Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Notices 60833 

Filing Date: The application was filed 

on August 27, 2010. 

Applicant’s Address: 6803 S. Tucson 

Way, Centennial, CO 80112. 

Sycuan Funds [File No. 811–21401] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On February 1, 

2010, applicant made a liquidating 

distribution to its shareholders, based 

on net asset value. Expenses of $600 

incurred in connection with the 

liquidation were paid by Sycuan Capital 

Management, Inc., applicant’s 

investment adviser. 

Filing Date: The application was filed 

on September 9, 2010. 

Applicant’s Address: 1530 Hilton 

Head Rd., Suite 210, El Cajon, CA 

92019. 

SGM Funds [File No. 811–22247] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On May 14, 2010, 

applicant made its final liquidating 

distribution to its shareholders, based 

on net asset value. Expenses of $2,050 

incurred in connection with the 

liquidation were paid by SGM Funds 

Management, LLC, applicant’s 

investment adviser. 

Filing Dates: The application was 

filed on June 30, 2010, and amended on 

September 14, 2010. 

Applicant’s Address: 8000 Town 

Centre Dr., Suite 400, Broadview 

Heights, OH 44147. 

National Retail Fund I [File No. 811– 

22197] 

Summary: Applicant, a closed-end 

investment company, seeks an order 

declaring that it has ceased to be an 

investment company. Applicant has 

never made a public offering of its 

securities and does not propose to make 

a public offering or engage in business 

of any kind. 

Filing Date: The application was filed 

on September 15, 2010. 

Applicant’s Address: 4020 S. 147th 

St., Omaha, NE 68137. 

Federated International Small 

Company Opportunity Fund [File No. 

811–10131] 

Summary: Applicant, a closed-end 

investment company, seeks an order 

declaring that it has ceased to be an 

investment company. Applicant has 

never made a public offering of its 

securities and does not propose to make 

a public offering or engage in business 

of any kind. 

Filing Date: The application was filed 

on September 14, 2010. 

Applicant’s Address: Federated 

Investors Funds, 4000 Ericsson Dr., 

Warrendale, PA 15086–7561. 

MLIG Variable Insurance Trust [File 

No. 811–21038] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On September 11, 

2009, October 23, 2009, and June 22, 

2010, applicant made liquidating 

distributions to its shareholders, based 

on net asset value. Expenses of 

approximately $186,650 incurred in 

connection with the liquidation were 

paid by Roszel Advisors, LLC, 

applicant’s investment adviser. 

Filing Date: The application was filed 

on June 29, 2010. 

Applicant’s Address: 1700 Merrill 

Lynch Drive, Pennington, NJ 08534. 

Modern Woodmen of America Variable 

Account [File No. 811–10497] 

Summary: Applicant, a unit 

investment trust, seeks an order 

declaring that it has ceased to be an 

investment company. All previously 

issued policies have been surrendered 

and the applicant has distributed all of 

its assets to its shareholders. Applicant 

incurred expenses of $6,959.50 in 

connection with the liquidation. 

Filing Dates: The application was 

filed on June 8, 2010, and amended on 

August 31, 2010. 

Applicant’s Address: 1701 1st 

Avenue, Rock Island, Illinois 61201. 

Kemper Investors Life Insurance 

Company Separate Account—3 [File 

No. 811–22161] 

Summary: Applicant, a unit 

investment trust registered under the 

Investment Company Act of 1940, seeks 

an order declaring that it has ceased to 

be an investment company. Applicant 

states that it has no contractowners and 

no outstanding contracts that allocate 

premiums and contract value to the 

Separate Account. The contract 

registered on Form N–4 and offered out 

of the Separate Account (File No. 333– 

148489) was sold to only one (1) 

contractowner; that sale occurred on 

April 20, 2009. That one (1) contract 

was surrendered on November 24, 2009. 

Because the Depositor has decided to 

discontinue sales of the contract and has 

no plans to develop any other variable 

annuity contracts that would be 

supported by the Separate Account, and 

because there are currently no assets in 

the Separate Account or its subaccounts, 

the Depositor has determined that it will 

not use the Separate Account as a 

funding medium to support reserves for 

future sales of any other variable 

annuity contract and that the Separate 

Account should be deregistered. 

