Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Notices 57693 

1 Forward Funds, et al., Investment Company Act 

Release Nos. 27777 (April 5, 2007) (notice) and 

27814 (May 1, 2007) (order). 

2All existing entities that currently intend to rely 

on the order are named as applicants. Any entity 

that relies on the order in the future will do so only 

in accordance with the terms and conditions of the 

application. If the name of any Sub-Advised Fund 

contains the name of a Sub-Adviser (as defined 

below), the name of the Manager that serves as the 

primary adviser to the Sub-Advised Fund will 

precede the name of the Sub-Adviser. 

3A successor in interest is limited to entities that 

result from a reorganization into another 

jurisdiction or a change in the type of business 

organization. 

(a) That the Interfund Loan Rate will 

be higher than the Repo Rate, but lower 

than the Bank Loan Rate; 

(b) Compliance with the collateral 

requirements as set forth in the 

application; 

(c) Compliance with the percentage 

limitations on interfund borrowing and 

lending; 

(d) Allocation of interfund borrowing 

and lending demand in an equitable 

manner and in accordance with 

procedures established by the Fund 

Board; and 

(e) That the interest rate on any 

Interfund Loan does not exceed the 

interest rate on any third-party 

borrowings of a borrowing Fund at the 

time of the Interfund Loan. 

After the final report is filed, each 

Fund’s independent auditors, in 

connection with their audit 

examinations of the Fund, will continue 

to review the operation of the proposed 

credit facility for compliance with the 

conditions of the application and their 

review will form the basis, in part, of 

the auditor’s report on internal 

accounting controls in Form N–SAR. 

18. No Fund will participate in the 

proposed credit facility upon receipt of 

requisite regulatory approval unless it 

has fully disclosed in its prospectus 

and/or SAI all material facts about its 

intended participation. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23343 Filed 10–2–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28420; 812–13533] 

Forward Funds and Forward 

Management, LLC; Notice of 

Application 

September 29, 2008. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from section 15(a) of the Act and rule 

18f–2 under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order that would supersede 

an existing order that permits them to 

enter into and materially amend 

subadvisory agreements without 

shareholder approval (‘‘Existing 

Order’’).1

APPLICANTS: Forward Funds (the 

‘‘Trust’’) and Forward Management, LLC 

(‘‘Forward Management’’). 

DATES: Filing Dates: The application was 

filed on May 19, 2008 and amended on 

September 25, 2008. 

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 October 24, 2008, 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 St., 

NE., Washington, DC 20549–1090; 

Applicants, 433 California Street, 11th 

Floor, San Francisco, CA 94104. 

FOR FURTHER INFORMATION CONTACT: 

Mary Kay Frech, Branch Chief, or 

Michael W. Mundt, Assistant Director, 

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 

Commission’s Public Reference Desk, 

100 F St., NE., Washington, DC 20549– 

1520 (telephone (202) 551–5850). 

Applicants’ Representations 

1. The Trust is organized as a 

Delaware statutory trust and is 

registered under the Act as an open-end 

management investment company. The 

Trust currently offers sixteen series (the 

‘‘Funds’’), each with its own investment 

objectives, policies, and restrictions. 

Applicants request that the order apply 

to: (a) The Funds; and (b) any future 

series of the Trust and any other 

registered open-end management 

investment companies or series thereof 

that (1) use the ‘‘manager-of-managers’’ 

arrangement described in the 

application, (2) comply with the terms 

and conditions of the application, and 

(3) are advised by a Manager (as defined 

below) (the investment companies and 

their series, as well as the Funds, the 

‘‘Sub-Advised Funds’’).2

2. Forward Management is registered 

as an investment adviser under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’) and serves as 

