Eagle Capital Appreciation Fund, et al.; Notice of Application, 53468-53471 [2014-21365]
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53468
Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
Applicants, 880 Carillon Parkway, St.
Petersburg, Florida 33716.
FOR FURTHER INFORMATION CONTACT: Kay[Investment Company Act Release No.
Mario Vobis, Senior Counsel, at (202)
31239; File No. 812–14173]
551–6728, or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Division of
Eagle Capital Appreciation Fund, et al.;
Investment Management, Chief
Notice of Application
Counsel’s Office).
September 3, 2014.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
AGENCY: Securities and Exchange
application. The complete application
Commission (‘‘Commission’’).
may be obtained via the Commission’s
ACTION: Notice of an application under
section 6(c) of the Investment Company Web site by searching for the file
number or an applicant using the
Act of 1940 (‘‘Act’’) for an exemption
Company name box, at https://
from section 15(a) of the Act and rule
www.sec.gov/search/search.htm or by
18f–2 under the Act, as well as from
calling (202) 551–8090.
certain disclosure requirements.
Applicants’ Representations:
1. Each Trust is organized as a
Summary of Application: Applicants
request an order that would permit them Massachusetts business trust and is
registered with the Commission as an
to enter into and materially amend
open-end management investment
subadvisory agreements with Whollycompany under the Act. Each Trust may
Owned Subadvisers (as defined below)
offer one or more series of shares (each
and Non-Affiliated Subadvisers (as
a ‘‘Fund,’’ and collectively the
defined below) without shareholder
‘‘Funds’’), each with its own distinct
approval and would grant relief from
investment objectives, policies and
certain disclosure requirements. The
requested order would supersede a prior restrictions. The Adviser is a Florida
corporation registered with the
order that granted relief solely with
Commission as an investment adviser
respect to Non-Affiliated Subadvisers.1
under the Investment Advisers Act of
Applicants: Eagle Capital
1940 (the ‘‘Advisers Act’’), and serves as
Appreciation Fund, Eagle Growth &
investment adviser to the Funds.
Income Fund and Eagle Series Trust
2. Applicants request an order to
(each, a ‘‘Trust’’ and collectively, the
‘‘Trusts’’), and Eagle Asset Management, permit the Adviser, subject to the
approval of the board of trustees of each
Inc. (the ‘‘Adviser’’).
2
DATES: Filing Dates: The application was Trust (collectively, the ‘‘Board’’),
including a majority of the trustees who
filed on July 1, 2013, and amended on
are not ‘‘interested persons’’ of the
October 25, 2013, on April 4, 2014 and
Trusts or the Adviser, as defined in
on July 31, 2014.
Hearing or Notification of Hearing: An section 2(a)(19) of the Act (the
‘‘Independent Trustees’’), to, without
order granting the application will be
obtaining shareholder approval: (i)
issued unless the Commission orders a
hearing. Interested persons may request Select certain wholly-owned and nonaffiliated investment Subadvisers 3 to
a hearing by writing to the
manage all or a portion of the assets of
Commission’s Secretary and serving
one or more of the Funds pursuant to an
applicants with a copy of the request,
investment subadvisory agreement with
personally or by mail. Hearing requests
each Subadviser (each a ‘‘Subadvisory
should be received by the Commission
Agreement’’ and collectively, the
by 5:30 p.m. on September 29, 2014,
and should be accompanied by proof of
2 The term ‘‘Board’’ also includes the board of
service on applicants, in the form of an
trustees or directors of a future Subadvised Fund (as
affidavit or, for lawyers, a certificate of
defined below), if different from the board of
trustees of the Trusts.
service. Hearing requests should state
3 A ‘‘Subadviser’’ for a Fund is a Subadviser that
the nature of the writer’s interest, the
is (i) an indirect or direct ‘‘wholly-owned
reason for the request, and the issues
subsidiary’’ (as such term is defined in the Act) of
contested. Persons who wish to be
the Adviser, or (ii) a sister company of the Adviser
notified of a hearing may request
that is an indirect or direct ‘‘wholly-owned
subsidiary’’ (as such term is defined in the Act) of
notification by writing to the
the same company that, indirectly or directly,
Commission’s Secretary.
wholly owns the Adviser (each of (i) and (ii) a
ADDRESSES: Secretary, U.S. Securities
‘‘Wholly-Owned Subadviser’’ and collectively, the
and Exchange Commission, 100 F Street ‘‘Wholly-Owned Subadvisers’’), or (iii) not an
‘‘affiliated person’’ (as such term is defined in
NE., Washington, DC 20549–1090.
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SECURITIES AND EXCHANGE
COMMISSION
1 Heritage Capital Appreciation Trust, et al.,
Investment Company Act Release Nos. 25252
(November 2, 2001) (notice) and 25301 (November
28, 2001) (order).
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section 2(a)(3) of the Act) of a Fund or the Adviser,
except to the extent that an affiliation arises solely
because the Subadviser serves as a subadviser to
one or more Funds (each a ‘‘Non-Affiliated
Subadviser’’ and collectively, the ‘‘Non-Affiliated
Subadvisers’’).
