55376 Federal Register / Vol. 75, No. 175 / Friday, September 10, 2010 / Notices 

6Each Fund will preserve the accounts, books 

and other documents required to be maintained in 

an easily accessible place for the first two years. 

1Applicants request that the order extend to any 

future series of the Trusts and any other existing or 

future registered open-end management investment 

company and any series thereof that is part of the 

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

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

and that is, or may in the future be advised by the 

Adviser or any entity controlling, controlled by, or 

under common control with the Adviser (included 

in the term ‘‘Funds.’’). All existing 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 do so only in accordance 

with the terms and conditions of the application. 

2A Fund of Funds may not invest in an 

Underlying Fund that operates as a feeder fund 

unless the feeder fund is part of the same group of 

investment companies (as defined in section 

12(d)(1)(G)(ii)) of the Act as its corresponding 

master fund. 

2a–7 under the Act; or (iv) listed on or 

traded on any foreign securities 

exchange or board of trade that satisfies 

regulatory requirements under the law 

of the jurisdiction in which such foreign 

securities exchange or board of trade is 

organized similar to those that apply to 

a national securities exchange or a 

national market system for securities. 

4. Each Fund and its Manager will 

maintain and preserve, for the life of 

each Fund and at least six years 

thereafter, all accounts, books, and other 

documents constituting the record 

forming the basis for the audited 

financial statements that are to be 

provided to the Fund Investors, and 

each annual report of such Fund 

required to be sent to the Fund 

Investors, and agree that all such 

records will be subject to examination 

by the Commission and its staff.6

5. The Manager will send to each 

Fund Investor who had an Interest in 

the Fund, at any time during the fiscal 

year then ended, Fund financial 

statements that have been audited by 

that Fund’s independent accountants. 

At the end of each fiscal year, the 

Manager will make a valuation or have 

a valuation made of all of the assets of 

the Fund as of such fiscal year end in 

a manner consistent with customary 

practice with respect to the valuation of 

assets of the kind held by the Fund. In 

addition, within 120 days after the end 

of each fiscal year of the Fund, the 

Manager of a Fund shall send a report 

to each person who was a Fund Investor 

at any time during the fiscal year then 

ended setting forth tax information 

necessary for the preparation by the 

Fund Investor of his or her Federal and 

State income tax returns and a report of 

the investment activities of the Fund 

during that year. 

6. Whenever a Fund makes a purchase 

from or sale to an entity that is affiliated 

with the Fund by reason of a Tudor 

Group director, officer, or employee (a) 

serving as an officer, director, general 

partner or investment adviser of the 

entity or (b) having a 5% or more 

investment in the entity, that individual 

will not participate in the determination 

by the Fund of whether or not to effect 

the purchase or sale. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22622 Filed 9–9–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29410; File No. 812–13661] 

Transamerica Asset Management, Inc. 

et al.; Notice of Application 

September 3, 2010 

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 section 17(a) of the Act, 

and under section 6(c) of the Act for an 

exemption from rule 12d1–2(a) under 

the Act. 

Summary of the Application: The 

requested order would (a) permit certain 

series of registered open-end 

management investment companies to 

acquire shares of other registered openend management investment companies 

or unit investment trusts (‘‘UITs’’) 

registered under the Act that are within 

or outside of the same group of 

investment companies as the acquiring 

investment companies, and (b) permit 

certain series of registered open-end 

management investment companies 

relying on rule 12d1–2 under the Act to 

invest in certain financial instruments. 

Applicants: Transamerica Asset 

Management, Inc. (the ‘‘Adviser’’), 

Transamerica Funds (‘‘TF’’), 

Transamerica Partners Funds Group 

(‘‘TPFG’’), Transamerica Partners Funds 

Group II (‘‘TPFGII’’), Transamerica 

Partners Portfolios (‘‘TPP’’) and 

Transamerica Series Trust (‘‘TST’’) 

(collectively, TF, TPFG, TPFGII, TPP, 

and TST, the ‘‘Trusts’’). 

Filing Dates: The application was 

filed on May 28, 2009 and amended on 

November 20, 2009 and August 17, 

2010. 

Hearing or Notification of Hearing: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on September 27, 2010, 

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, 570 Carillon 

Parkway, St Petersburg, Florida 33716. 

