Forum Funds II and Acuitas Investments, LLC; Notice of Application, 77538-77542 [2014-30129]
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Federal Register / Vol. 79, No. 247 / Wednesday, December 24, 2014 / Notices
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This notice issued in Washington, DC, on
December 16, 2014.
Denora Miller,
FOIA/Privacy Act Officer, Management.
[FR Doc. 2014–30187 Filed 12–23–14; 8:45 am]
BILLING CODE 6051–01–P
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Effective date: December 24,
2014.
Elizabeth A. Reed, 202–268–3179.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 18,
2014, it filed with the Postal Regulatory
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AGENCY:
Closed.
ACTION:
MATTERS TO BE CONSIDERED:
Wednesday, January 7, 2015, at 2 p.m.
1. Strategic Issues.
2. Financial Matters.
3. Pricing.
4. Personnel Matters and
Compensation Issues.
5. Governors’ Executive Session—
Discussion of prior agenda items and
Board Governance.
BILLING CODE 7710–12–P
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The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Effective date: December 24,
FOR FURTHER INFORMATION CONTACT:
Julie S. Moore, Secretary of the Board,
U.S. Postal Service, 475 L’Enfant Plaza,
SW., Washington, DC, 20260–1000.
Telephone (202) 268–4800.
[FR Doc. 2014–30140 Filed 12–22–14; 11:15 am]
Notice.
2014.
CONTACT PERSON FOR MORE INFORMATION:
Julie S. Moore,
Secretary.
Postal ServiceTM.
SUMMARY:
DATES:
Elizabeth A. Reed, 202–268–3179.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 18,
2014, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Contract 105 to Competitive
Product List. Documents are available at
SUPPLEMENTARY INFORMATION:
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31385; 812–14345]
Forum Funds II and Acuitas
Investments, LLC; Notice of
Application
December 18, 2014.
FOR FURTHER INFORMATION CONTACT:
Product Change—Priority Mail
Negotiated Service Agreement
Washington, DC, via
Teleconference.
PLACE:
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BILLING CODE 7710–12–P
Notice.
SUMMARY:
DATES:
Stanley F. Mires,
Attorney, Federal Requirements.
[FR Doc. 2014–30139 Filed 12–23–14; 8:45 am]
POSTAL SERVICE
January 7, 2015, at 2
16:34 Dec 23, 2014
ACTION:
Postal ServiceTM.
BILLING CODE 7710–12–P
p.m.
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AGENCY:
[FR Doc. 2014–30143 Filed 12–23–14; 8:45 am]
Board of Governors; Sunshine Act
Meeting
STATUS:
Product Change—Priority Mail Express
Negotiated Service Agreement
Stanley F. Mires,
Attorney, Federal Requirements.
POSTAL SERVICE
DATES AND TIMES:
www.prc.gov, Docket Nos. MC2015–20,
CP2015–25.
POSTAL SERVICE
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Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
AGENCY:
Summary of Application: Applicants
request an order that would permit them
to enter into and materially amend subadvisory agreements with WhollyOwned Sub-Advisers (as defined below)
and Non-Affiliated Sub-Advisers (as
defined below) without shareholder
approval and would grant relief from
certain disclosure requirements.
Applicants: Forum Funds II (‘‘Trust’’)
and Acuitas Investments, LLC
(‘‘Adviser’’).
DATES: Filing Dates: The application
was filed August 12, 2014, and amended
on September 19, 2014, November 18,
2014, November 21, 2014 and December
16, 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 January 12, 2015, and
should be accompanied by proof of
service on 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: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
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Federal Register / Vol. 79, No. 247 / Wednesday, December 24, 2014 / Notices
NE., Washington, DC 20549–1090.
Applicants: Trust, Three Canal Plaza,
Suite 600, Portland, ME 04101; Adviser,
520 Pike Street, Suite 1221, Seattle,
Washington 98101.
FOR FURTHER INFORMATION CONTACT:
Kaitlin C. Bottock, Attorney Adviser, at
(202) 551–8658, or Daniele Marchesani,
Branch Chief, at (202) 551–6747
(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.
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Applicants’ Representations
1. The Trust is organized as a
Delaware statutory trust and is
registered under the Act as an open-end
management investment company. The
Trust offers one or more series of shares
(each, a ‘‘Series’’). Each Subadvised
Series (as defined below) has its own
investment objectives, policies and
restrictions and may offer one or more
classes of shares that are subject to
different expenses.
2. The Adviser, a limited liability
company organized under the laws of
the state of Washington, is registered as
an investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’).
3. Applicants request an order to
permit the Adviser, subject to the
approval of the Board, including a
majority of the members of the Board
who are not ‘‘interested persons,’’ as
defined in section 2(a)(19) of the Act, of
the Series or the Adviser (‘‘Independent
Board Members’’), to, without obtaining
shareholder approval: (i) Select SubAdvisers to manage all or a portion of
the assets of a Series and enter into SubAdvisory Agreements (as defined below)
with the Sub-Advisers,1 and (ii)
1 A ‘‘Sub-Adviser’’ is (a) an indirect or direct
‘‘wholly owned subsidiary’’ (as such term is defined
in the Act) of the Adviser for that Series, or (b) a
sister company of the Adviser for that Series that
is an indirect or direct ‘‘wholly-owned subsidiary’’
(as such term is defined in the Act) of the same
company that, indirectly or directly, wholly owns
the Adviser (each of (a) and (b) a ‘‘Wholly-Owned
Sub-Adviser’’ and collectively, the ‘‘Wholly-Owned
Sub-Advisers’’), or (c) an investment sub-adviser for
that Series that is not an ‘‘affiliated person’’ (as such
term is defined in section 2(a)(3) of the Act) of the
Series or the Adviser, except to the extent that an
affiliation arises solely because the sub-adviser
serves as a sub-adviser to one or more Series (each,
a ‘‘Non-Affiliated Sub-Adviser’’ and collectively,
the ‘‘Non-Affiliated Sub-Advisers’’). Each SubAdviser will be registered with the Commission
under the Advisers Act or not subject to such
registration.
