[Federal Register Volume 78, Number 52 (Monday, March 18, 2013)]
[Notices]
[Pages 16715-16723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06119]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30422; File No. 812-13976]
Renaissance Capital Greenwich Funds, et al.; Notice of
Application
March 11, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1
under the Act, under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under
section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act.
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SUMMARY: Summary of Application: Applicants request an order that would
permit (a) series of certain open-end management investment companies
to issue shares (``Shares'') redeemable in large aggregations only
(``Creation Units''); (b) secondary market transactions in Shares to
occur at negotiated market prices; (c) certain
[[Page 16716]]
series to pay redemption proceeds, under certain circumstances, more
than seven days after the tender of Shares for redemption; (d) certain
affiliated persons of the series to deposit securities into, and
receive securities from, the series in connection with the purchase and
redemption of Creation Units; and (e) certain registered management
investment companies and unit investment trusts outside of the same
group of investment companies as the series to acquire Shares.
Applicants: Renaissance Capital Greenwich Funds (``Trust''),
Renaissance Capital LLC (``Adviser''), and Renaissance Capital
Investments, Inc. (``Renaissance Capital Investments'').
DATES: Filing Dates: The application was filed on November 18, 2011 and
amended on June 8, 2012, October 16, 2012, January 17, 2013, and March
7, 2013.
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 April 5, 2013, and should be accompanied by proof of
service on applicants, in the form of an affidavit, or for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090; Applicants, 165 Mason Street,
Greenwich, CT 06830.
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel at (202)
551-6819, or David P. Bartels, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
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 http://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. The Trust is registered as an open-end management investment
company under the Act and is organized as a Delaware statutory trust.
Applicants request that the order apply to a newly created series of
the Trust described in the application (``Initial Fund'') and to other
open-end management investment companies, or series thereof, that may
be created in the future as well as future series of the Trust
(collectively, ``Future Funds''),\1\ each of which will be an
exchanged-traded fund and will track a specified domestic and/or
foreign securities index (``Underlying Index''). Any Future Fund will
(a) be advised by the Adviser or an entity controlling, controlled by,
or under common control with the Adviser and (b) comply with the terms
and conditions of the application. The Initial Fund and Future Funds,
together, are the ``Funds.'' \2\ Each Underlying Index will be
comprised solely of equity and/or fixed income securities. The Funds
will be based on Underlying Indexes comprised of equity and/or fixed
income securities that trade in U.S. markets, or equity and/or fixed
income securities that trade in non-U.S. markets (``Foreign Funds''),
or a combination of domestic and foreign equity and/or fixed income
securities (``Global Funds'').
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\1\ Prior to the date of the application, the Trust consisted of
one mutual fund series, the Global IPO Plus Aftermarket Fund.
\2\ All existing entities that currently intend to rely on the
requested order have been named as applicants. Any other existing or
future entity that subsequently relies on the order will comply with
the terms and conditions of the application. An Investing Fund (as
defined below) may rely on the order only to invest in Funds and not
in any other registered investment company.
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2. The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the ``Advisers Act'') and will serve
as investment adviser to the Initial Fund. Any investment adviser to
Future Funds will be registered as an investment adviser under the
Advisers Act. The Adviser may enter into sub-advisory agreements with
one or more investment advisers to act as sub-advisers to particular
Funds (each, a ``Sub-Adviser''). Any Sub-Adviser to a Fund will either
be registered under the Advisers Act or will not be required to
register thereunder. The distributor for the Initial Fund will be
Renaissance Capital Investments, a Delaware corporation, or an
unaffiliated distributor to be designated. Renaissance Capital
Investments is, and each distributor for a Future Fund will be, a
broker-dealer (``Broker'') registered under the Securities Exchange Act
of 1934 (the ``Exchange Act'') and will act as distributor and
principal underwriter (``Distributor'') of one or more of the Funds.
The Distributor of any Fund may be an Affiliated Person (as defined
below), or a Second-Tier Affiliate (as defined below), of that Fund's
Adviser and/or Sub-Advisers.
3. Each Fund will hold certain securities (``Portfolio
Securities'') consisting largely of some or all of the component
securities (``Component Securities'') of an Underlying Index selected
to correspond before fees and expenses generally to the price and yield
performance of such Underlying Index. The Initial Fund and any Future
Fund will be entitled to use its Underlying Index pursuant to either a
licensing agreement with the entity that compiles, creates, sponsors or
maintains an Underlying Index (each, an ``Index Provider'') or one or
more sub-licensing arrangements pursuant to such licensing agreement
with the Index Provider. The Initial Fund will be a Fund based upon an
Underlying Index that is created, compiled, sponsored or maintained by
an Index Provider that is an affiliated person, as defined in section
2(a)(3) of the Act (``Affiliated Person'') or an affiliated person of
such Affiliated Person (``Second-Tier Affiliate'') of the Trust, the
Adviser, the Distributor, promoter or any Sub-Adviser to the Fund
(each, a ``Self-Indexing Fund'').\3\ Each Future Fund may be a Self-
Indexing Fund, or it may be a Fund based upon an Underlying Index that
is created, compiled, sponsored or maintained by an Index Provider who
is not and will not be an Affiliated Person, or a Second-Tier
Affiliate, of the Trust, the Adviser, the Distributor, promoter or any
Sub-Adviser to the Fund.
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\3\ The licenses for the Self-Indexing Funds will specifically
state that the Adviser must provide the use of the Underlying
Indexes and related intellectual property at no cost to the Trust
and the Self-Indexing Funds.
