46252 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 

10The staff estimated the annual cost of 

preserving the required books and records by 

identifying the annual costs incurred by several 

funds and then relating this total cost to the average 

net assets of these funds during the year. With a 

total of $1 billion under management in small 

funds, $126.8 billion under management in medium 

funds and $3.7 trillion under management in large 

funds, the costs of preservation were estimated as 

follows: ((0.0051295 x $1 billion) + (0.0005041 x 

$126.8 billion) + (0.0000009 x $3.7 trillion) = 

$72.38 million. 

1Applicants also request relief with respect to 

future series of the Trust and any other existing or 

future registered open-end management investment 

company or series thereof that: (a) Is advised by the 

Adviser or any entity controlling, controlled by or 

under common control with the Adviser; (b) uses 

the manager of managers structure described in the 

application; and (c) complies with the terms and 

conditions of the application (collectively, the 

‘‘Funds’’ and each, a ‘‘Fund’’). A Post-Effective 

Amendment to the Trust’s registration statement 

relating to the CLS Risk-Managed Enhanced Income 

Fund, the CLS Fixed Income Fund and the CLS 

Concentrated Allocation Fund (the ‘‘New Funds’’) 

has been filed with the Commission and is not yet 

effective. The only existing registered open-end 

management investment company that currently 

intends to rely on the requested order is named as 

an Applicant. If the name of any Fund contains the 

name of a Subadviser (as defined below), the name 

of the Adviser that serves as the primary adviser to 

the Fund will precede the name of the Subadviser. 

staff estimates compliance with rule 2a– 

7 costs the fund industry approximately 

$72.4 million per year.10 Based on 

responses from individuals in the 

money market fund industry, the staff 

estimates that some of the largest fund 

complexes have created computer 

programs for maintaining and 

preserving compliance records for rule 

2a–7. Based on a cost of $0.0000132 per 

dollar of assets under management for 

large funds, the staff estimates that total 

annualized capital/startup costs range 

from $0 for small funds to $48.8 million 

for all large funds. Commission staff 

further estimates that, even absent the 

requirements of rule 2a–7, money 

market funds would spend at least half 

of the amount for capital costs ($24.4 

million) and for record preservation 

($36.2 million) to establish and 

maintain these records and the systems 

for preserving them as a part of sound 

business practices to ensure 

diversification and minimal credit risk 

in a portfolio for a fund that seeks to 

maintain a stable price per share. 

The collections of information 

required by rule 2a–7 are necessary to 

obtain the benefits described above. 

Notices to the Commission will not be 

kept confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid control number. 

Please direct general comments 

regarding the above information to the 

following persons: (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or send an e-mail to Shagufta Ahmed at 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21618 Filed 9–4–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28894; File No. 812–13643] 

AdvisorOne Funds and CLS 

Investments, LLC; Notice of 

Application 

August 31, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (the ‘‘Act’’) for an 

exemption from section 15(a) of the Act 

and rule 18f-2 under the Act. 

Summary of Application: The 

requested order would permit certain 

registered open-end management 

investment companies to enter into and 

materially amend subadvisory 

agreements without shareholder 

approval. 

Applicants: AdvisorOne Funds (the 

‘‘Trust’’) and CLS Investments, LLC (the 

‘‘Adviser’’) (collectively, ‘‘Applicants’’). 

Filing Dates: The application was 

filed on March 16, 2009, and amended 

on August 26, 2009. 

Hearing or Notification of Hearing: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on September 25, 2009 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 

reasons for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

1090. Applicants, Gemini Fund 

Services, LLC, 450 Wireless Boulevard, 

Hauppauge, New York 11788–0132. 

FOR FURTHER INFORMATION CONTACT: 

Barbara T. Heussler, Senior Counsel at 

(202) 551–6990, or Jennifer L. Sawin, 

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 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, a Delaware statutory 

trust, is registered under the Act as an 

open-end management investment 

company and currently consists of six 

separate funds: The Amerigo Fund, 

Clermont Fund, Berolina Fund, 

Reservoir Fund, Descartes Fund, and 

Liahona Fund.1 Each Fund has its own 

investment objective, policies, and 

restrictions. 