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‘‘Subadvisory Agreements’’); and (ii)
materially amend Subadvisory
Agreements with the Subadvisers.4
Applicants request that the relief apply
to the named applicants, as well as to
any future Fund and any other existing
or future registered open-end
management investment company or
series thereof that intends to rely on the
requested order in the future and (i) is
advised by the Adviser or its
successors; 5 (ii) uses the multi-manager
structure described in the application;
and (iii) complies with the terms and
conditions set forth in the application
(each, a ‘‘Subadvised Fund’’).6 The
requested relief will not extend to any
subadviser, other than a Wholly-Owned
Subadviser, who is an affiliated person,
as defined in section 2(a)(3) of the Act,
of the Subadvised Fund or of the
Adviser, other than by reason of serving
as a subadviser to one or more of the
Subadvised Funds (‘‘Affiliated
Subadviser’’).
3. The Adviser serves as the
investment adviser to each Fund
pursuant to an investment advisory
agreement with the Fund (each an
‘‘Investment Advisory Agreement’’ and,
together, the ‘‘Investment Advisory
Agreements’’). Any future Adviser also
will be registered with the Commission
as an investment adviser under the
Advisers Act. Each Investment Advisory
Agreement has been or will be approved
by the Board, including a majority of the
Independent Trustees, and by the
shareholders of the relevant Fund in the
manner required by sections 15(a) and
15(c) of the Act and rule 18f–2
thereunder. The terms of the Investment
Advisory Agreements comply or will
comply with section 15(a) of the Act.
4. Pursuant to the terms of each
Investment Advisory Agreement, the
Adviser, subject to the oversight of the
Board, has agreed or will agree to
4 Shareholder approval will continue to be
required for any other subadviser changes and
material amendments to an existing subadvisory
agreement with any subadviser other than a NonAffiliated Subadviser or a Wholly-Owned
Subadviser (all such changes referred to herein as
‘‘Ineligible Subadviser Changes’’), except as
otherwise permitted by rule or other action of the
Commission or its staff.
5 For the purposes of the requested order,
‘‘successor’’ is limited to an entity that results from
a reorganization into another jurisdiction or a
change in the type of business organization.
6 All registered open-end investment companies
that currently intend to rely on the requested order
are named as applicants. Any entity that relies on
the requested order will do so only in accordance
with the terms and conditions contained in the
application. If the name of any Subadvised Fund
contains the name of a Subadviser, the name of the
Adviser that serves as the primary adviser to the
Subadvised Fund, or a trademark or trade name that
is owned by or publicly used to identify that
Adviser, will precede the name of the Subadviser.
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provide a continuous investment
program for each Fund, which includes
determining the securities and other
investments to be purchased, retained,
sold or loaned by each Fund and the
portion of such assets to be invested or
held uninvested as cash. The Adviser
will periodically review each Fund’s
investment policies and strategies and,
based on the need of a particular Fund,
may recommend changes to the
investment policies and strategies of the
Fund for consideration by the Board.
For its services to each Fund, the
Adviser receives or will receive an
investment advisory fee from that Fund
as specified in the applicable
Investment Advisory Agreement.
Consistent with the terms of each
Subadvised Fund’s Investment Advisory
Agreement, the Adviser may, subject to
the approval of the Board, including a
majority of the Independent Trustees,
and the shareholders of the applicable
Subadvised Fund (if required), delegate
portfolio management responsibilities of
all or a portion of the assets of a
Subadvised Fund to a Subadviser. The
Adviser continues to have overall
responsibility for the management and
investment of the assets of each
Subadvised Fund. These responsibilities
include recommending the removal or
replacement of Subadvisers, and
determining the portion of that
Subadvised Fund’s assets to be managed
by any given Subadviser and
reallocating those assets as necessary
from time to time.
5. Pursuant to the authority under the
Investment Advisory Agreement, the
Adviser may enter into Subadvisory
Agreements with various Subadvisers
on behalf of the Funds. The Adviser has
entered into a Subadvisory Agreement
with Eagle Boston Investment
Management, Inc., a wholly-owned
subsidiary of the Adviser. The Adviser
also may, in the future, enter into
Subadvisory Agreements with other
Subadvisers on behalf of the Funds. The
Subadvisory Agreements were or will be
approved by the Board, including a
majority of the Independent Trustees,
and the shareholders of the Subadvised
Fund in accordance with sections 15(a)
and 15(c) of the Act and rule 18f-2
thereunder. In addition, the terms of the
Subadvisory Agreements comply or will
comply fully with the requirements of
section 15(a) of the Act. The
Subadvisers, subject to the oversight of
the Adviser and the Board, determine or
will determine the securities and other
instruments to be purchased, sold or
entered into by a Subadvised Fund’s
portfolio or a portion thereof, and place
orders with brokers or dealers that they
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select. The Adviser will compensate the
Subadvisers out of the fee received by
the Adviser from the applicable
Subadvised Fund under the applicable
Investment Advisory Agreement.
6. Subadvised 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
Subadvised Fund, that Subadvised
Fund will send its shareholders either a
Multi-manager Notice or a Multimanager Notice and Multi-manager
Information Statement; 7 and (b) a
Subadvised 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 state that, in the
circumstances described in the
application, a proxy solicitation to
approve the appointment of new
Subadvisers provides no more
meaningful information to shareholders
than the proposed Multi-manager
Information Statement. Applicants also
state that the Board would comply with
the requirements of sections 15(a) and
15(c) of the Act before entering into or
amending Subadvisory Agreements.
