9708 Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices 

1 $67/hour figure for a Compliance Clerk is from 

SIFMA’s Office Salaries in the Securities Industry 

2010, modified by Commission staff to account for 

an 1,800-hour work year and multiplied by 2.93 to 

account for bonuses, firm size, employee benefits 

and overhead. 

foreign banks and foreign insurance 

companies that are exempted from the 

definition of ‘‘investment company’’ by 

virtue of rules 3a–1 (17 CFR 270.3a–1), 

3a–5 (17 CFR 270.3a–5), and 3a–6 (17 

CFR 270.3a–6) under the Investment 

Company Act of 1940 (15 U.S.C. 80a–1 

et seq.) to file Form F–N (17 CFR 

239.43) to appoint an agent for service 

of process when making a public 

offering of securities in the United 

States. During calendar year 2010, 

approximately 13 entities were required 

by rule 489 to make 15 Form F–N 

submissions. The Commission has 

previously estimated that the total 

annual burden associated with 

information collection and Form F–N 

preparation and submission is one hour 

per filing. Based on the Commission’s 

experience with disclosure documents 

generally, the Commission continues to 

believe that this estimate is appropriate. 

The estimated annual burden of 

complying with the rule’s filing 

requirement is approximately 15 hours, 

as some of the entities submitted 

multiple filings. 

The estimates of average burden hours 

are made solely for the purposes of the 

Paperwork Reduction Act of 1995 and 

are not derived from a comprehensive or 

even representative survey or study of 

the cost of Commission rules and forms. 

The collection of information under 

Form F–N is mandatory. The 

information provided by the Form is not 

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. 

The public may view the background 

documentation for this information 

collection at the following Web site, 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503, 

or by sending an email to: 

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

Thomas Bayer, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way, 

Alexandria, VA 22312 or send an email 

to: PRA_Mailbox@sec.gov. Comments 

must be submitted to OMB within 30 

days of this notice. 

Dated: February 14, 2012. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3768 Filed 2–16–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: Rule 6c–7, SEC File No. 270–269, 

OMB Control No. 3235–0276. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Rule 6c–7 (17 CFR 270.6c–7) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a–1 et seq.) (‘‘1940 Act’’) 

provides exemption from certain 

provisions of Sections 22(e) and 27 of 

the 1940 Act for registered separate 

accounts offering variable annuity 

contracts to certain employees of Texas 

institutions of higher education 

participating in the Texas Optional 

Retirement Program. There are 

approximately 50 registrants governed 

by rule 6c–7. The burden of compliance 

with rule 6c–7, in connection with the 

registrants obtaining from a purchaser, 

prior to or at the time of purchase, a 

signed document acknowledging the 

restrictions on redeemability imposed 

by Texas law, is estimated to be 

approximately 3 minutes of professional 

time per response for each of 

approximately 2,400 purchasers 

annually (at an estimated $67 per 

hour),1 for a total annual burden of 120 

hours (at a total annual cost of $8,040). 

The estimate of average burden hours 

is made solely for the purposes of the 

Paperwork Reduction Act, and is not 

derived from a comprehensive or even 

a representative survey or study of the 

costs of Commission rules or forms. The 

Commission does not include in the 

estimate of average burden hours the 

time preparing registration statements 

and sales literature disclosure regarding 

the restrictions on redeemability 

imposed by Texas law. The estimate of 

burden hours for completing the 

relevant registration statements are 

reported on the separate PRA 

submissions for those statements. (See 

the separate PRA submissions for Form 

N–3 (17 CFR 274.11b) and Form N–4 (17 

CFR 274.11c.) 

The Commission requests written 

comments on: (a) Whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; (b) the accuracy of the 

agency’s estimate of the burden of the 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information collected; and (d) 

ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

Please direct your written comments 

to Thomas Bayer, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O Remi 

Pavlik-Simon, 6432 General Green Way, 

Alexandria, VA 22312; or send an email 

to: PRA_Mailbox@sec.gov. 

February 14, 2012. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3767 Filed 2–16–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29944; File No. 812–13962] 

Pacific Life Insurance Company, et al.; 

Notice of Application 

February 13, 2012. 

AGENCY: Securities and Exchange 

Commission (the ‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 12(d)(1)(J) of the 

Investment Company Act of 1940, as 

amended (the ‘‘Act’’), for an exemption 

from sections 12(d)(1)(A) and (B) of the 

Act, under sections 6(c) and 17(b) of the 

Act for an exemption from section 17(a) 

of the Act, and under section 6(c) of the 

Act for an exemption from rule 12d1– 

2(a) under the Act. 

