Document ID: SEC-2011-0870-0001
Agency: sec
Document Type: Notice
Title: Applications: Highmark Funds and Highmark Capital Management, Inc.
Posted Date: 2011-06-22T04:00Z

[Federal Register Volume 76, Number 120 (Wednesday, June 22, 2011)]
[Notices]
[Pages 36584-36585]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15552]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29694; File No. 812-13843]

Highmark Funds and Highmark Capital Management, Inc.

June 16, 2011.
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 rule 12d1-2(a) 
under the Act.

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Summary of Application: Applicants request an order to permit open-end 
management investment companies relying on rule 12d1-2 under the Act to 
invest in certain financial instruments.

APPLICANTS: HighMark Funds (``Trust'') and HighMark Capital Management, 
Inc. (``HCM,'' and together with the Trust, ``Applicants'').

Filing Dates: The application was filed on November 10, 2010, and 
amended on April 29, 2011.

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 July 11, 2011 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.

[[Page 36585]]

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090; Applicants: c\o Gregory C. Davis, esq., 
Ropes & Gray LLP, Three Embarcadero Center, San Francisco, California 
94111-4006.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Senior Counsel, at 
(202) 551-6868, or Janet M. Grossnickle, 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 Trust is organized as a Massachusetts business trust and is 
registered with the Commission as an open-end management investment 
company. HCM, a California corporation and wholly-owned subsidiary of 
Union Bank, N.A, is registered as an investment adviser under the 
Investment Advisers Act of 1940, as amended.
    2. Applicants request the exemption to the extent necessary to 
permit any existing or future series of the Trust and any other 
registered open-end management investment company that is advised by 
HCM or any person controlling, controlled by or under common control 
with HCM (any such adviser or HCM, an ``Adviser'') that invests in 
other registered open-end management investment companies (``Underlying 
Funds'') in reliance on section 12(d)(1)(G) of the Act and rule 12d1-2 
under the Act, and which is also eligible to invest in securities (as 
defined in section 2(a)(36) of the Act) in reliance on rule 12d1-2 
under the Act (each a ``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'').\1\
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    \1\ Every existing entity that currently intends to rely on the 
requested order is named as an applicant. Any existing or future 
entity that relies on the order in the future will do so only in 
accordance with the terms and conditions in the application.
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    3. Consistent with its fiduciary obligations under the Act, each 
Fund of Funds' board of trustees or directors will review the advisory 
fees charged by the 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 Fund of Funds may 
invest.

Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company (``acquiring company'') may acquire securities of 
another investment company (``acquired company'') if such securities 
represent more than 3% of the acquired company's outstanding voting 
stock or more than 5% of the acquiring company's total assets, or if 
such securities, together with the securities of other investment 
companies, represent more than 10% of the acquiring company's total 
assets. Section 12(d)(1)(B) of the Act provides that no registered 
open-end investment company may sell its securities 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 cause more than 
10% of the acquired company's voting stock to be owned by investment 
companies and companies controlled by them.
    2. 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: (a) The acquired company and acquiring company 
are part of the same group of investment companies; (b) 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; (c) 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 Securities Exchange Act of 1934 or by the Commission; and 
(d) the acquired company has a policy that prohibits it from acquiring 
securities of registered open-end investment companies or registered 
unit investment trusts in reliance on section 12(d)(1)(F) or (G) of the 
Act.
    3. 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: (a) 
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; (b) securities (other 
than securities issued by an investment company); and (c) securities 
issued by a money market fund, when the acquisition 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.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction from any provision of the Act, or 
from any rule under the Act, if such exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provisions of the Act.
    5. Applicants state that the proposed arrangement would comply with 
the provisions of rule 12d1-2 under the Act, but for the fact that the 
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 Fund of Funds to 
invest in Other Investments. Applicants assert that permitting the 
Funds of Funds to invest in Other Investments as described in the 
application would not raise any of the concerns that the requirements 
of section 12(d)(1) were designed to address.

Applicants' Condition

    Applicants agree that the order granting the requested relief will 
be subject to the following condition:
    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 
Fund of Funds from investing in Other Investments as described in the 
application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Cathy H. Ahn,
 Deputy Secretary.
[FR Doc. 2011-15552 Filed 6-21-11; 8:45 am]
BILLING CODE 8011-01-P