Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 12161 

1All references to the term ‘‘Adviser’’ include 

successors-in-interest to the Adviser. Successors-ininterest are limited to any entity resulting from a 

name change, a reorganization of the Adviser into 

another jurisdiction or a change in the type of 

business organization. 

2As of the date of the application, the Underlying 

Funds include the following series of MFS Series 

Trust I: MFS Core Growth Fund, MFS New 

Discovery Fund, MFS Research International Fund, 

MFS Value Fund; the following series of MFS 

Series Trust III: MFS High Income Fund; the 

following series of MFS Series Trust IV: MFS Mid 

Cap Growth Fund, MFS Money Market Fund; the 

following series of MFS Series Trust V: MFS 

International New Discovery Fund, MFS Research 

Fund; the following series of MFS Series Trust IX: 

MFS Inflation-Adjusted Bond Fund, MFS Limited 

Maturity Fund, MFS Research Bond Fund; the 

following series of MFS Series Trust X: MFS 

Emerging Markets Equity Fund, MFS Floating Rate 

High Income Fund, MFS International Growth 

Fund, MFS International Value Fund; the following 

series of MFS Series Trust XI: MFS Mid Cap Value 

Fund; and the following series of MFS Series Trust 

XIII: MFS Government Securities Fund. 

3All 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. An Unrelated Fund of Funds may rely 

on the requested order only to invest in an 

Underlying Fund and not in any other registered 

investment company. 

Ronald.Hodapp@rrb.gov and to the 

OMB Desk Officer for the RRB, at the 

Office of Management and Budget, 

Room 10230, New Executive Office 

Building, Washington, DC 20503. 

Charles Mierzwa, 

Clearance Officer. 

[FR Doc. E9–6223 Filed 3–20–09; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28649; 812–13519] 

Massachusetts Financial Services 

Company, et al.; Notice of Application 

March 17, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

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

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from sections 

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

sections 6(c) and 17(b) of the Act for an 

exemption from sections 17(a)(1) and (2) 

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

Act for an exemption from rule 12d1– 

2(a) under the Act. 

Summary of the Application: The 

requested order would (a) permit certain 

registered management investment 

companies to acquire shares of certain 

registered open-end management 

investment companies that are outside 

the same group of investment 

companies as the acquiring investment 

companies, and (b) permit funds of 

funds relying on rule 12d1–2 under the 

Act to invest in certain financial 

instruments. 

Applicants: MFS Series Trust I, MFS 

Series Trust III, MFS Series Trust IV, 

MFS Series Trust V, MFS Series Trust 

IX, MFS Series Trust X, MFS Series 

Trust XI, MFS Series Trust XII, and MFS 

Series Trust XIII (collectively, the 

‘‘Trusts’’), Massachusetts Financial 

Services Company (the ‘‘Adviser’’), and 

MFS Fund Distributors, Inc. (the 

‘‘Distributor’’). 

Filing Dates: The application was 

filed on April 17, 2008, and amended on 

November 26, 2008. Applicants have 

agreed to file an amendment during the 

notice period, the substance of which is 

contained in this notice. 

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 April 13, 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 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

1090. Applicants, 500 Boylston Street, 

Boston, MA 02116. 

FOR FURTHER INFORMATION CONTACT: 

Christine Y. Greenlees, Senior Counsel, 

at (202) 551–6879, or Mary Kay Frech, 

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 for a fee at the Public 

Reference Desk, U.S. Securities and 

Exchange Commission, 100 F Street, 

NE., Washington DC 20549–0102 

(telephone (202) 551–5850). 