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4. The Index Provider of each Self-Indexing Fund will create and/or
own a proprietary, rules based methodology (``Rules-Based Process'') to
create indexes for use by the Self-Indexing Funds and other equity or
fixed income investors.\4\ Applicants contend that any
[[Page 16717]]
potential conflicts of interest arising from the fact that the Index
Provider of each Self-Indexing Fund will be an ``affiliated person'' of
the Adviser will not have any impact on the operation of the Self-
Indexing Funds because the Underlying Indexes will maintain
transparency, the Self-Indexing Funds' portfolios will be transparent,
and the Index Provider, the Adviser, any Sub-Adviser and the Self-
Indexing Funds each will adopt policies and procedures to address any
potential conflicts of interest (``Policies and Procedures''). The
Index Provider will publish in the public domain, including on the
Self-Indexing Funds' Web site, the rules that govern the construction
and maintenance of each of its Underlying Indexes. Applicants believe
that this will prevent the Adviser from possessing any advantage over
other market participants by virtue of its affiliation with the Index
Provider. Applicants note that the identity and weightings of the
Component Securities for a Self-Indexing Fund will be readily
ascertainable by anyone, since the Rules-Based Process will be publicly
available.
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\4\ The Underlying Indexes may be made available to registered
investment companies, as well as separately managed accounts of
institutional investors and privately offered funds that are not
deemed to be ``investment companies'' in reliance on section 3(c)(1)
or 3(c)(7) of the Act for which the Adviser acts as adviser or
subadviser (``Affiliated Accounts'') as well as other such
registered investment companies, separately managed accounts and
privately offered funds for which it does not act either as adviser
or subadviser (``Unaffiliated Accounts''). The Affiliated Accounts
and the Unaffiliated Accounts (collectively referred to herein as
``Accounts''), like the Funds, would seek to track the performance
of one or more Underlying Index(es) by investing in the constituents
of such Underlying Index(es) or a representative sample of such
constituents of the Underlying Index. Consistent with the relief
requested from section 17(a), the Affiliated Accounts will not
engage in Creation Unit transactions with a Fund.
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5. While the Index Provider does not presently contemplate specific
changes to the Rules-Based Process, it could be modified, for example,
to reflect changes in the underlying market tracked by an Underlying
Index, the way in which the Rules-Based Process takes into account
market events or to change the way a corporate action, such as a stock
split, is handled. Such changes would not take effect until the Index
Group\5\ has given (a) the Calculation Agent (defined below) reasonable
prior written notice of such rule changes and (b) the investing public
at least sixty (60) days published notice that such changes will be
implemented. Each Underlying Index for a Self-Indexing Fund will be
reconstituted or rebalanced on at least an annual basis, but no more
frequently than monthly.
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\5\ The ``Index Group'' refers to those employees of the Index
Provider appointed to assist the Index Administrator (as defined
below) in the performance of his/her duties.
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6. As owner of the Underlying Indexes, the Index Provider of each
Self-Indexing Fund will enter into an agreement with a third party to
act as ``Calculation Agent.'' The Calculation Agent will be solely
responsible for the calculation and maintenance of each Self-Indexing
Fund's Underlying Index, as well as the dissemination of the values of
each such Underlying Index. The Calculation Agent is not, and will not
be, an Affiliated Person or a Second-Tier Affiliate of the Self-
Indexing Funds, the Adviser, any Sub-Adviser, any promoter or the
Distributor.
7. The Adviser and the Index Provider of each Self-Indexing Fund
will adopt and implement Policies and Procedures to minimize or
eliminate any potential conflicts of interest. Among other things, the
Policies and Procedures will be designed to limit or prohibit
communication with respect to issues/information related to the
maintenance, calculation and reconstitution of the Underlying Indexes
between the Index Administrator,\6\ the Index Group, and the employees
of the Adviser.\7\ As employees of the Index Provider, the Index
Administrator and members of the Index Group (i) will not have any
responsibility for the management of the Self-Indexing Funds or the
Affiliated Accounts, (ii) will be expressly prohibited from sharing
this information with any employees of the Adviser or those of any Sub-
Adviser, including those persons that have responsibility for the
management of the Self-Indexing Funds or the Affiliated Accounts until
such information is publicly announced, and (iii) will be expressly
prohibited from sharing or using this non-public information in any way
except in connection with the performance of their respective duties.
In addition, the Adviser has adopted and any Sub-Adviser will have
adopted, pursuant to rule 206(4)-7 under the Advisers Act, written
policies and procedures designed to prevent violations of the Advisers
Act and the rules under the Advisers Act. Also, the Adviser has
adopted, and any Sub-Adviser will be required to adopt, a Code of
Ethics pursuant to rule 17j-1 under the Act and rule 204A-1 under the
Advisers Act.
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\6\ The ``Index Administrator'' refers to the employee of the
Index Provider with ultimate responsibility for the Underlying
Indexes and Rules-Based Process.
\7\ If the Index Administrator or the Index Group includes
employees of the Adviser (such as when the Index Provider is a
division of the Adviser), such limits or prohibitions on
communication will apply between those employees and the other
employees of the Adviser. In the event that the Adviser serves as
the Index Provider for a Self-Indexing Fund, the term `Index
Provider,' with respect to that Fund, will refer to the employees of
the Adviser that are responsible for creating, compiling, and
maintaining the relevant Underlying Index.
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8. Applicants assert that certain potential conflicts of interest
discussed in the application do not exist where the Funds are not Self-
Indexing Funds. Applicants assert that the representations and
undertakings in the application designed to prevent such potential
conflicts of interest shall only apply to the Initial Fund and any
Future Funds that are Self-Indexing Funds.