FOR FURTHER INFORMATION CONTACT: 

Laura J. Riegel, Senior Counsel, at (202) 

551–6873, 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 via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations: 

1. The Trusts are open-end 

management investment companies 

registered under the Act. Each Trust is 

comprised of separate series (the 

‘‘Funds’’) that pursue distinctive 

investment objectives and strategies.1

TF and TST are statutory trusts 

organized under the laws of Delaware. 

TPFG and TPFGII are business trusts 

organized under the laws of 

Massachusetts. TPP is organized as a 

New York trust. TPFG and TPFGII 

include Funds that operate as feeder 

trusts in a master-feeder structure in 

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

Act, with TPP as their common 

corresponding master trust.2 TST 

includes Funds that are offered solely to 

insurance company separate accounts 

(‘‘Separate Accounts’’) that fund variable 

annuity and variable life contracts 

issued by insurance companies. The 

Separate Accounts may be registered 

under the Act (‘‘Registered Separate 

Accounts’’) or unregistered under the 

Act (‘‘Unregistered Separate Accounts’’). 

The Adviser, a Florida corporation, is 


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3Certain of the Unaffiliated Underlying Funds 

may be registered under the Act as either UITs or 

open-end management investment companies and 

have obtained exemptions from the Commission 

necessary to permit their shares to be listed and 

traded on a national securities exchange at 

negotiated prices (each, an ‘‘ETF’’). 

registered under the Investment 

Advisers Act of 1940 (the ‘‘Advisers 

Act’’). The Adviser serves as investment 

adviser to each of the Funds. 

2. Applicants request relief to permit 

(a) certain Funds (each, a ‘‘Fund of 

Funds’’) to acquire shares of (i) other 

Funds (‘‘Affiliated Underlying Funds’’) 

and (ii) registered open-end 

management investment companies (the 

‘‘Unaffiliated Funds’’) and UITs 

(‘‘Unaffiliated Trusts,’’ and together with 

the Unaffiliated Funds, the ‘‘Unaffiliated 

Underlying Funds’’) 3 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 (collectively, the Affiliated 

Underlying Funds and the Unaffiliated 

Underlying Funds are ‘‘Underlying 

Funds’’); (b) the Affiliated Underlying 

Funds, or their principal underwriters 

and any broker or dealer registered 

under the Securities Exchange Act of 

1934 (‘‘Broker’’) to sell shares of the 

Affiliated Underlying Funds to the Fund 

of Funds; and (c) the Unaffiliated 

Funds, or their principal underwriters 

and any Broker to sell shares of the 

Unaffiliated Funds to the Funds of 

Funds. Applicants also request an order 

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

to permit Underlying Funds that are 

affiliated persons of Fund of Funds to 

sell their shares to and redeem their 

shares from the Fund of Funds. 

3. Applicants also request an 

exemption under section 6(c) of the Act 

to permit any Fund that may invest in 

Affiliated Underlying Funds in reliance 

on section 12(d)(1)(G) of the Act (‘‘Same 

Group Fund of Funds’’) and that is 

eligible to invest in securities (as 

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

reliance on rule 12d1–2 under the Act, 

to also invest, consistent with its 

investment objectives, policies, 

strategies and limitations, in financial 

instruments that may not be securities 

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

the Act (‘‘Other Investments’’). 

4. Consistent with its fiduciary 

obligations under the Act, each Same 

Group Fund of Funds’ board of trustees 

or directors will review the advisory 

fees charged by the Same Group Fund 

of Funds’ 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 

Same Group Fund of Funds may invest. 

