Document ID: SEC-2014-1893-0001
Agency: sec
Document Type: Notice
Title: Applications: AllianceBernstein Cap Fund, Inc., et al.
Posted Date: 2014-11-13T05:00Z

[Federal Register Volume 79, Number 219 (Thursday, November 13, 2014)]
[Notices]
[Pages 67479-67485]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26816]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31332; 812-14236]

AllianceBernstein Cap Fund, Inc., et al.; Notice of Application

November 6, 2014.
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 exemptions from 
sections 12(d)(1)(A), (B), and (C) 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.

-----------------------------------------------------------------------

[[Page 67480]]

Summary of the Application: Applicants request an order that would (a) 
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, registered closed-end 
management investment companies, business development companies as 
defined by section 2(a)(48) of the Act (``business development 
companies''), and registered unit investment trusts that are within or 
outside the same group of investment companies as the acquiring 
investment companies and (b) permit certain registered open-end 
management investment companies relying on rule 12d1-2 under the Act to 
invest in certain financial instruments.

Applicants: AllianceBernstein Cap Fund, Inc. (the ``Company''), 
AllianceBernstein L.P. (the ``Adviser''), and AllianceBernstein 
Investments, Inc. (the ``Distributor'').

DATES:  Filing Dates: The application was filed on November 14, 2013, 
and amended on June 10, 2014, August 22, 2014, and November 4, 2014.

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 December 1, 2014, and should be accompanied by proof of service 
on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing on the desirability of a hearing on the matter, 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 Emilie D. Wrapp, 
1345 Avenue of the Americas, New York, NY 10105.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 551-6876, or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

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. The Company is an open-end management investment company 
registered under the Act and organized as a Maryland corporation. The 
Company has multiple series, which pursue distinct investment 
objectives and strategies. Applicants request that the order apply not 
only to any existing series of the Company, but also to any future 
series of the Company, and any other existing or future registered 
open-end management investment companies and any series thereof that 
are part of the same group of investment companies, as defined in 
section 12(d)(1)(G)(ii) of the Act, as the Company and are, or may in 
the future be, advised by the Adviser or any other investment adviser 
controlling, controlled by, or under common control with the Adviser 
(together with the existing series of the Company, each series a 
``Fund,'' and collectively, the ``Funds'').\1\
---------------------------------------------------------------------------

    \1\ 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.
---------------------------------------------------------------------------

    2. The Adviser, a Delaware limited partnership, is registered as an 
investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act''), and serves as the investment adviser to the existing 
Funds.\2\ The Distributor is a Broker (as defined below) and serves as 
the existing Funds' principal underwriter and distributor.
---------------------------------------------------------------------------

    \2\ All references to the term ``Adviser'' include any 
successors in interest to the Adviser. A successor is limited to an 
entity that results from a reorganization into another jurisdiction 
or a change in the type of business organization.
---------------------------------------------------------------------------

    3. Applicants request relief to the extent necessary to permit: (a) 
A Fund (each, a ``Fund of Funds,'' and collectively, the ``Funds of 
Funds'') to acquire shares of registered open-end management investment 
companies (each, an ``Unaffiliated Open-End Investment Company''), 
registered closed-end management investment companies, business 
development companies (each registered closed-end management investment 
company and each business development company, an ``Unaffiliated 
Closed-End Investment Company'' and, together with the Unaffiliated 
Open-End Investment Companies, the ``Unaffiliated Investment 
Companies''), and registered unit investment trusts (``UITs'') (the 
``Unaffiliated Trusts,'' and together with the Unaffiliated Investment 
Companies, the ``Unaffiliated Funds''), in each case, that are not part 
of the same ``group of investment companies'' as the Funds of Funds; 
\3\ (b) the Unaffiliated Open-End Investment Companies, their principal 
underwriters and any broker or dealer registered under the Securities 
Exchange Act of 1934 (the ``1934 Act'') (``Broker'') to sell shares of 
such Unaffiliated Open-End Investment Companies to the Funds of Funds; 
(c) the Funds of Funds to acquire shares of other registered investment 
companies, including open-end management investment companies and 
series thereof, closed-end management investment companies and UITs, as 
well as business development companies, in the same group of investment 
companies as the Funds of Funds (collectively, the ``Affiliated 
Funds,'' and, together with the Unaffiliated Funds, the ``Underlying 
Funds''); \4\ and (d) the Affiliated Funds that are registered open-end 
management investment companies, their principal underwriters and any 
Broker to sell shares of the Affiliated Funds to the Funds 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 certain Underlying Funds to sell their shares to Funds of Funds 
and redeem their shares from Funds of Funds.
---------------------------------------------------------------------------

