
[Federal Register: August 7, 2008 (Volume 73, Number 153)]
[Notices]               
[Page 46062-46066]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au08-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28347; 812-13456]

 
Goldman Sachs Trust, et al.; Notice of Application

July 31, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an 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 (B) of the Act, and under sections 6(c) and 
17(b) of the Act for an exemption from section 17(a) of the Act.

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Summary of the Application:  Applicants request an order that would 
permit 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.

Applicants:  Goldman Sachs Trust (``GST''), Goldman Sachs Variable 
Insurance Trust (``VIT,'' and together with GST, the ``Trusts''), 
Goldman Sachs Asset Management, L.P. (``GSAM'') and Goldman Sachs Asset 
Management International (``GSAMI,'' and together with GSAM, the 
``Advisers'').

Filing Dates:  The application was filed on November 27, 2007 and 
amended on May 29, 2008. 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 August 25, 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, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090; Applicants, c/o Jack W. Murphy, 
Esq., Dechert LLP, 1775 I Street, NW., Washington, DC 20006-2401.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, 
at (202) 551-6990, or Marilyn Mann, Branch Chief, at (202) 551-6821 
(Office of Investment Company Regulation, Division of Investment 
Management).

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 Desk, 100 F Street, NE., Washington, DC 
20549-1520 (telephone (202) 551-5850).

Applicants' Representations

    1. The Trusts, organized as Delaware statutory trusts, are 
registered under the Act as open-end management investment companies 
and offer multiple series, each of which has its own distinct 
investment objectives and policies (``Funds''). GST currently offers 86 
Funds and VIT offers 11 Funds. Shares of the Trusts are registered 
under the Securities Act of 1933, as amended (the ``1933 Act''). Shares 
of GST are offered directly to the public. Shares of VIT are not 
offered directly to the public but only to insurance company separate 
accounts (``Separate Accounts'') that fund variable annuity and 
variable life insurance contracts (``Variable Contracts'') issued by 
participating insurance companies. The Separate Accounts may be 
registered under the Act (``Registered Separate Accounts''), or 
unregistered thereunder (``Unregistered Separate Accounts'').
    2. GSAM is a Delaware limited partnership and a wholly-owned 
subsidiary of The Goldman Sachs Group, Inc. GSAM is a registered 
investment adviser under the Investment Advisers Act of 1940, as 
amended (the ``Advisers Act'') and serves as investment adviser for 
eighty-six of the Funds. GSAMI is a company organized under the laws of 
England and Wales and is a registered investment adviser under the 
Advisers Act. GSAMI is indirectly wholly-owned by The Goldman Sachs 
Group, Inc.
    3. Applicants request relief to permit: (a) A Fund (each a ``Fund 
of Funds'') to acquire shares of registered open-end management 
investment companies (the ``Unaffiliated Investment Companies'') and 
unit investment trusts (``UITs'') that are not part of the same ``group 
of investment companies'' as defined in section 12(d)(1)(G)(ii) of the 
Act (``Unaffiliated Trusts,'' and together with Unaffiliated Investment 
Companies, the ``Unaffiliated Funds''); (b) the Unaffiliated Investment 
Companies, their principal underwriters

[[Page 46063]]

and any broker or dealer (``Broker'') registered under the Securities 
Exchange Act of 1934 to sell their shares to the Fund of Funds; (c) the 
Fund of Funds to acquire shares of certain other Funds in the same 
group of investment companies as the Fund of Funds (the ``Affiliated 
Funds,'' and together with the Unaffiliated Funds, the ``Underlying 
Funds''); and (d) the Affiliated Funds, their principal underwriters 
and any Brokers to sell their shares to the Fund of Funds.\1\ Certain 
of the Unaffiliated Funds have obtained exemptions from the Commission 
to permit their shares to be listed and traded on a national securities 
exchange at negotiated prices (``ETFs''). Each Fund of Funds may also 
invest in other securities and financial instruments that are not 
issued by registered investment companies and are consistent with its 
investment objective and restrictions.
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    \1\ Applicants request that the order extend to any future 
series of the Trusts, and any other existing or future registered 
open-end management investment companies and their series that are 
part of the same group of investment companies, as defined in 
section 12(d)(1)(G)(ii) of the Act, as the Trusts and are, or may in 
the future be, advised by the Advisers or any other investment 
adviser controlling, controlled by, or under common control with the 
Advisers (included in the term, ``Funds''). The Trusts are the only 
registered investment companies that currently intend to rely on the 
requested order. Any other entity that relies on the order in the 
future will comply with the terms and conditions of the application.
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Applicants' Legal Analysis