Summary of the Application: 

Applicants request an order that would 

(a) permit certain series of registered 

open-end management investment 

companies to acquire shares of other 

registered open-end management 

investment companies and unit 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices 9709 

1Applicants request that the order extend to any 

future Series of the Fund, and any other existing or 

future registered open-end management investment 

company and series thereof that are part of the same 

‘‘group of investment companies,’’ as defined in 

section 12(d)(1)(G)(ii) of the Act, as the Fund and 

are, or may in the future be, advised by the Manager 

or any other investment adviser controlling, 

controlled by, or under common control with the 

Manager (any such entity is included in the term, 

‘‘Series’’). All entities that currently intend to rely 

on the requested order are named as applicants. 

Any other entity that relies on the order in the 

future will comply with the terms and conditions 

of the application. 

2Certain of the Unaffiliated Funds may have 

obtained exemptions from the Commission 

necessary to permit their shares to be listed and 

traded on a national securities exchange at 

negotiated prices (‘‘ETFs’’). 

3Certain of the Underlying Funds currently 

pursue, or may in the future pursue, their 

investment objectives through a master-feeder 

arrangement in reliance on section 12(d)(1)(E) of the 

Act. In accordance with condition 12, a Fund of 

Funds may not invest in an Underlying Fund that 

operates as a feeder fund unless the feeder fund is 

part of the same ‘‘group of investment companies,’’ 

as defined in section 12(d)(1)(G)(ii) of the Act, as 

its corresponding master fund or the Fund of 

Funds. If a Fund of Funds invests in an Affiliated 

Fund that operates as a feeder fund and the 

corresponding master fund is not within the same 

‘‘group of investment companies,’’ as defined in 

section 12(d)(1)(G)(ii) of the Act, as the Fund of 

Funds and Affiliated Fund, the master fund would 

be an Unaffiliated Fund for purposes of the 

application and its conditions. 

investment trusts (‘‘UITs’’) that are 

within or outside the same ‘‘group of 

investment companies,’’ as defined in 

section 12(d)(1)(G)(ii) of the Act, as the 

acquiring company and (b) permit 

certain series of registered open-end 

management investment companies 

relying on rule 12d1–2 under the Act to 

invest in certain financial instruments. 

Applicants: Pacific Life Insurance 

Company (‘‘Pacific Life’’), Pacific Life & 

Annuity Company (‘‘PL&A,’’ and 

collectively with Pacific Life and any 

insurance company controlling, 

controlled by, or under common control 

with Pacific Life or PL&A, the 

‘‘Insurance Companies’’); Pacific Life 

Fund Advisors LLC (the ‘‘Manager’’); 

Pacific Select Fund (the ‘‘Fund’’); and 

Pacific Select Distributors, Inc. (the 

‘‘Distributor’’). 

Filing Dates: The application was 

filed on September 20, 2011, and 

amended on December 16, 2011 and 

February 10, 2012. 

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 March 9, 2012, 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: The Commission: Secretary, 

U.S. Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090; 

Applicants: c/o Robin S. Yonis, Esq., 

Pacific Life Fund Advisors LLC, 700 

Newport Center Drive, Newport Beach, 

California 92660. 

FOR FURTHER INFORMATION CONTACT: 

Mark N. Zaruba, Attorney Advisor, at 

(202) 551–6878, or Mary Kay Frech, 

Branch Chief, at (202) 551–6814 (Office 

of Investment Company Regulation, 

Division of Investment Management). 

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 Fund is a Massachusetts 

business trust, registered under the Act 

as an open-end management investment 

company, and is comprised of multiple 

series (the ‘‘Series’’), each of which has 

its own investment objective, policies 

and restrictions.1 Shares of the Series 

are not offered directly to the public. 

Shares of the Series are offered through 

separate accounts that are registered as 

UITs under the Act (‘‘Registered 

Separate Accounts’’) or that are exempt 

from registration under the Act 

(‘‘Unregistered Separate Accounts,’’ and 

together with the Registered Separate 

Accounts, ‘‘Separate Accounts’’) of the 

Insurance Companies and serve as the 

underlying funding vehicles for the 

variable life insurance contracts and 

variable annuity contracts (the 

‘‘Contracts’’) issued by the Insurance 

Companies. Shares of the Series may 

also be offered to qualified pension and 

retirement plans, certain of the general 

accounts of the Insurance Companies, or 

to other Series. 

