Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 16239 

3 17 CFR 240.13f–1. 

4 17 CFR 249.325. 

1Phoenix Life Insurance Co, et al., Investment 

Company Act Release Nos. 27315 (May 8, 2006) 

(notice) and 27388 (June 5, 2006) (order). The Prior 

Order granted relief to the applicants and also to 

Phoenix Investment Counsel, Inc. (‘‘PIC’’), Phoenix 

Pholios, and certain registered open-end 

management investment companies and their series 

advised by PIC or any entity controlling, controlled 

by or under common control with PIC. 

disclosure system to collect specific 

information; and (2) disseminate such 

information to the public. Rule 13f–1 3

under the Exchange Act requires 

institutional investment managers that 

exercise investment discretion over 

accounts—having in the aggregate a fair 

market value of at least $100,000,000 of 

exchange-traded or NASDAQ-quoted 

equity securities—to file quarterly 

reports with the Commission on Form 

13F.4

The information collection 

requirements apply to institutional 

investment managers that meet the $100 

million reporting threshold. Section 

13(f)(5) of the Exchange Act defines an 

‘‘institutional investment manager’’ as 

any person, other than a natural person, 

investing in or buying and selling 

securities for its own account, and any 

person exercising investment discretion 

with respect to the account of any other 

person. Form 13F under the Exchange 

Act defines ‘‘investment discretion’’ for 

purposes of Form 13F reporting. 

The reporting system required by 

Section 13(f) of the Exchange Act is 

intended, among other things, to create 

in the Commission a central repository 

of historical and current data about the 

investment activities of institutional 

investment managers, and to improve 

the body of factual data available to 

regulators and the public. 

The Commission staff estimates that 

4,052 respondents make approximately 

16,208 responses under the rule each 

year. The staff estimates that on average, 

Form 13F filers spend 98.8 hours/year 

to prepare and submit the report. In 

addition, the staff estimates that 210 

respondents file approximately 840 

amendments each year. The staff 

estimates that on average, Form 13F 

filers spend 4 hours/year to prepare and 

submit amendments to Form 13F. The 

total annual burden of the rule’s 

requirements for all respondents 

therefore is estimated to be 401,178 

hours ((4,052 filers × 98.8 hours) + (210 

filers × 4 hours)). 

The estimate of average burden hours 

is made solely for the purposes of the 

Paperwork Reduction Act. The estimate 

is not derived from a comprehensive or 

even a representative survey or study of 

the costs of Commission rules. 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. 

Written comments are invited on: (a) 

Whether the collections of information 

are necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information has practical utility; (b) the 

accuracy of the Commission’s estimate 

of the burdens of the collections of 

information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burdens of the collections 

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 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. 

Dated: April 3, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8067 Filed 4–8–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–28686; 812–13564] 

Phoenix Life Insurance Company, et 

al.; Notice of Application 

April 3, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application to amend 

a prior order under section 12(d)(1)(J) of 

the Investment Company Act of 1940 

(‘‘Act’’) for an exemption from sections 

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

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

exemption from section 17(a) of the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order that would amend and 

supersede as to them (‘‘Amended 

Order’’) a prior order that permits 

certain registered open-end management 

investment companies to acquire shares 

of other registered open-end 

management investment companies and 

unit investment trusts (‘‘UITs’’) both 

within and outside the same group of 

investment companies (‘‘Prior Order’’).1

The Amended Order would subject 

applicants to different conditions than 

the Prior Order and delete a condition 

of the Prior Order. 

APPLICANTS: (a) Phoenix Life Insurance 

Company (‘‘Phoenix’’), PHL Variable 

Insurance Company (‘‘PHL Variable’’) 

and Phoenix Life and Annuity Company 

(‘‘PLAC,’’ and together with Phoenix, 

PHL Variable and any insurance 

company controlling, controlled by or 

under common control with Phoenix, 

PHL Variable or PLAC, the ‘‘Insurance 

Companies’’); (b) Phoenix Edge Series 

Fund (the ‘‘Edge Fund’’), including the 

currently existing series and all future 

series thereof; (c) any existing or future 

registered open-end management 

investment companies and any 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 

Edge Fund, and are, or will be, advised 

by Phoenix Variable Advisors, Inc. 

