Document ID: SEC-2009-0459-0001
Agency: sec
Document Type: Notice
Title: Applications: First American Strategy Funds, Inc., et al.
Posted Date: 2009-04-06T04:00Z

[Federal Register: April 6, 2009 (Volume 74, Number 64)]
[Notices]               
[Page 15526-15527]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ap09-126]                         

[[Page 15526]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28683; 812-13602]

 
First American Strategy Funds, Inc., et al.; Notice of 
Application

March 31, 2009.
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 funds of 
funds relying on rule 12d1-2 under the Act to invest in certain 
financial instruments.

Applicants: First American Strategy Funds, Inc. (``FASF''), First 
American Investment Funds, Inc. (``FAIF''), FAF Advisors, Inc. (``FAF 
Advisors''), and Quasar Distributors, LLC (``Quasar'').

Filing Dates: The application was filed on November 12, 2008, and 
amended on March 20, 2009. Applicants have agreed to file an amendment 
during the notice period, the substance of which is reflected in this 
notice.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on April 27, 2009 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, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090; Applicants, c/o Kathleen L. Prudhomme, 
FAF Advisors, Inc., BC-MN-H04N, 800 Nicollet Mall, 4th Floor, 
Minneapolis, MN 55402.

FOR FURTHER INFORMATION CONTACT: Lewis 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 for a fee at the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549-1520 (telephone (202) 551-5850).

Applicants' Representations

    1. FASF is organized as a Minnesota corporation and FAIF as a 
Maryland corporation and each is registered under the Act as an open-
end management investment company. FAF Advisors is a Delaware 
corporation registered as an investment adviser under the Investment 
Advisers Act of 1940, as amended, and currently serves as investment 
adviser to the series of FASF and FAIF. Quasar is a Delaware limited 
liability company registered as a broker-dealer under the Securities 
Exchange Act of 1934, as amended (``Exchange Act''), that serves as the 
distributor for FASF and FAIF and all of their series.
    2. Applicants request the exemption to the extent necessary to 
permit any existing or future registered open-end management investment 
company or series thereof (i) that is advised by FAF Advisors or an 
entity controlling, controlled by, under common control with FAF 
Advisors (each, an ``Advisor'') that is in the same group of investment 
companies as defined in section 12(d)(1)(G) of the Act and (ii) that 
invests in other registered open-end management investment companies in 
reliance on section 12(d)(1)(G) of the Act, and (iii) that 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 (together with FASF, FAIF 
and their series, the ``Funds 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\ Applicants also request that the order exempt any entity 
controlling, controlled by or under common control with FAF Advisors 
or Quasar that now or in the future acts as principal underwriter 
with respect to the transactions described in the application. 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 condition in the application.
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    3. Consistent with its fiduciary obligations under the Act, each 
Fund of Funds' board of 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: (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.
    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: (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

[[Page 15527]]

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.
    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 policies 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 Funds 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.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-7591 Filed 4-3-09; 8:45 am]

BILLING CODE 8011-01-P