Great-West Funds, Inc., et al.; Notice of Application, 58832-58837 [2014-23227]
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Federal Register / Vol. 79, No. 189 / Tuesday, September 30, 2014 / Notices
statutory requirement and states that it
has taken steps to ensure that
anticipated revenues will not exceed
$50 million in any year. Id.; see 39
U.S.C. 3642(e)(2). It asserts that the
market test is likely to benefit the public
and meet an expected demand, as well
as contribute to the financial stability of
the Postal Service. Id.
Data collection. The Postal Service
asserts that it will monitor market
demand for Customized Delivery and
will track the costs of providing delivery
of grocery and other pre-packaged goods
during customized delivery windows.
Id. at 8. It has prepared a data collection
plan to track volumes of packages
delivered via Customized Delivery; total
revenue generated; work hours, travel
times, and other cost data; and
administrative and start-up cost data. Id.
III. Notice of Filing
The Commission establishes Docket
No. MT2014–1 to consider matters
raised by the Notice, including the
Postal Service’s request for exemption
from the $10 million revenue limitation.
It encourages interested persons to
review the Notice for more details.
Interested persons may submit
comments on whether the Postal
Service’s filing is consistent with the
requirements of 39 U.S.C. 3641.
Comments are due no later than October
9, 2014. The filing can be accessed via
the Commission’s Web site (https://
www.prc.gov).
The Commission appoints Anne J.
Siarnacki to serve as Public
Representative in this docket.
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IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
No. MT2014–1 to consider matters
raised by the Notice.
2. Pursuant to 39 U.S.C. 505, Anne J.
Siarnacki is appointed to serve as an
officer of the Commission (Public
Representative) to represent the
interests of the general public in this
proceeding.
3. Comments by interested persons
are due no later than October 9, 2014.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2014–23241 Filed 9–29–14; 8:45 am]
BILLING CODE 7710–FW–P
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POSTAL SERVICE
Market Test of Experimental Product—
Customized Delivery
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
The Postal Service gives
notice of a market test of an
experimental product in accordance
with statutory requirements.
DATES: Effective Date: September 30,
2014.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3641(c)(1), it will begin a market test of
its Customized Delivery experimental
product on or after October 24, 2014.
The Postal Service has filed with the
Postal Regulatory Commission a notice
setting out the basis for the Postal
Service’s determination that the market
test is covered by 39 U.S.C. 3641 and
describing the nature and scope of the
market test. Documents are available at
www.prc.gov, Docket No. MT2014–1.
SUMMARY:
Stanley F. Mires,
Attorney, Federal Requirements.
[FR Doc. 2014–23189 Filed 9–29–14; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
Extension:
Form F–6; OMB Control No. 3235–0292,
SEC File No. 270–270
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for approval.
Form F–6 (17 CFR 239.36) is a form
used by foreign companies to register
the offer and sale of American
Depositary Receipts (ADRs) under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.). Form F–6 requires disclosure of
information regarding the terms of the
depository bank, fees charged, and a
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description of the ADRs. No special
information regarding the foreign
company is required to be prepared or
disclosed, although the foreign company
must be one which periodically
furnishes information to the
Commission. The information is needed
to ensure that investors in ADRs have
full disclosure of information
concerning the deposit agreement and
the foreign company. Form F–6 takes
approximately 1 hour per response to
prepare and is filed by 500 respondents
annually. We estimate that 25% of the
1.35 hour per response (0.338 hours) is
prepared by the filer for a total annual
reporting burden of 169 hours (0.338
hours per response × 500 responses).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to Thomas Bayer, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: September 25, 2014.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–23254 Filed 9–29–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31262; File No. 812–14252]
Great-West Funds, Inc., et al.; Notice of
Application
September 24, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
12(d)(1)(A) and (B) of the Act, under
sections 6(c) and 17(b) of the Act for an
AGENCY:
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exemption from sections 17(a)(1) and (2)
of the Act, and under section 6(c) of the
Act for an exemption from rule 12d1–
2(a) under the Act.
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Summary of the Application: The
requested order would (a) permit certain
registered open-end management
investment companies that operate as
‘‘funds of funds’’ to acquire shares of
certain registered open-end management
investment companies and unit
investment trusts (‘‘UITs’’) that are
within and outside the same group of
investment companies as the acquiring
investment companies, and (b) permit
funds of funds relying on rule 12d1–2
under the Act to invest in certain
financial instruments.
Applicants: Great-West Funds, Inc.
(‘‘Great-West Funds’’), Great-West
Capital Management, LLC (‘‘Adviser’’),
and GWFS Equities, Inc. (the
‘‘Distributor’’).
Filing Dates: The application was
filed on December 18, 2013 and
amended on May 13, 2014, and on
August 27, 2014.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 17, 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. Pursuant to Rule 0–5 under
the Act, hearing requests should state
the nature of the writer’s interest, any
facts bearing upon the desirability of a
hearing on the matter, 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: Brent J. Fields, Secretary,
U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
Applicants: c/o Renee M. Hardt, Vedder
Price P.C., 222 N. LaSalle Street, Suite
2600, Chicago, Illinois 60601.
FOR FURTHER INFORMATION CONTACT:
Emerson S. Davis, Senior Counsel, at
(202) 551–6868, or Daniele Marchesani,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
Applicants’ Representations
1. Great-West Funds, a Maryland
corporation, is registered under the Act
as an open-end management investment
company and currently offers shares of
63 series (‘‘Funds’’), each of which
pursues different investment objectives
and principal investment strategies.1
2. The Adviser, a Colorado limited
liability company, is registered as an
investment adviser under the
Investment Advisers Act of 1940, as
amended (‘‘Advisers Act’’) and serves as
investment adviser to the Funds.
3. The Distributor, a Delaware
corporation, is registered as a brokerdealer under the Securities Exchange
Act of 1934 (the ‘‘Exchange Act’’). The
Distributor will serve as principal
underwriter and distributor for the
shares of the Funds.
4. Applicants request an order to
permit (a) a Fund that operates as a
‘‘fund of funds’’ (each a ‘‘Fund of
Funds’’) to acquire shares of (i)
registered open-end management
investment companies that are not part
of the same ‘‘group of investment
companies,’’ within the meaning of
section 12(d)(1)(G)(ii) of the Act, as the
Fund of Funds (‘‘Unaffiliated
Investment Companies’’) and unit
investment trusts (‘‘UITs’’) that are not
part of the same group of investment
companies as the Fund of Funds
(‘‘Unaffiliated Trusts,’’ together with the
Unaffiliated Investment Companies,
‘‘Unaffiliated Funds’’) 2 or (ii) registered
open-end management companies or
UITs that are part of the same ‘‘group of
investment companies,’’ within the
meaning of section 12(d)(1)(G) (ii) of the
Act, as the Fund of Funds (collectively,
‘‘Affiliated Funds,’’ together with the
Unaffiliated Funds, ‘‘Underlying
Funds’’) and (b) each Underlying Fund,
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1 Applicants request that the order apply to each
existing and future series of Great-West Funds and
to each existing and future registered open-end
management investment company or series thereof
that is advised by the Adviser or any entity
controlling, controlled by or under common control
with the Adviser and is part of the same ‘‘group of
investment companies’’ (as defined in section
12(d)(1)(G)(ii) of the Act), as Great-West Funds
(each, a ‘‘Fund’’ and collectively, ‘‘Funds.’’). All
entities that currently intend to rely on the
requested order are named as applicants. Any other
entity that relies on the order in the future will
comply with the terms and conditions of the
application.