Applicants’ Representations 

1. The Trusts are open-end 

management investment companies 

registered under the Act and organized 

as Massachusetts business trusts. Each 

Trust is comprised of separate series 

that pursue distinct investment 

objectives and strategies. The Trusts are 

part of the same ‘‘group of investment 

companies’’ within the meaning of 

section 12(d)(1)(G)(ii) of the Act. The 

Adviser, a Delaware corporation, is 

registered as an investment adviser 

under the Investment Advisers Act of 

1940 (‘‘Advisers Act’’) and serves as 

investment adviser to the Trusts.1 The 

Distributor is a Delaware corporation 

and is registered as a broker-dealer 

under the Securities Exchange Act of 

1934 (the ‘‘Exchange Act’’). The 

Distributor serves as principal 

underwriter and distributor for the 

shares of the Underlying Funds (as 

defined below) and the Related Funds of 

Funds (as defined below). 

2. Applicants request an exemption to 

permit registered management 

investment companies that operate as a 

‘‘fund of funds’’ and that are not part of 

the same ‘‘group of investment 

companies,’’ within the meaning of 

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

Trusts (‘‘Unrelated Funds of Funds’’) to 

acquire shares of separate series of the 

Trusts that do not operate as ‘‘funds of 

funds’’ (‘‘Underlying Funds’’) 2 in excess 

of the limits in section 12(d)(1)(A) of the 

Act, and to permit Underlying Funds, 

any principal underwriter for an 

Underlying Fund, and any broker or 

dealer registered under the Exchange 

Act (‘‘Broker’’) to sell shares of an 

Underlying Fund to an Unrelated Fund 

of Funds in excess of the limits in 

section 12(d)(1)(B) of the Act. 

Applicants request that the relief apply 

to: (1) Each registered open-end 

management investment company or 

series thereof that currently or 

subsequently is part of the same ‘‘group 

of investment companies,’’ within the 

meaning of section 12(d)(1)(G)(ii) of the 

Act, as the Trusts, and that is advised 

or sponsored by the Adviser or any 

entity controlling, controlled by, or 

under common control with the Adviser 

(such registered open-end management 

investment companies or their series are 

included in the term ‘‘Underlying 

Funds’’); (2) each Unrelated Fund of 

Funds that enters into a Participation 

Agreement (as defined below) with an 

Underlying Fund to purchase shares of 

the Underlying Fund; and (3) any 

principal underwriter to an Underlying 

Fund or Broker selling shares of an 

Underlying Fund.3

3. Each Unrelated Fund of Funds will 

be advised by an investment adviser, 

within the meaning of section 

2(a)(20)(A) of the Act, that is registered 

as an investment adviser under the 

Advisers Act (an ‘‘Unrelated Fund of 


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4Applicants request that the relief apply to each 

registered open-end management investment 

company or series thereof that operates as a ‘‘fund 

of funds’’ and that currently or subsequently is part 

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

within the meaning of section 12(d)(1)(G)(ii) of the 

Act, as the Trusts, and is advised or sponsored by 

the Adviser or any entity controlling, controlled by 

or under common control with the Adviser (such 

registered open-end management investment 

companies or their series are included in the term 

‘‘Related Fund of Funds’’). 

5An ‘‘Unrelated Fund of Funds Affiliate’’ is an 

Unrelated Fund of Funds Adviser, Unrelated Fund 

of Funds Subadviser, a promoter, or a principal 

underwriter of an Unrelated Fund of Funds, and 

any person controlling, controlled by, or under 

common control with any of those entities. An 

‘‘Underlying Fund Affiliate’’ is an investment 

adviser, sponsor, promoter, or principal 

underwriter of an Underlying Fund, and any person 

controlling, controlled by, or under common 

control with any of those entities. 

Funds Adviser’’). An Unrelated Fund of 

Funds or its Adviser may contract with 

an investment adviser that meets the 

definition of section 2(a)(20)(B) of the 

Act (an ‘‘Unrelated Fund of Funds 

Subadviser’’). Applicants state that 

Unrelated Funds of Funds will be 

interested in using the Underlying 

Funds as part of their overall investment 

strategy. 