9. The investment objective of each Fund will be to provide
investment returns that correspond, before fees and expenses, generally
to the price and yield performance of its Underlying Index.\8\ Each
Fund will sell and redeem Creation Units only on a ``Business Day,''
which is defined as any day that the NYSE, the relevant Listing
Exchange (as defined below), the Trust and the custodian are open for
business and includes any day that a Fund is required to be open under
section 22(e) of the Act. A Fund will utilize either a replication or
representative sampling strategy to track its Underlying Index. A Fund
using a replication strategy will invest in the Component Securities of
its Underlying Index in the same approximate proportions as in such
Underlying Index. A Fund using a representative sampling strategy will
hold some, but not necessarily all of the Component Securities of its
Underlying Index. Applicants state that a Fund using a representative
sampling strategy will not be expected to track the performance of its
Underlying Index with the same degree of accuracy as would an
investment vehicle that invested in every Component Security of the
Underlying Index with the same weighting as the Underlying Index.
Applicants expect that each Fund will have an annual tracking error
relative to the performance of its Underlying Index of less than 5%.
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\8\ Applicants represent that at least 80% of each Fund's total
assets (excluding securities lending collateral) (``80% Basket'')
will be invested in Component Securities that comprise its
Underlying Index or TBA Transactions (as defined below), or in the
case of Foreign Funds and Global Funds, the 80% Basket requirement
may also include Depositary Receipts (defined below) representing
Component Securities. Depositary receipts representing foreign
securities (``Depositary Receipts'') include American Depositary
Receipts (``ADRs'') and Global Depositary Receipts (``GDRs''). Each
Fund may also invest up to 20% of its total assets in a broad
variety of other instruments, including securities not included in
its Underlying Index, which the Adviser believes will help the Fund
track its Underlying Index.
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10. Creation Units will consist of specified large aggregations of
Shares, e.g., 25,000 or 100,000 Shares, and it is expected that the
initial price of a Creation Unit will range from $1 million to $10
million. All orders to purchase Creation Units must be placed with the
Distributor by or through a party that has entered into an agreement
with the Distributor (``Authorized Participant''). The Distributor will
be responsible for transmitting the orders to the Funds. An Authorized
Participant must be either (a) a Broker or other participant in the
[[Page 16718]]
continuous net settlement system of the National Securities Clearing
Corporation (``NSCC''), a clearing agency registered with the
Commission, or (b) a participant in the Depository Trust Company
(``DTC,'' and such participant, ``DTC Participant'').
11. The Shares will be purchased and redeemed in Creation Units and
generally on an in-kind basis. Except where the purchase or redemption
will include cash under the limited circumstances specified below,
purchasers will be required to purchase Creation Units by making an in-
kind deposit of specified instruments (``Deposit Instruments''), and
shareholders redeeming their Shares will receive an in-kind transfer of
specified instruments (``Redemption Instruments'').\9\ On any given
Business Day, the names and quantities of the instruments that
constitute the Deposit Instruments and the names and quantities of the
instruments that constitute the Redemption Instruments will be
identical, unless the Fund is Rebalancing (as defined below). In
addition, the Deposit Instruments and the Redemption Instruments will
each correspond pro rata to the positions in the Fund's portfolio
(including cash positions) \10\ except: (a) In the case of bonds, for
minor differences when it is impossible to break up bonds beyond
certain minimum sizes needed for transfer and settlement; (b) for minor
differences when rounding is necessary to eliminate fractional shares
or lots that are not tradeable round lots; \11\ (c) TBA Transactions
\12\ and other positions that cannot be transferred in kind \13\ will
be excluded from the Deposit Instruments and the Redemption
Instruments,\14\ (d) to the extent the Fund determines, on a given
Business Day, to use a representative sampling of the Fund's portfolio;
\15\ or (e) for temporary periods, to effect changes in the Fund's
portfolio as a result of the rebalancing of its Underlying Index (any
such change, a ``Rebalancing''). If there is a difference between the
net asset value (``NAV'') attributable to a Creation Unit and the
aggregate market value of the Deposit Instruments or Redemption
Instruments exchanged for the Creation Unit, the party conveying
instruments with the lower value will also pay to the other an amount
in cash equal to that difference (the ``Balancing Amount'').
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\9\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the Securities Act of 1933 (``Securities
Act''). In accepting Deposit Instruments and satisfying redemptions
with Redemption Instruments that are restricted securities eligible
for resale pursuant to rule 144A under the Securities Act, the Funds
will comply with the conditions of rule 144A.
\10\ The portfolio used for this purpose will be the same
portfolio used to calculate the Fund's NAV for the Business Day.
\11\ A tradeable round lot for a security will be the standard
unit of trading in that particular type of security in its primary
market.
\12\ A ``TBA Transaction'' is a method of trading mortgage-
backed securities. In a TBA Transaction, the buyer and seller agree
upon general trade parameters such as agency, settlement date, par
amount and price. The actual pools delivered generally are
determined two days prior to the settlement date.
\13\ This includes instruments that can be transferred in kind
only with the consent of the original counterparty to the extent the
Fund does not intend to seek such consents.
\14\ Because these instruments will be excluded from the Deposit
Instruments and the Redemption Instruments, their value will be
reflected in the determination of the Balancing Amount (as defined
below).
\15\ A Fund may only use sampling for this purpose if the
sample: (i) Is designed to generate performance that is highly
correlated to the performance of the Fund's portfolio; (ii) consists
entirely of instruments that are already included in the Fund's
portfolio; and (iii) is the same for all Authorized Participants on
a given Business Day.