(‘‘PVA’’) or any entity controlling, 

controlled by or under common control 

with PVA (together with series of the 

Edge Fund, ‘‘Phoenix Funds’’ or 

‘‘Funds’’); and (d) PVA. 

FILING DATES: The application was filed 

on August 11, 2008 and amended on 

March 9, 2009. Applicants have agreed 

to file an amendment during the notice 

period, the substance of which is 

reflected 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. April 27, 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, c/o Kathleen A. 

McGah, Esq., Phoenix Life Insurance 

Company, One American Row, H–11, 

Hartford, CT 06102. 

FOR FURTHER INFORMATION CONTACT: 

Emerson S. Davis, Sr., Senior Counsel, 

at (202) 551–6868, or Julia Kim Gilmer, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 


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16240 Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 

2All entities that currently intend to rely on the 

Amended Order are named as applicants. Any other 

entity that relies on the Amended Order in the 

future will comply with the terms and conditions 

of the application. 

3The Phoenix Edge Series Fund, Investment 

Company Act Release Nos. 25687 (July 26, 2002) 

(notice) and 25703 (August 20, 2002) (order). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained for a fee at the Public 

Reference Room, U.S. Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1520 

(telephone (202) 551–5850). 

Applicants’ Representations 

1. Phoenix is a New York life 

insurance company and an indirect 

wholly-owned subsidiary of The 

Phoenix Companies Inc. (‘‘The Phoenix 

Companies’’) a publicly traded Delaware 

corporation. PHL Variable is a 

Connecticut life insurance company and 

an indirect wholly-owned subsidiary of 

Phoenix. PLAC is a Connecticut life 

insurance company and an indirect 

wholly-owned subsidiary of The 

Phoenix Companies. The Insurance 

Companies issue group and individual 

variable annuity contracts and variable 

life insurance policies (collectively, the 

‘‘Contracts’’) that offer opportunities to 

invest in the Edge Fund through 

separate accounts registered under the 

Act (‘‘Registered Separate Accounts’’) 

and separate accounts exempt from 

registration under the Act 

(‘‘Unregistered Separate Accounts,’’ and 

together with the Registered Separate 

Accounts, the ‘‘Separate Accounts’’). 

PVA is an affiliated person of the 

Insurance Companies, is registered 

under the Investment Advisers Act of 

1940 and serves as investment adviser 

to each of the Funds that is a series of 

the Edge Funds. 

2. The Edge Fund is a Massachusetts 

business trust registered under the Act 

as an open-end management investment 

company, and currently offers 18 

Funds.2 Except for organizational seed 

capital for certain of the Funds invested 

by PVA or an affiliate, shares of the 

Edge Fund currently are sold 

exclusively to the Insurance Companies 

on behalf of their Separate Accounts to 

fund benefits under the Contracts. 

Shares of the Edge Fund may also be 

offered in the future to unaffiliated 

insurance companies to fund benefits 

under variable annuity contracts and 

variable life insurance policies issued 

by the unaffiliated insurance 

companies, and directly to certain 

qualified pension and profit sharing 

plans pursuant to an order granted by 

the Commission.3

3. The Prior Order permits Funds 

(each a ‘‘Fund of Funds’’) to invest in: 

(a) Other Funds in the same group of 

investment companies as the Fund of 

Funds (‘‘Affiliated Funds’’), and/or (b) 

registered open-end management 

investment companies (‘‘Unaffiliated 

Management Companies’’) and UITs 

(‘‘Unaffiliated Trusts’’) 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 Fund of 

Funds (‘‘Unaffiliated Funds’’, and 

together with the Affiliated Funds, the 

‘‘Underlying Funds’’). The Prior Order 

also permits the Underlying Funds, 

their principal underwriters, and any 

broker or dealer registered under the 

Securities Exchange Act of 1934 

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

Underlying Fund to a Fund of Funds. 

