Document ID: SEC-2012-0773-0001
Agency: sec
Document Type: Notice
Title: Applications: Van Eck VIP Trust, et al.
Posted Date: 2012-05-17T04:00Z

[Federal Register Volume 77, Number 96 (Thursday, May 17, 2012)]
[Notices]
[Pages 29394-29396]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11930]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30063; 812-13846]

Van Eck VIP Trust, et al.; Notice of Application

May 10, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application to amend a prior order under section 
12(d)(1)(J) of the Investment Company Act of 1940 (``Act'') for an 
exemption from sections 12(d)(1)(A) and (C) of the Act.

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Applicants: Van Eck VIP Trust (f/k/a Van Eck Worldwide Insurance Trust) 
(``VIP''), Van Eck Funds, Market Vectors ETF Trust (each, a ``Trust'' 
and collectively, the ``Trusts''), and Van Eck Associates Corporation 
(the ``Adviser'').

Summary of the Application: Applicants previously obtained an order 
(``Prior Order'') permitting certain registered open-end management 
investment companies to acquire shares of other registered open-end 
management investment companies and unit investment trusts that are 
within and outside the same group of investment companies in excess of 
the limits imposed by sections 12(d)(1)(A) and 12(d)(1)(B) of the 
Act.\1\ Applicants request an order (``Order'') that would amend the 
Prior Order by also permitting such registered open-end management 
investment companies to acquire shares of registered closed-end 
investment companies and business development companies as defined by 
section 2(a)(48) of the Act (``business development companies,'' and, 
collectively with registered closed-end investment companies, ``Closed-
End Funds'') that are within and outside the same group of investment 
companies in excess of the limits imposed by sections 12(d)(1)(A) and 
12(d)(1)(C) of the Act.
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    \1\ In the Matter of Van Eck Worldwide Insurance Trust, et al., 
Investment Company Act Release Nos. 27820 (May 9, 2007) (notice) and 
27849 (June 1, 2007) (order). Van Eck Funds, Inc. was a party to the 
application for the Prior Order but is not among the applicants for 
the Application (as defined below) because Van Eck Funds, Inc. was 
deregistered on June 25, 2008 (under the name Van Eck Funds II, 
Inc.).

Filing Dates: The application was filed on November 16, 2010, and 
amended on May 10, 2011, November 18, 2011, March 15, 2012, and May 7, 
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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 June 4, 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, 
335 Madison Avenue 19th Floor, New York, New York 10017.

FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 
551-6819, or David P. Bartels, 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. Each Trust is registered under the Act as an open-end management 
investment company. The shares of each series of VIP currently are 
offered and sold through registered separate accounts of insurance 
companies that are not affiliates of the Adviser (``Registered Separate 
Accounts'') and unregistered separate accounts of insurance companies 
that are not affiliates of the Adviser (``Unregistered Separate 
Accounts'' and, together with the Registered Separate Accounts, the

[[Page 29395]]