4. Applicants also request an 

exemption to the extent necessary to 

permit any existing or future funds that 

operate as ‘‘funds of funds’’ and that are 

part of the same ‘‘group of investment 

companies,’’ within the meaning of 

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

Trusts (‘‘Related Funds of Funds’’) and 

which invest in other Underlying Funds 

in reliance on section 12(d)(1)(G) of the 

Act, and which are also 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, consistent with its investment 

objective, policies, strategies and 

limitations, in financial instruments that 

may not be securities within the 

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

(‘‘Other Investments’’).4

5. Consistent with its fiduciary 

obligations under the Act, each Related 

Fund of Fund’s board of trustees will 

review the advisory fees charged by the 

Related Fund of Fund’s investment 

adviser to ensure that they are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided pursuant to the advisory 

agreement of any investment company 

in which the Related Fund of Funds 

may invest. 

Applicants’ Legal Analysis 

Investments in Underlying Funds by 

Unrelated Funds of Funds 

A. Section 12(d)(1) 

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

relevant part, prohibits a registered 

investment company from acquiring 

shares of an investment company if the 

securities represent more than 3% of the 

total outstanding voting stock of the 

acquired company, more than 5% of the 

total assets of the acquiring company, 

or, together with the securities of any 

other investment companies, more than 

10% of the total assets of the acquiring 

company. Section 12(d)(1)(B) of the Act 

prohibits a registered open-end 

investment company, its principal 

underwriter, and any broker or dealer 

from selling the investment company’s 

shares to another investment company if 

the sale will cause the acquiring 

company to own more than 3% of the 

acquired company’s 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) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Applicants seek an exemption under 

section 12(d)(1)(J) of the Act to permit 

Unrelated Funds of Funds to acquire 

shares of the Underlying Funds in 

excess of the limits in section 

12(d)(1)(A), and an Underlying Fund, 

any principal underwriter for an 

Underlying Fund, and any Broker to sell 

shares of an Underlying Fund to an 

Unrelated Fund of Funds in excess of 

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

Act. 

3. Applicants state that the terms and 

conditions of the proposed arrangement 

will adequately address the policy 

concerns underlying sections 

12(d)(1)(A) and (B), which include 

concerns about undue influence by a 

fund of funds over underlying funds, 

excessive layering of fees, and overly 

complex fund structures. Accordingly, 

applicants believe that the requested 

exemption is consistent with the public 

interest and the protection of investors. 

4. Applicants believe that neither an 

Unrelated Fund of Funds nor an 

Unrelated Fund of Funds Affiliate 

would be able to exert undue influence 

over the Underlying Funds.5 To limit 

the control that an Unrelated Fund of 

Funds may have over an Underlying 

Fund, applicants propose a condition 

prohibiting the Unrelated Fund of 

Funds Adviser, any person controlling, 

controlled by, or under common control 

with the Unrelated Fund of Funds 

Adviser, and any investment company 

or issuer that would be an investment 

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

3(c)(7) of the Act that is advised or 

sponsored by the Unrelated Fund of 

Funds Adviser or any person 

controlling, controlled by, or under 

common control with the Unrelated 

Fund of Funds Adviser (the ‘‘Unrelated 

Fund of Funds Advisory Group’’) from 

controlling (individually or in the 

aggregate) an Underlying Fund within 

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

The same prohibition would apply to 

the Unrelated Fund of Funds 

Subadviser, any person controlling, 

controlled by or under common control 

with the Unrelated Fund of Funds 

Subadviser, and any investment 

company or issuer that would be an 

investment company but for section 

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

of such investment company or issuer) 

advised or sponsored by the Unrelated 

Fund of Funds Subadviser or any 

person controlling, controlled by or 

under common control with the 

Unrelated Fund of Funds Subadviser 

(the ‘‘Unrelated Fund of Funds 

Subadvisory Group’’). Applicants 

propose other conditions to limit the 

potential for undue influence over the 

Underlying Funds, including that no 

Unrelated Fund of Funds or Unrelated 

Fund of Funds Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to an open-end fund) 

will cause an Underlying Fund to 

purchase a security in an offering of 

securities during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

Underwriting Affiliate (‘‘Affiliated 

Underwriting’’). An ‘‘Underwriting 

Affiliate’’ is a principal underwriter in 

any underwriting or selling syndicate 

that is an officer, director, member of an 

advisory board, investment adviser, 

subadviser, or employee of the 

Unrelated Fund of Funds, or a person of 

which any such officer, director, 

member of an advisory board, 

investment adviser, subadviser, or 

employee is an affiliated person. An 

Underwriting Affiliate does not include 

any person whose relationship to an 

Underlying Fund is covered by section 

10(f) of the Act. 