2 Certain of the Unaffiliated Funds may be
registered under the Act as either UITs or open-end
management investment companies and have
received exemptive relief to permit their shares to
be listed and traded on a national securities
exchange at negotiated prices (‘‘ETFs’’).
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the Distributor or any principal
underwriter for the Underlying Fund,
and any broker or dealer registered
under the Exchange Act (‘‘Broker’’) to
sell shares of the Underlying Fund to
the Fund of Funds in amounts in excess
of limits set forth in section 12(d)(1)(B).
Applicants also request an order under
sections 6(c) and 17(b) of the Act to
exempt applicants from section 17(a) to
the extent necessary to permit
Underlying Funds to sell their shares to
Funds of Funds and redeem their shares
from Funds of Funds.
5. Applicants also request an
exemption under section 6(c) from rule
12d1–2 under the Act to permit any
existing or future Fund that relies on
section 12(d)(1)(G) of the Act (‘‘Same
Group Fund of Funds’’) and that
otherwise complies with rule 12d1–2 to
also invest, to the extent consistent with
its investment objective, policies,
strategies, and limitations, in financial
instruments that may not be securities
within the meaning of section 2(a)(36) of
the Act (‘‘Other Investments’’).
Applicants’ Legal Analysis
A. Investments in Underlying Funds—
Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in
relevant part, prohibits a registered
investment company from acquiring
shares of an investment company if the
securities represent more than 3% of the
total outstanding voting stock of the
acquired company, more than 5% of the
total assets of the acquiring company,
or, together with the securities of any
other investment companies, more than
10% of the total assets of the acquiring
company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end
investment company, its principal
underwriter, and any Broker from
selling the investment company’s shares
to another investment company if the
sale will cause the acquiring company
to own more than 3% of the acquired
company’s total outstanding voting
stock, or if the sale will cause more than
10% of the acquired company’s total
outstanding voting stock to be owned by
investment companies generally.
2. Section 12(d)(1)(J) 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 section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants seek an exemption under
section 12(d)(1)(J) of the Act to permit
a Fund of Funds to acquire shares of the
Underlying Funds in excess of the limits
in section 12(d)(1)(A), and an
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Underlying Fund, any principal
underwriter for an Underlying Fund,
and any Broker to sell shares of an
Underlying Fund to a Fund of Funds in
excess of the limits in section
12(d)(1)(B) of the Act.
3. Applicants state that the terms and
conditions of the proposed arrangement
will not give rise to the policy concerns
underlying sections 12(d)(1)(A) and (B),
which include concerns about undue
influence by a fund of funds over
underlying funds, excessive layering of
fees, and overly complex fund
structures. Accordingly, applicants
believe that the requested exemption is
consistent with the public interest and
the protection of investors.
4. Applicants believe that the
proposed arrangement will not result in
the exercise of undue influence by the
Fund of Funds or a Fund of Funds
Affiliate over the Unaffiliated Funds.3
To limit the control that the Fund of
Funds may have over an Unaffiliated
Fund, applicants propose a condition
prohibiting the Adviser, any person
controlling, controlled by, or under
common control with the Adviser, and
any investment company or issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
that is advised or sponsored by the
Adviser or any person controlling,
controlled by, or under common control
with the Adviser (the ‘‘Advisory
Group’’) from controlling (individually
or in the aggregate) an Unaffiliated Fund
within the meaning of section 2(a)(9) of
the Act. The same prohibition would
apply to any other investment adviser
within the meaning of section
2(a)(20)(B) of the Act to a Fund of Funds
(‘‘Subadviser’’), any person controlling,
controlled by, or under common control
with the Subadviser, and any
investment company or issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
(or portion of such investment company
or issuer) advised or sponsored by the
Subadviser or any person controlling,
controlled by, or under common control
with the Subadviser (the ‘‘Subadvisory
Group’’). Applicants propose other
conditions to limit the potential for
undue influence over the Unaffiliated
Funds, including that no Fund of Funds
or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an
3 A ‘‘Fund of Funds Affiliate’’ is the Adviser, any
Subadviser (as defined below), promoter, or
principal underwriter of a Fund of Funds, as well
as any person controlling, controlled by, or under
common control with any of those entities. An
‘‘Unaffiliated Fund Affiliate’’ is an investment
adviser, sponsor, promoter, or principal
underwriter of an Unaffiliated Fund, as well as any
person controlling, controlled by, or under common
control with any of those entities.
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investment adviser to an Unaffiliated
Investment Company or sponsor to an
Unaffiliated Trust) will cause an
Unaffiliated Fund to purchase a security
in an offering of securities during the
existence of any underwriting or selling
syndicate of which a principal
underwriter is an Underwriting Affiliate
(‘‘Affiliated Underwriting’’). An
‘‘Underwriting Affiliate’’ is a principal
underwriter in any underwriting or
selling syndicate that is an officer,
director, trustee, advisory board
member, investment adviser,
Subadviser, or employee of the Fund of
Funds, or a person of which any such
officer, director, trustee, advisory board
member, investment adviser,
Subadviser, or employee is an affiliated
person. An Underwriting Affiliate does
not include any person whose
relationship to an Unaffiliated Fund is
covered by section 10(f) of the Act.
5. To further ensure that an
Unaffiliated Investment Company
understands the implications of an
investment by a Fund of Funds under
the requested order, prior to a Fund of
Funds’ investment in the shares of an
Unaffiliated Investment Company in
excess of the limit in section
12(d)(1)(A)(i) of the Act, the Fund of
Funds and the Unaffiliated Investment
Company will execute an agreement
stating, without limitation, that their
respective board of directors or trustees
(for any entity, the ‘‘Board’’) and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order (‘‘Participation
Agreement’’). Applicants note that an
Unaffiliated Investment Company (other
than an ETF whose shares are
purchased by a Fund of Funds in the
secondary market) will retain its right at
all times to reject any investment by a
Fund of Funds.4
6. Applicants state that they do not
believe that the proposed arrangement
will involve excessive layering of fees.
The Board of each Fund of Funds,
including a majority of the directors
who are not ‘‘interested persons’’
(within the meaning of section 2(a)(19)
of the Act) (‘‘Independent Directors’’),
will find that the advisory fees charged
under investment advisory or
management contract(s) are based on
services provided that will be in
addition to, rather than duplicative of,
the services provided under such
advisory contract(s) of any Underlying
4 An Unaffiliated Investment Company, including
an ETF, would retain its right to reject any initial
investment by a Fund of Funds in excess of the
limit in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement
with the Fund of Funds.