Applicants’ Legal Analysis 

Investments in Underlying Funds by 

Fund of Funds 

A. Section 12(d)(1) 

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

prohibits a registered investment 

company from acquiring shares of any 

other 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) to the extent necessary to permit the 

Funds of Funds to acquire shares of the 

Underlying Funds in excess of the limits 

set forth in section 12(d)(1)(A) of the Act 

and to permit the Affiliated Underlying 

Funds and Unaffiliated Funds, their 

principal underwriters and any Broker 

to sell shares to the Funds of Funds in 

excess of the limits set forth in sections 

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

3. Applicants state that the proposed 

arrangement will not give rise to the 

policy concerns underlying sections 

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

concerns about undue influence by a 

fund of funds or its affiliated persons 

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 state that the proposed 

arrangement will not result in undue 

influence by a Fund of Funds or its 

affiliated persons over the Underlying 

Funds. The concern about undue 

influence does not arise in connection 

with a Fund of Funds’ investment in the 

Affiliated Underlying Funds, since they 

are part of the same group of investment 

companies. To limit the control that a 

Fund of Funds or its affiliated persons 

may have over an Unaffiliated 

Underlying Fund, applicants propose a 

condition prohibiting: (a) Any 

investment adviser within the meaning 

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

Fund of Funds (‘‘Fund of Funds’ 

Adviser’’), any person controlling, 

controlled by or under common control 

with the Fund of Funds’ Adviser and 

any investment company or 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 

Fund of Funds’ Adviser or any person 

controlling, controlled by or under 

common control with the Fund of 

Funds’ Adviser (collectively, the 

‘‘Group’’), and (b) any investment 

adviser within the meaning of section 

2(a)(20)(B) of the Act to a Fund of Funds 

(‘‘Fund of Funds’ Subadviser’’), any 

person controlling, controlled by or 

under common control with the 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 Fund of 

Funds’ Subadviser or any person 

controlling, controlled by or under 

common control with the Fund of 

Funds’ Subadviser (collectively, the 

‘‘Subadviser Group’’) from controlling 

(individually or in the aggregate) an 

Unaffiliated Underlying Fund within 

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

5. Applicants further state that 

condition 2 precludes a Fund of Funds, 

a Fund of Funds’ Adviser, any Fund of 

Funds’ Subadviser, promoter or 

principal underwriter of a Fund of 

Funds, and any person controlling, 

controlled by or under common control 

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

of Funds Affiliate’’) from taking 

advantage of an Unaffiliated Underlying 

Fund, with respect to transactions 

between the Fund of Funds or a Fund 

of Funds Affiliate and the Unaffiliated 

Underlying Fund or the Unaffiliated 

Underlying Fund’s investment 

adviser(s), sponsor, promoter, principal 

underwriter or any person controlling, 

controlled by or under common control 

with any of these entities (each, an 

‘‘Unaffiliated Fund Affiliate’’). Condition 

5 precludes a Fund of Funds or Fund of 

Funds Affiliate (except to the extent it 

is acting in its capacity as an investment 

adviser to an Unaffiliated Fund or 


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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 Funds. 

5Any reference to NASD Conduct Rule 2830 

includes any successor or replacement rule to 

NASD Conduct Rule 2830 that may be adopted by 

the Financial Industry Regulatory Authority. 

6Applicants acknowledge that receipt of any 

compensation by (a) an affiliated person of a Funds 

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

the purchase by the Fund of Funds of shares of an 

Underlying Fund or (b) an affiliated person of an 

Underlying Fund, or an affiliated person of such 

person, for the sale by the Underlying Fund of its 

shares to a Fund of Funds may be prohibited by 

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

Agreement also will include this acknowledgement. 

sponsor to an Unaffiliated Trust) from 

causing an Unaffiliated 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 officer, director, 

trustee, member of an advisory board, 

Fund of Fund’s Adviser, Fund of Funds’ 

Subadviser, or employee of the Fund of 

Funds, or a person of which any such 

officer, director, trustee, investment 

adviser, Fund of Funds’ Subadviser, 

member of an advisory board, or 

employee is an affiliated person (each, 

an ‘‘Underwriting Affiliate,’’ except that 

any person whose relationship to the 

Unaffiliated Underlying 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. As an additional assurance that an 

Unaffiliated Fund understands the 

implications of an investment by a Fund 

of Funds under the requested order, 

prior to a Fund of Funds’ investment in 

the Unaffiliated Fund in excess of the 

limit in section 12(d)(1)(A)(i), condition 

8 requires that the Fund of Funds and 

Unaffiliated Fund execute an agreement 

stating, without limitation, that their 

boards of directors or trustees (‘‘Boards’’) 

and their investment advisers 

understand the terms and conditions of 

the order and agree to fulfill their 

responsibilities under the 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 do not believe that the 

proposed arrangement will involve 

excessive layering of fees. With respect 

to investment advisory fees, applicants 

state that, in connection with the 

approval of any investment advisory 

contract under section 15 of the Act, the 

Board of 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 Board Members’’), will 