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12. Purchases and redemptions of Creation Units may be made in
whole or in part on a cash basis, rather than in kind, solely under the
following circumstances: (a) To the extent there is a Balancing Amount;
(b) if, on a given Business Day, the Fund announces before the open of
trading that all purchases, all redemptions or all purchases and
redemptions on that day will be made entirely in cash; (c) if, upon
receiving a purchase or redemption order from an Authorized
Participant, the Fund determines to require the purchase or redemption,
as applicable, to be made entirely in cash; \16\ (d) if, on a given
Business Day, the Fund requires all Authorized Participants purchasing
or redeeming Shares on that day to deposit or receive (as applicable)
cash in lieu of some or all of the Deposit Instruments or Redemption
Instruments, respectively, solely because: (i) such instruments are not
eligible for transfer through either the NSCC or DTC; or (ii) in the
case of Global Funds and Foreign Funds, such instruments are not
eligible for trading due to local trading restrictions, local
restrictions on securities transfers or other similar circumstances; or
(e) if the Fund permits an Authorized Participant to deposit or receive
(as applicable) cash in lieu of some or all of the Deposit Instruments
or Redemption Instruments, respectively, solely because: (i) Such
instruments are, in the case of the purchase of a Creation Unit, not
available in sufficient quantity; (ii) such instruments are not
eligible for trading by an Authorized Participant or the investor on
whose behalf the Authorized Participant is acting; or (iii) a holder of
Shares of a Global Fund or Foreign Fund would be subject to unfavorable
income tax treatment if the holder receives redemption proceeds in
kind.\17\
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\16\ In determining whether a particular Fund will sell or
redeem Creation Units entirely on a cash or in-kind basis (whether
for a given day or a given order), the key consideration will be the
benefit that would accrue to the Fund and its investors. For
instance, in bond transactions, the Adviser may be able to obtain
better execution than Share purchasers because of the Adviser's
size, experience and potentially stronger relationships in the fixed
income markets. Purchases of Creation Units either on an all cash
basis or in-kind are expected to be neutral to the Funds from a tax
perspective. In contrast, cash redemptions typically require selling
portfolio holdings, which may result in adverse tax consequences for
the remaining Fund shareholders that would not occur with an in-kind
redemption. As a result, tax consideration may warrant in-kind
redemptions.
\17\ A ``custom order'' is any purchase or redemption of Shares
made in whole or in part on a cash basis in reliance on clause
(e)(i) or (e)(ii).
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13. Each Business Day, before the open of trading on a national
securities exchange, as defined in section 2(a)(26) of the Act
(``Exchange'') on which Shares are listed (``Listing Exchange''), each
Fund will cause to be published through the NSCC the names and
quantities of the instruments comprising the Deposit Instruments and
the Redemption Instruments, as well as the estimated Balancing Amount
(if any), for that day. The list of Deposit Instruments and Redemption
Instruments will apply until a new list is announced on the following
Business Day, and there will be no intra-day changes to the list except
to correct errors in the published list. Each Listing Exchange will
disseminate, every 15 seconds during regular Exchange trading hours,
through the facilities of the Consolidated Tape Association, an amount
for each Fund stated on a per individual Share basis representing the
sum of (i) the estimated Balancing Amount and (ii) the current value of
the Portfolio Securities and other assets of the Fund.
14. An investor acquiring or redeeming a Creation Unit from a Fund
will be charged a fee (``Transaction Fee'') to prevent the dilution of
the interests of the remaining shareholders resulting from costs in
connection with the purchase or redemption of Creation Units.\18\ All
orders to purchase Shares of a Fund in Creation Units must be placed
with the Distributor by or through an
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Authorized Participant, and it will be the Distributor's responsibility
to transmit such orders to the Fund. The Distributor also will be
responsible for delivering the Fund's prospectus to those persons
acquiring Shares in Creation Units and for maintaining records of both
the orders placed with it and the confirmations of acceptance furnished
by it. In addition, the Distributor will maintain a record of the
instructions given to the applicable Fund to implement the delivery of
its Shares.
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\18\ Where a Fund permits an in-kind purchaser to substitute
cash-in-lieu of depositing one or more of the requisite Deposit
Instruments, the purchaser may be assessed a higher Transaction Fee
to cover the cost of purchasing such Deposit Instruments.
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15. Shares of each Fund will be listed and traded individually on a
Listing Exchange. It is expected that one or more member firms of a
Listing Exchange will be designated to act as a market maker (each, a
``Market Maker'') and maintain a market for Shares trading on that
Listing Exchange. Prices of Shares trading on an Exchange will be based
on the current bid/offer market. Transactions involving the sale of
Shares on an Exchange will be subject to customary brokerage
commissions and charges.
16. Applicants expect that purchasers of Creation Units will
include institutional investors and arbitrageurs. Market Makers may
also purchase or redeem Creation Units in connection with their market-
making activities. Applicants expect that secondary market purchasers
of Shares will include both institutional and retail investors.\19\ The
price at which Shares trade will be disciplined by arbitrage
opportunities created by the option to continually purchase or redeem
Creation Units at their NAV, which should ensure that Shares will not
trade at a material discount or premium in relation to their NAV.
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\19\ Shares will be registered in book-entry form only. DTC or
its nominee will be the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on
the records of DTC or the DTC Participants.
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17. Shares will not be individually redeemable, and owners of
Shares may acquire those Shares from the Fund, or tender such Shares
for redemption to the Fund, in Creation Units only. To redeem, an
investor must accumulate enough Shares to constitute a Creation Unit.
Redemption requests must be placed by or through an Authorized
Participant. A redeeming investor may pay a Transaction Fee, calculated
in the same manner as a Transaction Fee payable in connection with
purchases of Creation Units.
18. Neither the Trust nor any Fund will be advertised or marketed
or otherwise held out as a traditional open-end investment company or a
``mutual fund.'' Instead, each such Fund will be marketed as an ``ETF''
or ``exchange-traded fund.'' All advertising materials that describe
the features or method of obtaining, buying or selling Creation Units,
or Shares traded on an Exchange, or refer to redeemability, will
prominently disclose that Shares are not individually redeemable and
will disclose that the owners of Shares may acquire those Shares from
the Fund or tender such Shares for redemption to the Fund in Creation
Units only. The Funds will provide copies of their annual and semi-
annual shareholder reports to DTC Participants for distribution to
beneficial owners of Shares.