Filing Dates: The application was 

filed on March 24, 2010 and an 

amended application was filed on 

September 22, 2010. 

Applicant’s Address: 1400 American 

Lane, Schaumburg, IL 60196. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–24605 Filed 9–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29442; File No. 812–13765] 

Jackson National Life Insurance 

Company, et al.; Notice of Application 

September 27, 2010. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

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, under 

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

exemption from section 17(a) of the Act 

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

exemption from rule 12d1–2(a) under 

the Act. 

SUMMARY OF THE APPLICATION: 

Applicants request an order that would 

(a) permit certain series of registered 

open-end management investment 

companies to acquire shares of other 

registered open-end management 

investment companies and unit 

investment trusts (‘‘UITs’’) that are 

within or outside the same group of 

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: Jackson National Life 

Insurance Company (‘‘Jackson’’), Jackson 

National Life Insurance Company of 

New York (‘‘Jackson New York,’’ and 

collectively with Jackson and any 

insurance company controlling, 

controlled by, or under common control 

with Jackson or Jackson New York, the 

‘‘Insurance Companies’’); Jackson 

National Asset Management, LLC (the 

‘‘Manager’’); JNL Series Trust (‘‘Series 

Trust’’), and JNL Variable Fund LLC 

(‘‘JNLVF’’ together with Series Trust, the 

‘‘Trusts’’). 


emcdonald on DSK2BSOYB1PROD with NOTICES
60834 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Notices 

1Applicants request that the order extend to any 

future series of the Trusts, and any other existing 

or future registered open-end management 

investment companies and their series that are part 

of the same group of investment companies, as 

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

Trusts and are, or may in the future be, advised by 

the Manager or any other investment adviser 

controlling, controlled by, or under common 

control with the Manager (included in the term, 

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

on the requested order are named as applicants. 

Any other entity that relies on the order in the 

future will comply with the terms and conditions 

of the application. 

2Certain of the Unaffiliated Funds may have 

obtained exemptions from the Commission 

necessary to permit their shares to be listed and 

traded on a national securities exchange at 

negotiated prices (‘‘ETFs’’). 

3Certain of the Underlying Funds currently 

pursue, or may in the future pursue, their 

investment objectives through a master-feeder 

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

Act. A Fund of Funds may not invest in an 

Underlying Fund that operates as a feeder fund 

unless the feeder fund is part of the same group of 

investment companies (as defined in section 

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

master fund. 

FILING DATES: The application was filed 

on April 8, 2010, and amended on 

September 22, 2010, and September 24, 

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 October 22, 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: c/o Susan S. Rhee, 

Jackson National Asset Management, 

LLC, 1 Corporate Way, Lansing, 

Michigan 48951. 

FOR FURTHER INFORMATION CONTACT: 

Keith A. Gregory, Senior Counsel, at 

(202) 551–6815, or Mary Kay Frech, 

Branch Chief, at (202) 551–6821 (Office 

of Investment Company Regulation, 

Division of Investment Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

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

calling (202) 551–8090. 

Applicants’ Representations 

1. Series Trust is a Massachusetts 

business trust and JNLVF is a Delaware 

limited liability company. Each Trust is 

registered under the Act as an open-end 

management investment company and 

is comprised of multiple series 

(‘‘Funds’’), each of which has its own 

investment objective, policies and 

restrictions.1 Shares of the Funds are 

not offered directly to the public. Shares 

of the Funds are offered to separate 

accounts that are registered as unit 

investment trusts under the Act 

(‘‘Registered Separate Accounts’’) or that 

are exempt from registration under the 

Act (‘‘Unregistered Separate Accounts,’’ 

and together with the Registered 

Separate Accounts, ‘‘Separate 

Accounts’’) of the Insurance Companies 

and serve as the underlying investment 

vehicles for the variable life insurance 

contracts and variable annuity contracts 

(‘‘Variable Contracts’’) issued by the 

Insurance Companies. Shares of the 

Funds may also be offered to qualified 

pension and retirement plans, the 

general accounts of the Insurance 

Companies, or to series of the Trusts. 