    \3\ For purposes of the request for relief from sections 
12(d)(1)(A), (B), and (C) of the Act, the term ``group of investment 
companies'' means any two or more registered investment companies 
(including closed-end investment companies) or business development 
companies that hold themselves out to investors as related companies 
for purposes of investment and investor services.
    \4\ Certain of the Underlying Funds may be registered under the 
Act as either UITs or open-end management investment companies and 
have obtained exemptions from the Commission necessary to permit 
their shares to be listed and traded on a national securities 
exchange at negotiated prices and, accordingly, to operate as 
exchange-traded funds (collectively, ``ETFs'' and each, an ``ETF''). 
In addition, certain of the Underlying Funds may now or in the 
future pursue their investment objectives through a master-feeder 
arrangement in reliance on section 12(d)(1)(E) of the Act. In 
accordance with condition 12, 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 its 
corresponding master fund or the Fund of Funds. If a Fund of Funds 
invests in an Affiliated Fund that operates as a feeder fund and the 
corresponding master fund is not within the same ``group of 
investment companies'' as the Fund of Funds and Affiliated Fund, the 
master fund would be an Unaffiliated Fund for purposes of the 
application and its conditions.
---------------------------------------------------------------------------

    4. Applicants also request an exemption under section 6(c) from 
rule 12d1-2 under the Act to permit any existing or future Fund that 
relies on

[[Page 67481]]

section 12(d)(1)(G) of the Act (``Section 12(d)(1)(G) Fund'') and that 
otherwise complies with rule 12d1-2 under the Act, to also invest, to 
the extent consistent with its investment objective(s), policies, 
strategies and limitations, in other financial instruments that may not 
be securities within the meaning of section 2(a)(36) of the Act 
(``Other Investments'').

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. Section 12(d)(1)(C) 
prohibits an investment company from acquiring any security issued by a 
registered closed-end investment company if such acquisition would 
result in the acquiring company, any other investment companies having 
the same investment adviser, and companies controlled by such 
investment companies, collectively, owning more than 10% of the 
outstanding voting stock of the registered closed-end investment 
company.
    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 request an exemption under 
section 12(d)(1)(J) of the Act from the limitations of sections 
12(d)(1)(A), (B) and (C) of the Act to the extent necessary to permit: 
(i) The Funds of Funds to acquire shares of Underlying Funds in excess 
of the limits set forth in section 12(d)(1)(A) and (C) of the Act; and 
(ii) the Underlying Funds that are registered open-end management 
investment companies, their principal underwriters and any Broker to 
sell shares of the Underlying Funds 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), (B), and 
(C), 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 submit that the proposed structure will not result in 
the exercise of undue influence by a Fund of Funds or its affiliated 
persons over the Underlying Funds. Applicants assert that the concern 
about undue influence does not arise in connection with a Fund of 
Funds' investment in the Affiliated Funds because they are part of the 
same group of investment companies. To limit the control a Fund of 
Funds or Fund of Funds Affiliate \5\ may have over an Unaffiliated 
Fund, applicants propose a condition prohibiting the Adviser and any 
person controlling, controlled by or under common control with the 
Adviser, and 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 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 to any other investment adviser within the 
meaning of section 2(a)(20)(B) of the Act (``Sub-Adviser'') and any 
person controlling, controlled by or under common control with the Sub-
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 (or 
portion of such investment company or issuer) advised or sponsored by 
the Sub-Adviser or any person controlling, controlled by or under 
common control with the Sub-Adviser (collectively, the ``Sub-Adviser 
Group'').
---------------------------------------------------------------------------