2. The Manager is a Delaware limited 

liability company registered as an 

investment adviser under the 

Investment Advisers Act of 1940, as 

amended (the ‘‘Advisers Act’’), and 

serves as investment adviser to the 

Series. The Manager is a wholly-owned 

subsidiary of Pacific Life and PL&A. 

PL&A is a wholly-owned subsidiary of 

Pacific Life and Pacific Life is a whollyowned subsidiary of Pacific Mutual 

Holding Company. 

3. The Distributor is a California 

corporation and serves as the Fund’s 

principal underwriter and distributor. 

The Distributor is registered as a brokerdealer with the Commission and the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’). The 

Distributor is a wholly-owned 

subsidiary of Pacific Life. The 

Distributor also serves as the distributor 

for the Contracts. 

4. Applicants request relief to permit: 

(a) Certain Series (each, a ‘‘Fund of 

Funds,’’ and collectively, the ‘‘Funds of 

Funds’’) to acquire shares of registered 

open-end management investment 

companies and UITs that 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 

of Funds (the ‘‘Unaffiliated Investment 

Companies’’ and ‘‘Unaffiliated Trusts,’’ 

respectively, and together, the 

‘‘Unaffiliated Funds’’); 2 (b) the 

Unaffiliated Investment Companies, 

their principal underwriters and any 

broker or dealer registered under the 

Securities Exchange Act of 1934, as 

amended (the ‘‘Exchange Act’’, and any 

such broker or dealer, a ‘‘Broker’’), to 

sell shares of the Unaffiliated 

Investment Companies to the Funds of 

Funds in excess of the limitations in 

section 12(d)(1)(B) of the Act; (c) the 

Funds of Funds to acquire shares of 

certain other Series in the same ‘‘group 

of investment companies,’’ as defined in 

section 12(d)(1)(G)(ii) of the Act, as the 

Fund of Funds (the ‘‘Affiliated Funds,’’ 

and together with the Unaffiliated 

Funds, the ‘‘Underlying Funds’’); 3 and 

(d) the Affiliated Funds, their principal 

underwriters and any Broker to sell 

shares of the Affiliated Funds to the 

Fund of Funds in excess of the 

limitations in section 12(d)(1)(B) of the 

Act. Applicants also request an order 

under sections 6(c) and 17(b) of the Act 

exempting the transactions described in 

(a) through (d) above from section 17(a) 

of the Act to the extent necessary to 

permit an Underlying Fund that is an 

affiliated person of a Fund of Funds to 

sell its shares to, and redeem its shares 

from, the Fund of Funds. 

5. Applicants also request an 

exemption to the extent necessary to 

permit a Fund of Funds that invests in 

Underlying Funds in reliance on section 

12(d)(1)(G) of the Act (a ‘‘Section 

12(d)(1)(G) Fund of Funds’’), and that is 

eligible to invest in securities (as 

defined in section 2(a)(36) of the Act) in 

reliance on rule 12d1–2 under the Act, 

to also invest, to the extent consistent 

mstockstill on DSK4VPTVN1PROD with NOTICES

9710 Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices 

4An Unaffiliated Investment Company, including 

an ETF, would retain its right to reject any initial 

investment by a Fund of Funds in excess of the 

limit in section 12(d)(1)(A)(i) of the Act by 

declining to execute the Participation Agreement 

with the Fund of Funds. 

with its investment objectives, policies, 

strategies and limitations, in financial 

instruments that may not be securities 

within the meaning of section 2(a)(36) of 

the Act (‘‘Other Investments’’). 

Applicants’ Legal Analysis 

A. Investments in Underlying Funds— 

Section 12(d)(1) 

1. Section 12(d)(1)(A) of the Act 

prohibits a registered investment 

company (an ‘‘acquiring company’’) 

from acquiring shares of another 

investment company (an ‘‘acquired 

company’’) if the securities represent 

more than 3% of the total outstanding 

voting stock of the acquired company, 

more than 5% of the total assets of the 

acquiring company, or, together with 

the securities of any other investment 

companies, more than 10% of the total 

assets of the acquiring company. Section 

12(d)(1)(B) of the Act prohibits a 

registered open-end investment 

company, its principal underwriter and 

any Broker from selling the shares of the 

investment company to another 

investment company if the sale will 

cause the acquiring company to own 

more than 3% of the acquired 

company’s voting stock, or if the sale 

will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. 

2. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

any provision of section 12(d)(1) of the 

Act if the exemption is consistent with 

the public interest and the protection of 

investors. Applicants seek an exemption 

under section 12(d)(1)(J) of the Act from 

the limitations of sections 12(d)(1)(A) 

and (B) of the Act to the extent 

necessary to permit the Funds of Funds 

to acquire shares of the Underlying 

Funds in excess of the limits set forth 

in section 12(d)(1)(A) of the Act and to 

permit the Underlying Funds, their 

principal underwriters and any Broker 

to sell shares of the Underlying Funds 

to the Funds of Funds in excess of the 

limits set forth in section 12(d)(1)(B) of 

the Act. 

3. Applicants state that the proposed 

arrangement will not give rise to the 

policy concerns underlying sections 

12(d)(1)(A) and (B) of the Act, which 

include concerns about undue influence 

by a Fund of Funds or its affiliated 

persons over the Underlying Funds, 

excessive layering of fees, and overly 

complex fund structures. Accordingly, 

applicants believe that the requested 

exemption is consistent with the public 

interest and the protection of investors. 

4. Applicants state that the proposed 

arrangement will not result in undue 

influence by a Fund of Funds or its 

affiliated persons over the Underlying 

Funds. The concern about undue 

influence does not arise in connection 

with a Fund of Funds’ investment in the 

Affiliated Funds, since the Affiliated 

Funds are part of the same ‘‘group of 

investment companies,’’ as defined in 

section 12(d)(1)(G)(ii) of the Act, as the 

Funds of Funds. To limit the control 

that a Fund of Funds or its affiliated 

persons may have over an Unaffiliated 

Fund, applicants state that condition 1 

prohibits: (a) The Manager and any 

person controlling, controlled by or 

under common control with the 

Manager, any investment company and 

any issuer that would be an investment 

company but for section 3(c)(1) or 

section 3(c)(7) of the Act advised or 

sponsored by the Manager or any person 

controlling, controlled by or under 

common control with the Manager 

(collectively, the ‘‘Group’’) and (b) any 

other investment adviser within the 

meaning of section 2(a)(20)(B) of the Act 

to a Fund of Funds (each, a 

‘‘Subadviser’’), any person controlling, 

controlled by or under common control 

with a Subadviser, and any investment 

company or issuer that would be an 

investment company but for section 

3(c)(1) or 3(c)(7) of the Act (or portion 

of such investment company or issuer) 

advised or sponsored by a Subadviser or 

any person controlling, controlled by or 

under common control with the 

Subadviser (collectively, the 

‘‘Subadviser Group’’) from controlling 

(individually or in the aggregate) an 

Unaffiliated Fund within the meaning of 

section 2(a)(9) of the Act. 

5. Applicants further state that 

condition 2 precludes a Fund of Funds, 

the Manager, any Subadviser, promoter 

or principal underwriter of a Fund of 

Funds, and any person controlling, 

controlled by or under common control 

with any of those entities (each, a ‘‘Fund 

of Funds Affiliate’’) from taking 

advantage of an Unaffiliated Fund, with 

respect to transactions between the 

Fund of Funds or a Fund of Funds 

Affiliate and the Unaffiliated Fund or 

the Unaffiliated Fund’s investment 

adviser(s), sponsor, promoter, principal 

underwriter and any person controlling, 

controlled by or under common control 

with any of those entities (each, an 

‘‘Unaffiliated Fund Affiliate’’). 

6. Condition 5 precludes a Fund of 

Funds or Fund of Funds Affiliate 

(except to the extent it is acting in its 

capacity as an investment adviser to an 

Unaffiliated Investment Company or 

sponsor to an Unaffiliated Trust) from 

causing an Unaffiliated Fund to 

purchase a security in an offering of 

securities during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

officer, director, member of an advisory 

board, Manager, Subadviser, or 

employee of the Fund of Funds, or a 

person of which any such officer, 

director, Manager, Subadviser, member 

of an advisory board, or employee is an 

affiliated person (each, an 

‘‘Underwriting Affiliate,’’ except any 

person whose relationship to the 

Unaffiliated Fund is covered by section 

10(f) of the Act is not an Underwriting 

Affiliate). An offering of securities 

during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

Underwriting Affiliate is an ‘‘Affiliated 

Underwriting.’’ 

7. As an additional assurance that an 

Unaffiliated Investment Company 

understands the implications of an 

investment by a Fund of Funds under 

the requested order, prior to an 

investment in the shares of the 

Unaffiliated Investment Company in 

excess of the limit in section 

12(d)(1)(A)(i) of the Act, the Fund of 

Funds and the Unaffiliated Investment 

Company will execute an agreement 

(the ‘‘Participation Agreement’’) stating, 

without limitation, that their respective 

boards of directors or trustees (for any 

entity, the ‘‘Board’’) and their 

investment advisers understand the 

terms and conditions of the order and 

agree to fulfill their respective 

responsibilities under the order. 