Applicants' Legal Analysis
1. Applicants request an order under section 6(c) of the Act
granting an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e)
of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b)
of the Act granting an exemption from sections 17(a)(1) and (2) of the
Act, and under section 12(d)(1)(J) for an exemption from sections
12(d)(1)(A) and (B) of the Act.
2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provision of the Act, if and to
the extent that 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.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and the proposed transaction is
consistent with the policies of the registered investment company and
the general provisions of the Act. 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.
Sections 5(a)(1) and 2(a)(32) of the Act
3. Section 5(a)(1) of the Act defines an ``open-end company'' as a
management investment company that is offering for sale or has
outstanding any redeemable security of which it is the issuer. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the holder, upon
its presentation to the issuer, is entitled to receive approximately a
proportionate share of the issuer's current net assets, or the cash
equivalent. Because Shares will not be individually redeemable,
applicants request an order that would permit the Trust and each Fund
to redeem Shares in Creation Units only. Applicants state that
investors may purchase Shares in Creation Units from each Fund and
redeem Creation Units according to the provisions of the Act.
Applicants further state that because the market price of Shares will
be disciplined by arbitrage opportunities, investors should be able to
sell Shares in the secondary market at prices that do not vary
materially from their NAV per Share.
Section 22(d) of the Act and Rule 22c-1 Under the Act
4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security that is currently being offered to
the public by or through an underwriter, except at a current public
offering price described in the prospectus. Rule 22c-1 under the Act
generally requires that a dealer selling, redeeming, or repurchasing a
redeemable security do so only at a price based on its NAV. Applicants
state that secondary market trading in Shares will take place at
negotiated prices, not at a current offering price described in a
Fund's prospectus and not at a price based on NAV. Thus, purchases and
sales of Shares in the secondary market will not comply with section
22(d) of the Act and rule 22c-1 under the Act. Applicants request an
exemption under section 6(c) from these provisions.
5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Shares.
Applicants maintain that, while there is little legislative history
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by
certain riskless-trading schemes by principal underwriters and contract
dealers, (b) prevent unjust discrimination or preferential treatment
among buyers, and (c) ensure an orderly distribution system of
investment company shares by eliminating price competition from non-
contract dealers offering shares at less than the published sales price
and repurchasing shares at more than the published redemption price.
[[Page 16720]]
6. Applicants believe that none of these purposes will be thwarted
by permitting Shares to trade in the secondary market at negotiated
prices. Applicants state that (a) secondary market trading in Shares
does not involve the Funds as parties and cannot result in dilution of
an investment in Shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
Shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants contend that the proposed distribution
system will be orderly because arbitrage activity will ensure that the
Shares do not trade at a material discount or premium in relation to
their NAV.
Section 22(e) of the Act
7. Section 22(e) of the Act generally prohibits a registered
investment company from suspending the right of redemption or
postponing the date of payment of redemption proceeds for more than
seven days after the tender of a security for redemption. Applicants
state that settlement of redemptions for Foreign Funds and Global Funds
will be contingent not only on the settlement cycle of the U.S.
securities markets but also on the delivery cycles in local markets for
underlying foreign Portfolio Securities held by the Foreign Funds and
Global Funds. Applicants state that current delivery cycles for
transferring Redemption Instruments to redeeming investors, coupled
with local market holiday schedules, in certain circumstances will
require a delivery process for the Foreign Funds and Global Funds of up
to 14 calendar days. Applicants request relief under section 6(c) of
the Act from section 22(e) to allow Foreign Funds and Global Funds to
pay redemption proceeds up to 14 calendar days after the tender of the
Creation Units for redemption. Except as disclosed in the relevant
Foreign Fund's or Global Fund's Statement of Additional Information
(``SAI''), applicants expect that each Foreign Fund and Global Fund
will be able to deliver redemption proceeds within seven days.\20\
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\20\ Rule 15c6-1 under the Exchange Act requires that most
securities transactions be settled within three business days of the
trade date. Applicants acknowledge that relief obtained from the
requirements of section 22(e) will not affect any obligations that
they have under rule 15c6-1.
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8. Applicants state that Congress adopted section 22(e) to prevent
unreasonable, undisclosed and unforeseen delays in the actual payment
of redemption proceeds. Applicants state that allowing redemption
payments for Creation Units of a Foreign Fund or Global Fund to be made
within the number of days indicated above would not be inconsistent
with the spirit and intent of section 22(e). Applicants state that the
SAI will disclose those local holidays (over the period of at least one
year following the date of the SAI), if any, that are expected to
prevent the delivery of in kind redemption proceeds in seven calendar
days, and the maximum number of days (up to 14 calendar days) needed to
deliver the proceeds for each affected Foreign Fund and Global Fund.
9. Applicants are not seeking relief from section 22(e) with
respect to Foreign Funds or Global Funds that do not effect creations
and redemptions of Creation Units in-kind.
Section 12(d)(1) of the Act
10. Section 12(d)(1)(A) of the Act 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, or
any other broker or dealer registered under the Exchange Act from
selling the investment company's shares to another investment company
if the sale would cause the acquiring company to own more than 3% of
the acquired company's voting stock, or if the sale would cause more
than 10% of the acquired company's voting stock to be owned by
investment companies generally.