``Separate Accounts'').\2\ The Adviser is registered with the 
Commission as an investment adviser under the Investment Advisers Act 
of 1940 and is the investment adviser for each of the Funds (as defined 
below).
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    \2\ Capitalized terms not otherwise defined in this notice have 
the same meaning ascribed to them in the application for the Order 
(``Application''). To ensure that the Closed-End Funds are covered 
by the terms and conditions of the Prior Order, as amended by the 
Application, applicants have proposed modifying the terms 
``Affiliated Underlying Funds,'' ``Unaffiliated Underlying Funds'' 
and ``Unaffiliated Funds'' to include relevant Closed-End Funds.
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    2. The Prior Order permits certain series of the Trusts (``Funds'') 
to operate as funds of funds (``Funds of Funds'') that will invest in 
other Funds that are part of the same ``group of investment companies'' 
(as defined in section 12(d)(1)(G) of the Act) as the Fund of Funds and 
also in other registered open-end management investment companies and 
unit investment trusts that are not part of the same group of 
investment companies (as defined in section 12(d)(1)(G) of the Act) as 
the Fund of Funds.\3\ Applicants request an Order under section 
12(d)(1)(J) that would amend the Prior Order by also permitting the 
Funds of Funds to invest in excess of the limits imposed by sections 
12(d)(1)(A) and 12(d)(1)(C) of the Act in securities issued by Closed-
End Funds that may or may not be part of the same group of investment 
companies \4\ as the Fund of Funds.\5\
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    \3\ Each Fund of Funds will comply with the terms and conditions 
of the Prior Order, as amended by the Application. All entities that 
currently intend to rely on the requested Order have been named as 
applicants and any other entity that relies on the Order in the 
future will comply with the terms and conditions of the Application. 
Applicants request that the relief also apply to any other existing 
or future registered open-end management investment company that is 
part of the same group of investment companies, as defined in 
section 12(d)(1)(G) of the Act, as the Funds.
    \4\ For purposes of the Application, the term ``group of 
investment companies'' means any two or more registered investment 
companies, including closed-end investment companies, that hold 
themselves out to investors as related companies for purposes of 
investment and investor services.
    \5\ With respect to investments in business development 
companies, applicants only seek an exemption from section 
12(d)(1)(A) of the Act, not section 12(d)(1)(C). Applicants state 
that, for purposes of the Application, investments in business 
development companies do not present any particular considerations 
or concerns that may be different from those presented by 
investments in registered closed-end investment companies.
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Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act 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 value of the total assets of 
the acquiring company. 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.
    3. Applicants state that the terms and conditions of the Prior 
Order would largely address the concerns underlying section 12(d)(1) 
with respect to the acquisition by a Fund of Funds of shares of Closed-
End Funds, which include concerns about undue influence by a fund of 
funds over underlying funds, excessive layering of fees, and overly 
complex fund structures. For example, applicants state that, pursuant 
to condition 8 of the Prior Order, as amended, prior to an investment 
in shares of a Closed-End Fund in excess of the limit in section 
12(d)(l)(A)(i), the Fund of Funds and the Closed-End Fund will execute 
a Participation Agreement. Applicants also state that an Unaffiliated 
Fund (including a Closed-End Fund) would 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, applicants 
state that, subject solely to the giving of notice to the Fund of Funds 
and the passage of a reasonable notice period, an Unaffiliated Fund 
(including a Closed-End Fund) could terminate a Participation Agreement 
with the Fund of Funds.
    4. Furthermore, applicants believe that a Fund of Fund's 
investments in Closed-End Funds raise less potential for a fund to 
exercise undue influence over the management and operation of an 
Underlying Fund through the threat of large scale redemptions. 
Applicants state that this concern is not applicable to a Fund of 
Funds' investments in Closed-End Funds because Closed-End Funds do not 
issue redeemable securities. Rather, applicants state that sales will 
only be effected through transactions in the secondary market.\6\ 
Applicants state that, because these sales would not require the 
Closed-End Fund to alter its investments or deplete its assets, a Fund 
of Funds should not be able to influence the management or operation of 
a Closed-End Fund through threats of sales of shares.
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    \6\ Applicants note that a Fund of Funds would purchase and sell 
shares of a Closed-End Fund through secondary market transactions at 
market prices rather than through principal transactions with the 
Closed-End Fund at net asset value. Applicants are not requesting 
section 17(a) relief to acquire shares of Closed-End Funds and will 
not rely on the section 17(a) relief granted in the Prior Order for 
such purpose.
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    5. However, applicants state that there may be a greater 
opportunity for a Fund of Funds to exercise influence over the 
management and operations of a Closed-End Fund through voting power 
than is the case with respect to open-end funds. To address this 
concern, applicants submit that, with respect to a Fund of Funds' 
investment in an Unaffiliated Underlying Fund that is a Closed-End 
Fund, (i) each member of the Group or the Subadviser 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 
Closed-End Fund in the manner prescribed by section 12(d)(1)(E) of the 
Act and (ii) each other member of the Group or the Subadviser Group 
will vote its shares of the Closed-End Fund in the same proportion as 
the vote of all other holders of the same type of such Closed-End 
Fund's shares (except that any member of the Group or Subadviser Group 
that is a Separate Account will instead be subject to the voting 
procedures described in Condition 1 below). Applicants state that this 
would preclude the Group and Subadviser Group from influencing the 
management or operation of a Closed-End Fund, including the outcome of 
a shareholder proposal, through voting by a Fund of Funds of shares.
    6. Accordingly, applicants believe that the requested exemption is 
consistent with the public interest and the protection of investors.

Applicants' Conditions

    Applicants agree that the Order granting the requested relief would 
be subject to the same conditions as those imposed by the Prior Order, 
except for condition 1 to the Prior Order, which would be revised as 
follows:
    The members of the Group will not control (individually or in the 
aggregate) an Unaffiliated Underlying Fund within

[[Page 29396]]

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 Underlying Fund within the meaning of section 2(a)(9) of 
the Act. With respect to a Fund of Funds' investment in an Unaffiliated 
Underlying Fund that is a Closed-End Fund (i) each member of the Group 
or the Subadviser 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 Closed-End Fund in the manner 
prescribed by section 12(d)(1)(E) of the Act and (ii) each other member 
of the Group or the Subadviser Group will vote its shares of the 
Closed-End Fund in the same proportion as the vote of all other holders 
of the same type of such Closed-End Fund's shares (except that any 
member of the Group or Subadviser Group that is a Separate Account will 
instead be subject to the voting procedures described below). If, as a 
result of a decrease in the outstanding voting securities of any other 
Unaffiliated Underlying Fund, the Group or a Subadviser Group, each in 
the aggregate, becomes a holder of more than 25% of the outstanding 
voting securities of such Unaffiliated Underlying Fund, then the Group 
or the Subadviser Group (except for any member of the Group or 
Subadviser Group that is a Separate Account) will vote its shares of 
the Unaffiliated Underlying Fund in the same proportion as the vote of 
all other holders of the Unaffiliated Underlying Fund's shares. This 
condition will not apply to a Subadviser Group with respect to an 
Unaffiliated Underlying Fund for which the Fund of Funds Subadviser or 
a person controlling, controlled by or under common control with the 
Fund of Funds Subadviser acts as the investment adviser within the 
meaning of section 2(a)(20)(A) of the Act (in the case of an 
Unaffiliated Fund) or the sponsor (in the case of an Unaffiliated 
Trust).
    A Registered Separate Account will seek voting instructions from 
its contract holders and will vote its shares of an Unaffiliated 
Underlying Fund in accordance with the instructions received and will 
vote those shares for which no instructions were received in the same 
proportion as the shares for which instructions were received. An 
Unregistered Separate Account will either (a) vote its shares of the 
Unaffiliated Underlying Fund in the same proportion as the vote of all 
other holders of the Unaffiliated Underlying Fund's shares or (b) seek 
voting instructions from its contract holders and vote its shares in 
accordance with the instructions received and vote those shares for 
which no instructions were received in the same proportion as the 
shares for which instructions were received.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11930 Filed 5-16-12; 8:45 am]
BILLING CODE 8011-01-P