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Fund in which the Fund of Funds may
invest. In addition, the Adviser will
waive fees otherwise payable to it by a
Fund of Funds in an amount at least
equal to any compensation (including
fees received pursuant to any plan
adopted by an Unaffiliated Investment
Company under rule 12b–1 under the
Act) received from an Unaffiliated Fund
by the Adviser or an affiliated person of
the Adviser, other than any advisory
fees paid to the Adviser or its affiliated
person by an Unaffiliated Investment
Company, in connection with the
investment by the Fund of Funds in the
Unaffiliated Fund. Any sales charges
and/or service fees charged with respect
to shares of a Fund of Funds will not
exceed the limits applicable to a fund of
funds as set forth in Rule 2830 of the
Conduct Rules of the NASD (‘‘NASD
Conduct Rule 2830’’).5
7. Applicants submit that the
proposed arrangement will not create an
overly complex fund structure.
Applicants note that no Underlying
Fund will acquire securities of any
investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
in certain circumstances identified in
condition 11 below.
B. Section 17(a)
1. Section 17(a) of the Act generally
prohibits sales or purchases of securities
between a registered investment
company and any affiliated person of
the company. Section 2(a)(3) of the Act
defines an ‘‘affiliated person’’ of another
person to include (a) any person directly
or indirectly owning, controlling, or
holding with power to vote, 5% or more
of the outstanding voting securities of
the other person; (b) any person 5% or
more of whose outstanding voting
securities are directly or indirectly
owned, controlled, or held with power
to vote by the other person; and (c) any
person directly or indirectly controlling,
controlled by, or under common control
with the other person.
2. Applicants state that a Fund of
Funds and the Affiliated Funds
managed by the same Adviser might be
deemed to be under common control of
the Adviser and therefore affiliated
persons of one another. Applicants also
state that the Fund of Funds and the
Unaffiliated Funds might be deemed to
be affiliated persons of one another if
the Fund of Funds acquires 5% or more
of an Unaffiliated Fund’s outstanding
voting securities. In light of these and
5 Any references to NASD Conduct Rule 2830
include any successor or replacement rule of FINRA
to NASD Conduct Rule 2830.
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other possible affiliations, section 17(a)
could prevent an Underlying Fund from
selling shares to and redeeming shares
from a Fund of Funds.
3. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act 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.
4. Applicants submit that the
proposed transactions satisfy the
standards for relief under sections 17(b)
and 6(c) of the Act.6 Applicants state
that the terms of the transactions are
reasonable and fair and do not involve
overreaching. Applicants state that the
terms upon which an Underlying Fund
will sell its shares to or purchase its
shares from a Fund of Funds will be
based on the net asset value of the
Underlying Fund.7 Applicants state that
the proposed transactions will be
consistent with the policies of each
Fund of Funds and each Underlying
Fund and with the general purposes of
the Act.
6 Applicants acknowledge that receipt of any
compensation by (a) an affiliated person of a Fund
of Funds, or an affiliated person of such person, for
the purchase by a Fund of Funds of shares of an
Underlying Fund or (b) an affiliated person of an
Underlying Fund, or an affiliated person of such
person, for the sale by the Underlying Fund of its
shares to a Fund of Funds may be prohibited by
section 17(e)(1) of the Act. The Participation
Agreement also will include this acknowledgement.
7 To the extent purchases and sales of shares of
an ETF occur in the secondary market (and not
through principal transactions directly between a
Fund of Funds and an ETF), relief from section
17(a) of the Act would not be necessary. The
requested relief is intended to cover, however,
transactions directly between ETFs and a Fund of
Funds. Applicants are not seeking relief from
section 17(a) of the Act for, and the requested relief
will not apply to, transactions where an ETF could
be deemed an affiliated person, or an affiliated
person of an affiliated person, of a Fund of Funds
because the investment adviser to the ETF, or an
entity controlling, controlled by, or under common
control with the investment adviser to the ETF, is
an investment adviser to the Fund of Funds.
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C. Other Investments by Same Group
Fund of Funds
1. Section 12(d)(1)(G) of the Act
provides that section 12(d)(1) will not
apply to securities of an acquired
company purchased by an acquiring
company if: (i) The acquiring company
and acquired company are part of the
same group of investment companies;
(ii) the acquiring company holds only
securities of acquired companies that
are part of the same group of investment
companies, government securities, and
short-term paper; (iii) the aggregate sales
loads and distribution-related fees of the
acquiring company and the acquired
company are not excessive under rules
adopted pursuant to section 22(b) or
section 22(c) of the Act by a securities
association registered under section 15A
of the Exchange Act or by the
Commission; and (iv) the acquired
company has a policy that prohibits it
from acquiring securities of registered
open-end management investment
companies or registered unit investment
trusts in reliance on section 12(d)(1)(F)
or (G) of the Act.
2. Rule 12d1–2 under the Act permits
a registered open-end investment
company or a registered unit investment
trust that relies on section 12(d)(1)(G) of
the Act to acquire, in addition to
securities issued by another registered
investment company in the same group
of investment companies, government
securities, and short-term paper: (1)
Securities issued by an investment
company that is not in the same group
of investment companies, when the
acquisition is in reliance on section
12(d)(1)(A) or 12(d)(1)(F) of the Act; (2)
securities (other than securities issued
by an investment company); and (3)
securities issued by a money market
fund, when the investment is in reliance
on rule 12d1–1 under the Act. For the
purposes of rule 12d1–2, ‘‘securities’’
means any security as defined in section
2(a)(36) of the Act.
3. Applicants state that the proposed
arrangement would comply with the
provisions of rule 12d1–2 under the Act,
but for the fact that a Same Group Fund
of Funds may invest a portion of its
assets in Other Investments. Applicants
request an order under section 6(c) of
the Act for an exemption from rule
12d1–2(a) to allow the Same Group
Fund of Funds to invest in Other
Investments. Applicants assert that
permitting Same Group Fund of Funds
to invest in Other Investments as
described in the application would not
raise any of the concerns that the
requirements of section 12(d)(1) were
designed to address.
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4. Consistent with its fiduciary
obligations under the Act, the Board of
each Same Group Fund of Funds will
review the advisory fees charged by the
Same Group Fund of Funds’ investment
adviser to ensure that they are based on
services provided that are in addition to,
rather than duplicative of, services
provided pursuant to the advisory
agreement of any investment company
in which the Same Group Fund of
Funds may invest.
Applicants’ Conditions
Investments by Funds of Funds in
Underlying Funds
Applicants agree that the relief to
permit Funds of Funds to invest in
Underlying Funds shall be subject to the
following conditions:
1. The members of an Advisory Group
will not control (individually or in the
aggregate) an Unaffiliated Fund within
the meaning of section 2(a)(9) of the Act.
The members of a Subadvisory Group
will not control (individually or in the
aggregate) an Unaffiliated Fund within
the meaning of section 2(a)(9) of the Act.
If, as a result of a decrease in the
outstanding voting securities of an
Unaffiliated Fund, the Advisory Group
or a Subadvisory Group, each in the
aggregate, becomes a holder of more
than 25 percent of the outstanding
voting securities of the Unaffiliated
Fund, then the Advisory Group or the
Subadvisory Group will vote its shares
of the Unaffiliated Fund in the same
proportion as the vote of all other
holders of the Unaffiliated Fund’s
shares. This condition will not apply to
a Subadvisory Group with respect to an
Unaffiliated Fund for which the
Subadviser or a person controlling,
controlled by, or under common control
with the Subadviser acts as the
investment adviser within the meaning
of section 2(a)(20)(A) of the Act (in the
case of an Unaffiliated Investment
Company) or as the sponsor (in the case
of an Unaffiliated Trust).