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 pursuant to any Underlying 

Fund’s advisory contract(s). Applicants 

further state that the Fund of Funds’ 

Adviser 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 Underlying Fund by the 

Fund of Funds’ Adviser, or an affiliated 

person of the Fund of Funds’ Adviser, 

other than any advisory fees paid to the 

Fund of Funds’ Adviser or an affiliated 

person of the Fund of Funds’ Adviser by 

an Unaffiliated Fund, in connection 

with the investment by the Fund of 

Funds in the Unaffiliated Underlying 

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’’),5 if any, will only be charged at 

the Fund of Funds level or at the 

Underlying Fund level, not both. With 

respect to other investments in a Fund 

of Funds, any sales charges and/or 

service fees charged with respect to 

shares of the Fund of Funds will not 

exceed the limits applicable to funds of 

funds as set forth in NASD Conduct 

Rule 2830. 

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, are 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 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 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. 

B. Section 17(a) 

1. Section 17(a) of the Act generally 

prohibits sales or purchases of securities 

between a registered investment 

company and its affiliated persons or 

affiliated persons of such persons. 

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

‘‘affiliated person’’ of another person to 

include (a) any person directly or 

indirectly owning, controlling, or 

holding with power to vote, 5% or more 

of the outstanding voting securities of 

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

more of whose outstanding voting 

securities are directly or indirectly 

owned, controlled, or held with power 

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

person directly or indirectly controlling, 

controlled by, or under common control 

with the other person. 

2. Applicants state that the Funds of 

Funds and the Affiliated Funds may be 

deemed to be under common control of 

the Fund of Funds’ Adviser and 

therefore affiliated persons of one 

another. Applicants also state that the 

Funds of Funds and the Underlying 

Funds may be deemed to be affiliated 

persons of one another if a Fund of 

Funds acquires 5% or more of an 

Underlying Fund’s outstanding voting 

securities. In light of these possible 

affiliations, section 17(a) could prevent 

an Underlying Fund from selling shares 

to and redeeming shares from a Fund of 

Funds.6

3. Section 17(b) of the Act authorizes 

the Commission to grant an order 

permitting a transaction otherwise 


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7Applicants note that a Fund of Funds generally 

would purchase and sell shares of an Unaffiliated 

Underlying Fund that operates as an ETF through 

secondary market transactions at market prices 

rather than through principal transactions with the 

Unaffiliated Underlying Fund at net asset value. To 

the extent that a Fund of Funds purchases or 

redeems shares from an ETF that is an affiliated 

person, or an affiliated person of an affiliated 

person of the Fund of Funds, in exchange for a 

basket of specified securities as described in the 

application for the exemptive order upon which the 

ETF relies, applicants also request relief from 

section 17(a) for those transactions. 

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 transactions satisfy the 

requirements for relief under sections 

17(b) and 6(c) of the Act as the terms are 

fair and reasonable and do not involve 

overreaching. Applicants state that the 

terms upon which an Underlying Fund 

will sell its shares to or purchase its 

shares from a Fund of Funds will be 

based on the net asset value of each 

Underlying Fund.7 Applicants also state 

that the proposed transactions will be 

consistent with the policies of each 

Fund of Funds and Underlying Fund, 

and with the general purposes of the 

Act. 

Other Investments by Same Group Fund 

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 

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 Same Group 

Fund 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 Same 

Group Fund of Funds to invest in Other 

Investments. Applicants assert that 

permitting the Same Group Fund 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 

A. Investments in Underlying Funds by 

Funds of Funds 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. The members of the Group will not 

control (individually or in the aggregate) 

an Unaffiliated Underlying Fund within 

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

The members of a Subadviser Group 

will not control (individually or in the 

aggregate) an Unaffiliated 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 Unaffiliated Underlying 

