board''),\2\ including a majority of 
the trustees who are not ``interested persons,'' as defined in section 
2(a)(19) of the Act, of the Trust, the Adviser, or any Subadviser (as 
defined below) (the

[[Page 21306]]

``Independent Trustees'') and by the initial shareholder of each of the 
Funds in the manner required by sections 15(a) and 15(c) of the Act and 
rule 18f-2 thereunder. Applicants are not seeking any exemptions from 
the provisions of the Act with respect to any Advisory Agreement.
---------------------------------------------------------------------------

    \2\ The term ``Board'' also includes the board of trustees or 
directors of a future Trust and future Fund, if different.
---------------------------------------------------------------------------

    3. Under the terms of the Advisory Agreements, each Adviser, 
subject to the oversight of the applicable Board, is responsible for 
the overall management of the Funds' business affairs and selecting the 
Funds' investments according to the Funds' investment objectives, 
policies, and restrictions. For the investment advisory services that 
they provide to the Funds, the Advisers receive a fee from the Funds as 
specified in the Advisory Agreements. The Advisory Agreements also 
authorize the Advisers to retain one or more unaffiliated investment 
subadvisers (each, a ``Subadviser''), to be compensated by the Advisers 
for the purpose of managing the investment of the assets of the Funds. 
The Advisers have entered into subadvisory agreements (``Subadvisory 
Agreements'') with various Subadvisers to provide investment advisory 
services to certain Funds in each Trust.\3\ Each Subadviser is, and 
each future Subadviser will be, an ``investment adviser,'' as defined 
in section 2(a)(20)(B) of the Act, and registered as an investment 
adviser under the Advisers Act, or not subject to such registration. 
The Advisers will evaluate, allocate assets to, and oversee the 
Subadvisers, and make recommendations about their hiring, termination, 
and replacement to the applicable Board, at all times subject to the 
authority of that Board. The Adviser compensates each Subadviser out of 
the fee paid by a Fund to the Adviser under the Advisory Agreement.
---------------------------------------------------------------------------

    \3\ All existing Subadvisory Agreements comply with sections 
15(a) and (c) of the Act and rule 18f-2 thereunder.
---------------------------------------------------------------------------

    4. Applicants request an order to permit the Advisers, subject to 
Board approval, to engage Subadvisers to manage all or a portion of the 
assets of a Fund pursuant to a Subadvisory Agreement and materially 
amend Subadvisory Agreements without obtaining shareholder approval. 
The requested relief will not extend to any Subadviser that is an 
``affiliated person,'' as defined in section 2(a)(3) of the Act, of a 
Fund or the Adviser, other than by reason of serving as Subadviser to a 
Fund (``Affiliated Subadviser'').
    5. Applicants also request an order exempting each Fund from 
certain disclosure provisions described below that may require the 
Funds to disclose fees paid by the Advisers to each Subadviser. 
Applicants seek an order to permit each Fund to disclose (as both a 
dollar amount and as a percentage of a Fund's net assets) only: (a) The 
aggregate fees paid to its Adviser and any Affiliated Subadvisers; and 
(b) the aggregate fees paid to Subadvisers other than Affiliated 
Subadvisers (collectively, the ``Aggregate Fee Disclosure''). A Fund 
that employs an Affiliated Subadviser will provide separate disclosure 
of any fees paid to the Affiliated Subadviser.
    6. The Funds 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 Subadviser is 
hired for any Fund, that Fund will send its shareholders either a 
Multi-Manager Notice or a Multi-Manager Notice and Multi-Manager 
Information Statement; \4\ and (b) the 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.
---------------------------------------------------------------------------

    \4\ 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 Subadviser; (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 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.
---------------------------------------------------------------------------

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 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 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 provision 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 each Fund's 
Adviser, subject to the review and approval of the Board, to select the 
Subadvisers who are best suited to achieve the Fund's investment 
objective. Applicants assert that, from the perspective of the 
shareholder, the role of the Subadviser is substantially equivalent to 
the role of the individual portfolio managers employed by traditional 
investment company advisory firms. Applicants state that requiring 
shareholder approval of each Subadvisory Agreement would impose 
unnecessary delays and expenses on the Funds, and may preclude a Fund 
from acting promptly when the applicable Board and Adviser believe that 
a change would benefit the Fund and its