2. No Fund of Funds or Fund of
Funds Affiliate will cause any existing
or potential investment by the Fund of
Funds in shares of an Unaffiliated Fund
to influence the terms of any services or
transactions between the Fund of Funds
or a Fund of Funds Affiliate and the
Unaffiliated Fund or an Unaffiliated
Fund Affiliate.
3. The Board of each Fund of Funds,
including a majority of the Independent
Directors, will adopt procedures
reasonably designed to ensure that its
Adviser and any Subadviser(s) to the
Fund of Funds are conducting the
investment program of the Fund of
Funds without taking into account any
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consideration received by the Fund of
Funds or Fund of Funds Affiliate from
an Unaffiliated Fund or an Unaffiliated
Fund Affiliate in connection with any
services or transactions.
4. Once an investment by a Fund of
Funds in the securities of an
Unaffiliated Investment Company
exceeds the limit of section
12(d)(1)(A)(i) of the Act, the Board of
the Unaffiliated Investment Company,
including a majority of the Independent
Directors, will determine that any
consideration paid by the Unaffiliated
Investment Company to a Fund of
Funds or a Fund of Funds Affiliate in
connection with any services or
transactions: (a) Is fair and reasonable in
relation to the nature and quality of the
services and benefits received by the
Unaffiliated Investment Company; (b) is
within the range of consideration that
the Unaffiliated Investment Company
would be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned. This
condition does not apply with respect to
any services or transactions between an
Unaffiliated Investment Company and
its investment adviser(s) or any person
controlling, controlled by, or under
common control with such investment
adviser(s).
5. No Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
adviser to an Unaffiliated Investment
Company or sponsor to an Unaffiliated
Trust) will cause an Unaffiliated Fund
to purchase a security in any Affiliated
Underwriting.
6. The Board of an Unaffiliated
Investment Company, including a
majority of the Independent Directors,
will adopt procedures reasonably
designed to monitor any purchases of
securities by the Unaffiliated Investment
Company in an Affiliated Underwriting
once an investment by a Fund of Funds
in the securities of the Unaffiliated
Investment Company exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly
from an Underwriting Affiliate. The
Board of the Unaffiliated Investment
Company will review these purchases
periodically, but no less frequently than
annually, to determine whether the
purchases were influenced by the
investment by the Fund of Funds in the
Unaffiliated Investment Company. The
Board of the Unaffiliated Investment
Company will consider, among other
things: (a) Whether the purchases were
consistent with the investment
objectives and policies of the
Unaffiliated Investment Company; (b)
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18:09 Sep 29, 2014
Jkt 232001
how the performance of securities
purchased in an Affiliated Underwriting
compares to the performance of
comparable securities purchased during
a comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (c)
whether the amount of securities
purchased by the Unaffiliated
Investment Company in Affiliated
Underwritings and the amount
purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board of the Unaffiliated Investment
Company will take any appropriate
actions based on its review, including,
if appropriate, the institution of
procedures designed to ensure that
purchases of securities in Affiliated
Underwritings are in the best interests
of shareholders.
7. Each Unaffiliated Investment
Company shall maintain and preserve
permanently in an easily accessible
place a written copy of the procedures
described in the preceding condition,
and any modifications to such
procedures, and shall maintain and
preserve for a period not less than six
years from the end of the fiscal year in
which any purchase in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in an Affiliated Underwriting
once an investment by a Fund of Funds
in the securities of an Unaffiliated
Investment Company exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
setting forth: (a) The party from whom
the securities were acquired, (b) the
identity of the underwriting syndicate’s
members, (c) the terms of the purchase,
and (d) the information or materials
upon which the determinations of the
Board of the Unaffiliated Investment
Company were made.
8. Prior to its investment in shares of
an Unaffiliated Investment Company in
excess of the limit in section
12(d)(1)(A)(i) of the Act, the Fund of
Funds and the Unaffiliated Investment
Company will execute a Participation
Agreement stating, without limitation,
that their Boards and their investment
advisers understand the terms and
conditions of the order and agree to
fulfill their responsibilities under the
order. At the time of its investment in
shares of an Unaffiliated Investment
Company in excess of the limit in
section 12(d)(1)(A)(i), a Fund of Funds
will notify the Unaffiliated Investment
Company of the investment. At such
time, the Fund of Funds will also
transmit to the Unaffiliated Investment
Company a list of the names of each
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Unaffiliated
Investment Company of any changes to
the list of the names as soon as
reasonably practicable after a change
occurs. The Unaffiliated Investment
Company and the Fund of Funds will
maintain and preserve a copy of the
order, the Participation Agreement, and
the list with any updated information
for the duration of the investment and
for a period of not less than six years
thereafter, the first two years in an
easily accessible place.
9. Before approving any advisory
contract under section 15 of the Act, the
Board of each Fund of Funds, including
a majority of the Independent Directors,
shall find that the advisory fees charged
under such advisory contract are based
on services provided that are in addition
to, rather than duplicative of, services
provided under the advisory contract(s)
of any Underlying Fund in which the
Fund of Funds may invest. Such finding
and the basis upon which the finding
was made will be recorded fully in the
minute books of the appropriate Fund of
Funds.
10. The Adviser will waive fees
otherwise payable to it by a Fund of
Funds in an amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Unaffiliated Investment Company under
rule 12b–1 under the Act) received from
an Unaffiliated Fund by the Adviser, or
an affiliated person of the Adviser, other
than any advisory fees paid to the
Adviser or its affiliated person by an
Unaffiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Unaffiliated Fund.
Any Subadviser will waive fees
otherwise payable to the Subadviser,
directly or indirectly, by the Fund of
Funds in an amount at least equal to any
compensation received by the
Subadviser, or an affiliated person of the
Subadviser, from an Unaffiliated Fund,
other than any advisory fees paid to the
Subadviser or its affiliated person by an
Unaffiliated Investment Company, in
connection with the investment by the
Fund of Funds in the Unaffiliated Fund
made at the direction of the Subadviser.
In the event that the Subadviser waives
fees, the benefit of the waiver will be
passed through to the applicable Fund
of Funds.
11. No Underlying Fund will acquire
securities of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section
12(d)(1)(A) of the Act, except to the
extent that such Underlying Fund: (a)
Receives securities of another
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investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
the purpose of evading section 12(d)(1)
of the Act); or (b) acquires (or is deemed
to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund to (i)
acquire securities of one or more
investment companies for short-term
cash management purposes, or (ii)
engage in interfund borrowing and
lending transactions.
12. Any sales charges and/or service
fees charged with respect to shares of a
Fund of Funds will not exceed the
limits applicable to fund of funds set
forth in NASD Conduct Rule 2830.