5. Applicants do not believe that the 

proposed arrangement will involve 

excessive layering of fees. The board of 

directors or trustees of each Unrelated 

Fund of Funds, including a majority of 

the directors or trustees who are not 

‘‘interested persons’’ (within the 

meaning of section 2(a)(19) of the Act) 

(‘‘Independent Trustees’’), will find that 

the advisory fees charged under such 

advisory contract are based on services 


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6Applicants represent that each Unrelated Fund 

of Funds will represent in the Participation 

Agreement (as defined below) that no insurance 

company sponsoring a registered separate account 

funding variable insurance contracts will be 

permitted to invest in the Unrelated Fund of Funds 

unless the insurance company has certified to the 

Unrelated Fund of Funds that the aggregate of all 

fees and charges associated with each contract that 

invests in the Unrelated Fund of Funds, including 

fees and charges at the separate account, Unrelated 

Fund of Funds, and Underlying Fund levels, will 

be reasonable in relation to the services rendered, 

the expenses expected to be incurred, and the risks 

assumed by the insurance company. 

7Applicants acknowledge that receipt of 

compensation by (a) an affiliated person of an 

Unrelated Fund of Funds, or an affiliated person of 

such person, for the purchase by the Unrelated 

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 an Unrelated 

Fund of Funds may be prohibited by section 17(e) 

of the Act. The Participation Agreement also will 

include this acknowledgment. 

provided that will be in addition to, 

rather than duplicative of, the services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Unrelated Fund of Funds may invest. In 

addition, an Unrelated Fund of Funds 

Adviser will waive fees otherwise 

payable to it by the Unrelated Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Underlying Fund under rule 12b–1 

under the Act) received from an 

Underlying Fund by the Unrelated Fund 

of Funds Adviser or an affiliated person 

of the Unrelated Fund of Funds Adviser, 

other than any advisory fees paid to the 

Unrelated Fund of Funds Adviser or its 

affiliated person, by an Underlying 

Fund, in connection with the 

investment by the Unrelated Fund of 

Funds in the Underlying Fund. 

Applicants also state that with respect 

to registered separate accounts that 

invest in an Unrelated Fund of Funds, 

no sales load will be charged at the 

Unrelated Fund of Funds level or at the 

Underlying Fund level.6 Other sales 

charges and service fees, as defined in 

Rule 2830 of the Conduct Rules of the 

NASD (‘‘NASD Conduct Rules’’), if any, 

will only be charged at the Unrelated 

Fund of Funds level or at the 

Underlying Fund level, not both. With 

respect to other investments in an 

Unrelated Fund of Funds, any sales 

charges and/or service fees charged with 

respect to shares of the Unrelated Fund 

of Funds will not exceed the limits 

applicable to a fund of funds as set forth 

in Rule 2830 of the NASD Conduct 

Rules. 

6. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Underlying 

Fund will acquire securities of any 

investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

in certain circumstances identified in 

condition 12 below. Applicants also 

represent that to ensure that Unrelated 

Funds of Funds comply with the terms 

and conditions of the requested 

exemption from section 12(d)(1)(A) of 

the Act, an Unrelated Fund of Funds 

must enter into a participation 

agreement between a Trust, on behalf of 

the relevant Underlying Fund, and the 

Unrelated Funds of Funds 

(‘‘Participation Agreement’’) before 

investing in an Underlying Fund in 

excess of the limits in section 

12(d)(1)(A). The Participation 

Agreement will require the Unrelated 

Fund of Funds to adhere to the terms 

and conditions of the requested order. 

