Document ID: SEC-2012-1525-0001
Agency: sec
Document Type: Notice
Title: Applications: Prudential Investment Portfolios 3, et al.
Posted Date: 2012-09-17T04:00Z

[Federal Register Volume 77, Number 180 (Monday, September 17, 2012)]
[Notices]
[Pages 57162-57166]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-22792]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30200; File No. 812-13993]

Prudential Investment Portfolios 3, et al.; Notice of Application

September 11, 2012.
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 sections 17(a)(1) and (2) of the 
Act.

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SUMMARY:  Summary of the Application: The requested order would permit 
certain registered open-end management investment companies that 
operate as ``funds of funds'' to acquire shares of certain registered 
open-end management investment companies and unit investment trusts 
(``UITs'') that are within and outside the same group of investment 
companies as the acquiring investment companies.

Applicants: Prudential Investment Portfolios 3 (``PIP 3''), The 
Prudential Investment Portfolios, Inc. (``PIP Inc.'', together with PIP 
3, the ``Trusts'') and Prudential Investments LLC (``PI'' or the 
``Adviser'').

DATES:  Filing Dates: The application was filed on December 21, 2011, 
and amended on May 9, 2012, and September 10, 2012.

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 5, 2012, 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: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
Gateway Center Three, 100 Mulberry Street, 4th Floor, Newark, New 
Jersey 07102-4061.

[[Page 57163]]

FOR FURTHER INFORMATION CONTACT: Lewis B. Reich, Senior Counsel, at 
(202) 551-6919, or Jennifer L. 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 may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. PIP 3 is an open-end management investment company registered 
under the Act and organized as a Delaware statutory trust. PIP 3 is a 
series trust and currently offers four series, each with its own 
investment objectives and policies. PIP Inc. is an open-end management 
investment company registered under the Act and organized as a Maryland 
corporation. PIP Inc. is a series trust and currently offers six 
series, each with its own investment objectives and policies.\1\ One 
series of PIP 3 and three series of PIP Inc. currently operate as Funds 
of Funds and intend to rely on the requested order.
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    \1\ Applicants request that the relief apply to the Trusts and 
to any existing or future registered open-end management investment 
company or series thereof that (i) is advised by PI or by an entity 
controlling, controlled by or under common control with PI and (ii) 
invests in other registered open-end management investment companies 
in reliance on section 12(d)(1)(G) of the Act (any such investment 
companies or series thereof, together with any series of either 
Trust, a ``Fund'', and any Fund that operates as a fund of funds, a 
``Fund of Funds'').
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    2. PI, a New York limited liability company that is a wholly-owned 
direct subsidiary of Prudential Financial, Inc., is registered as an 
investment adviser under the Investment Advisers Act of 1940 and serves 
as investment adviser to the Trusts. PI currently employs certain 
entities either controlling, controlled by or under common control with 
PI as subadvisers to the Funds.
    3. Applicants request an order under section 12(d)(1)(J) of the Act 
exempting them from sections 12(d)(1)(A) and (B) of the Act to permit 
(1) a Fund of Funds to acquire shares in excess of the limits set forth 
in section 12(d)(1)(A) of the Act of (a) registered open-end management 
investment companies that are not part of the same ``group of 
investment companies,'' within the meaning of section 12(d)(1)(G)(ii) 
of the Act, as the Fund of Funds (``Unaffiliated Investment 
Companies'') and UITs that are not part of the same group of investment 
companies as the Fund of Funds (``Unaffiliated Trusts,'' together with 
the Unaffiliated Investment Companies, ``Unaffiliated Funds'')\2\ and 
(b) registered open-end management investment companies and UITs that 
are part of the same group of investment companies as the Fund of Funds 
(collectively, ``Affiliated Funds,'' together with the Unaffiliated 
Funds, ``Underlying Funds'') and (2) each Underlying Fund, any 
principal underwriter for the Underlying Fund, and any broker or dealer 
registered under the Securities Exchange Act of 1934 (``Broker'') to 
sell shares of the Underlying Fund to the Fund of Funds in excess of 
the limits set forth in section 12(d)(1)(B) of the Act.\3\ 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.
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    \2\ Certain of the Unaffiliated Funds may be registered under 
the Act as either UITs or open-end investment companies and have 
received exemptive relief to permit their shares to be listed and 
traded on a national securities exchange at negotiated prices 
(``ETFs'').
    \3\ 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 set 
forth in the application.
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Applicants' Legal Analysis