7. Applicants also request an order
under section 6(c) of the Act exempting
the Subadvised Funds from certain
disclosure obligations that may require
each Subadvised Fund to disclose fees
paid by the Adviser to each Subadviser.
Applicants seek relief to permit each
Subadvised Fund to disclose (as a dollar
amount and a percentage of a
Subadvised Fund’s net assets) (a) the
7 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 (except as modified
to permit Aggregate Fee Disclosure, as defined
below); (b) inform shareholders that the Multimanager 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 Fund.
A ‘‘Multi-manager Information Statement’’ will
meet the requirements of Regulation 14C, Schedule
14C and Item 22 of Schedule 14A under the
Exchange Act for an information statement, except
as modified by the order to permit Aggregate Fee
Disclosure. Multi-manager Information Statements
will be filed with the Commission via the EDGAR
system.
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53469
aggregate fees paid to the Adviser and
any Wholly-Owned Subadvisers; (b) the
aggregate fees paid to Non-Affiliated
Subadvisers; and (c) the fee paid to each
Affiliated Subadviser (collectively, the
‘‘Aggregate Fee Disclosure’’). An
exemption is requested to permit a
Subadvised Fund to include only the
Aggregate Fee Disclosure. All other
items required by Sections 6–07(2)(a),
(b) and (c) of Regulation S–X will be
disclosed.
Applicants’ Legal Analysis:
1. Section 15(a) of the Act states, in
part, that it is unlawful for any person
to act as an investment adviser to a
registered investment company ‘‘except
pursuant to a written contract, which
contract, whether with such registered
company or with an investment adviser
of such registered company, has been
approved by the vote of a majority of the
outstanding voting securities of such
registered company.’’ Rule 18f–2 under
the Act 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 a registered investment
company to disclose in its statement of
additional information the method of
computing the ‘‘advisory fee payable’’
by the investment company, including
the total dollar amounts that the
investment company ‘‘paid to the
adviser (aggregated with amounts paid
to affiliated advisers, if any), and any
advisers who are not affiliated persons
of the adviser, under the investment
advisory contract for the last three fiscal
years.’’
3. Rule 20a–1 under the Act requires
proxies solicited with respect to a
registered investment company to
comply with Schedule 14A under the
Exchange Act. Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
Schedule 14A, taken together, require a
proxy statement for a shareholder
meeting at which the advisory contract
will be voted upon to include the ‘‘rate
of compensation of the investment
adviser,’’ the ‘‘aggregate amount of the
investment adviser’s fee,’’ a description
of the ‘‘terms of the contract to be acted
upon,’’ and, if a change in the advisory
fee is proposed, the existing and
proposed fees and the difference
between the two fees.
4. Regulation S–X sets forth the
requirements for financial statements
required to be included as part of a
registered investment company’s
registration statement and shareholder
reports filed with the Commission.
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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 their requested relief meets
this standard for the reasons discussed
below.
6. Applicants assert that the
shareholders expect the Adviser, subject
to the review and approval of the Board,
to select a Subadviser who is in the best
position to achieve the Subadvised
Fund’s investment objective. Applicants
assert that, from the perspective of the
shareholder, the role of the Subadvisers
is substantially equivalent to the role of
the individual portfolio managers
employed by an investment adviser to a
traditional investment company.
Applicants believe that permitting the
Adviser to perform the duties for which
the shareholders of a Subadvised Fund
are paying the Adviser—the selection,
supervision and evaluation of the
Subadviser—without incurring
unnecessary delays or expenses is
appropriate and in the interest of a
Subadvised Fund’s shareholders and
will allow such Subadvised Fund to
operate more efficiently. Applicants
state that each Investment Advisory
Agreement will continue to be fully
subject to section 15(a) of the Act and
rule 18f–2 under the Act and approved
by the relevant Board, including a
majority of the Independent Trustees, in
the manner required by sections 15(a)
and 15(c) of the Act. Applicants are not
seeking an exemption with respect to
the Investment Advisory Agreements.
7. Applicants assert that disclosure of
the individual fees that the Adviser
would pay to the Subadvisers does not
serve any meaningful purpose.
Applicants contend that the primary
reasons for requiring disclosure of
individual fees paid to Subadvisers are
to inform shareholders of expenses to be
charged by a particular Subadvised
Fund and to enable shareholders to
compare the fees to those of other
comparable investment companies.
Applicants believe that the requested
relief satisfies these objectives because
the advisory fee paid to the Adviser will
be fully disclosed and, therefore,
shareholders will know what a
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Subadvised Fund’s fees and expenses
are and will be able to compare the
advisory fees a Subadvised Fund is
charged to those of other investment
companies. Applicants assert that the
requested disclosure relief would
benefit shareholders of the Subadvised
Funds because it would improve the
Adviser’s ability to negotiate the fees
paid to Subadvisers. Applicants state
that the Adviser 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 assert that the relief will also
encourage Subadvisers to negotiate
lower subadvisory fees with the Adviser
if the lower fees are not required to be
made public.
8. Applicants submit that the
requested relief meets the standards for
relief under section 6(c) of the Act.