Fund, the Group or the Subadviser 

Group, each in the aggregate, becomes a 

holder of more than 25% of the 

outstanding voting securities of the 

Unaffiliated Underlying Fund, then the 

Group or the Subadviser Group (except 

for any member of the Group or the 

Subadviser Group that is a Separate 

Account) will vote its shares of the 

Unaffiliated Underlying Fund in the 

same proportion as the vote of all other 

holders of the Unaffiliated Underlying 

Fund’s shares. This condition will not 

apply to the Subadviser Group with 

respect to the Unaffiliated Underlying 

Fund for which the Fund of Funds’ 

Subadviser or a person controlling, 

controlled by, or under common control 

with the Fund of Funds’ Subadviser acts 

as the investment adviser within the 

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

(in the case of an Unaffiliated Fund) 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 Underlying 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 (a) vote its shares of the 

Unaffiliated Underlying Fund in the 

same proportion as the vote of all other 

holders of the Unaffiliated Underlying 

Fund’s shares; or (b) 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 shares of an Unaffiliated 

Underlying Fund to influence the terms 

of any services or transactions between 

the Fund of Funds or a Fund of Funds 

Affiliate and the Unaffiliated 

Underlying Fund or an Unaffiliated 

Fund Affiliate. 

3. The Board of each Fund of Funds, 

including a majority of the Independent 

Board Members, will adopt procedures 

reasonably designed to assure that the 

Funds of Funds’ Adviser and any Fund 

of Funds’ Subadviser are conducting the 

investment program of the Fund of 

Funds without taking into account any 

consideration received by the Fund of 

Funds or a Fund of Funds Affiliate from 

an Unaffiliated Underlying 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 


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55380 Federal Register / Vol. 75, No. 175 / Friday, September 10, 2010 / Notices 

Unaffiliated Fund exceeds the limit of 

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

Board of the Unaffiliated Fund, 

including a majority of the Independent 

Board Members, will determine that any 

consideration paid by the Unaffiliated 

Fund 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 Fund; (b) is 

within the range of consideration that 

the Unaffiliated 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 Unaffiliated 

Fund 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 Fund or 

sponsor to an Unaffiliated Trust) will 

cause an Unaffiliated Underlying Fund 

to purchase a security in an Affiliated 

Underwriting. 

6. The Board of an Unaffiliated Fund, 

including a majority of the Independent 

Board Members, will adopt procedures 

reasonably designed to monitor any 

purchases of securities by the 

Unaffiliated Fund in an Affiliated 

Underwriting, once an investment by a 

Fund of Funds in the securities of the 

Unaffiliated 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 Unaffiliated Fund will 

review these purchases periodically, but 

no less frequently than annually, to 

determine whether the purchases were 

influenced by the investment by the 

Fund of Funds in shares of the 

Unaffiliated Fund. The Board of the 

Unaffiliated Fund will consider, among 

other things: (a) Whether the purchases 

were consistent with the investment 

objectives and policies of the 

Unaffiliated Fund; (b) how the 

performance of securities purchased in 

an Affiliated Underwriting compares to 

the performance of comparable 

securities purchased during a 

comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated Fund in 

Affiliated Underwritings and the 

amount purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Unaffiliated Fund will take 

any appropriate actions based on its 

review, including, if appropriate, the 

institution of procedures designed to 

assure that purchases of securities in 

Affiliated Underwritings are in the best 

interests of shareholders. 

7. Each Unaffiliated Fund will 

maintain and preserve permanently in 

an easily accessible place a written copy 

of the procedures described in the 

preceding condition, and any 

modifications to such procedures, and 

will maintain and preserve for a period 

of not less than six years from the end 

of the fiscal year in which any purchase 

in an Affiliated Underwriting occurred, 

the first two years in an easily accessible 

place, a written record of each purchase 

of securities in an Affiliated 

Underwriting once an investment by a 

Fund of Funds in the securities of an 

Unaffiliated Fund exceeds the limit of 

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 determinations of the Unaffiliated 

Fund’s Board were made. 