A. Section 12(d)(1)

    1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a 
registered investment company from acquiring shares of an investment 
company if the securities represent more than 3% of the total 
outstanding voting stock of the acquired company, more than 5% of the 
total assets of the acquiring company, or, together with the securities 
of any other investment companies, more than 10% of the total assets of 
the acquiring company. Section 12(d)(1)(B) of the Act prohibits a 
registered open-end investment company, its principal underwriter, and 
any broker or dealer from selling the investment company's shares 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 to permit (a) the Funds of Funds to acquire 
shares of the Underlying Funds in excess of the limits in section 
12(d)(1)(A), and (b) the Underlying Funds, their principal 
underwriters, and any Broker to sell shares of an Underlying Fund to a 
Fund of Funds in excess of the limits 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 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 the exercise of undue influence by a Fund of Funds or its affiliated 
persons over the Underlying Funds. The concern about undue influence 
does not arise in connection with a Fund of Funds' investment in the 
Affiliated Funds, 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 the Adviser, any person controlling, controlled 
by, or under common control with the Adviser, and any investment 
company or issuer that would be an investment company but for section 
3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by the 
Adviser or any person controlling, controlled by, or under common 
control with the Adviser (collectively, the ``Group'') from controlling 
(individually or in the aggregate) an Unaffiliated Fund within the 
meaning of section 2(a)(9) of the Act. The same prohibition would apply 
(individually and in the aggregate) to 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 (the ``Subadviser Group''). 
Applicants propose other conditions to limit the potential for undue 
influence over the Unaffiliated Funds, including that no Fund of Funds 
or Fund of Funds

[[Page 57164]]

Affiliate\4\ (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 an offering of securities during the existence of any 
underwriting or selling syndicate of which a principal underwriter is 
an officer, director, trustee, advisory board member, investment 
adviser, Subadviser or employee of the Fund of Funds, or a person of 
which any such officer, director, trustee, investment adviser, 
Subadviser, member of an advisory board or employee is an affiliated 
person (each, an ``Underwriting Affiliate''; however 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 an underwriting or selling syndicate of which a 
principal underwriter is an Underwriting Affiliate is referred to as an 
``Affiliated Underwriting.''
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    \4\ A ``Fund of Funds Affiliate'' is the Adviser, any 
Subadviser, promoter or principal underwriter of a Fund of Funds, as 
well as any person controlling, controlled by, or under common 
control with any of those entities. An ``Unaffiliated Fund 
Affiliate'' is an investment adviser, sponsor, promoter, or 
principal underwriter of an Unaffiliated Fund, as well as any person 
controlling, controlled by, or under common control with any of 
those entities.
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    5. To further ensure that an Unaffiliated Investment Company 
understands the implications of an investment by a Fund of Funds under 
the requested order, prior to a Fund of Funds' investment in the shares 
of an Unaffiliated Investment Company in excess of the limit in section 
12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated 
Investment Company will execute an agreement stating, without 
limitation, that their 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 its right at all times to reject any investment by a 
Fund of Funds.\5\
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    \5\ An 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.
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    6. Applicants state that they do not believe that the proposed 
arrangement will involve excessive layering of fees. The Board of each 
Fund of Funds, including a majority of the trustees who are not 
``interested persons'' (within the meaning of section 2(a)(19) of the 
Act) (``Independent Trustees''), will find that the advisory fees 
charged under any Fund of Funds investment advisory or management 
contract are based on services provided that will be in addition to, 
rather than duplicative of, the services provided under any Underlying 
Fund's advisory contract. In addition, the 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 Investment Company under rule 12b-1 under 
the Act) received from an Unaffiliated Fund by the Adviser or an 
affiliated person of the Adviser, other than any advisory fees paid to 
the Adviser 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 for a Fund of Funds 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 by the Unaffiliated Fund, 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. Any sales charges and/or service fees charged with 
respect to shares of a Fund of Funds will not exceed the limits 
applicable to a fund of funds as set forth in Rule 2830 of the Conduct 
Rules of the NASD (``NASD Conduct Rule 2830'').\6\
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    \6\ Any references to NASD Conduct Rule 2830 include any 
successor or replacement FINRA rule to NASD Conduct Rule 2830.
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    7. Applicants submit that the proposed arrangement will not create 
an overly complex fund structure. Applicants note that no Underlying 
Fund will acquire 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) of the Act, except in certain 
circumstances identified in condition 11 below.