Other Investments by Same Group Fund
of Funds
Applicants agree that the relief to
permit Same Group Fund of Funds to
invest in Other Investments shall be
subject to the following condition:
13. Applicants will comply with all
provisions of rule 12d1–2 under the Act,
except for paragraph (a)(2) to the extent
that it restricts any Same Group Fund of
Funds from investing in Other
Investments as described in the
application.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–23227 Filed 9–29–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31261; File No. 812–14270]
JNL Series Trust, et al.; Notice of
Application
September 24, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order pursuant to: (a) Section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act; (b)
section 12(d)(1)(J) of the Act granting an
exemption from section 12(d)(1) of the
Act; (c) sections 6(c) and 17(b) of the
Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
and (d) section 17(d) of the Act and rule
17d-1 under the Act to permit certain
joint arrangements and transactions.
tkelley on DSK3SPTVN1PROD with NOTICES
AGENCY:
Summary of the Application:
Applicants request an order that would
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18:09 Sep 29, 2014
Jkt 232001
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.
Applicants: JNL Series Trust, JNL
Investors Series Trust, Curian Series
Trust, and Curian Variable Series Trust
(each a ‘‘Trust’’ and collectively the
‘‘Trusts’’), JNL Variable Fund LLC and
JNL Strategic Income Fund LLC (each a
‘‘Limited Liability Company’’), Jackson
National Asset Management, LLC
(‘‘JNAM’’) and Curian Capital, LLC
(‘‘Curian’’) (each, an ‘‘Adviser,’’ and
such entities together, the ‘‘Advisers’’).
DATES: Filing Dates: The application was
filed on January 24, 2014, and amended
on May 29, 2104, and September 22,
2014.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail.
Hearing requests should be received
by the Commission by 5:30 p.m. on
October 17, 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.
Pursuant to Rule 0–5 under the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, 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: Brent J. Fields, Secretary,
U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC, 20549–1090;
Applicants: c/o Eric S. Purple, Esq., K&L
Gates LLP, 1601 K Street NW.,
Washington, DC 20006–1600.
For Further Information Contact:
Emerson S. Davis, Senior Counsel, at
(202) 551–6868 or Daniele Marchesani,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. Each Trust is organized as a
Massachusetts business trust and is
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
58837
registered under the Act as an open-end,
management investment company. Each
Limited Liability Company is a
Delaware limited liability company and
is registered as an open-end
management investment company. Each
Trust has issued one or more series,
each of which has shares having a
different investment objective and
different investment policies. Certain of
the Funds 1 either are or may be money
market funds that comply with rule 2a–
7 under the Act (each a ‘‘Money Market
Fund’’ and collectively, the ‘‘Money
Market Funds’’). JNAM and Curian are
each a Michigan limited liability
company that is registered as an
investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’). Both are indirect,
wholly-owned subsidiaries of
Prudential plc, a publically traded
company incorporated in the United
Kingdom and act as investment adviser
to the Funds.2
2. The Funds may lend cash to banks
or other entities by entering into
repurchase agreements, purchasing
short-term instruments. In order to meet
an unexpected volume of redemptions
or to cover unanticipated cash
shortfalls, the Funds contracted for
committed lines of credit with JP
Morgan, N.A., and other lenders that are
currently included or may be added in
the future to the lending syndicate
(‘‘Bank Borrowing’’). The amount of
borrowing under each of these lines of
credit is limited to the amount specified
by fundamental investment restrictions,
the terms specified in the agreements,
and/or other policies of the applicable
Fund and section 18 of the Act.
3. If Funds that experience a cash
shortfall were to draw down on their
Bank Borrowing, they would pay
interest at a rate that is likely to be
higher than the rate that could be earned
by non-borrowing Funds on investments
in repurchase agreements and other
short-term money market instruments of
the same maturity as the Bank
1 Applicants request that the order apply to any
registered open-end management investment
company or series thereof for which JNAM, Curian
or any successor thereto or an investment adviser
controlling, controlled by, or under common
control (within the meaning of section 2(a)(9) of the
Act) with JNAM or Curian or any successor thereto
serves as investment adviser (each a ‘‘Fund’’ and
collectively the ‘‘Funds’’ or each such investment
adviser as ‘‘Adviser’’). 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 a business
organization.
2 All Funds that currently intend to rely on the
requested order have been named as applicants.
Any other Fund that relies on the requested order
in the future will comply with the terms and
conditions of the application.
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]]>Agencies
[Federal Register Volume 79, Number 189 (Tuesday, September 30, 2014)]
[Notices]
[Pages 58832-58837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23227]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31262; File No. 812-14252]
Great-West Funds, Inc., et al.; Notice of Application
September 24, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 12(d)(1)(J)
of the Investment Company Act of 1940 (the ``Act'') for an exemption
from sections 12(d)(1)(A) and (B) of the Act, under sections 6(c) and
17(b) of the Act for an
[[Page 58833]]
exemption from sections 17(a)(1) and (2) of the Act, and under section
6(c) of the Act for an exemption from rule 12d1-2(a) under the Act.
-----------------------------------------------------------------------
Summary of the Application: The requested order would (a) permit
certain registered open-end management investment companies that
operate as ``funds of funds'' to acquire shares of certain registered
open-end management investment companies and unit investment trusts
(``UITs'') that are within and outside the same group of investment
companies as the acquiring investment companies, and (b) permit funds
of funds relying on rule 12d1-2 under the Act to invest in certain
financial instruments.
Applicants: Great-West Funds, Inc. (``Great-West Funds''), Great-
West Capital Management, LLC (``Adviser''), and GWFS Equities, Inc.
(the ``Distributor'').
Filing Dates: The application was filed on December 18, 2013 and
amended on May 13, 2014, and on August 27, 2014.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 17, 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. Pursuant to Rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, 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: Brent J. Fields, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: c/
o Renee M. Hardt, Vedder Price P.C., 222 N. LaSalle Street, Suite 2600,
Chicago, Illinois 60601.
FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Senior Counsel, at
(202) 551-6868, or Daniele Marchesani, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. Great-West Funds, a Maryland corporation, is registered under
the Act as an open-end management investment company and currently
offers shares of 63 series (``Funds''), each of which pursues different
investment objectives and principal investment strategies.\1\
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to each existing and
future series of Great-West Funds and to each existing and future
registered open-end management investment company or series thereof
that is advised by the Adviser or any entity controlling, controlled
by or under common control with the Adviser and is part of the same
``group of investment companies'' (as defined in section
12(d)(1)(G)(ii) of the Act), as Great-West Funds (each, a ``Fund''
and collectively, ``Funds.''). All entities that currently intend to
rely on the requested order are named as applicants. Any other
entity that relies on the order in the future will comply with the
terms and conditions of the application.
---------------------------------------------------------------------------
2. The Adviser, a Colorado limited liability company, is registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended (``Advisers Act'') and serves as investment adviser to the
Funds.
3. The Distributor, a Delaware corporation, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the ``Exchange
Act''). The Distributor will serve as principal underwriter and
distributor for the shares of the Funds.