The Adviser, a limited liability 

company organized under the laws of 

the State of Nebraska, is an investment 

adviser registered under the Investment 

Advisers Act of 1940 (‘‘Advisers Act’’). 

The Adviser serves as the investment 

adviser of each Fund and will serve as 

the investment adviser of each of the 

New Funds. The Adviser’s primary 

business activity is providing 

investment management services to the 

Funds pursuant to an investment 

advisory agreement with the Trust (the 

‘‘Advisory Agreement’’). The Advisory 

Agreement was approved by the board 

of trustees of the Trust (‘‘Board’’), 

including a majority of the trustees who 

are not ‘‘interested persons,’’ as defined 

in section 2(a)(19) of the Act, of the 

Trust or the Adviser (the ‘‘Independent 

Trustees’’) and, except with respect to 

the New Funds, was approved by the 

initial shareholder of each Fund. With 

respect to the New Funds, the Advisory 

Agreement will be approved by the 

initial shareholder of the Fund. 

2. Under the terms of the Advisory 

Agreement, the Adviser is responsible 

for formulating each Fund’s investment 

program and for making day-to-day 

investment decisions and engaging in 

portfolio transactions. For the 

investment management services that it 

provides to each Fund, the Adviser 


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Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 46253 

2Currently, the Reservoir Fund is sub-advised by 

Horizon Investment, LLC, a limited liability 

company organized under the laws of the State of 

North Carolina and registered an investment adviser 

under the Investment Advisers Act of 1940. The 

Reservoir Fund’s Subadvisory Agreement received 

shareholder approval. 

receives the fee specified in the 

Advisory Agreement from each Fund 

based on the Fund’s average daily net 

assets. The Advisory Agreement permits 

the Adviser to retain one or more 

unaffiliated subadvisers 

(‘‘Subadvisers’’), at the Adviser’s own 

cost and expense, for the purpose of 

managing the investment of the assets of 

one or more Funds of the Trust. The 

Adviser intends to enter into 

subadvisory agreements with various 

Subadvisers (‘‘Subadvisory 

Agreements’’) to provide investment 

advisory services to one or more of the 

Funds.2 Each Subadviser currently is or 

will be registered as an investment 

adviser under the Advisers Act. The 

Adviser will monitor and evaluate each 

Subadviser’s investment programs and 

will recommend to the Board whether 

Subadvisory Agreements should be 

renewed, modified or terminated. The 

Subadvisory Agreement with each 

Subadviser will be initially approved by 

the Board, including a majority of the 

Independent Trustees. Each Subadviser 

will have discretionary authority to 

invest that portion of a Fund’s assets 

assigned to it. The Adviser will 

compensate each Subadviser out of the 

fees that are paid to the Adviser under 

the Advisory Agreement. 

3. Applicants request an order to 

permit the Adviser, subject to Board 

approval, to select certain Subadvisers 

to manage all or a portion of the assets 

of a Fund, pursuant to a Subadvisory 

Agreement and enter into and materially 

amend Subadvisory Agreements 

without shareholder approval (the 

‘‘Manager of Managers Structure’’). The 

Applicants will not enter into a 

Subadvisory Agreement with any 

Subadviser that is an affiliated person, 

as defined in section 2(a)(3) of the Act, 

of the Trust, a Fund or of the Adviser, 

other than by reason of serving as 

Subadviser to one or more Funds 

(‘‘Affiliated Subadviser’’), unless 

shareholder approval of the Subadvisory 

Agreement with that Affiliated 

Subadviser is obtained. The requested 

relief will not apply with respect to 

Affiliated Subadvisers. 