Applicants state that the operation of a
Subadvised Fund in the manner
described in the application must be
approved by shareholders of the
Subadvised Fund before that
Subadvised Fund may rely on the
requested order. In addition, applicants
state that any conflict of interest or
economic incentive that may exist in
connection with the Adviser selecting a
Wholly-Owned Subadviser to manage
all or a portion of the assets of a
Subadvised Fund are addressed under
the terms and conditions of the
application and will be disclosed to
shareholders and considered by the
Board when it reviews the selection or
termination of Subadvisers. Applicants
also assert that conditions 6, 7, 10 and
11 are designed to provide the Board
with sufficient independence and the
resources and information it needs to
monitor and address any conflicts of
interest. Applicants state that,
accordingly, they believe the requested
relief is necessary or appropriate in the
public interest and consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act.
Applicants’ Conditions:
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Before a Subadvised Fund may rely
on the order requested in the
application, the operation of the
Subadvised Fund in the manner
described in the application, including
the hiring of Wholly-Owned
Subadvisers, will be, or has been,
approved by a majority of the
Subadvised Fund’s outstanding voting
securities as defined in the Act, or, in
the case of a Subadvised Fund whose
public shareholders purchase shares on
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the basis of a prospectus containing the
disclosure contemplated by condition 2
below, by the initial shareholder before
such Subadvised Fund’s shares are
offered to the public.
2. The prospectus 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 multimanager structure described in the
application. The prospectus will
prominently disclose that the Adviser
has the ultimate responsibility, subject
to oversight by the Board, to oversee the
Subadvisers and recommend their
hiring, termination, and replacement.
3. The Adviser will provide general
management services to each
Subadvised Fund, including overall
supervisory responsibility for the
general management and investment of
the Subadvised Fund’s assets, and
subject to review and approval of the
Board, will (i) set the Subadvised
Fund’s overall investment strategies; (ii)
evaluate, select, and recommend
Subadvisers to manage all or a portion
of the Subadvised Fund’s assets; (iii)
allocate and, when appropriate,
reallocate the Subadvised Fund’s assets
among Subadvisers; (iv) monitor and
evaluate the Subadvisers’ performance;
and (v) implement procedures
reasonably designed to ensure that
Subadvisers comply with the
Subadvised Fund’s investment
objective, policies and restrictions.
4. A Subadvised Fund will not make
any Ineligible Subadviser Changes
without the approval of the
shareholders of the applicable
Subadvised Fund.
5. Subadvised Funds 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.
6. At all times, at least a majority of
the Board will be Independent Trustees,
and the selection and nomination of
new or additional Independent Trustees
will be placed within the discretion of
the then-existing Independent Trustees.
7. 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.
8. The Adviser will provide the
Board, no less frequently than quarterly,
with information about the profitability
of the Adviser on a per Subadvised
Fund basis. The information will reflect
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the impact on profitability of the hiring
or termination of any Subadviser during
the applicable quarter.
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. Whenever a Subadviser change is
proposed for a Subadvised Fund with
an Affiliated Subadviser or a WhollyOwned Subadviser, the Board,
including a majority of the Independent
Trustees, will make a separate finding,
reflected in the Board minutes, that the
change is in the best interests of the
Subadvised Fund and its shareholders
and does not involve a conflict of
interest from which the Adviser or the
Affiliated Subadviser or Wholly-Owned
Subadviser derives an inappropriate
advantage.
11. No Trustee or officer of a
Subadvised Fund or director, or officer
of the Adviser will own directly or
indirectly (other than through a pooled
investment vehicle that is not controlled
by such person) any interest in a
Subadviser except for (i) ownership of
interests in the Adviser or any entity,
other than a Wholly-Owned Subadviser,
that controls, is controlled by or is
under common control with the
Adviser; or (ii) ownership of less than
1% of the outstanding securities of any
class of equity or debt of a publicly
traded company that is either a
Subadviser or an entity, that controls, is
controlled by or is under common
control with a Subadviser.
12. Each Subadvised Fund will
disclose in its registration statement the
Aggregate Fee Disclosure.
13. In the event that the Commission
adopts a rule under the Act providing
substantially similar relief to that
requested in the application, the
requested order will expire on the
effective date of that rule.
14. Any new Subadvisory Agreement
or any amendment to a Subadvised
Fund’s existing investment advisory
agreement or Subadvisory Agreement
that directly or indirectly results in an
increase in the aggregate advisory fee
rate payable by the Subadvised Fund
will be submitted to the Subadvised
Fund’s shareholders for approval.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72967; File No. SR–
NASDAQ–2014–082]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Common Ownership
September 3, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
20, 2014 The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by NASDAQ. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NASDAQ proposes to modify Chapter
XV, entitled ‘‘Options Pricing,’’
governing pricing for NASDAQ
members using the NASDAQ Options
Market (‘‘NOM’’), NASDAQ’s facility for
executing and routing standardized
equity and index options. Specifically,
NOM proposes to harmonize the process
by which it collects information from its
equity members and Options
Participants for aggregating the activity
of affiliated entities for the purposes of
assessing charges or credits.
The Exchange requests that this filing
become operative on December 1, 2014.
The text of the proposed rule change
is set forth below. Proposed new
language is in italics; deleted text is in
brackets.
