Document ID: SEC-2006-0122-0027
Agency: sec
Document Type: Notice
Title: Phoenix Equity Trust, et al.; Notice of Application
Posted Date: 2008-09-10T04:00Z

[Federal Register: September 10, 2008 (Volume 73, Number 176)]
[Notices]               
[Page 52707-52709]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se08-71]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28375; 812-13526]

 
Phoenix Equity Trust, et al.; Notice of Application

September 3, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 15(a) 
of the Act and rule 18f-2 under the Act.

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

Summary of Application: The requested order would permit certain 
registered open-end management investment companies to enter into and 
materially amend subadvisory agreements without shareholder approval.

Applicants:  Phoenix Equity Trust, Phoenix Insight Funds Trust, Phoenix 
Institutional Mutual Funds, Phoenix Opportunities Trust (the 
``Companies'') and Phoenix Investment Counsel, Inc. (the ``Advisor'') 
(collectively, with the Companies, ``Applicants'').

Filing Dates:  The application was filed on April 23, 2008, and amended 
on September 2, 2008.

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 September 26, 2008 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 reasons 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, Commission, 100 F Street, NE., Washington, DC 
20549-1090. Applicants, One American Row, P.O. Box 5056, Hartford, CT 
06102-5056.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel at 
(202) 551-6990, or Mary Kay Frech, 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 from 
the Commission's Public Reference Room, 100 F Street, NE., Washington, 
DC 20549-1520 (telephone (202) 551-5850).

Applicants' Representations

    1. The Companies are open-end management investment companies 
registered under the Act. The Companies, except Phoenix Insight Funds 
Trust, are organized as statutory trusts under Delaware law. Phoenix 
Insight Funds Trust is organized as a Massachusetts business trust 
under Massachusetts law. The Companies presently are comprised of 
fifty-three separate series (each, a ``Fund'' and collectively, the 
``Funds'') each of which has its own investment objectives, policies, 
and restrictions.\1\
---------------------------------------------------------------------------

    \1\ Applicants also request relief with respect to current or 
future series of the Companies and any other registered open-end 
management investment companies and their series that: (a) Are 
advised by the Advisor or any entity controlling, controlled by or 
under common control with the Advisor; (b) use the management 
structure described in the application; and (c) comply with the 
terms and conditions of the application (``Future Funds,'' included 
in the term ``Funds''). Any existing entity that currently intends 
to rely on the requested relief is named as an Applicant. If a Fund 
has the name of any Subadvisor (as defined below) in the Fund's 
name, the Fund's name will be preceded by the name of the Advisor 
(such as ``Phoenix,'' which is the present identifying name the 
Advisor uses in conducting its business) or the name of the entity 
controlling, controlled by, or under common control with the Advisor 
that serves as the primary adviser to the Fund.
---------------------------------------------------------------------------

    2. The Advisor, a Massachusetts corporation, is registered under 
the Investment Advisers Act of 1940 (``Advisers Act'') and serves as 
investment adviser to the Funds that use

[[Page 52708]]

the management structure described in the application.\2\
---------------------------------------------------------------------------

    \2\ Under a prior order, the Commission granted relief to 
certain applicants, including Phoenix Variable Advisors, Inc. 
(``PVA''), from the provisions of section 15(a) of the Act and rule 
18f-2 under the Act. The Phoenix Edge Series Fund and Phoenix 
Variable Advisors, Inc., Investment Company Act Release Nos. 25655 
(July 10, 2002) (notice) and 25693 (August 6, 2002) (order) (``Prior 
Order''). While Applicants are not named as applicants to the Prior 
Order, Applicants rely on the Prior Order due to a currently 
existing affiliation with the applicants to the Prior Order. 
However, a reorganization transaction expected to close in 
September, 2008 will result in the Advisor no longer being 
controlling, controlled by, or under common control with PVA, thus 
making the Prior Order inapplicable to Applicants and necessitating 
the current request for relief.
---------------------------------------------------------------------------