2. The Manager is a Michigan limited 

liability company registered under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’) and serves as 

investment adviser to the Funds. The 

Manager is a wholly-owned subsidiary 

of Jackson. Jackson is a wholly-owned 

subsidiary of Prudential plc (London, 

England). 

3. Applicants request relief to permit: 

(a) Certain Funds (each, a ‘‘Fund of 

Funds’’) to acquire shares of registered 

open-end management investment 

companies (the ‘‘Unaffiliated Investment 

Companies’’) and UITs that are not part 

of the same ‘‘group of investment 

companies’’ (as defined in section 

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

Funds (‘‘Unaffiliated Trusts,’’ and 

together with the Unaffiliated 

Investment Companies, the ‘‘Unaffiliated 

Funds’’); 2 (b) the Unaffiliated 

Investment Companies, their principal 

underwriters and any broker or dealer 

registered under the Securities 

Exchange Act of 1934 (‘‘Broker’’) to sell 

shares of the Unaffiliated Investment 

Companies to the Funds of Funds; (c) 

the Funds of Funds to acquire shares of 

other Funds in 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 Funds,’’ and together with 

the Unaffiliated Funds, the ‘‘Underlying 

Funds’’); 3 and (d) the Affiliated Funds, 

their principal underwriters and any 

Broker to sell shares of the Affiliated 

Funds to the Fund of Funds. Applicants 

also request an order under sections 6(c) 

and 17(b) of the Act to exempt 

applicants from section 17(a) to the 

extent necessary to permit Underlying 

Funds to sell their shares to Funds of 

Funds and redeem their shares from 

Funds of Funds. 

4. Applicants also request an 

exemption to the extent necessary to 

permit a Fund of Funds that invests in 

Underlying Funds in reliance on section 

12(d)(1)(G) of the Act, 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 

(‘‘Same Group Fund of Funds’’), to also 

invest, to the extent consistent with its 

investment objective, policies, strategies 

and limitations, in financial instruments 

that may not be securities within the 

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

(‘‘Other Investments’’). 

5. Consistent with its fiduciary 

obligations under the Act, each Same 

Group Fund of Funds’ board of trustees 

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 

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 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 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Notices 60835 

4An Unaffiliated Investment Company, including 

an ETF, would retain its right to reject any initial 

investment by a Fund of Funds in excess of the 

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

declining to execute the Participation Agreement 

with the Fund of Funds. 

5Any references to NASD Conduct Rule 2830 

include any successor or replacement FINRA rule 

to NASD Conduct Rule 2830. 

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 Unaffiliated 

Investment Companies and Affiliated 

Funds, their principal underwriters and 

any Broker to sell shares to the Funds 

of Funds in excess of the limits set forth 

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

3. Applicants state that the proposed 

arrangement will not give rise to the 

policy concerns underlying sections 

12(d)(1)(A) and (B), 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 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 Fund, 

applicants propose a condition 

prohibiting: (a) The Manager and any 

person controlling, controlled by or 

under common control with the 

Manager, any investment company and 

any issuer that would be an investment 

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

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

sponsored by the Manager or any person 

controlling, controlled by or under 

common control with the Manager 

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

other investment adviser within the 

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

to a Fund of Funds (‘‘Subadviser’’), any 

person controlling, controlled by or 

under common control with the 

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 Subadviser 

or any person controlling, controlled by 

or under common control with the 

Subadviser (collectively, the 

‘‘Subadviser Group’’) from controlling 

(individually or in the aggregate) an 

Unaffiliated Fund within the meaning of 

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

5. Applicants further state that 

condition 2 precludes a Fund of Funds, 

the Manager, any Subadviser, promoter 

or principal underwriter of a Fund of 

Funds, and any person controlling, 

controlled by or under common control 

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

of Funds Affiliate’’) from taking 

advantage of an Unaffiliated Fund, with 

respect to transactions between the 

Fund of Funds or a Fund of Funds 

Affiliate and the Unaffiliated Fund or 

the Unaffiliated Fund’s investment 

adviser(s), sponsor, promoter, principal 

underwriter or any person controlling, 

controlled by or under common control 

with any of those 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 Investment 