Certain of the Unaffiliated Funds may 

be ‘‘exchange-traded funds’’ that are 

registered under the Act as UITs or 

open-end management investment 

companies and have received exemptive 

relief to sell their shares on a national 

securities exchange at negotiated prices 

(‘‘ETFs’’). Any investment adviser to a 

Fund of Funds that meets the definition 

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

referred to as a ‘‘Manager.’’ 

4. The Amended Order would amend 

and supersede the Prior Order as to the 

applicants by deleting condition 2, 

which prohibited a Fund of Funds or its 

Manager, sub-adviser, promoter, 

principal underwriter and any person 

controlling, controlled by or under 

common control with any of these 

entities (each, a ‘‘Fund of Funds 

Affiliate’’) from receiving from an 

Unaffiliated Fund or its investment 

adviser(s), sponsor, promoter, principal 

underwriter and any person controlling, 

controlled by or under common control 

with any of these entities (each, an 

‘‘Unaffiliated Fund Affiliate’’) any 

consideration in connection with any 

services, transactions or the investment 

by the Fund of Funds in the Unaffiliated 

Fund. The Amended Order will subject 

applicants to certain other conditions 

governing the payment of such 

consideration consistent with recent 

Commission precedent. 

5. Each Fund of Funds may also make 

investments in government securities, 

domestic and foreign common and 

preferred stock, fixed income securities, 

futures transactions, options on the 

foregoing and in other securities or 

instruments that are not issued by 

registered investment companies and 

that are consistent with its investment 

objective, including money market 

instruments. Applicants state that the 

requested relief will provide an efficient 

and simple method of allowing 

investors to create a comprehensive 

asset allocation program. 

Applicants’ Legal Analysis 

A. Section 12(d)(1) 

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

prohibits a registered investment 

company from acquiring shares of an 

investment company if the securities 

represent more than 3% of the total 

outstanding voting stock of the acquired 

company, more than 5% of the total 

assets of the acquiring company, or, 

together with the securities of any other 

investment companies, more than 10% 

of the total assets of the acquiring 

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

prohibits a registered open-end 

investment company, its principal 

underwriter and any broker or dealer 

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) 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 Underlying Funds and to 

permit the Underlying Funds, their 

principal underwriters and any broker 

or dealer registered under the Exchange 

Act to sell shares of the Underlying 

Funds to the Funds of Funds. 

3. Applicants state that the proposed 

arrangement will not give rise to 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 continues to be consistent 

with the public interest and the 

protection of investors. 

4. Applicants state that the proposed 

structure will not result in the exercise 

of 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, 


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 16241 

4An Unaffiliated Fund, 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. 

since they are part of the same group of 

investment companies. To limit the 

control a Fund of Funds or its affiliated 

persons may have over an Unaffiliated 

Fund, applicants remain subject to a 

condition prohibiting: (a) A Manager 

and any person controlling, controlled 

by or under common control with such 

Manager, and 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, a ‘‘Group’’), and 

(b) any other investment adviser within 

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

Act to a Fund of Funds (a ‘‘SubAdviser’’), any person controlling, 

controlled by or under common control 

with a Sub-Adviser, and any investment 

company or issuer that would be an 

investment company but for section 

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

of such investment company or issuer) 

advised by the Sub-Adviser or any 

person controlling, controlled by or 

under common control with the SubAdviser (collectively, a ‘‘Sub-Adviser 

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 

proposed condition 2 precludes a Fund 

of Funds or a Fund of Funds Affiliate 

from taking advantage of an Unaffiliated 

Fund with respect to transactions 

between a Fund of Funds or a Fund of 

Funds Affiliate, and the Unaffiliated 

Fund or an Unaffiliated Fund Affiliate. 