11. Applicants request an exemption to permit management investment
companies (``Investing Management Companies'') and unit investment
trusts (``Investing Trusts'') registered under the Act that are not
sponsored or advised by the Adviser or an entity controlling,
controlled by, or under common control with the Adviser and are not
part of the same ``group of investment companies,'' as defined in
section 12(d)(1)(G)(ii) of the Act, as the Funds (collectively,
``Investing Funds'') to acquire Shares beyond the limits of section
12(d)(1)(A). In addition, applicants seek relief to permit a Fund, any
Distributor, and/or any Broker registered under the Exchange Act to
sell Shares to Investing Funds in excess of the limits of section
12(d)(1)(B).
12. Each Investing Management Company's investment adviser within
the meaning of section 2(a)(20)(A) of the Act is the ``Investing Funds
Adviser'' and each Investing Management Company's investment adviser
within the meaning of section 2(a)(20)(B) of the Act is the ``Investing
Funds Sub-Adviser.'' Any investment adviser to an Investing Fund will
be registered under the Advisers Act. Each Investing Trust's sponsor is
the ``Sponsor.''
13. Applicants submit that the proposed conditions to the requested
relief adequately address the concerns underlying the limits in
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. Applicants believe that the
requested exemption is consistent with the public interest and the
protection of investors.
14. Applicants believe that neither an Investing Fund nor an
Investing Funds Affiliate would be able to exert undue influence over a
Fund.\21\ To limit the control that an Investing Fund may have over a
Fund, applicants propose a condition prohibiting the Investing Funds
Adviser, Sponsor, any person controlling, controlled by, or under
common control with the Investing Funds Adviser or Sponsor, and any
investment company and any 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 Investing Funds Adviser, the Sponsor, or any person
controlling, controlled by, or under common control with the Investing
Funds Adviser or Sponsor (``Investing Funds' Advisory Group'') from
controlling (individually or in the aggregate) a Fund within the
meaning of section 2(a)(9) of the Act. The same prohibition would apply
to any Investing Funds Sub-Adviser, any person controlling, controlled
by or under common control with the Investing Funds Sub-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 (or portion of such
investment company or issuer) advised or sponsored by the Investing
Funds Sub-Adviser or any person controlling, controlled by or under
common control with the
[[Page 16721]]
Investing Funds Sub-Adviser (``Investing Funds' Sub-Advisory Group'').
Applicants propose other conditions to limit the potential for undue
influence over the Funds, including that no Investing Fund or Investing
Funds Affiliate (except to the extent it is acting in its capacity as
an investment adviser to a Fund) will cause a Fund to purchase a
security in an offering of securities during the existence of an
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, member
of an advisory board, Investing Funds Adviser, Investing Funds Sub-
Adviser, Sponsor or employee of the Investing Funds, or a person of
which any such officer, director, member of an advisory board,
Investing Funds Adviser, Investing Funds Sub-Adviser, Sponsor or
employee is an affiliated person (except any person whose relationship
to the Fund is covered by section 10(f) of the Act is not an
Underwriting Affiliate).
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\21\ An ``Investing Funds Affiliate'' is any Investing Funds
Adviser, Investing Funds Sub-Adviser, Sponsor, promoter, or
principal underwriter of the Investing Funds, and any person
controlling, controlled by, or under common control with any of
those entities. A ``Fund Affiliate'' is the Adviser, Sub-Adviser,
promoter or principal underwriter of a Fund, or any person
controlling, controlled by, or under common control with any of
those entities.
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15. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. The board of directors or trustees
of any Investing Management Company, including a majority of the
directors or trustees who are not ``interested persons'' within the
meaning of section 2(a)(19) of the Act (``non-interested directors or
trustees''), will find that the advisory fees charged under the
contract are based on services provided that will be in addition to,
rather than duplicative of, services provided under the advisory
contract of any Fund in which the Investing Management Company may
invest. In addition, under condition B.5, an Investing Funds Adviser,
or trustee or Sponsor of an Investing Trust, as applicable, will waive
fees otherwise payable to it by the Investing Fund in an amount at
least equal to any compensation (including fees received pursuant to
any plan adopted by a Fund under rule 12b-l under the Act) received
from a Fund by the Investing Funds Adviser, or trustee or Sponsor of
the Investing Trust, or an affiliated person of the Investing Funds
Adviser, or trustee or Sponsor of the Investing Trust, in connection
with the investment by the Investing Fund in the Fund. Applicants also
state that any sales charges or service fees charged with respect to
shares of an Investing Fund will not exceed the limits applicable to a
fund of funds as set forth in Conduct Rule 2830 of the NASD.\22\
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\22\ All references to Conduct Rule 2830 of the NASD include any
successor or replacement rule that may be adopted by FINRA.
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16. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that a Fund will be
prohibited from acquiring 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 to the
extent permitted by exemptive relief from the Commission permitting the
Fund to purchase shares for short-term cash management purposes. To
ensure that an Investing Fund is aware of the terms and conditions of
the requested order, the Investing Funds must enter into an agreement
with the respective Funds (``Investing Fund Participation Agreement'').
The Investing Fund Participation Agreement will include an
acknowledgement from the Investing Fund that it may rely on the order
only to invest in the Funds and not in any other investment company.
17. Applicants also note that a Fund may choose to reject a direct
purchase of Shares in Creation Units by an Investing Fund. To the
extent that an Investing Fund purchases Shares in the secondary market,
a Fund would still retain its ability to reject initial purchases of
Shares made in reliance on the requested order by declining to enter
into the Investing Fund Participation Agreement prior to any investment
by an Investing Fund in excess of the limits of section 12(d)(1)(A).
Section 17 of the Act
18. Section 17(a) of the Act generally prohibits an Affiliated
Person or a Second-Tier Affiliate, from selling any security to or
purchasing any security from a registered investment company. Section
2(a)(3) of the Act defines ``affiliated person'' of another person to
include 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 and any person directly or indirectly
controlling, controlled by, or under common control with, the other
person. Section 2(a)(9) of the Act defines ``control'' as the power to
exercise a controlling influence over the management or policies of a
company, and provides that a control relationship will be presumed
where one person owns more than 25% of a company's voting securities.