    \5\ A ``Fund of Funds Affiliate'' is the Adviser, any Sub-
Adviser, 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(s), sponsor, promoter or 
principal underwriter of any Unaffiliated Fund or any person 
controlling, controlled by or under common control with any of those 
entities.
---------------------------------------------------------------------------

    5. With respect to closed-end Underlying Funds, applicants note 
that although closed-end funds may not be unduly influenced by a 
holder's right of redemption, closed-end Underlying Funds may be unduly 
influenced by a holder's ability to vote a large block of stock. To 
address this concern, applicants submit that, with respect to a Fund's 
investment in an Unaffiliated Closed-End Investment Company, (i) each 
member of the Group or Sub-Adviser Group that is an investment company 
or an issuer that would be an investment company but for section 
3(c)(1) or 3(c)(7) of the Act will vote its shares of the Unaffiliated 
Closed-End Investment Company in the manner prescribed by section 
12(d)(1)(E) of the Act and (ii) each other member of the Group or Sub-
Adviser Group will vote its shares of the Unaffiliated Closed-End 
Investment Company in the same proportion as the vote of all other 
holders of the same type of such Unaffiliated Closed-End Investment 
Company's shares. Applicants state that, in this way, an Unaffiliated 
Closed-End Investment Company will be protected from undue influence by 
a Fund of Funds through the voting of the Unaffiliated Closed-End 
Investment Company's shares.
    6. 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 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 an offering of securities during the 
existence of any underwriting or selling syndicate of which a principal 
underwriter is an Underwriting Affiliate (``Affiliated 
Underwriting'').\6\
---------------------------------------------------------------------------

    \6\ An ``Underwriting Affiliate'' is a principal underwriter in 
any underwriting or selling syndicate that is an officer, director, 
trustee, advisory board member, investment adviser, sub-adviser or 
employee of the Fund of Funds, or a person of which any such 
officer, director, trustee, investment adviser, sub-adviser, member 
of an advisory board or employee is an affiliated person. An 
Underwriting Affiliate does not include any person whose 
relationship to an Unaffiliated Fund is covered by section 10(f) of 
the Act.
---------------------------------------------------------------------------

    7. To further ensure that an Unaffiliated Investment Company 
understands the implications of a Fund of Funds' investment under the 
requested exemptive relief, prior to its investment in the shares of an 
Unaffiliated Investment Company in excess of the limit of section 
12(d)(1)(A)(i) of the Act, a Fund of Funds and the Unaffiliated 
Investment Company will execute an agreement

[[Page 67482]]

stating, without limitation, that each of their boards of directors or 
trustees (for any entity, the ``Board'') and their investment advisers 
understand the terms and conditions of the order and agree to fulfill 
their responsibilities under the order (the ``Participation 
Agreement''). Applicants note that an Unaffiliated Investment Company 
(including an ETF or an Unaffiliated Closed-End Investment Company) 
would also retain its right to reject any initial investment by a Fund 
of Funds in excess of the limits in section 12(d)(1)(A)(i) of the Act 
by declining to execute the Participation Agreement with the Fund of 
Funds. In addition, an Unaffiliated Investment Company (other than an 
ETF or closed-end fund 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. Finally, subject solely to the giving of 
notice to a Fund of Funds and the passage of a reasonable notice 
period, an Unaffiliated Fund (including an ETF or an Unaffiliated 
Closed-End Investment Company) could terminate a Participation 
Agreement with the Fund of Funds.
    8. Applicants state that they do not believe that the proposed 
arrangement will result in excessive layering of fees. The Board of 
each Fund of Funds, including a majority of the directors who are not 
``interested persons'' within the meaning of section 2(a)(19) of the 
Act (the ``Independent Directors''), will find that the management or 
advisory fees charged under a Fund of Funds' 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. 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 an affiliated person of the 
Adviser by the Unaffiliated Investment Company, in connection with the 
investment by the Fund of Funds in the Unaffiliated Fund.
    9. Applicants further state that 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 rule 2830 of the 
Conduct Rules of the NASD (``NASD Conduct Rule 2830'').\7\
---------------------------------------------------------------------------