Applicants’ Legal Analysis: 

1. Section 15(a) of the Act provides, 

in relevant part, that it is unlawful for 

any person to act as an investment 

adviser to a registered investment 

company except pursuant to a written 

contract that has been approved by the 

vote of a majority of the company’s 

outstanding voting securities. Rule 18f– 

2 under the Act provides that each 

series or class of stock in a series 

company affected by a matter must 

approve such matter if the Act requires 

shareholder approval. 

2. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security, or transaction or any 

class or classes of persons, securities, or 

transactions from any provision of the 

Act, or from any rule thereunder, if 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. Applicants 

believe that their requested relief meets 

this standard. 

3. Applicants state that the 

shareholders expect the Adviser and the 

Board to select the Subadviser for a 

Fund that is best suited to achieve the 

Fund’s investment objective. Applicants 

assert that, from the perspective of the 

investor, the role of the Subadvisers 

with respect to the Funds utilizing the 

Manager of Managers Structure is 

substantially equivalent to the role of 

the individual portfolio managers 

employed by traditional investment 

company advisory firms. Applicants 

believe that permitting the Adviser to 

perform those duties for which 

shareholders of the Funds are paying 

the Adviser without incurring 

unnecessary delay or expense will be 

appropriate in the interests of Fund 

shareholders and will allow each Fund 

to operate more efficiently. Applicants 

also note that the Advisory Agreement 

will remain fully subject to the 

shareholder approval requirements in 

section 15(a) of the Act and rule 18f–2 

under the Act, including the 

requirement for shareholder voting. 

Applicants’ Conditions: 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Before a Fund may rely on the 

order requested in the application, the 

operation of the Fund in the manner 

described in the application will be 

approved by a majority of the Fund’s 

outstanding voting securities, as defined 

in the Act or, in the case of a Fund 

whose public shareholders purchase 

shares on the basis of a prospectus 

containing the disclosure contemplated 

by condition 2 below, by the initial 

shareholder(s) before offering shares of 

that sub-advised Fund to the public. 

2. The prospectus for each Fund 

relying on the order requested in this 

application will disclose the existence, 

substance, and effect of any order 

granted pursuant to this application. 

Each Fund relying on the order 

requested in this application will hold 

itself out to the public as utilizing the 

Manager of Managers Structure 

described in this application. The 

prospectus will prominently disclose 

that the Adviser has ultimate 

responsibility (subject to oversight by 

the Board) to oversee the Subadvisers 

and recommend their hiring, 

termination and replacement. 

3. Within 90 days of the hiring of a 

new Subadviser, the affected Fund 

shareholders will be furnished all 

information about the new Subadviser 

that would be included in a proxy 

statement. To meet this obligation, the 

Fund will provide shareholders with an 

information statement meeting the 

requirements of Regulation 14C, 

Schedule 14C, and Item 22 of Schedule 

14A under the Securities Exchange Act 

of 1934. 

4. The Adviser will not enter into a 

Subadvisory Agreement with any 

Affiliated Subadviser without such 

agreement, including the compensation 

to be paid thereunder, being approved 

by the shareholders of the applicable 

Fund. 

5. At all times, at least a majority of 

the Boards will be Independent 

Trustees, and the nomination of new or 

additional Independent Trustees will be 

placed within the discretion of the thenexisting Independent Trustees. 

6. Whenever a subadviser change is 

proposed for a Fund with an Affiliated 

Subadviser, the Board, including a 

majority of the Independent Trustees, 

will make a separate finding, reflected 

in the applicable Board minutes, that 

such change is in the best interests of 

the Fund and its shareholders, and does 

not involve a conflict of interest from 

which the Adviser or the Affiliated 

Subadviser derives an inappropriate 

advantage. 

7. The Adviser will provide general 

management services to each Fund that 

is sub-advised, including overall 

supervisory responsibility for the 

general management and investment of 

the Fund’s assets, and, subject to review 

and approval by the Board, will: (i) Set 

each Fund’s overall investment 

strategies; (ii) evaluate, select and 

recommend Subadvisers to manage all 

or a part of a Fund’s assets; (iii) allocate 

and, when appropriate, reallocate a 

Fund’s assets among one or more 

Subadvisers; (iv) monitor and evaluate 

the performance of Subadvisers; and (v) 

implement procedures reasonably 

designed to ensure that the Subadvisers 

comply with the relevant Fund’s 

investment objective, policies and 

restrictions. 