4. Applicants request an order to permit (a) a Fund that operates
as a ``fund of funds'' (each a ``Fund of Funds'') to acquire shares of
(i) registered open-end management investment companies that are not
part of the same ``group of investment companies,'' within the meaning
of section 12(d)(1)(G)(ii) of the Act, as the Fund of Funds
(``Unaffiliated Investment Companies'') and unit investment trusts
(``UITs'') that are not part of the same group of investment companies
as the Fund of Funds (``Unaffiliated Trusts,'' together with the
Unaffiliated Investment Companies, ``Unaffiliated Funds'') \2\ or (ii)
registered open-end management companies or UITs that are part of the
same ``group of investment companies,'' within the meaning of section
12(d)(1)(G) (ii) of the Act, as the Fund of Funds (collectively,
``Affiliated Funds,'' together with the Unaffiliated Funds,
``Underlying Funds'') and (b) each Underlying Fund, the Distributor or
any principal underwriter for the Underlying Fund, and any broker or
dealer registered under the Exchange Act (``Broker'') to sell shares of
the Underlying Fund to the Fund of Funds in amounts in excess of limits
set forth in section 12(d)(1)(B). Applicants also request an order
under sections 6(c) and 17(b) of the Act to exempt applicants from
section 17(a) to the extent necessary to permit Underlying Funds to
sell their shares to Funds of Funds and redeem their shares from Funds
of Funds.
---------------------------------------------------------------------------
\2\ Certain of the Unaffiliated Funds may be registered under
the Act as either UITs or open-end management investment companies
and have received exemptive relief to permit their shares to be
listed and traded on a national securities exchange at negotiated
prices (``ETFs'').
---------------------------------------------------------------------------
5. Applicants also request an exemption under section 6(c) from
rule 12d1-2 under the Act to permit any existing or future Fund that
relies on section 12(d)(1)(G) of the Act (``Same Group Fund of Funds'')
and that otherwise complies with rule 12d1-2 to also invest, to the
extent consistent with its investment objective, policies, strategies,
and limitations, in financial instruments that may not be securities
within the meaning of section 2(a)(36) of the Act (``Other
Investments'').
Applicants' Legal Analysis
A. Investments in Underlying Funds--Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a
registered investment company from acquiring shares of an investment
company if the securities represent more than 3% of the total
outstanding voting stock of the acquired company, more than 5% of the
total assets of the acquiring company, or, together with the securities
of any other investment companies, more than 10% of the total assets of
the acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter, and
any Broker from selling the investment company's shares to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's total outstanding voting stock,
or if the sale will cause more than 10% of the acquired company's total
outstanding voting stock to be owned by investment companies generally.
2. Section 12(d)(1)(J) 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 section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Applicants seek an exemption under section
12(d)(1)(J) of the Act to permit a Fund of Funds to acquire shares of
the Underlying Funds in excess of the limits in section 12(d)(1)(A),
and an
[[Page 58834]]
Underlying Fund, any principal underwriter for an Underlying Fund, and
any Broker to sell shares of an Underlying Fund to a Fund of Funds in
excess of the limits in section 12(d)(1)(B) of the Act.
3. Applicants state that the terms and conditions of the proposed
arrangement will not give rise to the policy concerns underlying
sections 12(d)(1)(A) and (B), which include concerns about undue
influence by a fund of funds over underlying funds, excessive layering
of fees, and overly complex fund structures. Accordingly, applicants
believe that the requested exemption is consistent with the public
interest and the protection of investors.
4. Applicants believe that the proposed arrangement will not result
in the exercise of undue influence by the Fund of Funds or a Fund of
Funds Affiliate over the Unaffiliated Funds.\3\ To limit the control
that the Fund of Funds may have over an Unaffiliated Fund, applicants
propose a condition prohibiting the Adviser, any person controlling,
controlled by, or under common control with the Adviser, and any
investment company or issuer that would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act that is advised or sponsored
by the Adviser or any person controlling, controlled by, or under
common control with the Adviser (the ``Advisory Group'') from
controlling (individually or in the aggregate) an Unaffiliated Fund
within the meaning of section 2(a)(9) of the Act. The same prohibition
would apply to any other investment adviser within the meaning of
section 2(a)(20)(B) of the Act to a Fund of Funds (``Subadviser''), any
person controlling, controlled by, or under common control with the
Subadviser, and any investment company or issuer that would be an
investment company but for section 3(c)(1) or 3(c)(7) of the Act (or
portion of such investment company or issuer) advised or sponsored by
the Subadviser or any person controlling, controlled by, or under
common control with the Subadviser (the ``Subadvisory Group'').
Applicants propose other conditions to limit the potential for undue
influence over the Unaffiliated Funds, including that no Fund of Funds
or Fund of Funds Affiliate (except to the extent it is acting in its
capacity as an investment adviser to an Unaffiliated Investment Company
or sponsor to an Unaffiliated Trust) will cause an Unaffiliated Fund to
purchase a security in an offering of securities during the existence
of any underwriting or selling syndicate of which a principal
underwriter is an Underwriting Affiliate (``Affiliated Underwriting'').
An ``Underwriting Affiliate'' is a principal underwriter in any
underwriting or selling syndicate that is an officer, director,
trustee, advisory board member, investment adviser, Subadviser, or
employee of the Fund of Funds, or a person of which any such officer,
director, trustee, advisory board member, investment adviser,
Subadviser, or employee is an affiliated person. An Underwriting
Affiliate does not include any person whose relationship to an
Unaffiliated Fund is covered by section 10(f) of the Act.
---------------------------------------------------------------------------
\3\ A ``Fund of Funds Affiliate'' is the Adviser, any Subadviser
(as defined below), promoter, or principal underwriter of a Fund of
Funds, as well as any person controlling, controlled by, or under
common control with any of those entities. An ``Unaffiliated Fund
Affiliate'' is an investment adviser, sponsor, promoter, or
principal underwriter of an Unaffiliated Fund, as well as any person
controlling, controlled by, or under common control with any of
those entities.
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5. To further ensure that an Unaffiliated Investment Company
understands the implications of an investment by a Fund of Funds under
the requested order, prior to a Fund of Funds' investment in the shares
of an Unaffiliated Investment Company in excess of the limit in section
12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated
Investment Company will execute an agreement stating, without
limitation, that their respective board of directors or trustees (for
any entity, the ``Board'') and their investment advisers understand the
terms and conditions of the order and agree to fulfill their
responsibilities under the order (``Participation Agreement'').
Applicants note that an Unaffiliated Investment Company (other than an
ETF whose shares are purchased by a Fund of Funds in the secondary
market) will retain its right at all times to reject any investment by
a Fund of Funds.\4\
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\4\ An Unaffiliated Investment Company, including an ETF, would
retain its right to reject any initial investment by a Fund of Funds
in excess of the limit in section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation Agreement with the Fund of
Funds.