The Participation Agreement will 

include an acknowledgment from the 

Unrelated Fund of Funds that it may 

rely on the requested order only to 

invest in the Underlying Funds and not 

in any other registered investment 

company. 

B. Section 17(a) 

1. Section 17(a) of the Act generally 

prohibits sales or purchases of securities 

between a registered investment 

company and any affiliated person of 

the company. Section 2(a)(3) of the Act 

defines an ‘‘affiliated person’’ of another 

person to include 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. 

2. Applicants seek relief from section 

17(a) to permit an Underlying Fund that 

is an affiliated person of an Unrelated 

Fund of Funds because the Unrelated 

Fund of Funds holds 5% or more of the 

Underlying Fund’s shares to sell its 

shares to and redeem its shares from an 

Unrelated Fund of Funds. Applicants 

state that any proposed transactions 

directly between an Underlying Fund 

and an Unrelated Fund of Funds will be 

consistent with the policies of each 

Underlying Fund and Unrelated Fund of 

Funds. The Participation Agreement 

will require any Unrelated Fund of 

Funds that purchases shares from an 

Underlying Fund to represent that the 

purchase of shares from the Underlying 

Fund by an Unrelated Fund of Funds 

will be accomplished in compliance 

with the investment restrictions of the 

Unrelated Fund of Funds and will be 

consistent with the investment policies 

set forth in the Unrelated Fund of 

Funds’ registration statement. 

3. Section 17(b) of the Act authorizes 

the Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (i) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (ii) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (iii) 

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.7 Applicants state 

that the terms of the transactions are 

reasonable and fair and do not involve 

overreaching. Applicants note that any 

consideration paid for the purchase or 

redemption of shares directly from an 

Underlying Fund will be based on the 

net asset value of the Underlying Fund. 

Applicants state that the proposed 

transactions will be consistent with the 

policies of each Underlying Fund and 

each Unrelated Fund of Funds and with 

the general purposes of the Act. 

Other Investments by Related 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; 

(ii) the acquiring company holds only 

securities of acquired companies that 

are part of the same group of investment 

companies, government securities, and 

short-term paper; (iii) the aggregate sales 

loads and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the Act by a securities 

association registered under section 15A 

of the Exchange Act or by the 

Commission; and (iv) the acquired 

company has a policy that prohibits it 

from acquiring securities of registered 

open-end management investment 

companies or registered unit investment 

trusts in reliance on section 12(d)(1)(F) 

or (G) of the Act. 

2. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered unit investment 


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trust that relies on section 12(d)(1)(G) of 

the Act to acquire, in addition to 

securities issued by another registered 

investment company in the same group 

of investment companies, government 

securities, and short-term paper: (1) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

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

securities (other than securities issued 

by an investment company); and (3) 

securities issued by a money market 

fund, when the investment is in reliance 

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

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

means any security as defined in section 

2(a)(36) of the Act. 

3. Applicants state that the proposed 

arrangement would comply with the 

provisions of rule 12d1–2 under the Act, 

but for the fact that the Related 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 Related Funds of 

Funds to invest in Other Investments. 

Applicants assert that permitting the 

Related 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) were designed to 

address. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

Investments in Underlying Funds by 

Unrelated Funds of Funds 

1. The members of an Unrelated Fund 

of Funds Advisory Group will not 

control (individually or in the aggregate) 

an Underlying Fund within the meaning 

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

members of an Unrelated Fund of Funds 

Subadvisory Group will not control 

(individually or in the aggregate) an 

Underlying 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 Underlying Fund, the 