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46254 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 

8. No trustee or officer of the Trust or 

a Fund, or 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 

Subadviser, except for (i) ownership of 

interests in the Adviser or any entity 

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 any publicly 

traded company that is either a 

Subadviser or an entity that controls, is 

controlled by or is under common 

control with a Subadviser. 

9. In the event the Commission adopts 

a rule under the Act providing 

substantially similar relief to that in the 

order requested in the Application, the 

requested order will expire on the 

effective date of that rule. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21494 Filed 9–4–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, September 10, 2009 at 2 

p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matters at the Closed 

Meeting. 

Commissioner Paredes, as duty 

officer, voted to consider the items 

listed for the Closed Meeting in a closed 

session. 

The subject matter of the Closed 

Meeting scheduled for Thursday, 

September 10, 2009 will be: 

Institution and settlement of injunctive 

actions; 

Institution and settlement of 

administrative proceedings; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: September 3, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–21716 Filed 9–3–09; 4:15 pm] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. PA–40; File No. S7–19–09] 

Privacy Act of 1974: Establishment of 

a System of Records 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Notice to establish a system of 

records. 

SUMMARY: In accordance with the 

requirements of the Privacy Act of 1974, 

as amended, 5 U.S.C. 552a, the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) gives notice 

of a proposed Privacy Act system of 

records: ‘‘Ethics Conduct Rules Files 

(SEC–60).’’ This system will contain 

information related to applicable SEC 

Ethics Conduct Rules (currently found 

at 17 CFR Part 200 Subpart M), 

including outside employment and 

activities, and covered securities 

transactions, securities holdings and 

securities accounts. 

DATES: The proposed system will 

become effective October 13, 2009, 

unless further notice is given. The 

Commission will publish a new notice 

if the effective date is delayed to review 

comments or if changes are made based 

on comments received. To be assured of 

consideration, comments should be 

received on or before October 8, 2009. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/other.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number S7–19–09 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number S7–19–09. This file number 

should be included on the subject line 

if e-mail is used. To help us process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/other.shtml). 

Comments are also available for public 

inspection and copying in the 

Commission’s Public Reference Room, 

100 F Street, NE., Washington, DC 

20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

All comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Barbara A. Stance, Chief Privacy Officer, 

Office of Information Technology, 202– 

551–7209. 

SUPPLEMENTARY INFORMATION: The 

Commission gives notice of the 

proposed establishment of a system of 

records, entitled ‘‘Ethics Conduct Rules 

Files (SEC–60).’’ The system will 

contain information related to the SEC’s 

‘‘Regulation Concerning Conduct of 

Members and Employees and Former 

Members and Employees of the 

Commission’’ (‘‘Ethics Conduct Rules’’), 

currently located at 17 CFR Part 200 

Subpart M, including outside 

employment and activities, and covered 

securities transactions, securities 

holdings and securities accounts. 

On May 22, 2009, to consolidate 

related responsibilities, the Commission 

transferred all the Commission’s Ethics 

Rules responsibilities that resided in the 

Office of Human Resources (consisting 

particularly of the administration of all 

of the SEC Ethics Conduct Rules files) 

to the Commission’s Ethics Office. 

Consistent with the transfer of 

responsibilities, the Commission is 

establishing a system of records in the 

Ethics Office to maintain records related 

to the Ethics Conduct Rules applicable 

to Commission Members and 

employees, including reports on 

securities transactions, holdings, and 

accounts required by applicable Federal 

securities laws and regulations. 

The Commission has submitted a 

report of the system of records to the 

Senate Committee on Homeland 

Security and Government Affairs, the 


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