Company or sponsor to an Unaffiliated 

Trust) from causing an Unaffiliated 

Fund to purchase a security in an 

offering of securities during the 

existence of any underwriting or selling 

syndicate of which a principal 

underwriter is an officer, director, 

member of an advisory board, Manager, 

Subadviser, or employee of the Fund of 

Funds, or a person of which any such 

officer, director, Manager, Subadviser, 

member of an advisory board, or 

employee is an affiliated person (each, 

an ‘‘Underwriting Affiliate,’’ except any 

person whose relationship to the 

Unaffiliated Fund is covered by section 

10(f) of the Act is not an Underwriting 

Affiliate). An offering of securities 

during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

Underwriting Affiliate is an ‘‘Affiliated 

Underwriting.’’ 

6. As an additional assurance that an 

Unaffiliated Investment Company 

understands the implications of an 

investment by a Fund of Funds under 

the requested order, prior to an 

investment in the shares of the 

Unaffiliated Investment Company in 

excess of the limit in section 

12(d)(1)(A)(i), condition 8 requires that 

the Fund of Funds and the Unaffiliated 

Investment Company 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 Investment 

Company (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 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 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 

Manager will waive fees otherwise 

payable to it by a Fund of Funds in an 

amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b–1 under the Act) 

received from an Unaffiliated Fund by 

the Manager, or an affiliated person of 

the Manager, other than any advisory 

fees paid to the Manager or an affiliated 

person of the Manager by an 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

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 NASD (‘‘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 the Fund of Funds will not 

exceed the limits applicable to funds of 

funds as set forth in NASD Conduct 

Rule 2830.5


emcdonald on DSK2BSOYB1PROD with NOTICES
60836 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Notices 

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. 

7Applicants note that a Fund of Funds generally 

would purchase and sell shares of an Unaffiliated 

Fund that operates as an ETF through secondary 

market transactions at market prices rather than 

through principal transactions with the Unaffiliated 

Fund at net asset value. Applicants would not rely 

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

secondary market transactions. To the extent that a 

Fund of Funds purchases or redeems shares from 

an ETF that is 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) of 

the Act for those in-kind transactions. 

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 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 

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 

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 

standards for relief under sections 17(b) 

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

and reasonable and do not involve 

overreaching. Applicants state that the 

terms upon which an Underlying Fund 

will sell its shares to or purchase its 

shares from a Fund of Funds will be 

based on the net asset value of each 

Underlying Fund.7 Applicants also state 

that the proposed transactions will be 

consistent with the policies of each 

Fund of Funds and Underlying Fund, 

and with the general purposes of the 

Act. 

C. Other Investments by Same Group 

Funds of Funds 

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

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

apply to securities of an acquired 

company purchased by an acquiring 

company if: (i) The acquiring company 

and acquired company are part of the 

same group of investment companies; 

(ii) the acquiring company holds only 

securities of acquired companies that 

are part of the same group of investment 

companies, government securities, and 

short-term paper; (iii) the aggregate sales 

loads and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the Act by a securities 

association registered under section 15A 

of the Exchange Act or by the 

Commission; and (iv) the acquired 

company has a policy that prohibits it 

from acquiring securities of registered 

open-end management investment 

companies or registered UITs in reliance 

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

2. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered UIT that relies 

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

acquire, in addition to securities issued 

by another registered investment 

company in the same group of 

investment companies, government 

securities, and short-term paper: (1) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

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

securities (other than securities issued 

by an investment company); and (3) 

securities issued by a money market 

fund, when the investment is in reliance 

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

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

means any security as defined in section 

2(a)(36) of the Act. 

3. Applicants state that the proposed 

arrangement would comply with the 

provisions of rule 12d1–2 under the Act, 

but for the fact that the Same Group 

Funds of Funds may invest a portion of 

their assets in Other Investments. 