Unrelated Fund of Funds Advisory 

Group or the Unrelated Fund of Funds 

Subadvisory Group, each in the 

aggregate, becomes a holder of more 

than 25 percent of the outstanding 

voting securities of an Underlying Fund, 

it (except for any member of the 

Unrelated Fund of Funds Advisory 

Group or Unrelated Fund of Funds 

Subadvisory Group that is a separate 

account funding variable insurance 

contracts) will vote its shares of the 

Underlying Fund in the same 

proportion as the vote of all other 

holders of the Underlying Fund’s 

shares. This condition does not apply to 

the Unrelated Fund of Funds 

Subadvisory Group with respect to an 

Underlying Fund for which the 

Unrelated Fund of Funds Subadviser or 

a person controlling, controlled by, or 

under common control with the 

Unrelated Fund of Funds Subadviser 

acts as the investment adviser within 

the meaning of section 2(a)(20)(A) of the 

Act. A registered separate account 

funding variable insurance contracts 

will seek voting instructions from its 

contract holders and will vote its shares 

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 funding 

variable insurance contracts will either 

(i) vote its shares of the Underlying 

Fund in the same proportion as the vote 

of all other holders of the Underlying 

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 Unrelated Fund of Funds or 

Unrelated Fund of Funds Affiliate will 

cause any existing or potential 

investment by the Unrelated Fund of 

Funds in shares of an Underlying Fund 

to influence the terms of any services or 

transactions between the Unrelated 

Fund of Funds or an Unrelated Fund of 

Funds Affiliate and the Underlying 

Fund or an Underlying Fund Affiliate. 

3. The board of directors or trustees of 

an Unrelated Fund of Funds, including 

a majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to assure that the Unrelated 

Fund of Funds Adviser and any 

Unrelated Fund of Funds Subadviser(s) 

are conducting the investment program 

of the Unrelated Fund of Funds without 

taking into account any consideration 

received by the Unrelated Fund of 

Funds or an Unrelated Fund of Funds 

Affiliate from an Underlying Fund or an 

Underlying Fund Affiliate in connection 

with any services or transactions. 

4. Once an investment by an 

Unrelated Fund of Funds in the 

securities of an Underlying Fund 

exceeds the limit in section 

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

trustees of the Underlying Fund (the 

‘‘Board’’), including a majority of the 

Independent Trustees, will determine 

that any consideration paid by the 

Underlying Fund to the Unrelated Fund 

of Funds or an Unrelated 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 

Underlying Fund; (b) is within the range 

of consideration that the Underlying 

Fund 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 Underlying Fund and its 

investment adviser(s) or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Unrelated Fund of Funds or 

Unrelated Fund of Funds Affiliate 

(except to the extent it is acting in its 

capacity as an investment adviser to an 

Underlying Fund) will cause an 

Underlying Fund to purchase a security 

in any Affiliated Underwriting. 

6. The Board of an Underlying Fund, 

including a majority of the Independent 

Trustees, will adopt procedures 

reasonably designed to monitor any 

purchases of securities by the 

Underlying Fund in an Affiliated 

Underwriting once an investment by an 

Unrelated Fund of Funds in the 

securities of the Underlying 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 of the 

Underlying Fund will review these 

purchases periodically, but no less 

frequently than annually, to determine 

whether the purchases were influenced 

by the investment by the Unrelated 

Fund of Funds in shares of the 

Underlying Fund. The Board of the 

Underlying Fund shall consider, among 

other things, (i) whether the purchases 

were consistent with the investment 

objectives and policies of the 

Underlying 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 Underlying Fund in 

Affiliated Underwritings and the 

amount purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Underlying Fund shall take 

any appropriate actions based on its 

review, including, if appropriate, the 

institution of procedures designed to 


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 12165 

assure that purchases of securities in 

Affiliated Underwritings are in the best 

interests of shareholders. 

7. Each Underlying Fund shall 

maintain and preserve permanently in 

an easily accessible place a written copy 

of the procedures described in the 

preceding condition, and any 

modifications to such procedures, and 

shall maintain and preserve for a period 

not less than six years from the end of 

the fiscal year in which any purchase in 

an Affiliated Underwriting occurred, the 

first two years in an easily accessible 

place, a written record of each purchase 

of securities in Affiliated Underwritings 

once an investment by an Unrelated 

Fund of Funds in the securities of an 

Underlying Fund exceeds the limit in 

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. 