    \7\ Any references to NASD Conduct Rule 2830 include any 
successor or replacement FINRA rule to NASD Conduct Rule 2830.
---------------------------------------------------------------------------

    10. Applicants submit that the proposed arrangement will not create 
an overly complex fund structure. Applicants note that no Underlying 
Fund (or, if applicable, its respective master 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 in certain circumstances 
identified in condition 12 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, or affiliated person of an 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 the Funds of Funds and the Affiliated 
Funds may be deemed to be under the common control of the Adviser and, 
therefore, affiliated persons of one another. Applicants also state 
that the Funds of Funds and the Underlying Funds organized as open-end 
investment companies (``Underlying Open-End Funds'') or UITs 
(``Underlying UITs'') may also be deemed to be affiliated persons of 
one another if a Fund of Funds owns 5% or more of the outstanding 
voting securities of one or more of such Underlying Open-End Funds and/
or Underlying UITs. Applicants state that the sale of shares by the 
Underlying Open-End Funds or Underlying UITs to the Funds of Funds and 
the purchase of those shares from the Funds of Funds by the Underlying 
Open-End Funds and/or Underlying UITs (through redemptions) could be 
deemed to violate section 17(a).\8\
---------------------------------------------------------------------------

    \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 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.
---------------------------------------------------------------------------

    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 (i) the terms of the proposed transaction are fair and 
reasonable and do not involve overreaching on the part of any person 
concerned; (ii) the proposed transaction is consistent with the 
policies of each registered investment company concerned; and (iii) 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. 
Applicants state that the terms of the transactions are reasonable and 
fair and do not involve overreaching. Applicants state that the terms 
upon which an Underlying Open-End Fund or Underlying UIT 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 Open-End Fund or Underlying 
UIT.\9\ Applicants also state that the proposed transactions will be 
consistent with the policies of each Fund of Funds, Underlying Open-End 
Fund, and

[[Page 67483]]

Underlying UIT and with the general purposes of the Act.
---------------------------------------------------------------------------

    \9\ Applicants note that a Fund of Funds generally would 
purchase and sell shares of an Underlying Fund that operates as an 
ETF through secondary market transactions rather than through 
principal transactions with the Underlying Fund. Applicants 
nevertheless request relief from sections 17(a)(1) and (2) to permit 
each Fund of Funds that is an affiliated person, or an affiliated 
person of an affiliated person, as defined in section 2(a)(3) of the 
Act, of an ETF to purchase or redeem shares from the ETF. 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 an investment adviser to the ETF 
or an entity controlling, controlled by or under common control with 
the investment adviser to the ETF is also an investment adviser to 
the Fund of Funds. Applicants further note that a Fund of Funds will 
purchase and sell shares of an Underlying Fund that is a closed-end 
fund (including business development companies) through secondary 
market transactions at market prices rather than through principal 
transactions with the closed-end fund (or business development 
company). Accordingly, applicants are not requesting section 17(a) 
relief with respect to principal transactions with closed-end funds 
(including business development companies).
---------------------------------------------------------------------------