    3. The Companies, on behalf of the Funds, have entered into 
investment advisory agreements with the Advisor (the ``Advisory 
Agreements''). Each Advisory Agreement requires approval by 
shareholders of the applicable Fund and by the Fund's board of trustees 
(the ``Board''), including a majority of the trustees who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act, of 
the Company or the Advisor (the ``Independent Trustees''). Under the 
Advisory Agreements, the Advisor has primary responsibility for 
management of the Funds, subject to general oversight by the Board. The 
Advisor also evaluates, selects, and recommends to the Boards 
investment management organizations (``Subadvisors'') who have 
discretionary authority to invest all or a portion of the assets of a 
particular Fund pursuant to a separate subadvisory agreement with the 
Advisor (``Subadvisory Agreement''). Each Subadvisor is, and any future 
Subadvisor will be, registered under the Advisers Act. The Advisor 
receives management fees at annual rates based on a percentage of the 
applicable Fund's average daily net assets. Each Subadvisor will be 
paid subadvisory fees by the Advisor out of its fees from the Funds at 
rates negotiated with the Subadvisor by the Advisor and approved by the 
Boards.
    4. The Advisor monitors and evaluates the Subadvisors and 
recommends to the Boards whether Subadvisory Agreements should be 
renewed, modified, or terminated. Advisor assesses the continued 
ability of the Subadvisor to meet the Fund's investment objective. The 
Advisor monitors possible replacement Subadvisors for a Fund so that 
any transition can be recommended to the Board and, if approved, can be 
effected on a timely basis should a Subadvisor change be warranted.
    5. Applicants request an order to permit the Advisor, subject to 
Board approval, to enter into and materially amend Subadvisory 
Agreements without shareholder approval. The applicants will not enter 
into a Subadvisory Agreement with any Subadvisor that is an affiliated 
person, as defined in section 2(a)(3) of the Act, of the Companies or 
the Advisor, other than by reason of serving as Subadvisor to one or 
more Funds (``Affiliated Subadvisor''), unless that agreement, 
including the compensation to be paid thereunder, has been separately 
approved by the shareholders of each Fund for which the Affiliated 
Subadvisor will act as an investment adviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series company affected by a matter must approve such 
matter if the Act requires shareholder approval.
    2. Section 6(c) 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 the Act, or 
from any rule thereunder, if and to the extent that 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. Applicants believe that their 
requested relief meets this standard.
    3. Applicants state that the Funds' shareholders rely on the 
Advisor to select the Subadvisors best suited to achieve a Fund's 
investment objectives. Applicants assert that, from the perspective of 
the investor, the role of the Subadvisors is comparable to that of 
individual portfolio managers employed by traditional investment 
advisory firms. Applicants contend that requiring shareholder approval 
of Subadvisory Agreements would impose costs and unnecessary delays on 
the Funds and may preclude the Advisor from acting promptly in a manner 
considered advisable by the Board. Applicants also note that the 
Advisory Agreement will remain subject to the shareholder approval 
requirements in section 15(a) of the Act and rule 18f-2 under the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The Advisor will not enter into a Subadvisory Agreement with any 
Affiliated Subadvisor without that agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    2. At all times, at least a majority of the Boards will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be at the discretion of the then-existing 
Independent Trustees.
    3. When a Subadvisor change is proposed for a Fund with an 
Affiliated Subadvisor, the Fund's Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
Board minutes, that the change is in the best interests of the Fund and 
its shareholders and does not involve a conflict of interest from which 
the Advisor or the Affiliated Subadvisor derives an inappropriate 
advantage.
    4. Before a Fund may rely on the requested order, the operation of 
the Fund in the manner described in the application will be approved by 
a majority of the Fund's outstanding voting securities, as defined in 
the Act, or, in the case of a Fund whose public shareholders purchase 
shares on the basis of a prospectus containing the disclosure 
contemplated by condition 6 below, by the initial shareholder(s) before 
offering shares of that Fund to the public.
    5. The Advisor will provide general management services to the 
Companies and their Funds, including overall supervisory responsibility 
for the general management and investment of each Fund's assets, and, 
subject to review and approval by the Boards, will (i) set the Fund's 
overall investment strategies; (ii) evaluate, select and recommend 
Subadvisors to manage all or part of a Fund's assets; (iii) allocate 
and, when appropriate, reallocate a Fund's assets among multiple 
Subadvisors; (iv) monitor and evaluate the performance of Subadvisors; 
and (v) implement procedures reasonably designed to ensure that the 
Subadvisors comply with the relevant Fund's investment objective, 
policies and restrictions.
    6. Each Fund relying on the requested order will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to the application. In addition, each Fund will hold itself 
out to the public as employing the management structure

[[Page 52709]]

described in the application. The prospectus will prominently disclose 
that the Advisor has ultimate responsibility (subject to oversight by 
the Boards) to oversee the Subadvisors and recommend their hiring, 
termination and replacement.
    7. No trustee or officer of a Company or officer or director of the 
Advisor will own directly or indirectly (other than through a pooled 
investment vehicle that is not controlled by that trustee, director or 
officer) any interest in a Subadvisor except for (i) ownership of 
interests in the Advisor or any entity that controls, is controlled by, 
or is under common control with the Advisor; or (ii) ownership of less 
than 1% of the outstanding securities of any class of equity or debt of 
a publicly-traded company that is either a Subadvisor or an entity that 
controls, is controlled by or is under common control with a 
Subadvisor.
    8. Within 90 days of the hiring of any new Subadvisor, shareholders 
of the Fund will be furnished all information about the new Subadvisor 
that would be included in a proxy statement, including any change in 
shareholder disclosure caused by the addition of the new Subadvisor. To 
meet this condition, the Funds will provide shareholders with an 
information statement meeting the requirements of Regulation 14C, 
Schedule 14C, and Item 22 of Schedule 14A under the Securities Exchange 
Act of 1934.
    9. The requested order will expire on the effective date of rule 
15a-5 under the Act, if adopted.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Florence E. Harmon,
 Acting Secretary.
[FR Doc. E8-20960 Filed 9-9-08; 8:45 am]

BILLING CODE 8010-01-P