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materially amend Sub-Advisory
Agreements with the Sub-Advisers.2
Applicants request that the relief apply
to named applicants, as well as any
future Series and any other existing or
future registered open-end management
investment company or series thereof
that is advised by the Adviser, uses the
multi-manager structure as described in
the application, and complies with the
terms and conditions of the application
(‘‘Subadvised Series’’).3 The requested
relief will not extend to any sub-adviser,
other than a Wholly-Owned SubAdviser, who is an affiliated person, as
defined in section 2(a)(3) of the Act, of
the Subadvised Series or of the Adviser,
other than by reason of serving as a subadviser to one or more of the
Subadvised Series (‘‘Affiliated SubAdviser’’).
4. Each Subadvised Series has, or will
have, as its investment adviser, the
Adviser, its successors, or an entity
controlling, controlled by or under
common control with the Adviser or its
successors (included in the term,
‘‘Adviser’’). The Adviser will serve as
investment adviser to each Subadvised
Series pursuant to an investment
advisory agreement with the Trust
(‘‘Investment Management Agreement’’).
The Investment Management Agreement
for each Series will be approved by the
board of trustees of the Trust
(‘‘Board’’),4 including a majority of the
Independent Board Members, and by
the shareholders of the relevant Series
as required by sections 15(a) and 15(c)
of the Act and rule 18f–2 thereunder.
The terms of the Investment
Management Agreement comply with
section 15(a) of the Act.
5. Under the terms of the Investment
Management Agreement, the Adviser,
subject to the supervision of the Board,
provides continuous investment
management of the assets of each Series.
2 Shareholder approval will continue to be
required for any other sub-adviser changes and
material amendments to an existing Sub-Advisory
Agreement with any sub-adviser other than a NonAffiliated Sub-Adviser or a Wholly-Owned SubAdviser (all such changes referred to as ‘‘Ineligible
Sub-Adviser Changes’’).
3 For 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. 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 Series contains the name
of a sub-adviser, the name of the Adviser, or a
trademark or trade name that is owned by or
publicly used to identify that Adviser, will precede
the name of the sub-adviser.
4 The term ‘‘Board’’ also includes the board of
trustees or directors of a future Subadvised Series,
if different.
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The Adviser periodically reviews each
Series’ investment policies and
strategies, and based on the need of a
particular Series may recommend
changes to the investment policies and
strategies of the Series for consideration
by the Board. For its services to each
Series under the Investment
Management Agreement, the Adviser
receives an investment management fee
from that Series. The Investment
Management Agreement provides that
the Adviser may, subject to the approval
of the Board, including a majority of the
Independent Board Members, and the
shareholders of the applicable
Subadvised Series (if required), delegate
portfolio management responsibilities of
all or a portion of the assets of a
Subadvised Series to one or more SubAdvisers.
6. Pursuant to the Investment
Management Agreement, the Adviser
continues to have overall responsibility
for the management and investment of
the assets of each Subadvised Series.
The Adviser’s responsibilities include
recommending the removal or
replacement of Sub-Advisers,
determining the portion of that
Subadvised Series’ assets to be managed
by any given Sub-Adviser and
reallocating those assets as necessary
from time to time.
7. The Adviser may enter into subadvisory agreements with various SubAdvisers (‘‘Sub-Advisory Agreements’’)
to provide investment management
services to the Subadvised Series. The
terms of each Sub-Advisory Agreement
comply fully with the requirements of
section 15(a) of the Act. Any SubAdvisory Agreements in effect at the
time the Subadvised Series commences
their public offerings of securities will
have been approved by the Board,
including a majority of the Independent
Board Members, and the initial
shareholders of the applicable
Subadvised Series in accordance with
sections 15(a) and 15(c) of the Act and
rule 18f–2 thereunder. The SubAdvisers, subject to the supervision of
the Adviser and oversight of the Board,
determine the securities and other
investments to be purchased, sold or
entered into by a Subadvised Series’
portfolio or a portion thereof, and will
place orders with brokers or dealers that
they select. The Adviser compensates
each Sub-Adviser out of the fee paid to
the Adviser under the Investment
Management Agreement.
8. If the requested order is granted,
the Subadvised Series will inform
shareholders of the hiring of a new SubAdviser pursuant to the following
procedures (‘‘Modified Notice and
Access Procedures’’): (a) Within 90 days
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after a new Sub-Adviser is hired for any
Subadvised Series, that Subadvised
Series will send its shareholders either
a Multi-manager Notice or a Multimanager Notice and Multi-manager
Information Statement; 5 and (b) the
Subadvised Series 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.
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 state that the
Board would comply with the
requirements of sections 15(a) and 15(c)
of the Act before entering into or
amending Sub-Advisory Agreements.
9. Applicants also request an order
exempting the Subadvised Series from
certain disclosure obligations that may
require each Subadvised Series to
disclose fees paid by the Adviser to each
Sub-Adviser. Applicants seek relief to
permit each Subadvised Series to
disclose (as a dollar amount and a
percentage of the Subadvised Series’ net
assets): (a) The aggregate fees paid to the
Adviser and any Wholly-Owned SubAdvisers, (b) the aggregate fees paid to
Non-Affiliated Sub-Advisers, and (c) the
fee paid to each Affiliated Sub-Adviser
(collectively, the ‘‘Aggregate Fee
Disclosure’’). An exemption is requested
to permit the Subadvised Series to
include only the Aggregate Fee
Disclosure. All other items required by
section 6–07(2)(a), (b), and (c) of
Regulation S–X will be disclosed.