C. Other Investments by Section 12(d)(1)(G) 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,'' as defined in 
section 12(d)(1)(G)(ii) of the Act; (ii) the acquiring company holds 
only securities of acquired companies that are part of the same ``group 
of investment companies,'' as defined in section 12(d)(1)(G)(ii) of the 
Act, 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 1934 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 
rule 12d1-2 under the Act, but for the fact that the Section 
12(d)(1)(G) 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 Section 12(d)(1)(G) 
Funds to invest in Other Investments. Applicants assert that permitting 
a Section 12(d)(1)(G) Fund to invest in Other Investments as described 
in the application would not raise any of the concerns that section 
12(d)(1) of the Act was intended to address.
    4. Consistent with its fiduciary obligations under the Act, a 
Section 12(d)(1)(G) Fund's Board will review the advisory fees charged 
by the Section 12(d)(1)(G) Fund's investment adviser(s) to ensure that 
the fees 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 Section 12(d)(1)(G) 
Fund may invest.

Applicants' Conditions

A. Investments by Funds of Funds in Underlying Funds

    Applicants agree that the order granting the requested relief to 
permit Funds of Funds to invest in Underlying Funds shall be subject to 
the following conditions:
    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 Sub-Adviser Group will not control 
(individually or in the aggregate) an Unaffiliated Fund within the 
meaning of section 2(a)(9) of the Act. With respect to a Fund's 
investment in an Unaffiliated Closed-End Investment Company, (i) each 
member of the Group or Sub-Adviser Group that is an investment company 
or an issuer that would be an investment company but for section 
3(c)(1) or 3(c)(7) of the Act will vote its shares of the Unaffiliated 
Closed-End Investment Company in the manner prescribed by section 
12(d)(1)(E) of the Act and (ii) each other member of the Group or Sub-
Adviser Group will vote its shares of the Unaffiliated Closed-End 
Investment Company in the same proportion as the vote of all other 
holders of the same type of such Unaffiliated Closed-End Investment 
Company's shares. If, as a result of a decrease in the outstanding 
voting securities of any other Unaffiliated Fund, the Group or a Sub-
Adviser Group, each in the aggregate, becomes a holder of more than 25% 
of the outstanding voting securities of such Unaffiliated Fund, then 
the Group or the Sub-Adviser 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 Sub-Adviser Group with respect to an Unaffiliated Fund for 
which the Sub-Adviser or a person controlling, controlled by or under 
common control with the Sub-Adviser 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 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 Directors, will adopt procedures reasonably designed to 
ensure that its Adviser and any Sub-Adviser 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 Investment Company or Unaffiliated 
Trust or any Unaffiliated Fund Affiliate of such Unaffiliated 
Investment Company or Unaffiliated Trust 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 Directors, 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 Directors,

[[Page 67484]]

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 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 
(1) the party from whom the securities were acquired, (2) the identity 
of the underwriting syndicate's members, (3) the terms of the purchase, 
and (4) 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 set forth 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 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 Directors, 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 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 pursuant to 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 the Unaffiliated Investment Company, in connection 
with the investment by the Fund of Funds in the Unaffiliated Fund. Any 
Sub-Adviser will waive fees otherwise payable to the Sub-Adviser, 
directly or indirectly, by the Fund of Funds in an amount at least 
equal to any compensation received by the Sub-Adviser, or an affiliated 
person of the Sub-Adviser, from an Unaffiliated Fund, other than any 
advisory fees paid to the Sub-Adviser or its affiliated person 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 
Sub-Adviser. In the event that the Sub-Adviser waives fees, the benefit 
of the waiver will be passed through to the Fund of Funds.
    11. 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 and 
either is an Affiliated Fund or is in the same ``group of investment 
companies'' as its corresponding master fund; (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 inter-fund 
borrowing and lending transactions.

B. Other Investments by Section 12(d)(1)(G) Funds

    Applicants agree that the order granting the requested relief to 
permit Section 12(d)(1)(G) Funds to invest in Other Investments shall 
be subject to the following condition:
    1. 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 Section 12(d)(1)(G) Fund from investing in Other Investments as 
described in the application.

[[Page 67485]]

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26816 Filed 11-12-14; 8:45 am]
BILLING CODE 8011-01-P