Applicants note that an Unaffiliated 

Investment Company (other than an ETF 

whose shares are purchased by a Fund 

of Funds in the secondary market) will 

retain the right at all times to reject any 

investment by a Fund of Funds.4

8. Applicants do not believe that the 

proposed arrangement will involve 

excessive layering of fees. With respect 

to investment advisory fees, applicants 

state that, in connection with the 

approval of any investment advisory 

contract under section 15 of the Act, the 

Board of the Fund, including a majority 

of the trustees who are not ‘‘interested 

persons,’’ as defined in section 2(a)(19) 

of the Act (for any Board, the 

‘‘Independent Trustees’’), will find that 

the advisory fees charged to a Fund of 

Funds under the advisory contract are 

based on services provided that are in 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices 9711 

5Any references to NASD Conduct Rule 2830 

include any successor or replacement rule to NASD 

Conduct Rule 2830 that may be adopted by FINRA. 

6Applicants acknowledge that receipt of any 

compensation by (a) an affiliated person of a Funds 

of Funds, or an affiliated person of such person, for 

the purchase by the Fund of Funds of shares of an 

Underlying Fund or (b) an affiliated person of an 

Underlying Fund, or an affiliated person of such 

person, for the sale by the Underlying Fund of its 

shares to a Fund of Funds may be prohibited by 

section 17(e)(1) of the Act. The Participation 

Agreement also will include this acknowledgement. 

7To the extent purchases and sales of shares of 

an ETF occur in the secondary market (and not 

through principal transactions directly between a 

Fund of Funds and an ETF), relief from section 

17(a) of the Act would not be necessary. The 

requested relief is intended to cover, however, 

transactions directly between ETFs and a Fund of 

Funds. Applicants are not seeking relief from 

section 17(a) for, and the requested relief will not 

apply to, transactions where an ETF could be 

deemed an affiliated person, or an affiliated person 

of an affiliated person, of a Fund of Funds because 

the investment adviser to the ETF or an entity 

controlling, controlled by or under common control 

with the investment adviser to the ETF also is a 

Manager to the Fund of Funds. 

addition to, rather than duplicative of, 

services provided pursuant to any 

Underlying Fund’s advisory contract(s). 

Applicants further state that the 

Manager will waive fees otherwise 

payable to it by a Fund of Funds in an 

amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b–1 under the Act) 

received from an Unaffiliated Fund by 

the Manager, or an affiliated person of 

the Manager, other than any advisory 

fees paid to the Manager or an affiliated 

person of the Manager by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

9. Applicants state that with respect 

to Registered Separate Accounts that 

invest in a Fund of Funds, no sales load 

will be charged at the Fund of Funds 

level or at the Underlying Fund level. 

Other sales charges and service fees, as 

defined in Rule 2830 of the Conduct 

Rules of the NASD (‘‘NASD Conduct 

Rule 2830’’),5 if any, will only be 

charged at the Fund of Funds level or 

at the Underlying Fund level, not both. 

With respect to other investments in a 

Fund of Funds, any sales charges and/ 

or service fees charged with respect to 

shares of the Fund of Funds will not 

exceed the limits applicable to funds of 

funds as set forth in NASD Conduct 

Rule 2830. 

10. Applicants represent that each 

Fund of Funds will represent in the 

Participation Agreement that no 

Insurance Company sponsoring a 

Registered Separate Account funding 

Contracts will be permitted to invest in 

the Fund of Funds unless the Insurance 

Company has certified to the Fund of 

Funds that the aggregate amount of all 

fees and charges associated with each 

Contract that invests in the Fund of 

Funds, including fees and charges at the 

Separate Account, Fund of Funds, and 

Underlying Fund levels, is reasonable in 

relation to the services rendered, the 

expenses expected to be incurred, and 

the risks assumed by the Insurance 

Company. 

11. Applicants state that the proposed 

arrangement will not create an overly 

complex fund structure. Applicants note 

that an Underlying 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 that such Underlying 

Fund: (a) Acquires such securities in 

compliance with section 12(d)(1)(E) of 

the Act and either is an Affiliated Fund 

or is in the same ‘‘group of investment 

companies,’’ as defined in Section 

12(d)(G)(ii) of the Act, as its 

corresponding master fund; (b) receives 

securities of another investment 

company as a dividend or as a result of 

a plan of reorganization of a company 

(other than a plan devised for the 

purpose of evading section 12(d)(1) of 

the Act); or (c) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

acquire securities of one or more 

investment companies for short-term 

cash management purposes, or (ii) 

engage in interfund borrowing and 

lending transactions. 