investment adviser to the Funds 

pursuant to an investment advisory 

agreement with the Trust, on behalf of 

the Funds (‘‘Advisory Agreement’’). The 

Advisory Agreement has been approved 

by the Trust’s board of trustees 

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

trustees who are not ‘‘interested 

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

of the Act, of the Trust (the 

‘‘Independent Trustees’’), as well as by 

the shareholders of the Funds. The term 

‘‘Manager’’ refers to Forward 

Management and any existing or future 

entity controlling, controlled by, or 

under common control with Forward 

Management that is an investment 

adviser registered under the Advisers 

Act and any successor in interest 

thereto.3

3. Under the terms of the Advisory 

Agreement, the Manager provides 

investment advisory services to each 

Sub-Advised Fund and has the 

authority, subject to Board approval, to 

enter into investment subadvisory 

agreements (‘‘Sub-Advisory 

Agreements’’) with one or more 

subadvisers (‘‘Sub-Advisers’’). Each 

Sub-Adviser is registered under the 

Advisers Act. The Manager will monitor 

and evaluate the Sub-Advisers and 

recommend to the Board their hiring, 

retention or termination. Sub-Advisers 

recommended to the Board by the 

Manager are selected and approved by 

the Board, including a majority of the 

Independent Trustees. Each SubAdviser has discretionary authority to 

invest the assets or a portion of the 

assets of the relevant Sub-Advised 

Fund. For its services, the Manager 

receives a fee from the Sub-Advised 

Fund computed as a percentage of the 

Sub-Advised Fund’s net assets. 

4. Applicants request an order that 

would permit the Manager to hire SubAdvisers and materially amend SubAdvisory Agreements without obtaining 

mstockstill on PROD1PC66 with NOTICES

57694 Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Notices 

4Under the Existing Order, the Manager 

compensates each Sub-Adviser out of the fees paid 

to the Manager under the Advisory Agreement. 

5 Investment Company Act Release No. 26230 

(Oct. 23, 2003). 

shareholder approval. The requested 

order would supersede the Existing 

Order to allow a Sub-Adviser to be 

compensated either (a) by the Manager 

out of the advisory fees it receives from 

the Sub-Advised Fund, or (b) directly by 

the Sub-Advised Fund out of its assets.4

The conditions of the requested order 

are identical to the conditions in the 

Existing Order, except for the addition 

of condition 10, which addresses SubAdviser compensation paid directly by 

a Sub-Advised Fund. The requested 

relief will not extend to any SubAdviser that is an affiliated person, as 

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

a Sub-Advised Fund or the Manager, 

other than by reason of serving as a SubAdviser to one or more of the SubAdvised Funds (‘‘Affiliated SubAdviser’’). 

Applicants’ Legal Analysis 

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

in relevant part, that it is unlawful for 

any person to act as an investment 

adviser to a registered investment 

company except under a written 

contract that has been approved by the 

vote of a majority of the company’s 

outstanding voting securities. Rule 18f– 

2 under the Act provides that each 

series or class of stock in a series 

company affected by a matter must 

approve such matter if the Act requires 

shareholder approval. 

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

the Commission may exempt any 

person, security, or transaction or any 

class or classes of persons, securities, or 

transactions from any provisions of the 

Act, or from any rule under 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. Applicants state that their 

requested relief meets this standard for 

the reasons discussed below. 

3. Applicants assert that the SubAdvised Funds’ shareholders are relying 

on the Manager’s experience to select 

one or more Sub-Advisers best suited to 

achieve a Sub-Advised Fund’s 

investment objectives. Applicants assert 

that, from the perspective of an investor 

in the Sub-Advised Fund, the role of the 

Sub-Advisers is comparable to that of 

the individual portfolio managers 

employed by traditional investment 

company advisory firms. Applicants 

state that requiring shareholder 

approval of each Sub-Advisory 

Agreement would impose costs and 

unnecessary delays on the Sub-Advised 

Funds, and may preclude the Manager 

from acting promptly in a manner 

considered advisable by the Board. 

Applicants note that the Advisory 

Agreement and any Sub-Advisory 

Agreement with an Affiliated SubAdviser will remain subject to section 

15(a) of the Act and rule 18f-2 under the 

Act. 

4. Applicants state that for tax or 

other reasons as may be determined by 

the Board and the Manager to be 

relevant from time to time, certain SubAdvised Funds may pay fees directly to 

the Sub-Adviser rather than having the 

Manager pay the Sub-Adviser out of its 

advisory fees. With respect to the SubAdvised Funds that pay Sub-Advisers 

directly, any change to a Sub-Advisory 

Agreement that results in an increase in 

the total management and advisory fees 

payable by a Sub-Advised Fund will be 

required to be approved by the 

shareholders of the Sub-Advised Fund. 

5. Applicants note that the 

Commission has proposed rule 15a–5 

under the Act and agree that the 

requested order will expire on the 

effective date of rule 15a–5 under the 

Act, if adopted.5

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Before a Sub-Advised Fund may 

rely on the requested order, the 

operation of the Sub-Advised Fund in 

the manner described in the application 

will be approved by a majority of the 

Sub-Advised Fund’s outstanding voting 

securities, as defined in the Act, or in 

the case of a Sub-Advised Fund whose 

public shareholders purchase shares on 

the basis of a prospectus containing the 

disclosure contemplated by condition 2 

below, by the initial shareholder(s) 

before offering shares of that SubAdvised Fund to the public. 