Section 12(d)(1)

    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 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 shares of the investment company 
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.
    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 seek an exemption under section 
12(d)(1)(J) of the Act from the limitations of sections 12(d)(1)(A) and 
(B) to the extent necessary to permit the Funds of Funds to acquire 
shares of the Underlying Funds in excess of the limits set forth in 
section 12(d)(1)(A) of the Act and to permit the Unaffiliated 
Investment Companies and Affiliated Funds, their principal underwriters 
and any Broker to sell their shares 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) and (B), 
which include concerns about undue influence by a fund of funds or its 
affiliated persons 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 state that the proposed arrangement will not result 
in undue influence by a Fund of Funds or its affiliated persons over 
the Underlying Funds. The concern about undue influence does not arise 
in connection with a Fund of Funds' investment in the Affiliated Funds, 
since they are part of the same group of investment companies. To limit 
the control that a Fund of Funds or its affiliated persons may have 
over an Unaffiliated Fund, applicants submit that: (a) the Advisers and 
any person controlling, controlled by or under common control with the 
Advisers, 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 Advisers or any person controlling, 
controlled by or under common control with the Advisers (collectively, 
the ``Group''); and (b) any investment adviser within the meaning of 
section 2(a)(20)(B) of the Act to a Fund of Funds (``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 by the Sub-
Adviser or any person controlling, controlled by or under common 
control with the Sub-Adviser (collectively, the ``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.
    5. Applicants further state that condition 2 below precludes a Fund 
of Funds or the Advisers, 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 
(each, a ``Fund of Funds Affiliate'') from taking advantage of an 
Unaffiliated Fund with respect to transactions between a Fund of Funds 
or a Fund of Funds Affiliate and the Unaffiliated Fund or its 
investment adviser(s), sponsor, promoter, and principal underwriter and 
any person controlling, controlled by or under common control with any 
of those entities (each, an ``Unaffiliated Fund Affiliate''). 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 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 (each, an ``Underwriting Affiliate,'' except any 
person whose relationship to the Unaffiliated Fund is covered by 
section 10(f) of the Act is not an Underwriting Affiliate). An offering 
of securities during the existence of any underwriting or selling 
syndicate of which a principal underwriter is an Underwriting Affiliate 
is an ``Affiliated Underwriting.''
    6. To further assure 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 in section 
12(d)(1)(A)(i) of the Act, a Fund of Funds and the Unaffiliated 
Investment Company will execute an agreement stating, without 
limitation, that their boards of directors or trustees (``Boards'') and 
their investment advisers understand the terms and conditions of the 
order and agree to fulfill their responsibilities under the order 
(``Participation Agreement''). Applicants note that an Unaffiliated 
Fund (other than an ETF whose shares are purchased by a Fund of Funds 
in the

[[Page 46064]]

secondary market) will retain its right at all times to reject any 
investment by a Fund of Funds.\2\
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    \2\ An Unaffiliated Fund, including an ETF, 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.
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    7. Applicants do not believe that the proposed arrangement will 
involve excessive layering of fees. To assure that the advisory fees 
are not duplicative, applicants state that, in connection with the 
approval of any advisory contract under section 15 of the Act, the 
Board of each Fund of Funds, including a majority of the trustees who 
are not ``interested persons,'' as defined in section 2(a)(19) of the 
Act (``Independent Trustees'') will 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 pursuant to 
any Underlying Fund's advisory contract(s). Applicants further state 
that an 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 an 
affiliated person of the Adviser by the Unaffiliated Fund, in 
connection with the investment by the Fund of Funds in the Unaffiliated 
Fund.
    8. Applicants state that with respect to Registered Separate 
Accounts that invest in a Fund of Funds, no sales load will be charged 
at the Fund of Funds level or at the Underlying Fund level. Other sales 
charges and service fees, as defined in Rule 2830 of the Conduct Rules 
of the National Association of Securities Dealers (``NASD Conduct Rule 
2830''), will only be charged at the Fund of Funds level or at the 
Underlying Fund level, not both. With respect to other investments in a 
Fund of Funds, 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.
    9. Applicants represent that each Fund of Funds will represent in 
the Participation Agreement that no insurance company sponsoring a 
Registered Separate Account funding Variable Contracts will be 
permitted to invest in the Fund of Funds unless the insurance company 
has certified to the Fund of Funds that the aggregate of all fees and 
charges associated with each contract that invests in the Fund of 
Funds, including fees and charges at the separate account, Fund of 
Funds, and Underlying Fund levels, are reasonable in relation to the 
services rendered, the expenses expected to be incurred, and the risks 
assumed by the insurance company.
    10. Applicants state that the proposed arrangement will not create 
an overly complex fund structure because 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 in certain 
circumstances identified in condition 12 below. Applicants also 
represent that a Fund of Funds' prospectus and sales literature will 
contain clear, concise, ``plain English'' disclosure designed to inform 
investors about the unique characteristics of the proposed arrangement, 
including, but not limited to, the expense structure and the additional 
expenses of investing in Underlying Funds.