[[Page 21307]]

shareholders. Applicants note that the Advisory Agreements and any 
Subadvisory Agreement with an Affiliated Subadviser (if any) will 
continue to be 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 Funds because it would improve the 
Advisers' ability to negotiate the fees paid to Subadvisers. Applicants 
state that the Advisers may be able to negotiate rates that are below a 
Subadviser's ``posted'' amounts, if the Adviser is not required to 
disclose the Subadvisers' fees to the public. Applicants submit that 
the requested relief will encourage Subadvisers to negotiate lower 
subadvisory fees with the Advisers 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: \5\
---------------------------------------------------------------------------

    \5\ Applicants will only comply with conditions 9, 10, and 11 if 
they rely on the fee disclosure relief that would allow them to 
provide Aggregate Fee Disclosure.
---------------------------------------------------------------------------

    1. Before a Fund may rely on the requested order, the operation of 
the Fund in the manner described in the application will be approved by 
a majority of the Fund's outstanding voting securities, as defined in 
the Act, or in the case of a Fund whose public shareholders purchase 
shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the initial shareholder(s) before 
offering shares of that Fund to the public.
    2. Each Fund relying on the requested order will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to the application. Each Fund will hold itself out to the 
public as utilizing the Manager of Managers Structure. The prospectus 
will prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight by the Board) to oversee the Subadvisers and 
recommend their hiring, termination, and replacement.
    3. Each Fund will inform shareholders of the hiring of a new 
Subadviser within 90 days after the hiring of the new Subadviser 
pursuant to the Modified Notice and Access Procedures.
    4. The Advisers will not enter into a subadvisory agreement with 
any Affiliated Subadviser without such agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. At all times, at least a majority of each Trust's Board will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
    6. Whenever a subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the applicable Board, including a majority of 
the Independent Trustees, will make a separate finding, reflected in 
the Board minutes, that such change is in the best interests of the 
Fund and its shareholders, and does not involve a conflict of interest 
from which the applicable Adviser or the Affiliated Subadviser derives 
an inappropriate advantage.
    7. The Advisers will provide general management services to the 
Funds, including overall supervisory responsibility for the general 
management and investment of each Fund's assets, and, subject to review 
and approval of the applicable Board, will: (a) Set each Fund's overall 
investment strategies; (b) evaluate, select and recommend Subadvisers 
to manage all or a part of each Fund's assets; (c) allocate and, when 
appropriate, reallocate each Fund's assets among one or more 
Subadvisers; (d) monitor and evaluate the performance of Subadvisers; 
and (e) implement procedures reasonably designed to ensure that the 
Subadvisers comply with each Fund's investment objective, policies and 
restrictions.
    8. No trustee or officer of the Trusts or the Funds, or director, 
manager or officer of the Advisers, will own, directly or indirectly 
(other than through a pooled investment vehicle that is not controlled 
by such person), any interest in a Subadviser, except for (a) ownership 
of interests in the Advisers or any entity that controls, is controlled 
by, or is under common control with the Advisers, or (b) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of any publicly traded company that is either a Subadviser or an 
entity that controls, is controlled by or is under common control with 
a Subadviser.
    9. Whenever a Subadviser is hired or terminated, the Adviser will 
provide the Board with information showing the expected impact on the 
profitability of the Adviser.
    10. Each Fund relying on the requested order will disclose in its 
registration statement the Aggregate Fee Disclosure.
    11. Each Adviser will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Adviser on a 
per-Fund basis. The information will reflect the impact on 
profitability of the hiring or termination of any Subadviser during the 
applicable quarter.
    12. 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.
    13. 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.
    14. Any new Subadvisory Agreement or any amendment to a Fund's 
existing Advisory Agreement or Subadvisory Agreement that directly or 
indirectly results in an increase in the aggregate advisory fee rate 
payable by the Fund will be submitted to the Fund's shareholders for 
approval.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-08526 Filed 4-14-14; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.