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 Management 

Company or sponsor to an Unaffiliated 

Trust) will cause 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, trustee, advisory board 

member, investment adviser, SubAdviser, or employee of the Fund of 

Funds, or a person of which any such 

officer, director, trustee, advisory board 

member, investment adviser, SubAdviser, 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.’’ 

6. To further assure that an 

Unaffiliated Management Company 

understands the implications of an 

investment by a Fund of Funds under 

the requested Amended Order, prior to 

its investment in an Unaffiliated 

Management Company in excess of the 

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

Funds and Unaffiliated Management 

Company will execute an agreement 

stating, without limitation, that their 

boards of directors or trustees and their 

investment advisers understand the 

terms and conditions of the Amended 

Order and agree to fulfill their 

responsibilities under the Amended 

Order (‘‘Participation Agreement’’). 

Applicants note that an Unaffiliated 

Fund (other than an ETF whose shares 

are purchased by a Fund of Funds in the 

secondary market) will retain the right 

to reject an investment by a Fund of 

Funds.4

7. Applicants state that they do not 

believe that the proposed arrangement 

will involve excessive layering of fees. 

To assure that the investment advisory 

fees are not duplicative, applicants state 

that, prior to reliance on the requested 

order and subsequently in connection 

with the approval of any investment 

advisory contract under section 15 of 

the Act, the board of directors or 

trustees (‘‘Board’’) of each Fund of 

Funds, including a majority of the 

directors or trustees who are not 

‘‘interested persons,’’ as defined in 

section 2(a)(19) of the Act 

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

the advisory fees charged under a Fund 

of Fund’s advisory contract(s) are based 

on services provided that are in addition 

to, rather than duplicative of, services 

provided pursuant to any Underlying 

Fund’s advisory contract(s). Applicants 

further state that a 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 Fund 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 the Unaffiliated Fund, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

8. 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 National Association of 

Securities Dealers (‘‘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. 

9. Applicants represent that each 

Fund of Funds will represent in the 

Participation Agreement that no 

insurance company sponsoring a 

registered separate account funding 

variable insurance 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 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, will be reasonable in relation to 

the services rendered, the expenses 

expected to be incurred, and the risks 

assumed by the insurance company. 

10. 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 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), except 

in certain circumstances identified in 

condition 12 below. 

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 (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 might 

be deemed to be under common control 

of the Manager, and therefore affiliated 


dwashington3 on PROD1PC60 with NOTICES
16242 Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 

5Applicants acknowledge that receipt of 

compensation by: (a) An affiliated person of a Fund 

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. 

6Applicants note that a Fund of Funds generally 

would purchase and sell shares of an Underlying 

Fund that operates as an ETF through secondary 

market transactions at market prices rather than 

through principal transactions with the Underlying 

Fund at net asset value. Applicants would not rely 

on the requested relief from section 17(a) for such 

secondary market transactions. A Fund of Funds 

could seek to transact in ‘‘creation units’’ directly 

with an ETF pursuant to the requested Section 17(a) 

relief. 

persons of one another. Applicants also 

state that the Funds of Funds and the 

Underlying Funds might 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) could 

prevent an Underlying Fund from 

selling shares to and redeeming shares 

from a Fund of Funds.5

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 (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 arrangement satisfies the 

standards for relief under sections 17(b) 

and 6(c) of the Act as the terms of the 

arrangement 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.6

Applicants also state that the proposed 

structure will be consistent with the 

policies of each Fund of Funds and 

Underlying Fund, and with the general 

purposes of the Act. 