B. Section 17(a)

    1. Section 17(a) of the Act generally prohibits sales or purchases 
of securities between a registered investment company and its 
affiliated persons or affiliated persons of such persons. 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 common control of the Adviser and 
therefore affiliated persons of one another. Applicants also state that 
a Fund of Funds and the Underlying Funds may be deemed to be affiliated 
persons of each other if a Fund of Funds acquires 5% or more of an 
Underlying Fund's outstanding voting securities. In light of these 
possible affiliations, section 17(a) could prevent an Underlying Fund 
from selling shares to and redeeming shares from a Fund of Funds.\3\
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    \3\ 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 is subject to 
section 17(e) of the Act. The Participation Agreement also will 
include this acknowledgement.
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    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: (a) The terms of the proposed transaction are fair and 
reasonable and do not involve overreaching on the part of any person 
concerned; (b) the proposed transaction is consistent with the policies 
of each registered investment company concerned; and (c) 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 
requirements for relief under sections 17(b) and 6(c) of the Act as the 
terms are fair and reasonable and do not involve overreaching. 
Applicants state that the terms upon which an Underlying Fund 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 Fund.\4\ Applicants also 
state that the proposed transactions will be consistent with the 
policies of each Fund of Funds and Underlying Fund, and with the 
general purposes of the Act.
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    \4\ Applicants note that a Fund of Funds generally would 
purchase and sell shares of an Unaffiliated Fund that operates as an 
ETF through secondary market transactions rather than through 
principal transactions with the Unaffiliated Fund. To the extent 
that a Fund of Funds purchases or redeems shares from an ETF that is 
an affiliated person, or an affiliated person of an affiliated 
person of the Fund of Funds, in exchange for a basket of specified 
securities as described in the application for the exemptive order 
upon which the ETF relies, applicants also request relief from 
section 17(a) for those transactions.
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Applicants' Conditions

    Applicants agree that any order granting the requested relief 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. If, as a result of a decrease in 
the

[[Page 46065]]

outstanding voting securities of an 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 the Unaffiliated Fund, then 
the Group or the Sub-Adviser Group (except for any member of the Group 
or the Sub-Adviser Group that is a Separate Account) 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).
    A Registered Separate Account will seek voting instructions from 
its Variable Contract holders and will vote its shares of an 
Unaffiliated 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 (i) vote its shares of the 
Unaffiliated Fund in the same proportion as the vote of all other 
holders of the Unaffiliated Fund's shares; or (ii) seek voting 
instructions from its Variable 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.
    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 Trustees, will adopt procedures reasonably designed to 
assure that the 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 Fund or an Unaffiliated Fund 
Affiliate 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 Trustees, 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 Trustees, 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 
procedures 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 an 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 from 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 
the: (a) Party from whom the securities were acquired, (b) identity of 
the underwriting syndicate's members, (c) terms of the purchase, and 
(d) 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 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 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

[[Page 46066]]

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 Trustees, 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 Advisers will waive fees otherwise payable to them 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 Fund, 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 Investment Company 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. With respect to Registered Separate Accounts that invest in a 
Fund of Funds, no sales load will be charged at the Fund of Funds level 
or at the Underlying Fund level. Other sales charges and service fees, 
as defined in NASD Conduct Rule 2830, if any, will be charged at the 
Fund of Funds level or at the Underlying Fund level, not both. With 
respect to other investments in a Fund of Funds, 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) 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 (b) 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 
affiliated investment companies for short-term cash management 
purposes, or (ii) engage in interfund borrowing and lending 
transactions.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-18069 Filed 8-6-08; 8:45 am]

BILLING CODE 8010-01-P