8. Before investing in shares of an 

Underlying Fund in excess of the limits 

in section 12(d)(1)(A), each Unrelated 

Fund of Funds and Underlying Fund 

will execute a Participation Agreement 

stating, without limitation, that their 

boards of directors or trustees 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 Underlying 

Fund in excess of the limit in section 

12(d)(1)(A)(i), an Unrelated Fund of 

Funds will notify the Underlying Fund 

of the investment. At such time, the 

Unrelated Fund of Funds will also 

transmit to the Underlying Fund a list 

of the names of each Unrelated Fund of 

Funds Affiliate and Underwriting 

Affiliate. The Unrelated Fund of Funds 

will notify the Underlying Fund of any 

changes to the list of the names as soon 

as reasonably practicable after a change 

occurs. The Underlying Fund and the 

Unrelated 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. Prior to approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Unrelated Fund of Funds, including a 

majority of the Independent Trustees, 

will find that the advisory fees charged 

under such advisory contracts 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 Underlying 

Fund in which the Unrelated Fund of 

Funds may invest. These findings and 

their basis will be recorded fully in the 

minute books of the appropriate 

Unrelated Fund of Funds. 

10. An Unrelated Fund of Funds 

Adviser will waive fees otherwise 

payable to it by the Unrelated Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Underlying Fund under rule 12b–1 

under the Act) received from an 

Underlying Fund by the Unrelated Fund 

of Funds Adviser, or an affiliated person 

of the Unrelated Fund of Funds Adviser, 

other than any advisory fees paid to the 

Unrelated Fund of Funds Adviser or its 

affiliated person by the Underlying 

Fund, in connection with the 

investment by the Unrelated Fund of 

Funds in the Underlying Fund. Any 

Unrelated Fund of Funds Subadviser 

will waive fees otherwise payable to the 

Unrelated Fund of Funds Subadviser, 

directly or indirectly, by the Unrelated 

Fund of Funds in an amount at least 

equal to any compensation received 

from any Underlying Fund by the 

Unrelated Fund of Funds Subadviser, or 

an affiliated person of the Unrelated 

Fund of Funds Subadviser, other than 

any advisory fees paid to the Unrelated 

Fund of Funds Subadviser or its 

affiliated person by the Underlying 

Fund, in connection with the 

investment by the Unrelated Fund of 

Funds in the Underlying Fund made at 

the direction of the Unrelated Fund of 

Funds Subadviser. In the event that the 

Unrelated Fund of Funds Subadviser 

waives fees, the benefit of the waiver 

will be passed through to the Unrelated 

Fund of Funds. 

11. With respect to registered separate 

accounts that invest in an Unrelated 

Fund of Funds, no sales load will be 

charged at the Unrelated Fund of Funds 

level or at the Underlying Fund level. 

Other sales charges and service fees, as 

defined in Rule 2830 of the NASD 

Conduct Rules, if any, will only be 

charged at the Unrelated Fund of Funds 

level or at the Underlying Fund level, 

not both. With respect to other 

investments in an Unrelated Fund of 

Funds, any sales charges and/or service 

fees charged with respect to shares of 

the Unrelated Fund of Funds will not 

exceed the limits applicable to a fund of 

funds as set forth in Rule 2830 of the 

NASD Conduct Rules. 

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; (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. 

Other Investments by Related Funds of 

Funds 

13. The 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 Related 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. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6209 Filed 3–20–09; 8:45 am] 

BILLING CODE 

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, March 26, 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)(5), (6), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(5), (6), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matters at the Closed 

Meeting. 

Commissioner Aguilar, as duty 

officer, voted to consider the items 

listed for the Closed Meeting in closed 

session. 


dwashington3 on PROD1PC60 with NOTICES