8. Prior to an investment in shares of 

an Unaffiliated Fund in excess of the 

limit 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 Fund in excess of the limit 

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

Funds will notify the Unaffiliated Fund 

of the investment. At such time, the 

Fund of Funds also will transmit to the 

Unaffiliated Fund a list of the names of 

each Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated Fund 

of any changes to the list as soon as 

reasonably practicable after a change 

occurs. The Unaffiliated Fund 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. 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 each Fund of 

Funds, including a majority of the 

Independent Board Members, will find 

that the advisory fees charged under the 

advisory contract are based on services 

provided that are in addition to, rather 

than duplicative of, the services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Fund of Funds may invest. This 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. The Funds of Funds’ Adviser will 

waive fees otherwise payable to it by the 

Fund of Funds in an amount at least 

equal to any compensation (including 

fees received pursuant to a plan adopted 

by an Unaffiliated Fund pursuant to rule 

12b–1 under the Act) received by the 

Fund of Funds’ Adviser or an affiliated 

person of the Fund of Funds’ Adviser 

from an Unaffiliated Underlying Fund, 

other than any advisory fees paid to the 

Fund of Funds’ Adviser or its affiliated 

person by the Unaffiliated Fund, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated 

Underlying Fund. Any Fund of Funds’ 

Subadviser will waive fees otherwise 

payable to the Fund of Funds’ 

Subadviser, directly or indirectly, by the 

Fund of Funds in an amount at least 

equal to any compensation received 

from an Unaffiliated Underlying Fund 

by the Fund of Funds’ Subadviser, or an 

affiliated person of the Fund of Funds’ 

Subadviser, other than any advisory fees 

paid to the Fund of Funds’ Subadviser 

or its affiliated person by an Unaffiliated 

Fund, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Underlying Fund made at 

the direction of the Fund of Funds’ 

Subadviser. In the event that the Fund 

of Funds’ Subadviser waives fees, the 

benefit of the waiver will be passed 

through to the Fund of Funds. 

11. With respect to Registered 

Separate Accounts that invest in a Fund 

of Funds, no sales load will be charged 

at the Fund of Funds level or at the 

Underlying Fund level. Other sales 

charges and service fees, as defined in 

NASD Conduct Rule 2830, if any, will 

only be charged at the Fund of Funds 

level or at the Underlying Fund level, 

not both. With respect to other 

investments in a Fund of Funds, any 

sales charges and/or service fees 

charged with respect to shares of a Fund 

of Funds will not exceed the limits 

applicable to funds of funds set forth in 

NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

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


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 175 / Friday, September 10, 2010 / Notices 55381 

1 15 U.S.C. 78k–1. 

2 17 CFR 242.608. 

3 17 CFR 242.605. On April 12, 2001, the 

Commission approved a national market system 

plan for the purpose of establishing procedures for 

market centers to follow in making their monthly 

reports available to the public under Rule 11Ac1– 

5 under the Act (n/k/a Rule 605 of Regulation 

NMS). See Securities Exchange Act Release No. 

44177 (April 12, 2001), 66 FR 19814 (April 17, 

2001). 

4See Securities Exchange Act Release No. 61824 

(April 1, 2010), 75 FR 18246 (April 9, 2010). 

5 15 U.S.C. 78k–1. 

6 17 CFR 242.608. 

7 15 U.S.C. 78k–1. 

8 15 U.S.C. 78k–1(a)(3)(B). 

9 17 CFR 242.608. 

10 17 CFR 200.30–3(a)(29). 

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. 

B. Other Investments by Same Group 

Fund of Funds 

Applicants agree that the relief to 

permit the Same Group Fund of Funds 

to invest in Other Investments shall be 

subject to the following condition: 

13. Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

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

that it restricts any Same Group 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. 2010–22623 Filed 9–9–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62823, File No. 4–51] 

Joint Industry Plan; Order Approving 

Amendment To Add EDGA Exchange, 

Inc. and EDGX Exchange, Inc. as 

Participants to National Market System 

Plan Establishing Procedures Under 

Rule 605 of Regulation NMS 

September 1, 2010. 

I. Introduction 

On March 30, 2010, EDGA Exchange, 

Inc. (‘‘EDGA’’) and EDGX Exchange, Inc. 