2. Each Sub-Advised Fund will 

disclose in its prospectus the existence, 

substance and effect of the order. In 

addition, each Sub-Advised Fund will 

hold itself out to the public as 

employing the manager-of-managers 

arrangement described in the 

application. The prospectus relating to 

each Sub-Advised Fund will 

prominently disclose that the Manager 

has ultimate responsibility (subject to 

oversight by the Board) to oversee SubAdvisers and to recommend their 

hiring, termination, and replacement. 

3. Within 90 days of the hiring of a 

new Sub-Adviser, the Manager will 

furnish shareholders of the applicable 

Sub-Advised Fund all information about 

the new Sub-Adviser that would be 

included in a proxy statement. To meet 

this condition, the Manager will provide 

shareholders of the applicable SubAdvised Fund with an information 

statement meeting the requirements of 

Regulation 14C, Schedule 14C and Item 

22 of Schedule 14A under the Securities 

Exchange Act of 1934. 

4. The Manager will not enter into a 

Sub-Advisory Agreement with any 

Affiliated Sub-Adviser unless such 

agreement, including the compensation 

to be paid thereunder, has been 

approved by the shareholders of the 

applicable Sub-Advised Fund. 

5. At all times, at least a majority of 

the Board will be Independent Trustees, 

and the nomination of new or additional 

Independent Trustees will be placed 

within the discretion of the thenexisting Independent Trustees. 

6. When a change of Sub-Adviser is 

proposed for a Sub-Advised Fund with 

an Affiliated Sub-Adviser, the Board, 

including a majority of the Independent 

Trustees, will make a separate finding, 

reflected in the Board minutes, that 

such change is in the best interests of 

such Sub-Advised Fund and its 

shareholders and does not involve a 

conflict of interest from which the 

Manager or an Affiliated Sub-Adviser 

derives an inappropriate advantage. 

7. The Manager will provide general 

investment management services to 

each Sub-Advised Fund, including 

overall supervisory responsibility for 

the general management and investment 

of each Sub-Advised Fund’s assets and, 

subject to review and approval by the 

Board, will: (a) Set the Sub-Advised 

Fund’s overall investment strategies; (b) 

evaluate, select, and recommend SubAdvisers to manage all or a part of the 

Sub-Advised Fund’s assets; (c) when 

appropriate, allocate and reallocate the 

Sub-Advised Fund’s assets among 

multiple Sub-Advisers; (d) monitor and 

evaluate the Sub-Advisers’ investment 

performance; and (e) implement 

procedures reasonably designed to 

ensure compliance by the SubAdviser(s) with the Sub-Advised Fund’s 

investment objectives, policies and 

restrictions. 

8. No trustee or officer of the Trust, 

or director or officer of the Manager, 

will own directly or indirectly (other 

than through a pooled investment 

vehicle that is not controlled by such 

person) any interest in a Sub-Adviser, 

except for (a) ownership of interests in 

the Manager or any entity that controls, 

is controlled by, or is under common 

control with the Manager, or (b) 

ownership of less than 1% of the 

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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Notices 57695 

1PowerShares Capital Management, et al., 

Investment Company Act Release Nos. 28140 (Feb. 

1, 2008) (notice) and 28171 (Feb. 27, 2008) (order). 

2The Initial Funds are the PowerShares Active 

AlphaQ Portfolio, PowerShares Active Alpha MultiCap Portfolio, PowerShares Active Mega-Cap 

Portfolio and PowerShares Active Low Duration 

Portfolio. 

3The Additional Funds consist of the 

PowerShares Active International Equity Portfolio 

which will invest in equity securities of foreign 

issuers, and the PowerShares Active Sovereign Debt 

Portfolio which will invest in foreign government 

debt securities. 

outstanding securities of any class of 

equity or debt of a publicly-traded 

company that is either a Sub-Adviser or 

an entity that controls, is controlled by 

or is under common control with a SubAdviser. 

9. The requested order will expire on 

the effective date of rule 15a-5 under the 

Act, if adopted. 