5 A ‘‘Multi-manager Notice’’ will be modeled on
a Notice of Internet Availability as defined in rule
14a–16 under the Securities Exchange Act of 1934
(‘‘Exchange Act’’), and specifically will, among
other things: (a) Summarize the relevant
information regarding the new Sub-Adviser (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 Multimanager 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 Multimanager Information Statement may be obtained,
without charge, by contacting the Subadvised
Series. A ‘‘Multi-manager Information Statement’’
will meet the requirements of Regulation 14C,
Schedule 14C and Item 22 of Schedule 14A under
the Exchange Act for an information statement,
except as modified by the order to permit Aggregate
Fee Disclosure. Multi-manager Information
Statements will be filed with the Commission via
the EDGAR system.
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Applicants’ Legal Analysis
1. Section 15(a) of the Act states, in
relevant part, that it is unlawful for any
person to act as an investment adviser
to a registered investment company
‘‘except pursuant to a written contract,
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,’’ a description of the ‘‘aggregate
amount of the investment adviser’s fee,’’
a description of the ‘‘terms of the
contract to be acted upon,’’ and, if a
change in the advisory fee is proposed,
the existing and proposed fees and the
difference between the two fees.
4. Regulation S–X sets forth the
requirements for financial statements
required to be included as part of a
registered investment company’s
registration statement and shareholder
reports filed with the Commission.
Sections 6–07(2)(a), (b), and (c) of
Regulation S–X require a registered
investment company to include in its
financial statement information about
the investment advisory fees.
5. Section 6(c) of the Act provides that
the Commission by order upon
application may conditionally or
unconditionally exempt any person,
security, or transaction or any class or
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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 the Sub-Advisers who are in
the best position to achieve the
Subadvised Series’ investment
objective. Applicants assert that, from
the perspective of the shareholder, the
role of the Sub-Adviser is substantially
equivalent to the role of the individual
portfolio managers employed by an
investment adviser to a traditional
investment company. Applicants
believe that permitting the Adviser to
perform the duties for which the
shareholders of the Subadvised Series
are paying the Adviser—the selection,
supervision and evaluation of the SubAdvisers—without incurring
unnecessary delays or expenses is
appropriate in the interest of the
Subadvised Series’ shareholders and
will allow such Subadvised Series to
operate more efficiently. Applicants
state that the Investment Management
Agreement will continue to be fully
subject to section 15(a) of the Act and
rule 18f–2 under the Act and approved
by the Board, including a majority of the
Independent Board Members, and by
the shareholders of the relevant Series
in the manner required by sections 15(a)
and 15(c) of the Act. Applicants are not
seeking an exemption with respect to
the Investment Management Agreement.
7. Applicants assert that disclosure of
the individual fees that the Adviser
would pay to the Sub-Advisers of
Subadvised Series that operate under
the multi-manager structure described
in the application would not serve any
meaningful purpose. Applicants
contend that the primary reasons for
requiring disclosure of individual fees
paid to Sub-Advisers are to inform
shareholders of expenses to be charged
by a particular Subadvised Series and to
enable shareholders to compare the fees
to those of other comparable investment
companies. Applicants believe that the
requested relief satisfies these objectives
because the advisory fee paid to the
Adviser will be fully disclosed and
therefore, shareholders will know what
the Subadvised Series’ fees and
expenses are and will be able to
compare the advisory fees a Subadvised
Series is charged to those of other
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investment companies. Applicants
assert that the requested disclosure
relief would benefit shareholders of the
Subadvised Series because it would
improve the Adviser’s ability to
negotiate the fees paid to Sub-Advisers.
Applicants state that the Adviser may be
able to negotiate rates that are below a
Sub-Adviser’s ‘‘posted’’ amounts if the
Adviser is not required to disclose the
Sub-Advisers’ fees to the public.
Applicants submit that the relief
requested to use Aggregate Fee
Disclosure will encourage Sub-Advisers
to negotiate lower sub-advisory fees
with the Adviser if the lower fees are
not required to be made public.
8. For the reasons discussed above,
applicants submit that the requested
relief meets the standards for relief
under section 6(c) of the Act. Applicants
state that the operation of the
Subadvised Series in the manner
described in the application must be
approved by shareholders of a
Subadvised Series before that
Subadvised Series may rely on the
requested relief. In addition, applicants
state that the proposed conditions to the
requested relief are designed to address
any potential conflicts of interest,
including any posed by the use of
Wholly-Owned Sub-Advisers, and
provide that shareholders are informed
when new Sub-Advisers are hired.
Applicants assert that conditions 6, 7,
10 and 11 are designed to provide the
Board with sufficient independence and
the resources and information it needs
to monitor and address any conflicts of
interest. 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: 6
1. Before a Subadvised Series may
rely on the order requested in the
Application, the operation of the
Subadvised Series in the manner
described in this Application, including
the hiring of Wholly-Owned SubAdvisers, will be, or has been, approved
by a majority of the Subadvised Series’
outstanding voting securities as defined
in the Act, or, in the case of a new
Subadvised Series whose public
shareholders purchase shares on the
basis of a prospectus containing the
6 Applicants will comply with conditions 7, 8, 9
and 12 only if they rely on the relief that would
allow them to provide Aggregate Fee Disclosure.
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disclosure contemplated by condition 2
below, by the sole initial shareholder
before offering the Subadvised Series’
shares to the public.
2. The prospectus for each
Subadvised Series will disclose the
existence, substance, and effect of any
order granted pursuant to this
Application. Each Subadvised Series
will hold itself out to the public as
employing the multi-manager structure
described in this Application. Each
prospectus will prominently disclose
that the Adviser has the ultimate
responsibility, subject to oversight by
the Board, to oversee the Sub-Advisers
and recommend their hiring,
termination and replacement.
