Document ID: SEC-2007-1799-0001
Agency: sec
Document Type: Notice
Title: The UBS Funds, et al.; Notice of Application
Posted Date: 2007-12-31T05:00Z

[Federal Register: December 31, 2007 (Volume 72, Number 249)]
[Notices]               
[Page 74372-74373]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de07-96]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28080; 812-13453]

 
The UBS Funds, et al.; Notice of Application

December 19, 2007.
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: The UBS Funds, SMA Relationship Trust, UBS Investment 
Trust, UBS Index Trust, UBS Series Trust, and UBS Relationship Funds 
(collectively, the ``Trusts''); UBS Global Asset Management (Americas) 
Inc. (the ``Advisor''); and UBS Global Asset Management (US) Inc. 
(``UBS Global AM (US)'').
    Filing Dates: The application was filed on November 23, 2007, and 
amended on December 14, 2007.
    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 January 15, 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 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, Commission, 100 F Street, NE., Washington, DC 
20549-1090; Applicants, c/o Mark F. Kemper, UBS Global Asset Management 
(Americas) Inc., One North Wacker Drive, Chicago, IL 60606.

FOR FURTHER INFORMATION CONTACT: Lewis Reich, Senior Counsel, at (202) 
551-6919, or Nadya B. Roytblat, Assistant Director, 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 Branch, 100 F Street, NE., Washington, DC 
20549-0104 (telephone (202) 551-8090).

Applicants' Representations

    1. Each Trust organized as a Delaware statutory trust or a 
Massachusetts business trust and is registered under the Act as an 
open-end management investment company. The Trusts offer separate 
series (``Funds'') that may invest in other registered investment 
companies in reliance on section 12(d)(1)(G) of the Act and rule 12d1-2 
under the Act (``Underlying Funds'').\1\ Applicants propose that the 
Funds be permitted to invest in futures contracts, options on futures 
contracts, swap agreements, derivatives, and other financial 
instruments that may not be securities within the meaning of section 
2(a)(36) of the Act (``Other Investments'') in addition to the 
Underlying Funds.\2\
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    \1\ Applicants request that the relief apply to all existing and 
future series of the Trusts and all other management investment 
companies and their series registered under the Act that are in the 
same group of investment companies, as defined in section 
12(d)(1)(G) of the Act, as the Trusts. All Funds that currently 
intend to rely on the order have been named as applicants. Any other 
existing or future entity that relies on the order in the future 
will do so only in accordance with the terms and conditions in the 
application.
    \2\ As part of its strategy to invest in securities, Other 
Investments and Underlying Funds, an Applicant Fund also may, 
pursuant to rule 12d1-2 under the Act, invest in securities issued 
by another registered investment company that is not in the same 
group of investment companies as the Fund (a ``Non-Group Fund'') 
consistent with section 12(d)(1)(A) or 12(d)(1)(F) of the Act.
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    2. The Advisor is a Delaware corporation and an indirect, wholly-
owned subsidiary of UBS AG, an internationally diversified organization 
with operations in many aspects of the financial services industry. The 
Advisor is registered as an investment adviser under the Investment 
Advisers Act of 1940 and serves as investment adviser to the Funds. UBS 
Global AM (US), also a Delaware corporation and an indirect, wholly-
owned subsidiary of UBS AG, is registered as a broker-dealer under the 
Securities Exchange Act of 1934 Act (``Exchange Act'') and serves as 
the principal underwriter to The UBS Funds, SMA Relationship Trust, UBS 
Investment Trust, UBS Index Trust, and UBS Series Trust.

Applicants' Legal Analysis

    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

[[Page 74373]]

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.
    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; (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.
    2. 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 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. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction from any provisions 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.
    4. 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 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 to invest in Other 
Investments. Applicants assert that permitting the 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' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Prior to approving any investment advisory agreement under 
section 15 of the Act, the board of trustees of the appropriate Fund, 
including a majority of the trustees who are not ``interested 
persons,'' as defined in section 2(a)(19) of the Act, will find that 
the advisory fees, if any, charged under the agreement are based on 
services provided that are in addition to, rather than duplicative of, 
services provided pursuant to the advisory agreement of any Underlying 
Fund or any Non-Group Fund in which the Fund may invest. Such findings, 
and the basis upon which the findings are made, will be recorded fully 
in the minute books of the appropriate Fund.
    2. 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 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. E7-25378 Filed 12-28-07; 8:45 am]

BILLING CODE 8011-01-P