B. Investments in Underlying Funds— 

Section 17(a) 

1. Section 17(a) of the Act generally 

prohibits sales or purchases of securities 

between a registered investment 

company and its affiliated persons or 

affiliated persons of such persons. 

Section 2(a)(3) of the Act defines an 

‘‘affiliated person’’ of another person to 

include (a) any person directly or 

indirectly owning, controlling, or 

holding with power to vote, 5% or more 

of the outstanding voting securities of 

the other person; (b) any person 5% or 

more of whose outstanding voting 

securities are directly or indirectly 

owned, controlled, or held with power 

to vote by the other person; and (c) any 

person directly or indirectly controlling, 

controlled by, or under common control 

with the other person. 

2. Applicants state that the Funds of 

Funds and the Affiliated Funds may be 

deemed to be under common control 

and therefore affiliated persons of one 

another. Applicants also state that the 

Funds of Funds and the Underlying 

Funds may be deemed to be affiliated 

persons of one another if a Fund of 

Funds acquires 5% or more of an 

Underlying Fund’s outstanding voting 

securities. In light of these possible 

affiliations, section 17(a) of the Act 

could prevent an Underlying Fund from 

selling shares to, and redeeming shares 

from, a Fund of Funds.6

3. Section 17(b) of the Act authorizes 

the Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) of the Act if 

it finds that (a) the terms of the 

proposed transaction are fair and 

reasonable and do not involve 

overreaching on the part of any person 

concerned; (b) the proposed transaction 

is consistent with the policies of each 

registered investment company 

involved; and (c) the proposed 

transaction is consistent with the 

general purposes of the Act. Section 6(c) 

of the Act permits the Commission to 

exempt any person or transactions from 

any provision of the Act if such 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. 

4. Applicants submit that the 

proposed transactions satisfy the 

standards for relief under sections 17(b) 

and 6(c) of the Act, as the terms are fair 

and reasonable and do not involve 

overreaching. Applicants state that the 

terms upon which an Underlying Fund 

will sell its shares to or purchase its 

shares from a Fund of Funds will be 

based on the net asset value of each 

Underlying Fund.7 Applicants also state 

that the proposed transactions will be 

consistent with the policies of each 

Fund of Funds and Underlying Fund, 

and with the general purposes of the 

Act. 

C. Other Investments by Section 

12(d)(1)(G) Funds of Funds 

1. Section 12(d)(1)(G) of the Act 

provides that section 12(d)(1) will not 

apply to securities of an acquired 

company purchased by an acquiring 

company if: (i) The acquiring company 

and acquired company are part of the 

same ‘‘group of investment companies,’’ 

as defined in section 12(d)(1)(G)(ii) of 

the Act; (ii) the acquiring company 

holds only securities of acquired 

companies that are part of the same 

‘‘group of investment companies,’’ as 

defined in section 12(d)(1)(G)(ii) of the 

Act, government securities, and shortmstockstill on DSK4VPTVN1PROD with NOTICES

9712 Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices 

term paper; (iii) the aggregate sales loads 

and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the Act by a securities 

association registered under section 15A 

of the Exchange Act or by the 

Commission; and (iv) the acquired 

company has a policy that prohibits it 

from acquiring securities of registered 

open-end management investment 

companies or registered UITs in reliance 

on section 12(d)(1)(F) or (G) of the Act. 

2. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered UIT that relies 

on section 12(d)(1)(G) of the Act to 

acquire, in addition to securities issued 

by another registered investment 

company in the same group of 

investment companies, government 

securities, and short-term paper: (1) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) 

securities (other than securities issued 

by an investment company); and (3) 

securities issued by a money market 

fund, when the investment is in reliance 

on rule 12d1–1 under the Act. For the 

purposes of rule 12d1–2, ‘‘securities’’ 

means any security as defined in section 

2(a)(36) of the Act. 

3. Applicants state that the proposed 

arrangement would comply with the 

provisions of rule 12d1–2 under the Act, 

but for the fact that the Section 

12(d)(1)(G) Funds of Funds may invest 

a portion of their assets in Other 

Investments. Applicants request an 

order under section 6(c) of the Act for 

an exemption from rule 12d1–2(a) to 

allow the Section 12(d)(1)(G) Funds of 

Funds to invest in Other Investments. 