3. The Adviser will provide general
management services to a Subadvised
Series, including overall supervisory
responsibility for the general
management and investment of the
Subadvised Series’ assets. Subject to
review and approval of the Board, the
Adviser will (a) set a Subadvised Series’
overall investment strategies, (b)
evaluate, select, and recommend SubAdvisers to manage all or a portion of
a Subadvised Series’ assets, and (c)
implement procedures reasonably
designed to ensure that Sub-Advisers
comply with a Subadvised Series’
investment objective, policies and
restrictions. Subject to review by the
Board, the Adviser will (a) when
appropriate, allocate and reallocate a
Subadvised Series’ assets among
multiple Sub-Advisers; and (b) monitor
and evaluate the performance of SubAdvisers.
4. A Subadvised Series will not make
any Ineligible Sub-Adviser Changes
without such agreement, including the
compensation to be paid thereunder,
being approved by the shareholders of
the applicable Subadvised Series.
5. Subadvised Series will inform
shareholders of the hiring of a new SubAdviser within 90 days after the hiring
of the new Sub-Adviser pursuant to the
Modified Notice and Access Procedures.
6. At all times, at least a majority of
the Board will be Independent Board
Members, and the selection and
nomination of new or additional
Independent Board Members will be
placed within the discretion of the thenexisting Independent Board Members.
7. Independent Legal Counsel, as
defined in rule 0–1(a)(6) under the Act,
will be engaged to represent the
Independent Board Members. The
selection of such counsel will be within
the discretion of the then-existing
Independent Board Members.
8. The Adviser will provide the
Board, no less frequently than quarterly,
with information about the profitability
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of the Adviser on a per Subadvised
Series basis. The information will reflect
the impact on profitability of the hiring
or termination of any sub-adviser during
the applicable quarter.
9. Whenever a sub-adviser is hired or
terminated, the Adviser will provide the
Board with information showing the
expected impact on the profitability of
the Adviser.
10. Whenever a sub-adviser change is
proposed for an Affiliated Sub-Adviser
or Wholly-Owned Sub-Adviser to a
Subadvised Series, the Board, including
a majority of the Independent Board
Members, will make a separate finding,
reflected in the Board minutes, that
such change is in the best interests of
the Subadvised Series and its
shareholders, and does not involve a
conflict of interest from which the
Adviser or the Affiliated Sub-Adviser or
the Wholly-Owned Sub-Adviser derives
an inappropriate advantage.
11. No Board Member or officer of a
Subadvised Series, or partner, director,
manager, or officer of the Adviser, will
own directly or indirectly (other than
through a pooled investment vehicle
that is not controlled by such person),
any interest in a Sub-Adviser, except for
(i) ownership of interests in the Adviser
or any entity, other than a WhollyOwned Sub-Adviser, that controls, is
controlled by, or is under common
control with the Adviser; or (ii)
ownership of less than 1% of the
outstanding securities of any class of
equity or debt of a publicly-traded
company that is either a Sub-Adviser or
an entity that controls, is controlled by
or is under common control with a SubAdviser.
12. Each Subadvised Series will
disclose the Aggregate Fee Disclosure in
its registration statement.
13. In the event the Commission
adopts a rule under the Act providing
substantially similar relief to that
requested in the Application, the
requested order will expire on the
effective date of that rule.
14. Any new Sub-Advisory
Agreement or any amendment to a
Subadvised Series’ existing Investment
Management Agreement or SubAdvisory Agreement that directly or
indirectly results in an increase in the
aggregate advisory fee rate payable by
the Subadvised Series will be submitted
to the Subadvised Series’ shareholders
for approval.
E:\FR\FM\24DEN1.SGM
24DEN1
77542
Federal Register / Vol. 79, No. 247 / Wednesday, December 24, 2014 / Notices
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–30129 Filed 12–23–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31386; 812–14344]
Forum Funds II and CVR Portfolio
Funds LLC; Notice of Application
December 18, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
mstockstill on DSK4VPTVN1PROD with NOTICES
AGENCY:
NE., Washington, DC 20549–1090.
Applicants: Trust, Three Canal Plaza,
Suite 600, Portland, ME 04101; Adviser,
One Bromfield Street, Suite 5100,
Boston, MA 02108.
FOR FURTHER INFORMATION CONTACT:
Kaitlin C. Bottock, Attorney Adviser, at
(202) 551–8658, or Daniele Marchesani,
Branch Chief, at (202) 551–6747
(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. The Trust is organized as a
Delaware statutory trust and is
registered under the Act as an open-end
management investment company. The
Trust offers one or more series of shares
SUMMARY OF APPLICATION: Applicants
(each, a ‘‘Series’’). Each Subadvised
request an order that would permit them Series (as defined below) has its own
to enter into and materially amend subinvestment objectives, policies and
advisory agreements with Whollyrestrictions and may offer one or more
Owned Sub-Advisers (as defined below) classes of shares that are subject to
and Non-Affiliated Sub-Advisers (as
different expenses.
defined below) without shareholder
2. The Adviser, a limited liability
approval and would grant relief from
company organized under the laws of
certain disclosure requirements.
the state of Delaware, is registered as an
APPLICANTS: Forum Funds II (‘‘Trust’’)
investment adviser under the
and CVR Portfolio Funds LLC
Investment Advisers Act of 1940
(‘‘Advisers Act’’).
(‘‘Adviser’’).