The Funds may be deemed to be controlled by the Adviser or an entity
controlling, controlled by or under common control with the Adviser and
hence Affiliated Persons of each other. In addition, the Funds may be
deemed to be under common control with any other registered investment
company (or series thereof) advised by the Adviser or an entity
controlling, controlled by or under common control with the Adviser (an
``Affiliated Fund''). Applicants also state that any investor,
including Market Makers, owning 5% or holding in excess of 25% of the
Trust or such Funds, may be deemed affiliated persons of the Trust or
such Funds. In addition, an investor could own 5% or more, or in excess
of 25%, of the outstanding shares of one or more Affiliated Funds
making that investor a Second-Tier Affiliate of the Funds.
19. Applicants request an exemption under sections 6(c) and 17(b)
of the Act from sections 17(a)(1) and 17(a)(2) of the Act in order to
permit in-kind purchases and redemptions of Creation Units from the
Funds by persons that are Affiliated Persons or Second-Tier Affiliates
of the Funds solely by virtue of one or more of the following: (a)
Holding 5% or more, or more than 25%, of the Shares of the Trust or one
or more Funds; (b) having an affiliation with a person with an
ownership interest described in (a); or (c) holding 5% or more, or more
than 25%, of the shares of one or more Affiliated Funds. Applicants
also request an exemption in order to permit each Fund to sell Shares
to and redeem Shares from, and engage in the in-kind transactions that
would accompany such sales and redemptions with, any Investing Fund of
which the Fund is an Affiliated Person or Second-Tier Affiliate.\23\
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\23\ To the extent that purchases and sales of Shares of a Fund
occur in the secondary market (and not through principal
transactions directly between an Investing Fund and a Fund), relief
from section 17(a) would not be necessary. The requested relief is
intended to cover, however, transactions directly between Funds and
Investing Funds. Applicants are not seeking relief from section
17(a) for, and the requested relief will not apply to, transactions
where a Fund could be deemed an Affiliated Person or Second-Tier
Affiliate of an Investing Fund because the Adviser or an entity
controlling, controlled by or under common control with the Adviser
is also an investment adviser to the Investing Fund.
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20. Applicants contend that no useful purpose would be served by
prohibiting such affiliated persons from making in-kind purchases or
in-kind redemptions of Shares of a Fund in Creation Units. Deposit
Instruments and Redemption Instruments for each Fund will be valued in
the same manner as the Portfolio Securities currently held by such
Fund, and will be valued in this same manner, regardless of the
identity of the purchaser or redeemer. Portfolio
[[Page 16722]]
Securities, Deposit Instruments, Redemption Instruments, and Balancing
Amounts will be the same regardless of the identity of the purchaser or
redeemer. Therefore, applicants state that in kind purchases and
redemptions will afford no opportunity for the specified affiliated
persons of a Fund to effect a transaction detrimental to the other
holders of Shares. Applicants also believe that in kind purchases and
redemptions will not result in abusive self-dealing or overreaching of
the Fund. Applicants also submit that the sale of Shares to and
redemption of Shares from an Investing Fund satisfies the standards for
relief under sections 17(b) and 6(c) of the Act. Applicants note that
any consideration paid for the purchase or redemption of Shares
directly from a Fund will be based on the NAV of the Fund in accordance
with policies and procedures set forth in the Fund's registration
statement.\24\ Applicants also state that the proposed transactions are
consistent with the general purposes of the Act and appropriate in the
public interest.
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\24\ Applicants acknowledge that receipt of compensation by (a)
an Affiliated Person of an Investing Fund, or a Second-Tier
Affiliate, for the purchase by the Investing Funds of Shares or (b)
an Affiliated Person of a Fund, or Second-Tier Affiliate, for the
sale by the Fund of its Shares to an Investing Fund may be
prohibited by section 17(e)(1) of the Act. The Investing Fund
Participation Agreement will include this acknowledgement.
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Applicants' Conditions
Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:
A. ETF Relief
1. As long as a Fund operates in reliance on the requested order,
the Shares of such Fund will be listed on an Exchange.
2. Neither the Trust nor any Fund will be advertised or marketed as
an open-end investment company or a mutual fund. Any advertising
material that describes the purchase or sale of Creation Units or
refers to redeemability will prominently disclose that Shares are not
individually redeemable and that owners of Shares may acquire those
Shares from the Fund and tender those Shares for redemption to a Fund
in Creation Units only.
3. The Web site maintained for each Fund, which is and will be
publicly accessible at no charge, will contain, on a per Share basis
for each Fund, the prior Business Day's NAV and the market closing
price or the midpoint of the bid/ask spread at the time of the
calculation of such NAV (``Bid/Ask Price''), and a calculation of the
premium or discount of the market closing price or Bid/Ask Price
against such NAV.
4. The requested relief to permit ETF operations will expire on the
effective date of any Commission rule under the Act that provides
relief permitting the operation of index-based exchange-traded funds.
B. Section 12(d)(1) Relief
1. The members of an Investing Funds' Advisory Group will not
control (individually or in the aggregate) a Fund within the meaning of
section 2(a)(9) of the Act. The members of an Investing Funds' Sub-
Advisory Group will not control (individually or in the aggregate) a
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 a Fund, the
Investing Funds' Advisory Group or the Investing Funds' Sub-Advisory
Group, each in the aggregate, becomes a holder of more than 25 percent
of the outstanding voting securities of a Fund, it will vote its Shares
of the Fund in the same proportion as the vote of all other holders of
the Fund's Shares. This condition does not apply to the Investing
Funds' Sub-Advisory Group with respect to a Fund for which the
Investing Funds Sub-Adviser or a person controlling, controlled by or
under common control with the Investing Funds Sub-Adviser acts as the
investment adviser within the meaning of section 2(a)(20)(A) of the
Act.