*
*
*
*
*
Chapter XV Options Pricing
NASDAQ Options Market Participants
may be subject to the Charges for
Membership, Services and Equipment
in the Rule 7000 Series as well as the
fees in this Chapter XV. For purposes of
assessing fees and paying rebates, the
following references should serve as
guidance.
The term ‘‘Customer’’ or (‘‘C’’) applies
to any transaction that is identified by
a Participant for clearing in the
Customer range at The Options Clearing
Corporation (‘‘OCC’’) which is not for
the account of broker or dealer or for the
[FR Doc. 2014–21365 Filed 9–8–14; 8:45 am]
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CFR 240.19b–4.
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account of a ‘‘Professional’’ (as that term
is defined in Chapter I, Section 1(a)(48)).
The term ‘‘NOM Market Maker’’ or
(‘‘M’’) is a Participant that has registered
as a Market Maker on NOM pursuant to
Chapter VII, Section 2, and must also
remain in good standing pursuant to
Chapter VII, Section 4. In order to
receive NOM Market Maker pricing in
all securities, the Participant must be
registered as a NOM Market Maker in at
least one security.
The term ‘‘Non-NOM Market Maker’’
or (‘‘O’’) is a registered market maker on
another options exchange that is not a
NOM Market Maker. A Non-NOM
Market Maker must append the proper
Non-NOM Market Maker designation to
orders routed to NOM.
The term ‘‘Firm’’ or (‘‘F’’) applies to
any transaction that is identified by a
Participant for clearing in the Firm
range at OCC.
The term ‘‘Professional’’ or (‘‘P’’)
means any person or entity that (i) is not
a broker or dealer in securities, and (ii)
places more than 390 orders in listed
options per day on average during a
calendar month for its own beneficial
account(s) pursuant to Chapter I,
Section 1(a)(48). All Professional orders
shall be appropriately marked by
Participants.
The term ‘‘Broker-Dealer’’ or (‘‘B’’)
applies to any transaction which is not
subject to any of the other transaction
fees applicable within a particular
category.
The term ‘‘Common Ownership’’ shall
mean Participants under 75% common
ownership or control.
(a) For purposes of applying any
options transaction fee or rebate where
the fee assessed, or rebate provided by
NOM depends upon the volume of an
Options Participant’s activity, an
Options Participant may request that
NOM aggregate its activity with the
activity of its affiliates.
(1) An Options Participant requesting
aggregation of affiliate activity shall be
required to certify to NOM the affiliate
status of entities whose activity it seeks
to aggregate prior to receiving approval
for aggregation, and shall be required to
inform NOM immediately of any event
that causes an entity to cease to be an
affiliate. NOM shall review available
information regarding the entities, and
reserves the right to request additional
information to verify the affiliate status
of an entity. NOM shall approve a
request unless it determines that the
certification is not accurate.
(2) If two or more Options
Participants become affiliated on or
prior to the sixteenth day of a month,
and submit the required request for
aggregation on or prior to the twenty-
E:\FR\FM\09SEN1.SGM
09SEN1
Agencies
[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53468-53471]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21365]
[[Page 53468]]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31239; File No. 812-14173]
Eagle Capital Appreciation Fund, et al.; Notice of Application
September 3, 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.
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Summary of Application: Applicants request an order that would
permit them to enter into and materially amend subadvisory agreements
with Wholly-Owned Subadvisers (as defined below) and Non-Affiliated
Subadvisers (as defined below) without shareholder approval and would
grant relief from certain disclosure requirements. The requested order
would supersede a prior order that granted relief solely with respect
to Non-Affiliated Subadvisers.\1\
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\1\ Heritage Capital Appreciation Trust, et al., Investment
Company Act Release Nos. 25252 (November 2, 2001) (notice) and 25301
(November 28, 2001) (order).
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Applicants: Eagle Capital Appreciation Fund, Eagle Growth & Income
Fund and Eagle Series Trust (each, a ``Trust'' and collectively, the
``Trusts''), and Eagle Asset Management, Inc. (the ``Adviser'').
DATES: Filing Dates: The application was filed on July 1, 2013, and
amended on October 25, 2013, on April 4, 2014 and on July 31, 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 September 29, 2014, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants, 880 Carillon
Parkway, St. Petersburg, Florida 33716.
FOR FURTHER INFORMATION CONTACT: Kay-Mario Vobis, Senior Counsel, at
(202) 551-6728, 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. Each Trust is organized as a Massachusetts business trust and is
registered with the Commission as an open-end management investment
company under the Act. Each Trust may offer one or more series of
shares (each a ``Fund,'' and collectively the ``Funds''), each with its
own distinct investment objectives, policies and restrictions. The
Adviser is a Florida corporation registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940 (the
``Advisers Act''), and serves as investment adviser to the Funds.