3. Applicants request an order to
DATES: Filing Dates: The application was
permit the Adviser, subject to the
filed August 12, 2014, and amended on
approval of the Board, including a
September 19, 2014, November 18,
2014, November 21, 2014 and December majority of the members of the Board
who are not ‘‘interested persons,’’ as
16, 2014.
defined in section 2(a)(19) of the Act, of
HEARING OR NOTIFICATION OF HEARING:
the Series or the Adviser (‘‘Independent
An order granting the requested relief
Board Members’’), to, without obtaining
will be issued unless the Commission
shareholder approval: (i) Select Suborders a hearing. Interested persons may Advisers to manage all or a portion of
request a hearing by writing to the
the assets of a Series and enter into SubCommission’s Secretary and serving
Advisory Agreements (as defined below)
applicants with a copy of the request,
with the Sub-Advisers,1 and (ii)
personally or by mail. Hearing requests
should be received by the Commission
1 A ‘‘Sub-Adviser’’ is (a) an indirect or direct
by 5:30 p.m. on January 12, 2015, and
‘‘wholly owned subsidiary’’ (as such term is defined
in the Act) of the Adviser for that Series, or (b) a
should be accompanied by proof of
sister company of the Adviser for that Series that
service on applicants, in the form of an
is an indirect or direct ‘‘wholly-owned subsidiary’’
affidavit or, for lawyers, a certificate of
(as such term is defined in the Act) of the same
company that, indirectly or directly, wholly owns
service. Pursuant to rule 0–5 under the
the Adviser (each of (a) and (b) a ‘‘Wholly-Owned
Act, hearing requests should state the
Sub-Adviser’’ and collectively, the ‘‘Wholly-Owned
nature of the writer’s interest, any facts
Sub-Advisers’’), or (c) an investment sub-adviser for
bearing upon the desirability of a
that Series that is not an ‘‘affiliated person’’ (as such
hearing on the matter, the reason for the term is defined in section 2(a)(3) of the Act) of the
Series or the Adviser, except to the extent that an
request, and the issues contested.
affiliation arises solely because the sub-adviser
Persons who wish to be notified of a
serves as a sub-adviser to one or more Series (each,
a ‘‘Non-Affiliated Sub-Adviser’’ and collectively,
hearing may request notification by
the ‘‘Non-Affiliated Sub-Advisers’’). Each Subwriting to the Commission’s Secretary.
Adviser will be registered with the Commission
ADDRESSES: Secretary, U.S. Securities
under the Advisers Act or not subject to such
and Exchange Commission, 100 F Street registration.
VerDate Sep<11>2014
16:34 Dec 23, 2014
Jkt 235001
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
materially amend Sub-Advisory
Agreements with the Sub-Advisers.2
Applicants request that the relief apply
to named applicants, as well as any
future Series and any other existing or
future registered open-end management
investment company or series thereof
that is advised by the Adviser, uses the
multi-manager structure as described in
the application, and complies with the
terms and conditions of the application
(‘‘Subadvised Series’’).3 The requested
relief will not extend to any sub-adviser,
other than a Wholly-Owned SubAdviser, who is an affiliated person, as
defined in section 2(a)(3) of the Act, of
the Subadvised Series or of the Adviser,
other than by reason of serving as a subadviser to one or more of the
Subadvised Series (‘‘Affiliated SubAdviser’’).
4. Each Subadvised Series has, or will
have, as its investment adviser, the
Adviser, its successors, or an entity
controlling, controlled by or under
common control with the Adviser or its
successors (included in the term,
‘‘Adviser’’). The Adviser will serve as
investment adviser to each Subadvised
Series pursuant to an investment
advisory agreement with the Trust
(‘‘Investment Management Agreement’’).
The Investment Management Agreement
for each Series will be approved by the
board of trustees of the Trust
(‘‘Board’’),4 including a majority of the
Independent Board Members, and by
the shareholders of the relevant Series
as required by sections 15(a) and 15(c)
of the Act and rule 18f–2 thereunder.
The terms of the Investment
Management Agreement comply with
section 15(a) of the Act.
5. Under the terms of the Investment
Management Agreement, the Adviser,
subject to the supervision of the Board,
provides continuous investment
management of the assets of each Series.
2 Shareholder approval will continue to be
required for any other sub-adviser changes and
material amendments to an existing Sub-Advisory
Agreement with any sub-adviser other than a NonAffiliated Sub-Adviser or a Wholly-Owned SubAdviser (all such changes referred to as ‘‘Ineligible
Sub-Adviser Changes’’).
3 For 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. 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 Series contains the name
of a sub-adviser, the name of the Adviser, or a
trademark or trade name that is owned by or
publicly used to identify that Adviser, will precede
the name of the sub-adviser.
4 The term ‘‘Board’’ also includes the board of
trustees or directors of a future Subadvised Series,
if different.
E:\FR\FM\24DEN1.SGM
24DEN1
]]>Agencies
[Federal Register Volume 79, Number 247 (Wednesday, December 24, 2014)]
[Notices]
[Pages 77538-77542]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30129]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31385; 812-14345]
Forum Funds II and Acuitas Investments, LLC; Notice of
Application
December 18, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act and rule 18f-2 under the Act, as well as from certain
disclosure requirements.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order that would
permit them to enter into and materially amend sub-advisory agreements
with Wholly-Owned Sub-Advisers (as defined below) and Non-Affiliated
Sub-Advisers (as defined below) without shareholder approval and would
grant relief from certain disclosure requirements.
Applicants: Forum Funds II (``Trust'') and Acuitas Investments, LLC
(``Adviser'').
DATES: Filing Dates: The application was filed August 12, 2014, and
amended on September 19, 2014, November 18, 2014, November 21, 2014 and
December 16, 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 January 12, 2015, and should be accompanied by proof of
service on 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: Secretary, U.S. Securities and Exchange Commission, 100 F
Street
[[Page 77539]]
NE., Washington, DC 20549-1090. Applicants: Trust, Three Canal Plaza,
Suite 600, Portland, ME 04101; Adviser, 520 Pike Street, Suite 1221,
Seattle, Washington 98101.