Applicants’ Conditions 

Applicants agree that any Amended 

Order granting the requested relief shall 

be subject to the following conditions: 

1. The members of a 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 Sub-Adviser 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 the 

Sub-Adviser Group, each in the 

aggregate, becomes a holder of more 

than 25% of the outstanding voting 

securities of the Unaffiliated Fund, it 

(except for any member of the Group or 

the Sub-Adviser 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 Sub-Adviser Group with respect to an 

Unaffiliated Fund for which the SubAdviser or a person controlling, 

controlled by, or under common control 

with the Sub-Adviser acts as the 

investment adviser within the meaning 

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

case of an Unaffiliated Management 

Company) or as 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 each Fund of Funds, 

including a majority of the Independent 

Trustees, will adopt procedures 

reasonably designed to assure that the 

Manager and any Sub-Adviser are 

conducting the investment program of 

the Fund of Funds without taking into 

account any consideration received by 

the Fund of Funds or 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 Management Company 

exceeds the limit of section 

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

the Unaffiliated Management Company, 

including a majority of the Independent 

Trustees, will determine that any 

consideration paid by the Unaffiliated 

Management 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 Management Company; (b) 

is within the range of consideration that 

the Unaffiliated Management 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 Management 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 Management 

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 

Management Company, including a 

majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to monitor any purchases of 

securities by the Unaffiliated 

Management Company in an Affiliated 

Underwriting once an investment by a 

Fund of Funds in the securities of the 

Unaffiliated Management 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 Management Company will 

review these purchases periodically, but 

no less frequently than annually, to 

determine whether or not the purchases 


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 16243 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

were influenced by the investment by 

the Fund of Funds in the Unaffiliated 

Management Company. The Board of 

the Unaffiliated Management Company 

will consider, among other things: (a) 

Whether or not the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Management 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 or not the amount of securities 

purchased by the Unaffiliated 

Management Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Unaffiliated Management 

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 interest of 

shareholders. 

7. Each Unaffiliated Management 

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 from 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 

Management Company exceeds the limit 

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

setting forth the: (a) Party from whom 

the securities were acquired; (b) identity 

of the underwriting syndicate’s 

members; (c) terms of the purchase; and 

(d) information or materials upon which 

the determinations of the Board of the 

Unaffiliated Management Company 

were made. 

8. Prior to its investment in shares of 

an Unaffiliated Management Company 

in excess of the limit set forth in section 

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

Funds and the Unaffiliated 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 Unaffiliated 

Management Company in excess of the 

limit set forth in section 12(d)(1)(A)(i), 

a Fund of Funds will notify the 

Unaffiliated Management Company of 

the investment. At such time, the Fund 

of Funds will also transmit to the 

Unaffiliated Management Company a 

list of the names of each Fund of Funds 

Affiliate and Underwriting Affiliate. The 

Fund of Funds will notify the 

Unaffiliated Management Company of 

any changes to the list as soon as 

reasonably practicable after a change 

occurs. The Unaffiliated Management 

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 each Fund of Funds, including 

a majority of the Independent Trustees, 

shall find that the advisory fees charged 

under the advisory contract 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 appropriate 

Fund of Funds. 

10. Each 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 Fund 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 its affiliated person by the 

Unaffiliated Fund, in connection with 

the investment by the Fund of Funds in 

the Unaffiliated Fund. Any Sub-Adviser 

will waive fees otherwise payable to the 

Sub-Adviser, directly or indirectly, by 

the Fund of Funds in an amount at least 

equal to any compensation received by 

the Sub-Adviser, or an affiliated person 

of the Sub-Adviser, from an Unaffiliated 

Fund, other than any advisory fees paid 

to the Sub-Adviser or its affiliated 

person by the Unaffiliated Fund, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated 

Underlying Fund made at the direction 

of the Sub-Adviser. In the event that the 

Sub-Adviser 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) 

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 (b) 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. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8068 Filed 4–8–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59690; File No. SR–CBOE– 

2009–019] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Cancellation 

Fees 

April 2, 2009. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 18, 

2009, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or the 


dwashington3 on PROD1PC60 with NOTICES