10. For Sub-Advised Funds that pay 

a Sub-Adviser’s fees directly from Fund 

assets, any changes to a Sub-Advisory 

Agreement that would result in an 

increase in the total management and 

advisory fees payable by a Sub-Advised 

Fund will be required to be approved by 

the shareholders of the Sub-Advised 

Fund. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23365 Filed 10–2–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28411; 812–13491] 

Invesco PowerShares Capital 

Management LLC, et al.; Notice of 

Application 

September 29, 2008. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application to 

amend a prior order under section 6(c) 

of the Investment Company Act of 1940 

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

2(a)(32), 5(a)(1), 22(d) and 22(e) of the 

Act and rule 22c–1 under the Act, and 

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

for an exemption from sections 17(a)(1) 

and (a)(2) of the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to amend a prior order 

(‘‘Prior Order’’) 1 that permits (a) Openend management investment companies 

whose portfolio securities include 

equity and/or fixed-income securities of 

U.S. issuers to issue shares (‘‘Shares’’) 

that can be redeemed only in large 

aggregations (‘‘Creation Units’’); (b) 

secondary market transactions in Shares 

to occur at negotiated prices; (c) certain 

affiliated persons of the series to deposit 

securities into, and receive securities 

from, the series in connection with the 

purchase and redemption of Creation 

Units; and (d) certain registered 

management investment companies and 

unit investment trusts outside of the 

same group of investment companies as 

the series to acquire Shares. Applicants 

seek to amend the Prior Order in order 

to offer two new series (the ‘‘Additional 

Funds’’) and future series (‘‘Future 

Foreign Funds,’’ together with the 

Additional Funds, the ‘‘Foreign Funds’’) 

investing in foreign equity and fixedincome securities. 

APPLICANTS: Invesco PowerShares 

Capital Management LLC, formerly 

known as PowerShares Capital 

Management LLC (the ‘‘Adviser’’), 

Invesco Aim Distributors, Inc., formerly 

known as AIM Distributors, Inc. (the 

‘‘Distributor’’), and PowerShares 

Actively Managed Exchange-Traded 

Fund Trust (the ‘‘Trust’’). 

FILING DATES: The application was filed 

on February 12, 2008, and amended on 

July 22, 2008. 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. on October 24, 2008, 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: Adviser and Trust, 

301 West Roosevelt Road, Wheaton, 

Illinois 60187, and Distributor, 11 

Greenway Plaza, Houston, Texas 77046– 

1173 

FOR FURTHER INFORMATION CONTACT: Jaea 

F. Hahn, Senior Counsel, at (202) 551– 

6870, or Marilyn Mann, 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 Room, U.S. Securities and 

Exchange Commission, 100 F Street, 

NE., Washington DC 20549–1520 

(telephone (202) 551–5850). 

Applicants’ Representations 

1. The Trust is an open-end 

management investment company 

registered under the Act and organized 

as a Delaware business trust. The Trust 

currently offers four series under the 

Prior Order (the ‘‘Initial Funds,’’ 

together with the Foreign Funds, the 

‘‘Funds’’).2 The Adviser, which is 

registered as an investment adviser 

under the Investment Advisers Act of 

1940 (‘‘Advisers Act’’), or an entity 

controlling, controlled by or under 

common control with the Adviser 

(included in the term ‘‘Adviser’’), will 

serve as investment adviser to each 

Fund. The Adviser may in the future 

retain one or more sub-advisers (‘‘SubAdvisers’’) to manage particular Funds’ 

portfolios. Any Sub-Adviser will be 

registered under the Advisers Act. The 

Distributor, a broker-dealer registered 

under the Securities Exchange Act of 

1934 (‘‘Exchange Act’’), serves as the 

principal underwriter and distributor 

for the Funds. 

2. The Trust is currently permitted to 

offer actively-managed exchange-traded 

funds investing in U.S. equity and fixedincome securities in reliance on the 

Prior Order. Applicants seek to amend 

the Prior Order to permit the Trusts to 

offer Foreign Funds that will invest in 

foreign equity and fixed-income 

securities.3

3. Applicants state that all discussions 

contained in the application for the 

Prior Order are equally applicable to the 

Foreign Funds, except as specifically 

noted by applicants (as summarized in 

this notice). Applicants assert that the 

Foreign Funds will operate in a manner 

identical to the Initial Funds and will 

comply with all of the terms, provisions 

and conditions of the Prior Order, as 

amended by the present application. 

Applicants believe that the requested 

relief meets the necessary exemptive 

standards. 

Applicants’ Legal Analysis 

1. In connection with applicants’ 

request for relief to permit the 

operations of Foreign Funds, applicants 

seek to amend the Prior Order to add 

relief from section 22(e) of the Act. 

Section 22(e) generally prohibits a 

registered investment company from 

mstockstill on PROD1PC66 with NOTICES