FOR FURTHER INFORMATION CONTACT: Kaitlin C. Bottock, Attorney Adviser,
at (202) 551-8658, or Daniele Marchesani, Branch Chief, at (202) 551-
6747 (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. The Trust is organized as a Delaware statutory trust and is
registered under the Act as an open-end management investment company.
The Trust offers one or more series of shares (each, a ``Series'').
Each Subadvised Series (as defined below) has its own investment
objectives, policies and restrictions and may offer one or more classes
of shares that are subject to different expenses.
2. The Adviser, a limited liability company organized under the
laws of the state of Washington, is registered as an investment adviser
under the Investment Advisers Act of 1940 (``Advisers Act'').
3. Applicants request an order to permit the Adviser, subject to
the approval of the Board, including a majority of the members of the
Board who are not ``interested persons,'' as defined in section
2(a)(19) of the Act, of the Series or the Adviser (``Independent Board
Members''), to, without obtaining shareholder approval: (i) Select Sub-
Advisers to manage all or a portion of the assets of a Series and enter
into Sub-Advisory Agreements (as defined below) with the Sub-
Advisers,\1\ and (ii) materially amend Sub-Advisory Agreements with the
Sub-Advisers.\2\ Applicants request that the relief apply to named
applicants, as well as any future Series and any other existing or
future registered open-end management investment company or series
thereof that is advised by the Adviser, uses the multi-manager
structure as described in the application, and complies with the terms
and conditions of the application (``Subadvised Series'').\3\ The
requested relief will not extend to any sub-adviser, other than a
Wholly-Owned Sub-Adviser, who is an affiliated person, as defined in
section 2(a)(3) of the Act, of the Subadvised Series or of the Adviser,
other than by reason of serving as a sub-adviser to one or more of the
Subadvised Series (``Affiliated Sub-Adviser'').
---------------------------------------------------------------------------
\1\ A ``Sub-Adviser'' is (a) an indirect or direct ``wholly
owned subsidiary'' (as such term is defined in the Act) of the
Adviser for that Series, or (b) a sister company of the Adviser for
that Series that is an indirect or direct ``wholly-owned
subsidiary'' (as such term is defined in the Act) of the same
company that, indirectly or directly, wholly owns the Adviser (each
of (a) and (b) a ``Wholly-Owned Sub-Adviser'' and collectively, the
``Wholly-Owned Sub-Advisers''), or (c) an investment sub-adviser for
that Series that is not an ``affiliated person'' (as such term is
defined in section 2(a)(3) of the Act) of the Series or the Adviser,
except to the extent that an affiliation arises solely because the
sub-adviser serves as a sub-adviser to one or more Series (each, a
``Non-Affiliated Sub-Adviser'' and collectively, the ``Non-
Affiliated Sub-Advisers''). Each Sub-Adviser will be registered with
the Commission under the Advisers Act or not subject to such
registration.
\2\ Shareholder approval will continue to be required for any
other sub-adviser changes and material amendments to an existing
Sub-Advisory Agreement with any sub-adviser other than a Non-
Affiliated Sub-Adviser or a Wholly-Owned Sub-Adviser (all such
changes referred to as ``Ineligible Sub-Adviser Changes'').
\3\ For 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. 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 Series contains the name of a sub-adviser, the name
of the Adviser, or a trademark or trade name that is owned by or
publicly used to identify that Adviser, will precede the name of the
sub-adviser.
---------------------------------------------------------------------------
4. Each Subadvised Series has, or will have, as its investment
adviser, the Adviser, its successors, or an entity controlling,
controlled by or under common control with the Adviser or its
successors (included in the term, ``Adviser''). The Adviser will serve
as investment adviser to each Subadvised Series pursuant to an
investment advisory agreement with the Trust (``Investment Management
Agreement''). The Investment Management Agreement for each Series will
be approved by the board of trustees of the Trust (``Board''),\4\
including a majority of the Independent Board Members, and by the
shareholders of the relevant Series as required by sections 15(a) and
15(c) of the Act and rule 18f-2 thereunder. The terms of the Investment
Management Agreement comply with section 15(a) of the Act.
---------------------------------------------------------------------------
\4\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Series, if different.
---------------------------------------------------------------------------
5. Under the terms of the Investment Management Agreement, the
Adviser, subject to the supervision of the Board, provides continuous
investment management of the assets of each Series. The Adviser
periodically reviews each Series' investment policies and strategies,
and based on the need of a particular Series may recommend changes to
the investment policies and strategies of the Series for consideration
by the Board. For its services to each Series under the Investment
Management Agreement, the Adviser receives an investment management fee
from that Series. The Investment Management Agreement provides that the
Adviser may, subject to the approval of the Board, including a majority
of the Independent Board Members, and the shareholders of the
applicable Subadvised Series (if required), delegate portfolio
management responsibilities of all or a portion of the assets of a
Subadvised Series to one or more Sub-Advisers.
6. Pursuant to the Investment Management Agreement, the Adviser
continues to have overall responsibility for the management and
investment of the assets of each Subadvised Series. The Adviser's
responsibilities include recommending the removal or replacement of
Sub-Advisers, determining the portion of that Subadvised Series' assets
to be managed by any given Sub-Adviser and reallocating those assets as
necessary from time to time.