Applicants assert that permitting the 

Section 12(d)(1)(G) Funds of Funds to 

invest in Other Investments as described 

in the application would not raise any 

of the concerns that the requirements of 

section 12(d)(1) of the Act were 

designed to address. 

4. Consistent with its fiduciary 

obligations under the Act, each Section 

12(d)(1)(G) Fund of Funds’ board of 

trustees will review the advisory fees 

charged by the Section 12(d)(1)(G) Fund 

of Funds’ investment adviser(s) to 

ensure that the fees are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided pursuant to the advisory 

agreement of any investment company 

in which the Section 12(d)(1)(G) Fund 

of Funds may invest. 

Applicants’ Conditions 

Applicants agree that the order 

granting the requested relief shall be 

subject to the following conditions: 

A. Investments in Underlying Funds by 

Funds of Funds 

1. The members of the Group will not 

control (individually or in the aggregate) 

an Unaffiliated Fund within the 

meaning of section 2(a)(9) of the Act. 

The members of a Subadviser Group 

will not control (individually or in the 

aggregate) an Unaffiliated Fund within 

the meaning of section 2(a)(9) of the Act. 

If, as a result of a decrease in the 

outstanding voting securities of an 

Unaffiliated Fund, the Group or a 

Subadviser Group, each in the aggregate, 

becomes a holder of more than 25% of 

the outstanding voting securities of the 

Unaffiliated Fund, then the Group or the 

Subadviser Group (except for any 

member of the Group or the Subadviser 

Group that is a Separate Account) will 

vote its shares of the Unaffiliated Fund 

in the same proportion as the vote of all 

other holders of the Unaffiliated Fund’s 

shares. This condition will not apply to 

a Subadviser Group with respect to an 

Unaffiliated Fund for which the 

Subadviser or a person controlling, 

controlled by, or under common control 

with the Subadviser acts as the 

investment adviser within the meaning 

section 2(a)(20)(A) of the Act (in the 

case of an Unaffiliated Investment 

Company) or the sponsor (in the case of 

an Unaffiliated Trust). A Registered 

Separate Account will seek voting 

instructions from its Contract holders 

and will vote its shares of an 

Unaffiliated Fund in accordance with 

the instructions received and will vote 

those shares for which no instructions 

were received in the same proportion as 

the shares for which instructions were 

received. An Unregistered Separate 

Account will either (i) vote its shares of 

the Unaffiliated Fund in the same 

proportion as the vote of all other 

holders of the Unaffiliated Fund’s 

shares; or (ii) seek voting instructions 

from its Contract holders and vote its 

shares in accordance with the 

instructions received and vote those 

shares for which no instructions were 

received in the same proportion as the 

shares for which instructions were 

received. 

2. No Fund of Funds or Fund of 

Funds Affiliate will cause any existing 

or potential investment by the Fund of 

Funds in an Unaffiliated Fund to 

influence the terms of any services or 

transactions between the Fund of Funds 

or a Fund of Funds Affiliate and the 

Unaffiliated Fund or an Unaffiliated 

Fund Affiliate. 

3. The Board of the Fund, including 

a majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to assure that the Manager and 

any Subadviser are conducting the 

investment program of the Fund of 

Funds without taking into account any 

consideration received by the Fund of 

Funds or a Fund of Funds Affiliate from 

an Unaffiliated Fund or an Unaffiliated 

Fund Affiliate in connection with any 

services or transactions. 

4. Once an investment by a Fund of 

Funds in the securities of an 

Unaffiliated Investment Company 

exceeds the limit of section 

12(d)(1)(A)(i) of the Act, the Board of 

the Unaffiliated Investment Company, 

including a majority of the Independent 

Trustees, will determine that any 

consideration paid by the Unaffiliated 

Investment Company to a Fund of 

Funds or a Fund of Funds Affiliate in 

connection with any services or 

transactions: (a) Is fair and reasonable in 

relation to the nature and quality of the 

services and benefits received by the 

Unaffiliated Investment Company; (b) is 

within the range of consideration that 

the Unaffiliated Investment Company 

would be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition does not apply with respect to 

any services or transactions between an 

Unaffiliated Investment Company and 

its investment adviser(s), or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Fund of Funds or Fund of 

Funds Affiliate (except to the extent it 

is acting in its capacity as an investment 

adviser to an Unaffiliated Investment 

Company or sponsor to an Unaffiliated 

Trust) will cause an Unaffiliated Fund 

to purchase a security in any Affiliated 

Underwriting. 