(‘‘EDGX’’) submitted to the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) in accordance with 

Section 11A of the Securities Exchange 

Act of 1934 (‘‘Act’’) 1 and Rule 608 of 

Regulation NMS,2 a proposed 

amendment to the national market 

system plan establishing procedures 

under Rule 605 of Regulation NMS 

(‘‘Joint-SRO Plan’’ or ‘‘Plan’’).3 Under the 

proposed amendment, EGDA and EDGX 

would be added as participants to the 

Joint-SRO Plan. Notice of filing and an 

order granting temporary effectiveness 

of the proposal were published in the 

Federal Register on April 9, 2010.4 The 

Commission did not receive any 

comments on the proposed amendment. 

This order approves the amendment on 

a permanent basis. 

II. Discussion 

The Joint-SRO Plan establishes 

procedures for market centers to follow 

in making their monthly reports 

required pursuant to Rule 605 of 

Regulation NMS, available to the public 

in a uniform, readily accessible, and 

usable electronic format. The current 

participants to the Joint-SRO Plan are 

the American Stock Exchange LLC (n/k/ 

a NYSE Amex, Inc.), BATS Exchange, 

Inc., Boston Stock Exchange, Inc. (n/k/ 

a NASDAQ OMX BX, Inc.), Chicago 

Board Options Exchange, Incorporated, 

Chicago Stock Exchange, Inc., 

Cincinnati Stock Exchange, Inc. (n/k/a 

National Stock ExchangeSM), 

International Securities Exchange, LLC, 

The NASDAQ Stock Market LLC, 

National Association of Securities 

Dealers, Inc. (n/k/a Financial Industry 

Regulatory Authority, Inc.), New York 

Stock Exchange, Inc. (n/k/a New York 

Stock Exchange LLC), Pacific Exchange, 

Inc. (n/k/a NYSE Arca, Inc.), and 

Philadelphia Stock Exchange, Inc. (n/k/ 

a NASDAQ OMX PHLX, Inc.). The 

proposed amendment would add EDGA 

and EDGX as participants to the JointSRO Plan. 

Section III(b) of the Joint-SRO Plan 

provides that a national securities 

exchange or national securities 

association may become a party to the 

Plan by: (i) Executing a copy of the Plan, 

as then in effect (with the only changes 

being the addition of the new 

participant’s name in Section 11(a) of 

the Plan and the new participant’s 

single-digit code in Section VI(a)(1) of 

the Plan) and (ii) submitting such 

executed plan to the Commission for 

approval. Each of EDGA and EDGX has 

submitted a signed copy of the JointSRO Plan to the Commission in 

accordance with the procedures set 

forth in the Plan regarding new 

participants. 

The Commission finds that the 

amendment to the Joint-SRO Plan is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder. Specifically, the 

Commission finds that the proposed 

amendment, which permits EDGA and 

EDGX to become participants to the 

Joint-SRO Plan, is consistent with the 

requirements of Section 11A of the Act,5

and Rule 608 of Regulation NMS.6 The 

Plan established appropriate procedures 

for market centers to follow in making 

their monthly reports required pursuant 

to Rule 605 of Regulation NMS, 

available to the public in a uniform, 

readily accessible, and usable electronic 

format. The amendment to include 

EDGA and EDGX as participants in the 

Joint-SRO Plan should contribute to the 

maintenance of fair and orderly markets 

and remove impediments to and perfect 

the mechanisms of a national market 

system by facilitating the uniform 

public disclosure of order execution 

information by all market centers. The 

Commission believes that it is necessary 

and appropriate in the public interest, 

for the maintenance of fair and orderly 

markets, to remove impediments to, and 

perfect mechanisms of, a national 

market system to allow EDGA and 

EDGX to become participants in the 

Joint-SRO Plan. The Commission finds, 

therefore, that approving amendment to 

the Joint-SRO Plan is appropriate and 

consistent with Section 11A of the Act.7

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 11A(a)(3)(B) of the Act 8 and 

Rule 608 of Regulation NMS,9 that the 

amendment to the Joint-SRO Plan to add 

EDGA and EDGX as participants to the 

Joint-SRO Plan is approved and EDGA 

and EDGX are authorized to each act 

jointly with the other participants to the 

Joint-SRO Plan in planning, developing, 

operating, or regulating the Plan as a 

means of facilitating a national market 

system. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22552 Filed 9–9–10; 8:45 am] 

BILLING CODE 8010–01–P 


srobinson on DSKHWCL6B1PROD with NOTICES