7. The Adviser may enter into sub-advisory agreements with various
Sub-Advisers (``Sub-Advisory Agreements'') to provide investment
management services to the Subadvised Series. The terms of each Sub-
Advisory Agreement comply fully with the requirements of section 15(a)
of the Act. Any Sub-Advisory Agreements in effect at the time the
Subadvised Series commences their public offerings of securities will
have been approved by the Board, including a majority of the
Independent Board Members, and the initial shareholders of the
applicable Subadvised Series in accordance with sections 15(a) and
15(c) of the Act and rule 18f-2 thereunder. The Sub-Advisers, subject
to the supervision of the Adviser and oversight of the Board, determine
the securities and other investments to be purchased, sold or entered
into by a Subadvised Series' portfolio or a portion thereof, and will
place orders with brokers or dealers that they select. The Adviser
compensates each Sub-Adviser out of the fee paid to the Adviser under
the Investment Management Agreement.
8. If the requested order is granted, the Subadvised Series will
inform shareholders of the hiring of a new Sub-Adviser pursuant to the
following procedures (``Modified Notice and Access Procedures''): (a)
Within 90 days
[[Page 77540]]
after a new Sub-Adviser is hired for any Subadvised Series, that
Subadvised Series will send its shareholders either a Multi-manager
Notice or a Multi-manager Notice and Multi-manager Information
Statement; \5\ and (b) the Subadvised Series will make the Multi-
manager Information Statement available on the Web site identified in
the Multi-manager Notice no later than when the Multi-manager Notice
(or Multi-manager Notice and Multi-manager Information Statement) is
first sent to shareholders, and will maintain it on that Web site for
at least 90 days. In the circumstances described in the application, a
proxy solicitation to approve the appointment of new Sub-Advisers
provides no more meaningful information to shareholders than the
proposed Multi-manager Information Statement. Applicants state that the
Board would comply with the requirements of sections 15(a) and 15(c) of
the Act before entering into or amending Sub-Advisory Agreements.
---------------------------------------------------------------------------
\5\ A ``Multi-manager Notice'' will be modeled on a Notice of
Internet Availability as defined in rule 14a-16 under the Securities
Exchange Act of 1934 (``Exchange Act''), and specifically will,
among other things: (a) Summarize the relevant information regarding
the new Sub-Adviser (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 Series. A ``Multi-manager Information Statement''
will meet the requirements of Regulation 14C, Schedule 14C and Item
22 of Schedule 14A under the Exchange Act for an information
statement, except as modified by the order to permit Aggregate Fee
Disclosure. Multi-manager Information Statements will be filed with
the Commission via the EDGAR system.
---------------------------------------------------------------------------
9. Applicants also request an order exempting the Subadvised Series
from certain disclosure obligations that may require each Subadvised
Series to disclose fees paid by the Adviser to each Sub-Adviser.
Applicants seek relief to permit each Subadvised Series to disclose (as
a dollar amount and a percentage of the Subadvised Series' net assets):
(a) The aggregate fees paid to the Adviser and any Wholly-Owned Sub-
Advisers, (b) the aggregate fees paid to Non-Affiliated Sub-Advisers,
and (c) the fee paid to each Affiliated Sub-Adviser (collectively, the
``Aggregate Fee Disclosure''). An exemption is requested to permit the
Subadvised Series to include only the Aggregate Fee Disclosure. All
other items required by section 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 relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company ``except pursuant to a written contract, 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,'' a
description of the ``aggregate amount of the investment adviser's
fee,'' a description of the ``terms of the contract to be acted upon,''
and, if a change in the advisory fee is proposed, the existing and
proposed fees and the difference between the two fees.
4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require
a registered investment company to include in its financial statement
information about the investment advisory fees.
5. Section 6(c) of the Act provides that the Commission by order
upon application may conditionally or unconditionally exempt any
person, security, or transaction or any class or classes of persons,
securities, or transactions from any provisions of the Act, or from any
rule thereunder, if such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Applicants state that their requested relief meets this standard for
the reasons discussed below.
6. Applicants assert that the shareholders expect the Adviser,
subject to the review and approval of the Board, to select the Sub-
Advisers who are in the best position to achieve the Subadvised Series'
investment objective. Applicants assert that, from the perspective of
the shareholder, the role of the Sub-Adviser is substantially
equivalent to the role of the individual portfolio managers employed by
an investment adviser to a traditional investment company. Applicants
believe that permitting the Adviser to perform the duties for which the
shareholders of the Subadvised Series are paying the Adviser--the
selection, supervision and evaluation of the Sub-Advisers--without
incurring unnecessary delays or expenses is appropriate in the interest
of the Subadvised Series' shareholders and will allow such Subadvised
Series to operate more efficiently. Applicants state that the
Investment Management Agreement will continue to be fully subject to
section 15(a) of the Act and rule 18f-2 under the Act and approved by
the Board, including a majority of the Independent Board Members, and
by the shareholders of the relevant Series in the manner required by
sections 15(a) and 15(c) of the Act. Applicants are not seeking an
exemption with respect to the Investment Management Agreement.
7. Applicants assert that disclosure of the individual fees that
the Adviser would pay to the Sub-Advisers of Subadvised Series that
operate under the multi-manager structure described in the application
would not serve any meaningful purpose. Applicants contend that the
primary reasons for requiring disclosure of individual fees paid to
Sub-Advisers are to inform shareholders of expenses to be charged by a
particular Subadvised Series and to enable shareholders to compare the
fees to those of other comparable investment companies. Applicants
believe that the requested relief satisfies these objectives because
the advisory fee paid to the Adviser will be fully disclosed and
therefore, shareholders will know what the Subadvised Series' fees and
expenses are and will be able to compare the advisory fees a Subadvised
Series is charged to those of other
[[Page 77541]]
investment companies. Applicants assert that the requested disclosure
relief would benefit shareholders of the Subadvised Series because it
would improve the Adviser's ability to negotiate the fees paid to Sub-
Advisers. Applicants state that the Adviser may be able to negotiate
rates that are below a Sub-Adviser's ``posted'' amounts if the Adviser
is not required to disclose the Sub-Advisers' fees to the public.