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6. Applicants state that they do not believe that the proposed
arrangement will involve excessive layering of fees. The Board of each
Fund of Funds, including a majority of the directors who are not
``interested persons'' (within the meaning of section 2(a)(19) of the
Act) (``Independent Directors''), will find that the advisory fees
charged under investment advisory or management contract(s) are based
on services provided that will be in addition to, rather than
duplicative of, the services provided under such advisory contract(s)
of any Underlying Fund in which the Fund of Funds may invest. In
addition, the Adviser will waive fees otherwise payable to it by a Fund
of Funds in an amount at least equal to any compensation (including
fees received pursuant to any plan adopted by an Unaffiliated
Investment Company under rule 12b-1 under the Act) received from an
Unaffiliated Fund by the Adviser or an affiliated person of the
Adviser, other than any advisory fees paid to the Adviser or its
affiliated person by an Unaffiliated Investment Company, in connection
with the investment by the Fund of Funds in the Unaffiliated Fund. Any
sales charges and/or service fees charged with respect to shares of a
Fund of Funds will not exceed the limits applicable to a fund of funds
as set forth in Rule 2830 of the Conduct Rules of the NASD (``NASD
Conduct Rule 2830'').\5\
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\5\ Any references to NASD Conduct Rule 2830 include any
successor or replacement rule of FINRA to NASD Conduct Rule 2830.
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7. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that no Underlying
Fund will acquire securities of any investment company or company
relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the
limits contained in section 12(d)(1)(A) of the Act, except in certain
circumstances identified in condition 11 below.
B. Section 17(a)
1. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and any
affiliated person of the company. Section 2(a)(3) of the Act defines an
``affiliated person'' of another person to include (a) any person
directly or indirectly owning, controlling, or holding with power to
vote, 5% or more of the outstanding voting securities of the other
person; (b) any person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with
power to vote by the other person; and (c) any person directly or
indirectly controlling, controlled by, or under common control with the
other person.
2. Applicants state that a Fund of Funds and the Affiliated Funds
managed by the same Adviser might be deemed to be under common control
of the Adviser and therefore affiliated persons of one another.
Applicants also state that the Fund of Funds and the Unaffiliated Funds
might be deemed to be affiliated persons of one another if the Fund of
Funds acquires 5% or more of an Unaffiliated Fund's outstanding voting
securities. In light of these and
[[Page 58835]]
other possible affiliations, section 17(a) could prevent an Underlying
Fund from selling shares to and redeeming shares from a Fund of Funds.
3. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
it finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act. Section
6(c) of the Act permits the Commission to exempt any persons or
transactions from any provision of the Act 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.
4. Applicants submit that the proposed transactions satisfy the
standards for relief under sections 17(b) and 6(c) of the Act.\6\
Applicants state that the terms of the transactions are reasonable and
fair and do not involve overreaching. Applicants state that the terms
upon which an Underlying Fund will sell its shares to or purchase its
shares from a Fund of Funds will be based on the net asset value of the
Underlying Fund.\7\ Applicants state that the proposed transactions
will be consistent with the policies of each Fund of Funds and each
Underlying Fund and with the general purposes of the Act.
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\6\ Applicants acknowledge that receipt of any compensation by
(a) an affiliated person of a Fund of Funds, or an affiliated person
of such person, for the purchase by a Fund of Funds of shares of an
Underlying Fund or (b) an affiliated person of an Underlying Fund,
or an affiliated person of such person, for the sale by the
Underlying Fund of its shares to a Fund of Funds may be prohibited
by section 17(e)(1) of the Act. The Participation Agreement also
will include this acknowledgement.
\7\ To the extent purchases and sales of shares of an ETF occur
in the secondary market (and not through principal transactions
directly between a Fund of Funds and an ETF), relief from section
17(a) of the Act would not be necessary. The requested relief is
intended to cover, however, transactions directly between ETFs and a
Fund of Funds. Applicants are not seeking relief from section 17(a)
of the Act for, and the requested relief will not apply to,
transactions where an ETF could be deemed an affiliated person, or
an affiliated person of an affiliated person, of a Fund of Funds
because the investment adviser to the ETF, or an entity controlling,
controlled by, or under common control with the investment adviser
to the ETF, is an investment adviser to the Fund of Funds.
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C. Other Investments by Same Group Fund of Funds
1. Section 12(d)(1)(G) of the Act provides that section 12(d)(1)
will not apply to securities of an acquired company purchased by an
acquiring company if: (i) The acquiring company and acquired company
are part of the same group of investment companies; (ii) the acquiring
company holds only securities of acquired companies that are part of
the same group of investment companies, government securities, and
short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not
excessive under rules adopted pursuant to section 22(b) or section
22(c) of the Act by a securities association registered under section
15A of the Exchange Act or by the Commission; and (iv) the acquired
company has a policy that prohibits it from acquiring securities of
registered open-end management investment companies or registered unit
investment trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
2. Rule 12d1-2 under the Act permits a registered open-end
investment company or a registered unit investment trust that relies on
section 12(d)(1)(G) of the Act to acquire, in addition to securities
issued by another registered investment company in the same group of
investment companies, government securities, and short-term paper: (1)
Securities issued by an investment company that is not in the same
group of investment companies, when the acquisition is in reliance on
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other
than securities issued by an investment company); and (3) securities
issued by a money market fund, when the investment is in reliance on
rule 12d1-1 under the Act. For the purposes of rule 12d1-2,
``securities'' means any security as defined in section 2(a)(36) of the
Act.
3. Applicants state that the proposed arrangement would comply with
the provisions of rule 12d1-2 under the Act, but for the fact that a
Same Group Fund of Funds may invest a portion of its assets in Other
Investments. Applicants request an order under section 6(c) of the Act
for an exemption from rule 12d1-2(a) to allow the Same Group Fund of
Funds to invest in Other Investments. Applicants assert that permitting
Same Group Fund of Funds to invest in Other Investments as described in
the application would not raise any of the concerns that the
requirements of section 12(d)(1) were designed to address.
4. Consistent with its fiduciary obligations under the Act, the
Board of each Same Group Fund of Funds will review the advisory fees
charged by the Same Group Fund of Funds' investment adviser to ensure
that they are based on services provided that are in addition to,
rather than duplicative of, services provided pursuant to the advisory
agreement of any investment company in which the Same Group Fund of
Funds may invest.
Applicants' Conditions
Investments by Funds of Funds in Underlying Funds
Applicants agree that the relief to permit Funds of Funds to invest
in Underlying Funds shall be subject to the following conditions:
1. The members of an Advisory Group will not control (individually
or in the aggregate) an Unaffiliated Fund within the meaning of section
2(a)(9) of the Act. The members of a Subadvisory Group will not control
(individually or in the aggregate) an Unaffiliated Fund within the
meaning of section 2(a)(9) of the Act. If, as a result of a decrease in
the outstanding voting securities of an Unaffiliated Fund, the Advisory
Group or a Subadvisory Group, each in the aggregate, becomes a holder
of more than 25 percent of the outstanding voting securities of the
Unaffiliated Fund, then the Advisory Group or the Subadvisory Group
will vote its shares of the Unaffiliated Fund in the same proportion as
the vote of all other holders of the Unaffiliated Fund's shares. This
condition will not apply to a Subadvisory Group with respect to an
Unaffiliated Fund for which the Subadviser or a person controlling,
controlled by, or under common control with the Subadviser acts as the
investment adviser within the meaning of section 2(a)(20)(A) of the Act
(in the case of an Unaffiliated Investment Company) or as the sponsor
(in the case of an Unaffiliated Trust).
2. No Fund of Funds or Fund of Funds Affiliate will cause any
existing or potential investment by the Fund of Funds in shares of an
Unaffiliated Fund to influence the terms of any services or
transactions between the Fund of Funds or a Fund of Funds Affiliate and
the Unaffiliated Fund or an Unaffiliated Fund Affiliate.