2. Applicants request an order to permit the Adviser, subject to
the approval of the board of trustees of each Trust (collectively, the
``Board''),\2\ including a majority of the trustees who are not
``interested persons'' of the Trusts or the Adviser, as defined in
section 2(a)(19) of the Act (the ``Independent Trustees''), to, without
obtaining shareholder approval: (i) Select certain wholly-owned and
non-affiliated investment Subadvisers \3\ to manage all or a portion of
the assets of one or more of the Funds pursuant to an investment
subadvisory agreement with each Subadviser (each a ``Subadvisory
Agreement'' and collectively, the ``Subadvisory Agreements''); and (ii)
materially amend Subadvisory Agreements with the Subadvisers.\4\
Applicants request that the relief apply to the named applicants, as
well as to any future Fund and any other existing or future registered
open-end management investment company or series thereof that intends
to rely on the requested order in the future and (i) is advised by the
Adviser or its successors; \5\ (ii) uses the multi-manager structure
described in the application; and (iii) complies with the terms and
conditions set forth in the application (each, a ``Subadvised
Fund'').\6\ The requested relief will not extend to any subadviser,
other than a Wholly-Owned Subadviser, who is an affiliated person, as
defined in section 2(a)(3) of the Act, of the Subadvised Fund or of the
Adviser, other than by reason of serving as a subadviser to one or more
of the Subadvised Funds (``Affiliated Subadviser'').
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\2\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Fund (as defined below), if
different from the board of trustees of the Trusts.
\3\ A ``Subadviser'' for a Fund is a Subadviser that is (i) an
indirect or direct ``wholly-owned subsidiary'' (as such term is
defined in the Act) of the Adviser, or (ii) a sister company of the
Adviser that is an indirect or direct ``wholly-owned subsidiary''
(as such term is defined in the Act) of the same company that,
indirectly or directly, wholly owns the Adviser (each of (i) and
(ii) a ``Wholly-Owned Subadviser'' and collectively, the ``Wholly-
Owned Subadvisers''), or (iii) not an ``affiliated person'' (as such
term is defined in section 2(a)(3) of the Act) of a Fund or the
Adviser, except to the extent that an affiliation arises solely
because the Subadviser serves as a subadviser to one or more Funds
(each a ``Non-Affiliated Subadviser'' and collectively, the ``Non-
Affiliated Subadvisers'').
\4\ Shareholder approval will continue to be required for any
other subadviser changes and material amendments to an existing
subadvisory agreement with any subadviser other than a Non-
Affiliated Subadviser or a Wholly-Owned Subadviser (all such changes
referred to herein as ``Ineligible Subadviser Changes''), except as
otherwise permitted by rule or other action of the Commission or its
staff.
\5\ For the purposes of the requested order, ``successor'' is
limited to an entity that results from a reorganization into another
jurisdiction or a change in the type of business organization.
\6\ All registered open-end investment companies that currently
intend to rely on the requested order are named as applicants. Any
entity that relies on the requested order will do so only in
accordance with the terms and conditions contained in the
application. If the name of any Subadvised Fund contains the name of
a Subadviser, the name of the Adviser that serves as the primary
adviser to the Subadvised Fund, or a trademark or trade name that is
owned by or publicly used to identify that Adviser, will precede the
name of the Subadviser.
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3. The Adviser serves as the investment adviser to each Fund
pursuant to an investment advisory agreement with the Fund (each an
``Investment Advisory Agreement'' and, together, the ``Investment
Advisory Agreements''). Any future Adviser also will be registered with
the Commission as an investment adviser under the Advisers Act. Each
Investment Advisory Agreement has been or will be approved by the
Board, including a majority of the Independent Trustees, and by the
shareholders of the relevant Fund in the manner required by sections
15(a) and 15(c) of the Act and rule 18f-2 thereunder. The terms of the
Investment Advisory Agreements comply or will comply with section 15(a)
of the Act.
4. Pursuant to the terms of each Investment Advisory Agreement, the
Adviser, subject to the oversight of the Board, has agreed or will
agree to
[[Page 53469]]
provide a continuous investment program for each Fund, which includes
determining the securities and other investments to be purchased,
retained, sold or loaned by each Fund and the portion of such assets to
be invested or held uninvested as cash. The Adviser will periodically
review each Fund's investment policies and strategies and, based on the
need of a particular Fund, may recommend changes to the investment
policies and strategies of the Fund for consideration by the Board. For
its services to each Fund, the Adviser receives or will receive an
investment advisory fee from that Fund as specified in the applicable
Investment Advisory Agreement. Consistent with the terms of each
Subadvised Fund's Investment Advisory Agreement, the Adviser may,
subject to the approval of the Board, including a majority of the
Independent Trustees, and the shareholders of the applicable Subadvised
Fund (if required), delegate portfolio management responsibilities of
all or a portion of the assets of a Subadvised Fund to a Subadviser.
The Adviser continues to have overall responsibility for the management
and investment of the assets of each Subadvised Fund. These
responsibilities include recommending the removal or replacement of
Subadvisers, and determining the portion of that Subadvised Fund's
assets to be managed by any given Subadviser and reallocating those
assets as necessary from time to time.
5. Pursuant to the authority under the Investment Advisory
Agreement, the Adviser may enter into Subadvisory Agreements with
various Subadvisers on behalf of the Funds. The Adviser has entered
into a Subadvisory Agreement with Eagle Boston Investment Management,
Inc., a wholly-owned subsidiary of the Adviser. The Adviser also may,
in the future, enter into Subadvisory Agreements with other Subadvisers
on behalf of the Funds. The Subadvisory Agreements were or will be
approved by the Board, including a majority of the Independent
Trustees, and the shareholders of the Subadvised Fund in accordance
with sections 15(a) and 15(c) of the Act and rule 18f-2 thereunder. In
addition, the terms of the Subadvisory Agreements comply or will comply
fully with the requirements of section 15(a) of the Act. The
Subadvisers, subject to the oversight of the Adviser and the Board,
determine or will determine the securities and other instruments to be
purchased, sold or entered into by a Subadvised Fund's portfolio or a
portion thereof, and place orders with brokers or dealers that they
select. The Adviser will compensate the Subadvisers out of the fee
received by the Adviser from the applicable Subadvised Fund under the
applicable Investment Advisory Agreement.