2. No Investing Fund or Investing Funds Affiliate will cause any
existing or potential investment by the Investing Fund in a Fund to
influence the terms of any services or transactions between the
Investing Fund or an Investing Funds Affiliate and the Fund or a Fund
Affiliate.
3. The board of directors or trustees of an Investing Management
Company, including a majority of the non-interested directors or
trustees, will adopt procedures reasonably designed to ensure that the
Investing Funds Adviser and any Investing Funds Sub-Adviser are
conducting the investment program of the Investing Management Company
without taking into account any consideration received by the Investing
Management Company or an Investing Funds Affiliate from a Fund or a
Fund Affiliate in connection with any services or transactions.
4. Once an investment by an Investing Fund in the securities of a
Fund exceeds the limit in section 12(d)(1)(A)(i) of the Act, the Board,
including a majority of the non-interested directors or trustees of the
Board, will determine that any consideration paid by the Fund to the
Investing Fund or an Investing Funds Affiliate in connection with any
services or transactions: (i) is fair and reasonable in relation to the
nature and quality of the services and benefits received by the Fund;
(ii) is within the range of consideration that the Fund would be
required to pay to another unaffiliated entity in connection with the
same services or transactions; and (iii) does not involve overreaching
on the part of any person concerned. This condition does not apply with
respect to any services or transactions between a Fund and its
investment adviser(s), or any person controlling, controlled by or
under common control with such investment adviser(s).
5. The Investing Funds Adviser, or trustee or Sponsor of an
Investing Trust, as applicable, will waive fees otherwise payable to it
by the Investing Fund in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by a Fund under
rule 12b-l under the Act) received from a Fund by the Investing Funds
Adviser, or trustee or Sponsor of the Investing Trust, or an affiliated
person of the Investing Funds Adviser, or trustee or Sponsor of the
Investing Trust, other than any advisory fees paid to the Investing
Funds Adviser, or trustee or Sponsor of an Investing Trust, or its
affiliated person by the Fund, in connection with the investment by the
Investing Fund in the Fund. Any Investing Funds Sub-Adviser will waive
fees otherwise payable to the Investing Funds Sub-Adviser, directly or
indirectly, by the Investing Management Company in an amount at least
equal to any compensation received from a Fund by the Investing Funds
Sub-Adviser, or an affiliated person of the Investing Funds Sub-
Adviser, other than any advisory fees paid to the Investing Funds Sub-
Adviser or its affiliated person by the Fund, in connection with the
investment by the Investing Management Company in the Fund made at the
direction of the Investing Funds Sub-Adviser. In the event that the
Investing Funds Sub-Adviser waives fees, the benefit of the waiver will
be passed through to the Investing Management Company.
6. No Investing Fund or Investing Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to a Fund)
will cause a Fund to purchase a security in an Affiliated Underwriting.
7. The Board, including a majority of the non-interested Board
members, will adopt procedures reasonably designed to monitor any
purchases of securities by a Fund in an Affiliated Underwriting,
[[Page 16723]]
once an investment by an Investing Fund in the securities of the Fund
exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any
purchases made directly from an Underwriting Affiliate. The Board will
review these purchases periodically, but no less frequently than
annually, to determine whether the purchases were influenced by the
investment by the Investing Fund in the Fund. The Board will consider,
among other things: (i) whether the purchases were consistent with the
investment objectives and policies of the Fund; (ii) 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
(iii) whether the amount of securities purchased by the Fund in
Affiliated Underwritings and the amount purchased directly from an
Underwriting Affiliate have changed significantly from prior years. The
Board 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
interest of shareholders of the Fund.
8. Each Fund will 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 will
maintain and preserve for a period of 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 Affiliated
Underwritings once an investment by an Investing Fund in the securities
of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act,
setting forth from whom the securities were acquired, the identity of
the underwriting syndicate's members, the terms of the purchase, and
the information or materials upon which the Board's determinations were
made.
9. Before investing in a Fund in excess of the limits in section
12(d)(1)(A), any Investing Fund and the Fund will execute an Investing
Fund Participation Agreement stating, without limitation, that their
respective boards of directors or trustees and their investment
advisers, or trustee and Sponsor, as applicable, 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 a Fund in excess of the limit in section 12(d)(1)(A)(i), an
Investing Fund will notify the Fund of the investment. At such time,
the Investing Fund will also transmit to the Fund a list of the names
of each Investing Funds Affiliate and Underwriting Affiliate. The
Investing Fund will notify the Fund of any changes to the list of the
names as soon as reasonably practicable after a change occurs. The Fund
and the Investing Fund will maintain and preserve a copy of the order,
the Investing Fund 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.
10. Before approving any advisory contract under section 15 of the
Act, the board of directors or trustees of each Investing Management
Company including a majority of the non-interested directors or
trustees, will find that the advisory fees charged under such contract
are based on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contract(s) of
any Fund in which the Investing Management Company may invest. These
findings and their basis will be recorded fully in the minute books of
the appropriate Investing Management Company.
11. Any sales charges and/or service fees with respect to shares of
an Investing Fund will not exceed the limits applicable to a fund of
funds as set forth in Conduct Rule 2830 of the NASD.
12. No Fund will acquire securities of an 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 permitted by exemptive relief from the Commission permitting the
Fund to purchase shares of other investment companies for short-term
cash management purposes.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-06119 Filed 3-15-13; 8:45 am]
BILLING CODE 8011-01-P