Applicants request an order under 

section 6(c) of the Act for an exemption 

from rule 12d1–2(a) to allow the Same 

Group Funds of Funds to invest in 

Other Investments. Applicants assert 

that permitting the Same Group Funds 

of Funds to invest in Other Investments 

as described in the application would 

not raise any of the concerns that the 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Notices 60837 

requirements of section 12(d)(1) were 

designed to address. 

Applicants’ Conditions 

Applicants agree that the order 

granting the requested relief shall be 

subject to the following conditions: 

Investments in Underlying Funds by 

Funds of Funds 

1. The members of the Group will not 

control (individually or in the aggregate) 

an Unaffiliated Fund within the 

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

The members of a Subadviser Group 

will not control (individually or in the 

aggregate) an Unaffiliated Fund within 

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

If, as a result of a decrease in the 

outstanding voting securities of an 

Unaffiliated Fund, the Group or a 

Subadviser Group, each in the aggregate, 

becomes a holder of more than 25% of 

the outstanding voting securities of the 

Unaffiliated Fund, then the Group or the 

Subadviser Group (except for any 

member of the Group or the Subadviser 

Group that is a Separate Account) will 

vote its shares of the Unaffiliated Fund 

in the same proportion as the vote of all 

other holders of the Unaffiliated Fund’s 

shares. This condition will not apply to 

a Subadviser Group with respect to an 

Unaffiliated Fund for which the 

Subadviser or a person controlling, 

controlled by, or under common control 

with the Subadviser acts as the 

investment adviser within the meaning 

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

case of an Unaffiliated Investment 

Company) or the sponsor (in the case of 

an Unaffiliated Trust). A Registered 

Separate Account will seek voting 

instructions from its Variable 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 Variable 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 Subadviser are 

conducting the investment program of 

the Fund of Funds without taking into 

account any consideration received by 

the Fund of Funds or a Fund of Funds 

Affiliate from an Unaffiliated Fund or 

an Unaffiliated Fund Affiliate in 

connection with any services or 

transactions. 

4. Once an investment by a Fund of 

Funds in the securities of an 

Unaffiliated Investment Company 

exceeds the limit of section 

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

the Unaffiliated Investment Company, 

including a majority of the Independent 

Trustees, will determine that any 

consideration paid by the Unaffiliated 

Investment Company to a Fund of 

Funds or a Fund of Funds Affiliate in 

connection with any services or 

transactions: (a) Is fair and reasonable in 

relation to the nature and quality of the 

services and benefits received by the 

Unaffiliated Investment Company; (b) is 

within the range of consideration that 

the Unaffiliated Investment Company 

would be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition will not apply with respect to 

any services or transactions between an 

Unaffiliated Investment Company and 

its investment adviser(s), or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Fund of Funds or Fund of 

Funds Affiliate (except to the extent it 

is acting in its capacity as an investment 

adviser to an Unaffiliated Investment 

Company or sponsor to an Unaffiliated 

Trust) will cause an Unaffiliated Fund 

to purchase a security in any Affiliated 

Underwriting. 

6. The Board of an Unaffiliated 

Investment Company, including a 

majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to monitor any purchases of 

securities by the Unaffiliated Investment 

Company in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of the Unaffiliated 

Investment Company exceeds the limit 

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

including any purchases made directly 

from an Underwriting Affiliate. The 

Board of the Unaffiliated Investment 

Company will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Fund of Funds in the 

Unaffiliated Investment Company. The 

Board of the Unaffiliated Investment 

Company will consider, among other 

things: (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Investment Company; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated 

Investment Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of an Unaffiliated Investment 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders. 

7. Each Unaffiliated Investment 

Company will maintain and preserve 

permanently in an easily accessible 

place a written copy of the procedures 

described in the preceding condition, 

and any modifications to such 

procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Investment Company exceeds the limit 

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

setting forth (a) the party from whom 

the securities were acquired, (b) the 

identity of the underwriting syndicate’s 

members, (c) the terms of the purchase, 

and (d) the information or materials 

upon which the determinations of the 

Board of the Unaffiliated Investment 

Company were made. 