6. Subadvised 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 Subadvised Fund, that Subadvised Fund will send its
shareholders either a Multi-manager Notice or a Multi-manager Notice
and Multi-manager Information Statement; \7\ and (b) a Subadvised 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. Applicants state that, in the
circumstances described in the application, a proxy solicitation to
approve the appointment of new Subadvisers provides no more meaningful
information to shareholders than the proposed Multi-manager Information
Statement. Applicants also state that the Board would comply with the
requirements of sections 15(a) and 15(c) of the Act before entering
into or amending Subadvisory Agreements.
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\7\ 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 (except as modified to permit Aggregate Fee
Disclosure, as defined below); (b) inform shareholders that the
Multi-manager Information Statement is available on a Web site; (c)
provide the Web site address; (d) state the time period during which
the Multi-manager Information Statement will remain available on
that Web site; (e) provide instructions for accessing and printing
the Multi-manager Information Statement; and (f) instruct the
shareholder that a paper or email copy of the Multi-manager
Information Statement may be obtained, without charge, by contacting
the Subadvised Fund.
A ``Multi-manager Information Statement'' will meet the
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule
14A under the Exchange Act for an information statement, except as
modified by the order to permit Aggregate Fee Disclosure. Multi-
manager Information Statements will be filed with the Commission via
the EDGAR system.
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7. Applicants also request an order under section 6(c) of the Act
exempting the Subadvised Funds from certain disclosure obligations that
may require each Subadvised Fund to disclose fees paid by the Adviser
to each Subadviser. Applicants seek relief to permit each Subadvised
Fund to disclose (as a dollar amount and a percentage of a Subadvised
Fund's net assets) (a) the aggregate fees paid to the Adviser and any
Wholly-Owned Subadvisers; (b) the aggregate fees paid to Non-Affiliated
Subadvisers; and (c) the fee paid to each Affiliated Subadviser
(collectively, the ``Aggregate Fee Disclosure''). An exemption is
requested to permit a Subadvised Fund to include only the Aggregate Fee
Disclosure. All other items required by Sections 6-07(2)(a), (b) and
(c) of Regulation S-X will be disclosed.
Applicants' Legal Analysis:
1. Section 15(a) of the Act states, in part, that it is unlawful
for any person to act as an investment adviser to a registered
investment company ``except pursuant to a written contract, which
contract, whether with such registered company or with an investment
adviser of such registered company, has been approved by the vote of a
majority of the outstanding voting securities of such registered
company.'' Rule 18f-2 under the Act 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 a registered
investment company to disclose in its statement of additional
information the method of computing the ``advisory fee payable'' by the
investment company, including the total dollar amounts that the
investment company ``paid to the adviser (aggregated with amounts paid
to affiliated advisers, if any), and any advisers who are not
affiliated persons of the adviser, under the investment advisory
contract for the last three fiscal years.''
3. Rule 20a-1 under the Act requires proxies solicited with respect
to a registered investment company to comply with Schedule 14A under
the Exchange Act. Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and
22(c)(9) of Schedule 14A, taken together, require a proxy statement for
a shareholder meeting at which the advisory contract will be voted upon
to include the ``rate of compensation of the investment adviser,'' the
``aggregate amount of the investment adviser's fee,'' a description of
the ``terms of the contract to be acted upon,'' and, if a change in the
advisory fee is proposed, the existing and proposed fees and the
difference between the two fees.
4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission.
[[Page 53470]]
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 their requested relief meets this standard
for the reasons discussed below.
6. Applicants assert that the shareholders expect the Adviser,
subject to the review and approval of the Board, to select a Subadviser
who is in the best position to achieve the Subadvised Fund's investment
objective. Applicants assert that, from the perspective of the
shareholder, the role of the Subadvisers is substantially equivalent to
the role of the individual portfolio managers employed by an investment
adviser to a traditional investment company. Applicants believe that
permitting the Adviser to perform the duties for which the shareholders
of a Subadvised Fund are paying the Adviser--the selection, supervision
and evaluation of the Subadviser--without incurring unnecessary delays
or expenses is appropriate and in the interest of a Subadvised Fund's
shareholders and will allow such Subadvised Fund to operate more
efficiently. Applicants state that each Investment Advisory Agreement
will continue to be fully subject to section 15(a) of the Act and rule
18f-2 under the Act and approved by the relevant Board, including a
majority of the Independent Trustees, in the manner required by
sections 15(a) and 15(c) of the Act. Applicants are not seeking an
exemption with respect to the Investment Advisory Agreements.