3. The Board of each Fund of Funds, including a majority of the
Independent Directors, will adopt procedures reasonably designed to
ensure that its Adviser and any Subadviser(s) to the Fund of Funds are
conducting the investment program of the Fund of Funds without taking
into account any
[[Page 58836]]
consideration received by the Fund of Funds or Fund of Funds Affiliate
from an Unaffiliated Fund or an Unaffiliated Fund Affiliate in
connection with any services or transactions.
4. Once an investment by a Fund of Funds in the securities of an
Unaffiliated Investment Company exceeds the limit of section
12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Investment
Company, including a majority of the Independent Directors, will
determine that any consideration paid by the Unaffiliated Investment
Company to a Fund of Funds or a Fund of Funds Affiliate in connection
with any services or transactions: (a) Is fair and reasonable in
relation to the nature and quality of the services and benefits
received by the Unaffiliated Investment Company; (b) is within the
range of consideration that the Unaffiliated Investment Company would
be required to pay to another unaffiliated entity in connection with
the same services or transactions; and (c) does not involve
overreaching on the part of any person concerned. This condition does
not apply with respect to any services or transactions between an
Unaffiliated Investment Company and its investment adviser(s) or any
person controlling, controlled by, or under common control with such
investment adviser(s).
5. No Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an
Unaffiliated Investment Company or sponsor to an Unaffiliated Trust)
will cause an Unaffiliated Fund to purchase a security in any
Affiliated Underwriting.
6. The Board of an Unaffiliated Investment Company, including a
majority of the Independent Directors, will adopt procedures reasonably
designed to monitor any purchases of securities by the Unaffiliated
Investment Company in an Affiliated Underwriting once an investment by
a Fund of Funds in the securities of the Unaffiliated Investment
Company exceeds the limit of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly from an Underwriting Affiliate.
The Board of the Unaffiliated Investment Company will review these
purchases periodically, but no less frequently than annually, to
determine whether the purchases were influenced by the investment by
the Fund of Funds in the Unaffiliated Investment Company. The Board of
the Unaffiliated Investment Company will consider, among other things:
(a) Whether the purchases were consistent with the investment
objectives and policies of the Unaffiliated Investment Company; (b) how
the performance of securities purchased in an Affiliated Underwriting
compares to the performance of comparable securities purchased during a
comparable period of time in underwritings other than Affiliated
Underwritings or to a benchmark such as a comparable market index; and
(c) whether the amount of securities purchased by the Unaffiliated
Investment Company in Affiliated Underwritings and the amount purchased
directly from an Underwriting Affiliate have changed significantly from
prior years. The Board of the Unaffiliated Investment Company will take
any appropriate actions based on its review, including, if appropriate,
the institution of procedures designed to ensure that purchases of
securities in Affiliated Underwritings are in the best interests of
shareholders.
7. Each Unaffiliated Investment Company shall maintain and preserve
permanently in an easily accessible place a written copy of the
procedures described in the preceding condition, and any modifications
to such procedures, and shall maintain and preserve for a period not
less than six years from the end of the fiscal year in which any
purchase in an Affiliated Underwriting occurred, the first two years in
an easily accessible place, a written record of each purchase of
securities in an Affiliated Underwriting once an investment by a Fund
of Funds in the securities of an Unaffiliated Investment Company
exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth:
(a) The party from whom the securities were acquired, (b) the identity
of the underwriting syndicate's members, (c) the terms of the purchase,
and (d) the information or materials upon which the determinations of
the Board of the Unaffiliated Investment Company were made.
8. Prior to its investment in shares of an Unaffiliated Investment
Company in excess of the limit in section 12(d)(1)(A)(i) of the Act,
the Fund of Funds and the Unaffiliated Investment Company will execute
a Participation Agreement stating, without limitation, that their
Boards and their investment advisers understand the terms and
conditions of the order and agree to fulfill their responsibilities
under the order. At the time of its investment in shares of an
Unaffiliated Investment Company in excess of the limit in section
12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Investment
Company of the investment. At such time, the Fund of Funds will also
transmit to the Unaffiliated Investment Company a list of the names of
each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of
Funds will notify the Unaffiliated Investment Company of any changes to
the list of the names as soon as reasonably practicable after a change
occurs. The Unaffiliated Investment Company and the Fund of Funds will
maintain and preserve a copy of the order, the Participation Agreement,
and the list with any updated information for the duration of the
investment and for a period of not less than six years thereafter, the
first two years in an easily accessible place.
9. Before approving any advisory contract under section 15 of the
Act, the Board of each Fund of Funds, including a majority of the
Independent Directors, shall find that the advisory fees charged under
such advisory contract are based on services provided that are in
addition to, rather than duplicative of, services provided under the
advisory contract(s) of any Underlying Fund in which the Fund of Funds
may invest. Such finding and the basis upon which the finding was made
will be recorded fully in the minute books of the appropriate Fund of
Funds.
10. The Adviser will waive fees otherwise payable to it by a Fund
of Funds in an amount at least equal to any compensation (including
fees received pursuant to any plan adopted by an Unaffiliated
Investment Company under rule 12b-1 under the Act) received from an
Unaffiliated Fund by the Adviser, or an affiliated person of the
Adviser, other than any advisory fees paid to the Adviser or its
affiliated person by an Unaffiliated Investment Company, in connection
with the investment by the Fund of Funds in the Unaffiliated Fund. Any
Subadviser will waive fees otherwise payable to the Subadviser,
directly or indirectly, by the Fund of Funds in an amount at least
equal to any compensation received by the Subadviser, or an affiliated
person of the Subadviser, from an Unaffiliated Fund, other than any
advisory fees paid to the Subadviser or its affiliated person by an
Unaffiliated Investment Company, in connection with the investment by
the Fund of Funds in the Unaffiliated Fund made at the direction of the
Subadviser. In the event that the Subadviser waives fees, the benefit
of the waiver will be passed through to the applicable Fund of Funds.
11. No Underlying Fund will acquire securities of any other
investment company or company relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained in section 12(d)(1)(A) of the
Act, except to the extent that such Underlying Fund: (a) Receives
securities of another
[[Page 58837]]
investment company as a dividend or as a result of a plan of
reorganization of a company (other than a plan devised for the purpose
of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed
to have acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting such Underlying Fund to
(i) acquire securities of one or more investment companies for short-
term cash management purposes, or (ii) engage in interfund borrowing
and lending transactions.
12. Any sales charges and/or service fees charged with respect to
shares of a Fund of Funds will not exceed the limits applicable to fund
of funds set forth in NASD Conduct Rule 2830.
Other Investments by Same Group Fund of Funds
Applicants agree that the relief to permit Same Group Fund of Funds
to invest in Other Investments shall be subject to the following
condition:
13. Applicants will comply with all provisions of rule 12d1-2 under
the Act, except for paragraph (a)(2) to the extent that it restricts
any Same Group Fund of Funds from investing in Other Investments as
described in the application.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23227 Filed 9-29-14; 8:45 am]
BILLING CODE 8011-01-P