8. Prior to its investment in shares of 

an Unaffiliated Investment Company in 

excess of the limit of section 

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

Funds and the Unaffiliated Investment 

Company will execute a Participation 

Agreement stating, without limitation, 

that their Boards and their investment 

advisers understand the terms and 


emcdonald on DSK2BSOYB1PROD with NOTICES
60838 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Notices 

conditions of the order and agree to 

fulfill their responsibilities under the 

order. At the time of its investment in 

shares of an Unaffiliated Investment 

Company in excess of the limit set forth 

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

Funds will notify the Unaffiliated 

Investment Company of the investment. 

At such time, the Fund of Funds will 

also transmit to the Unaffiliated 

Investment Company a list of the names 

of each Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated 

Investment Company of any changes to 

the list as soon as reasonably practicable 

after a change occurs. The Unaffiliated 

Investment Company and the Fund of 

Funds will maintain and preserve a 

copy of the order, the Participation 

Agreement and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of 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. The Manager will waive fees 

otherwise payable to it by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b–1 under the Act) 

received from an Unaffiliated Fund by 

the Manager, or an affiliated person of 

the Manager, other than any advisory 

fees paid to the Manager or its affiliated 

person by an Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund. Any Subadviser will 

waive fees otherwise payable to the 

Subadviser, directly or indirectly, by the 

Fund of Funds in an amount at least 

equal to any compensation received by 

the Subadviser, or an affiliated person of 

the Subadviser, from an Unaffiliated 

Fund, other than any advisory fees paid 

to the Subadviser or an affiliated person 

of the Subadviser by the Unaffiliated 

Investment Company, in connection 

with the investment by the Fund of 

Funds in the Unaffiliated Fund made at 

the direction of the Subadviser. In the 

event that the Subadviser waives fees, 

the benefit of the waiver will be passed 

through to the Fund of Funds. 

11. With respect to Registered 

Separate Accounts that invest in a Fund 

of Funds, no sales load will be charged 

at the Fund of Funds level or at the 

Underlying Fund level. Other sales 

charges and service fees, as defined in 

NASD Conduct Rule 2830, if any, will 

only be charged at the Fund of Funds 

level or at the Underlying Fund level, 

not both. With respect to other 

investments in a Fund of Funds, any 

sales charges and/or service fees 

charged with respect to shares of a Fund 

of Funds will not exceed the limits 

applicable to funds of funds set forth in 

NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

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

the limits contained in section 

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

extent that such Underlying Fund (a) 

Acquires such securities in compliance 

with section 12(d)(1)(E) of the Act; (b) 

receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

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

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

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

acquire securities of one or more 

investment companies for short-term 

cash management purposes, or (ii) 

engage in interfund borrowing and 

lending transactions. 

Other Investments by Same Group 

Funds of Funds 

13. The Applicants will comply with 

all provisions of rule 12d1–2 under the 

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

extent that it restricts any 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. 2010–24654 Filed 9–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29444; File No. 812–13708] 

American Fidelity Dual Strategy Fund, 

Inc. and American Fidelity Assurance 

Company; Notice of Application 

September 27, 2010. 

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, as well as 

from certain disclosure requirements. 

SUMMARY OF APPLICATION: Applicants 

request an order that would permit them 

to enter into and materially amend 

subadvisory agreements without 

shareholder approval and would grant 

relief from certain disclosure 

requirements. 

APPLICANTS: American Fidelity Dual 

Strategy Fund, Inc. (the ‘‘Fund’’) and 

American Fidelity Assurance Company 

(the ‘‘Advisor’’). 

FILING DATES: The application was filed 

on October 1, 2009, and amended on 

March 15, 2010, and September 24, 

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 October 22, 2010, and 

should be accompanied by proof of 

service on the 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, 2000 N. Classen 

Boulevard, Oklahoma City, OK 73106. 

FOR FURTHER INFORMATION CONTACT: 

Lewis Reich, Senior Counsel, at (202) 

551–6919, or Jennifer Sawin, 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 


emcdonald on DSK2BSOYB1PROD with NOTICES