6. The Board of an Unaffiliated 

Investment Company, including a 

majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to monitor any purchases of 

securities by the Unaffiliated Investment 

Company in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of the Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

including any purchases made directly 

from an Underwriting Affiliate. The 

Board of the Unaffiliated Investment 

Company will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 33 / Friday, February 17, 2012 / Notices 9713 

purchases were influenced by the 

investment by the Fund of Funds in the 

Unaffiliated Investment Company. The 

Board of the Unaffiliated Investment 

Company will consider, among other 

things: (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Investment Company; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated 

Investment Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of an Unaffiliated Investment 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders. 

7. Each Unaffiliated Investment 

Company 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 an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

setting forth (a) the party from whom 

the securities were acquired, (b) the 

identity of the underwriting syndicate’s 

members, (c) the terms of the purchase, 

and (d) the information or materials 

upon which the determinations of the 

Board of the Unaffiliated Investment 

Company were made. 

8. Prior to its investment in shares of 

an Unaffiliated Investment Company in 

excess of the limit of section 

12(d)(1)(A)(i) of the Act, the Fund of 

Funds and the Unaffiliated Investment 

Company will execute a Participation 

Agreement stating, without limitation, 

that their Boards and their investment 

advisers understand the terms and 

conditions of the order and agree to 

fulfill their responsibilities under the 

order. At the time of its investment in 

shares of an Unaffiliated Investment 

Company in excess of the limit set forth 

in section 12(d)(1)(A)(i), a Fund of 

Funds will notify the Unaffiliated 

Investment Company of the investment. 

At such time, the Fund of Funds will 

also transmit to the Unaffiliated 

Investment Company a list of the names 

of each Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated 

Investment Company of any changes to 

the list as soon as reasonably practicable 

after a change occurs. The Unaffiliated 

Investment Company and the Fund of 

Funds will maintain and preserve a 

copy of the order, the Participation 

Agreement and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of the Fund, including a majority 

of the Independent Trustees, shall find 

that the advisory fees charged to the 

Fund of Funds under the advisory 

contract(s) are based on services 

provided that are in addition to, rather 

than duplicative of, services provided 

under the advisory contract(s) of any 

Underlying Fund in which the Fund of 

Funds may invest. Such finding, and the 

basis upon which the finding was made, 

will be recorded fully in the minute 

books of the Fund. 

10. The Manager will waive fees 

otherwise payable to it by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company under 

rule 12b-1 under the Act) received from 

an Unaffiliated Fund by the Manager, or 

an affiliated person of the Manager, 

other than any advisory fees paid to the 

Manager or its affiliated person by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

Any Subadviser will waive fees 

otherwise payable to the Subadviser, 

directly or indirectly, by the Fund of 

Funds in an amount at least equal to any 

compensation received by the 

Subadviser, or an affiliated person of the 

Subadviser, from an Unaffiliated Fund, 

other than any advisory fees paid to the 

Subadviser or an affiliated person of the 

Subadviser by the Unaffiliated 

Investment Company, in connection 

with the investment by the Fund of 

Funds in the Unaffiliated Fund made at 

the direction of the Subadviser. In the 

event that the Subadviser waives fees, 

the benefit of the waiver will be passed 

through to the Fund of Funds. 

11. With respect to Registered 

Separate Accounts that invest in a Fund 

of Funds, no sales load will be charged 

at the Fund of Funds level or at the 

Underlying Fund level. Other sales 

charges and service fees, as defined in 

NASD Conduct Rule 2830, if any, will 

only be charged at the Fund of Funds 

level or at the Underlying Fund level, 

not both. With respect to other 

investments in a Fund of Funds, any 

sales charges and/or service fees 

charged with respect to shares of a Fund 

of Funds will not exceed the limits 

applicable to funds of funds set forth in 

NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund (a) 

acquires such securities in compliance 

with section 12(d)(1)(E) of the Act and 

either is an Affiliated Fund or is in the 

same ‘‘group of investment companies,’’ 

as defined in section 12(d)(1)(G)(ii) of 

the Act, as its corresponding master 

fund; (b) receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (c) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

investment companies for short-term 

cash management purposes, or (ii) 

engage in interfund borrowing and 

lending transactions. 

B. Other Investments by Section 

12(d)(1)(G) Funds of Funds 

13. Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Section 12(d)(1)(G) 

Fund of Funds from investing in Other 

Investments as described in the 

application. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3740 Filed 2–16–12; 8:45 am] 

BILLING CODE 8011–01–P 

mstockstill on DSK4VPTVN1PROD with NOTICES