7. Applicants assert that disclosure of the individual fees that
the Adviser would pay to the Subadvisers does not serve any meaningful
purpose. Applicants contend that the primary reasons for requiring
disclosure of individual fees paid to Subadvisers are to inform
shareholders of expenses to be charged by a particular Subadvised Fund
and to enable shareholders to compare the fees to those of other
comparable investment companies. Applicants believe that the requested
relief satisfies these objectives because the advisory fee paid to the
Adviser will be fully disclosed and, therefore, shareholders will know
what a Subadvised Fund's fees and expenses are and will be able to
compare the advisory fees a Subadvised Fund is charged to those of
other investment companies. Applicants assert that the requested
disclosure relief would benefit shareholders of the Subadvised Funds
because it would improve the Adviser's ability to negotiate the fees
paid to Subadvisers. Applicants state that the Adviser 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 assert that the relief will also encourage
Subadvisers to negotiate lower subadvisory fees with the Adviser if the
lower fees are not required to be made public.
8. Applicants submit that the requested relief meets the standards
for relief under section 6(c) of the Act. Applicants state that the
operation of a Subadvised Fund in the manner described in the
application must be approved by shareholders of the Subadvised Fund
before that Subadvised Fund may rely on the requested order. In
addition, applicants state that any conflict of interest or economic
incentive that may exist in connection with the Adviser selecting a
Wholly-Owned Subadviser to manage all or a portion of the assets of a
Subadvised Fund are addressed under the terms and conditions of the
application and will be disclosed to shareholders and considered by the
Board when it reviews the selection or termination of Subadvisers.
Applicants also assert that conditions 6, 7, 10 and 11 are designed to
provide the Board with sufficient independence and the resources and
information it needs to monitor and address any conflicts of interest.
Applicants state that, accordingly, they believe the requested relief
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act.
Applicants' Conditions:
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Subadvised Fund may rely on the order requested in the
application, the operation of the Subadvised Fund in the manner
described in the application, including the hiring of Wholly-Owned
Subadvisers, will be, or has been, approved by a majority of the
Subadvised Fund's outstanding voting securities as defined in the Act,
or, in the case of a Subadvised Fund whose public shareholders purchase
shares on the basis of a prospectus containing the disclosure
contemplated by condition 2 below, by the initial shareholder before
such Subadvised Fund's shares are offered to the public.
2. The prospectus 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 multi-manager structure described in the
application. The prospectus will prominently disclose that the Adviser
has the ultimate responsibility, subject to oversight by the Board, to
oversee the Subadvisers and recommend their hiring, termination, and
replacement.
3. The Adviser will provide general management services to each
Subadvised Fund, including overall supervisory responsibility for the
general management and investment of the Subadvised Fund's assets, and
subject to review and approval of the Board, will (i) set the
Subadvised Fund's overall investment strategies; (ii) evaluate, select,
and recommend Subadvisers to manage all or a portion of the Subadvised
Fund's assets; (iii) allocate and, when appropriate, reallocate the
Subadvised Fund's assets among Subadvisers; (iv) monitor and evaluate
the Subadvisers' performance; and (v) implement procedures reasonably
designed to ensure that Subadvisers comply with the Subadvised Fund's
investment objective, policies and restrictions.
4. A Subadvised Fund will not make any Ineligible Subadviser
Changes without the approval of the shareholders of the applicable
Subadvised Fund.
5. Subadvised Funds 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.
6. At all times, at least a majority of the Board will be
Independent Trustees, and the selection and nomination of new or
additional Independent Trustees will be placed within the discretion of
the then-existing Independent Trustees.
7. 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.
8. The Adviser will provide the Board, no less frequently than
quarterly, with information about the profitability of the Adviser on a
per Subadvised Fund basis. The information will reflect
[[Page 53471]]
the impact on profitability of the hiring or termination of any
Subadviser during the applicable quarter.
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. Whenever a Subadviser change is proposed for a Subadvised Fund
with an Affiliated Subadviser or a Wholly-Owned Subadviser, the Board,
including a majority of the Independent Trustees, will make a separate
finding, reflected in the Board minutes, that the change is in the best
interests of the Subadvised Fund and its shareholders and does not
involve a conflict of interest from which the Adviser or the Affiliated
Subadviser or Wholly-Owned Subadviser derives an inappropriate
advantage.
11. No Trustee or officer of a Subadvised Fund or director, or
officer of the Adviser will own directly or indirectly (other than
through a pooled investment vehicle that is not controlled by such
person) any interest in a Subadviser except for (i) ownership of
interests in the Adviser or any entity, other than a Wholly-Owned
Subadviser, that controls, is controlled by or is under common control
with the Adviser; or (ii) ownership of less than 1% of the outstanding
securities of any class of equity or debt of a publicly traded company
that is either a Subadviser or an entity, that controls, is controlled
by or is under common control with a Subadviser.
12. Each Subadvised Fund will disclose in its registration
statement the Aggregate Fee Disclosure.
13. In the event that the Commission adopts a rule under the Act
providing substantially similar relief to that requested in the
application, the requested order will expire on the effective date of
that rule.
14. Any new Subadvisory Agreement or any amendment to a Subadvised
Fund's existing investment advisory agreement or Subadvisory Agreement
that directly or indirectly results in an increase in the aggregate
advisory fee rate payable by the Subadvised Fund will be submitted to
the Subadvised Fund's shareholders for approval.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21365 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P