Applicants submit that the relief requested to use Aggregate Fee
Disclosure will encourage Sub-Advisers to negotiate lower sub-advisory
fees with the Adviser if the lower fees are not required to be made
public.
8. For the reasons discussed above, applicants submit that the
requested relief meets the standards for relief under section 6(c) of
the Act. Applicants state that the operation of the Subadvised Series
in the manner described in the application must be approved by
shareholders of a Subadvised Series before that Subadvised Series may
rely on the requested relief. In addition, applicants state that the
proposed conditions to the requested relief are designed to address any
potential conflicts of interest, including any posed by the use of
Wholly-Owned Sub-Advisers, and provide that shareholders are informed
when new Sub-Advisers are hired. Applicants assert that conditions 6,
7, 10 and 11 are designed to provide the Board with sufficient
independence and the resources and information it needs to monitor and
address any conflicts of interest. 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: \6\
---------------------------------------------------------------------------
\6\ Applicants will comply with conditions 7, 8, 9 and 12 only
if they rely on the relief that would allow them to provide
Aggregate Fee Disclosure.
---------------------------------------------------------------------------
1. Before a Subadvised Series may rely on the order requested in
the Application, the operation of the Subadvised Series in the manner
described in this Application, including the hiring of Wholly-Owned
Sub-Advisers, will be, or has been, approved by a majority of the
Subadvised Series' outstanding voting securities as defined in the Act,
or, in the case of a new Subadvised Series whose public shareholders
purchase shares on the basis of a prospectus containing the disclosure
contemplated by condition 2 below, by the sole initial shareholder
before offering the Subadvised Series' shares to the public.
2. The prospectus for each Subadvised Series will disclose the
existence, substance, and effect of any order granted pursuant to this
Application. Each Subadvised Series will hold itself out to the public
as employing the multi-manager structure described in this Application.
Each prospectus will prominently disclose that the Adviser has the
ultimate responsibility, subject to oversight by the Board, to oversee
the Sub-Advisers and recommend their hiring, termination and
replacement.
3. The Adviser will provide general management services to a
Subadvised Series, including overall supervisory responsibility for the
general management and investment of the Subadvised Series' assets.
Subject to review and approval of the Board, the Adviser will (a) set a
Subadvised Series' overall investment strategies, (b) evaluate, select,
and recommend Sub-Advisers to manage all or a portion of a Subadvised
Series' assets, and (c) implement procedures reasonably designed to
ensure that Sub-Advisers comply with a Subadvised Series' investment
objective, policies and restrictions. Subject to review by the Board,
the Adviser will (a) when appropriate, allocate and reallocate a
Subadvised Series' assets among multiple Sub-Advisers; and (b) monitor
and evaluate the performance of Sub-Advisers.
4. A Subadvised Series will not make any Ineligible Sub-Adviser
Changes without such agreement, including the compensation to be paid
thereunder, being approved by the shareholders of the applicable
Subadvised Series.
5. Subadvised Series will inform shareholders of the hiring of a
new Sub-Adviser within 90 days after the hiring of the new Sub-Adviser
pursuant to the Modified Notice and Access Procedures.
6. At all times, at least a majority of the Board will be
Independent Board Members, and the selection and nomination of new or
additional Independent Board Members will be placed within the
discretion of the then-existing Independent Board Members.
7. Independent Legal Counsel, as defined in rule 0-1(a)(6) under
the Act, will be engaged to represent the Independent Board Members.
The selection of such counsel will be within the discretion of the
then-existing Independent Board Members.
8. The Adviser will provide the Board, no less frequently than
quarterly, with information about the profitability of the Adviser on a
per Subadvised Series basis. The information will reflect the impact on
profitability of the hiring or termination of any sub-adviser during
the applicable quarter.
9. Whenever a sub-adviser is hired or terminated, the Adviser will
provide the Board with information showing the expected impact on the
profitability of the Adviser.
10. Whenever a sub-adviser change is proposed for an Affiliated
Sub-Adviser or Wholly-Owned Sub-Adviser to a Subadvised Series, the
Board, including a majority of the Independent Board Members, will make
a separate finding, reflected in the Board minutes, that such change is
in the best interests of the Subadvised Series and its shareholders,
and does not involve a conflict of interest from which the Adviser or
the Affiliated Sub-Adviser or the Wholly-Owned Sub-Adviser derives an
inappropriate advantage.
11. No Board Member or officer of a Subadvised Series, or partner,
director, manager, or officer of the Adviser, will own directly or
indirectly (other than through a pooled investment vehicle that is not
controlled by such person), any interest in a Sub-Adviser, except for
(i) ownership of interests in the Adviser or any entity, other than a
Wholly-Owned Sub-Adviser, that controls, is controlled by, or is under
common control with the Adviser; or (ii) ownership of less than 1% of
the outstanding securities of any class of equity or debt of a
publicly-traded company that is either a Sub-Adviser or an entity that
controls, is controlled by or is under common control with a Sub-
Adviser.
12. Each Subadvised Series will disclose the Aggregate Fee
Disclosure in its registration statement.
13. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that requested in the
Application, the requested order will expire on the effective date of
that rule.
14. Any new Sub-Advisory Agreement or any amendment to a Subadvised
Series' existing Investment Management Agreement or Sub-Advisory
Agreement that directly or indirectly results in an increase in the
aggregate advisory fee rate payable by the Subadvised Series will be
submitted to the Subadvised Series' shareholders for approval.
[[Page 77542]]
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-30129 Filed 12-23-14; 8:45 am]
BILLING CODE 8011-01-P