B. Section 17(a)

    1. Section 17(a) of the Act generally prohibits sales or purchases 
of securities between a registered investment company and any 
affiliated person of the company. Section 2(a)(3) of the Act defines an 
``affiliated person'' of another person to include (a) any person 
directly or indirectly owning, controlling, or holding with power to 
vote, 5% or more of the outstanding voting securities of the other 
person; (b) any person 5% or more of whose outstanding voting 
securities are directly or indirectly owned, controlled, or held with 
power to vote by the other person; and (c) any person directly or 
indirectly controlling, controlled by, or under common control with the 
other person.
    2. Applicants state that a Fund of Funds and the Affiliated Funds 
might be deemed to be under common control of the Adviser and therefore 
affiliated persons of one another. Applicants also state that a Fund of 
Funds and the Unaffiliated Funds might be deemed to be affiliated 
persons of one another if the Fund of Funds acquires 5% or more of an 
Unaffiliated Fund's outstanding voting securities. In light of these 
and other possible affiliations, section 17(a) could prevent an 
Underlying Fund from selling shares to and redeeming shares from a Fund 
of Funds.\7\
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    \7\ Applicants state that to the extent purchases and sales of 
shares of an ETF occur in the secondary market (and not through 
principal transactions directly between a Fund of Funds and an ETF), 
relief from section 17(a) would not be necessary. The requested 
relief is intended to cover, however, transactions directly between 
ETFs and a Fund of Funds. Applicants are not seeking relief from 
section 17(a) for, and the requested relief will not apply to, 
transactions where an ETF could be deemed an affiliated person, or 
an affiliated person of an affiliated person, of a Fund of Funds 
because the investment adviser to the ETF or an entity controlling, 
controlled by or under common control with the investment adviser to 
an ETF also is an investment adviser to the Fund of Funds.
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    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, including the 
consideration to be paid or received, 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.\8\ 
Applicants state

[[Page 57165]]

that the terms of the transactions are reasonable and fair 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 the Underlying 
Fund. Applicants state that the proposed transactions will be 
consistent with the policies of each Fund of Funds and each Underlying 
Fund and with the general purposes of the Act.
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    \8\ Applicants acknowledge that receipt of any compensation by 
(a) an affiliated person of a Fund of Funds, or an affiliated person 
of such person, for the purchase by a 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.
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Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. The members of a Group will not control (individually or in the 
aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) 
of the Act. The members of a 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 percent of the outstanding voting securities of the 
Unaffiliated Fund, then the Group or the Subadviser Group 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 of section 2(a)(20)(A) of the Act (in the 
case of an Unaffiliated Investment Company) or as the sponsor (in the 
case of an Unaffiliated Trust).
    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 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 its Adviser and any Subadviser(s) to the Fund of Funds are 
conducting the investment program of the Fund of Funds without taking 
into account any consideration received by the Fund of Funds or Fund of 
Funds Affiliate from an Unaffiliated Fund or an Unaffiliated Fund 
Affiliate in connection with any services or transactions.
    4. Once an investment by a Fund of Funds in the securities of an 
Unaffiliated 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 does 
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 the 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 shall 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 shall maintain and preserve for a period 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 
the: (a) Party from whom the securities were acquired, (b) identity of 
the underwriting syndicate's members, (c) terms of the purchase, and 
(d) information or materials upon which the determinations of the Board 
of the Unaffiliated Investment Company were made.
    8. Prior to its investment in shares of an Unaffiliated Investment 
Company in excess of the limit in 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 
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 in section 
12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Investment

[[Page 57166]]

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 of the names 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 
such 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 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 
Investment Company under rule 12b-1 under the Act) received from an 
Unaffiliated Fund by the Adviser, or an affiliated person of the 
Adviser, other than any advisory fees paid to the Adviser 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 its affiliated person by an 
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. No Underlying Fund will acquire securities of any other 
investment company or company relying on section 3(c)(1) or 3(c)(7) of 
the Act in excess of the limits contained in section 12(d)(1)(A) of the 
Act, except to the extent that such Underlying Fund: (a) receives 
securities of another investment company as a dividend or as a result 
of a plan of reorganization of a company (other than a plan devised for 
the purpose of evading section 12(d)(1) of the Act); or (b) acquires 
(or is deemed to have acquired) securities of another investment 
company pursuant to exemptive relief from the Commission permitting 
such Underlying Fund to (i) acquire securities of one or more 
investment companies for short-term cash management purposes, or (ii) 
engage in interfund borrowing and lending transactions.
    12. 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-22792 Filed 9-14-12; 8:45 am]
BILLING CODE 8011-01-P