

[Federal Register: May 15, 2007 (Volume 72, Number 93)]
[Notices]               
[Page 27340-27344]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15my07-86]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27820; 812-13304]

 
Van Eck Worldwide Insurance Trust, et al.; Notice of Application

May 9, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under sections 6(c) and 
17(b) of the Act for an exemption from section 17(a) of the Investment 
Company Act of 1940 (``Act'') and under section 12(d)(1)(J) of the Act 
for an exemption from sections 12(d)(1)(A) and (B).

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    Summary of the Application: The order would permit certain 
registered open-end management investment companies to acquire shares 
of other registered open-end management investment companies and unit 
investment trusts (``UITs'') that are within and outside the same group 
of investment companies.
    Applicants: Van Eck Worldwide Insurance Trust (``WWIT''), Van Eck 
Funds (``Van Eck Funds'') and Van Eck Funds, Inc. (``Van Eck Funds 
II'') (together, the ``Investment Companies'') and Van Eck Associates 
Corporation (``Adviser'').\1\
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    \1\ All entities that currently intend to rely on the requested 
order are 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 
Investment Companies (included in the term ``Investment 
Companies''). Each series of an Investment Company is referred to as 
``Fund'' and collectively as ``Funds.''

DATES: Filing Dates: The application was filed on June 16, 2006, and 
amended on May 3, 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 May 31, 2007, 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 
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request notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 100 F Street, NE., Washington, DC 
20549-9303. Applicants: Joseph McBrien, Esq., Van Eck Associates 
Corporation, 99 Park Avenue, New York, New York 10016.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 551-6868, or Nadya B. Roytblat, Assistant Director, 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 
20549-0102 (telephone (202) 551-5850).

Applicants' Representations

    1. WWIT is a Massachusetts business trust and is registered under 
the Act as an open-end management investment company. WWIT currently 
consists of five Funds, each with its own investment objective and 
policies. Shares of each WWIT Fund are currently offered and sold 
through

[[Page 27341]]

registered separate accounts of insurance companies that are not 
affiliates of the Adviser (``Registered Separate Accounts'') and 
unregistered separate accounts that are not affiliates of the Adviser 
(``Unregistered Separate Accounts,'' and together with the Registered 
Separate Accounts, the ``Separate Accounts'').
    2. Van Eck Funds is a Massachusetts business trust and is 
registered under the Act as an open-end management investment company. 
Van Eck Funds currently consists of three Funds, each with its own 
investment objective and policies. The shares of these Funds are 
offered and sold to retail and institutional investors and are not 
offered through Separate Accounts. Van Eck Funds II is a Maryland 
corporation and is registered under the Act as an open-end management 
investment company. It currently consists of one Fund, the shares of 
which are offered and sold to retail and institutional investors and 
are not offered through Separate Accounts. The Adviser is a Delaware 
corporation and is registered as an investment adviser under the 
Investment Advisers Act of 1940. Each investment adviser to a Fund of 
Funds that meets the definition of section 2(a)(20)(A) of the Act is 
referred to as a ``Fund of Funds Adviser.'' Any investment adviser to a 
Fund of Funds that meets the definition of section 2(a)(20)(B) of the 
Act is referred to as a ``Fund of Funds Sub-Adviser.''
    3. Applicants request relief to permit certain Funds (each such 
Fund, a ``Fund of Funds'') to invest in: (a) other Funds (``Affiliated 
Underlying Funds''), and (b) registered open-end management investment 
companies and UITs that are not part of the same ``group of investment 
companies'' (as defined in section 12(d)(1)(G)(ii) of the Act) as the 
Investment Companies (``Unaffiliated Underlying Funds,'' and together 
with the Affiliated Underlying Funds, the ``Underlying Funds''). The 
Unaffiliated Underlying Funds may include UITs (``Unaffiliated 
Trusts'') and open-end management investment companies registered under 
the Act (``Unaffiliated Funds''). Certain of the Unaffiliated 
Underlying Funds may have received exemptive relief to sell their 
shares on a national securities exchange at negotiated prices 
(``ETFs''). Each Fund of Funds may also make direct investments in 
other securities. Applicants state that each Fund of Funds will enable 
investors to create a comprehensive asset allocation program with just 
one investment and provide a simple, convenient and cost-efficient 
program for investors who are able to identify their investment goals 
and risk tolerances but may not be comfortable deciding how to invest 
their assets to achieve those goals.

Applicants' Legal Analysis

A. 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) to permit the Funds of Funds to acquire shares of 
Underlying Funds and to permit the Underlying Funds, their principal 
underwriters and any broker or dealer to sell shares to the Funds of 
Funds beyond the limits set forth in sections 12(d)(1)(A) and (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 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. To limit the control that a Fund of Funds, and 
its affiliates, may have over an Unaffiliated Underlying Fund, 
applicants submit that: (a)(i) Each Fund of Funds Adviser, (ii) any 
person controlling, controlled by or under common control with the Fund 
of Funds Adviser, (iii) 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 Fund of Funds Adviser or 
any person controlling, controlled by or under common control with the 
Fund of Funds Adviser (collectively, the ``Group''), and (b)(i) any 
Fund of Funds Subadviser, (ii) any person controlling, controlled by or 
under common control with the Fund of Funds Sub-Adviser, and (iii) 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 Fund of Funds 
Sub-Adviser or any person controlling, controlled by or under common 
control with the Fund of Funds Sub-Adviser (collectively, the ``Sub-
Adviser Group'') will not control (individually or in the aggregate) an 
Unaffiliated Underlying Fund within the meaning of section 2(a)(9) of 
the Act.
    5. Applicants also propose to prevent a Fund of Funds and its 
affiliated entities from taking advantage of an Unaffiliated Underlying 
Fund with respect to transactions between the entities by precluding a 
Fund of Funds and its Fund of Fund Adviser, Fund of Funds Sub-Adviser, 
promoter, principal underwriter and any person controlling, controlled 
by or under common control with any of these entities (each, a ``Fund 
of Funds Affiliate'') from causing any existing or potential investment 
by the Fund of Funds in an Unaffiliated Underlying Fund to influence 
the terms of any services or transactions between the Fund of Funds or 
a Fund of Funds Affiliate and the Unaffiliated Underlying Fund or its 
investment adviser(s), sponsor, promoter, principal underwriter and any 
person controlling, controlled by or under common control with any of 
these entities (each, an ``Unaffiliated Fund Affiliate''). Condition 5 
precludes a Fund of Funds and Fund of Funds Affiliate (except to the 
extent it is acting in its capacity as an investment adviser to an 
Unaffiliated Fund or sponsor to an Unaffiliated Trust) from causing an 
Unaffiliated Underlying 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, 
member of an advisory board, Adviser, Sub-Adviser, or employee of the 
Fund of Funds, or a person of which any such officer, director, member 
of an advisory board, Adviser, Sub-Adviser, or

[[Page 27342]]

employee is an affiliated person (each, an ``Underwriting Affiliate,'' 
except any person whose relationship to the Unaffiliated Underlying 
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. As an additional assurance that an Unaffiliated Fund understands 
the implications of an investment by a Fund of Funds under the 
requested order, prior to a Fund of Funds' investment in an 
Unaffiliated Fund in excess of the limit in section 12(d)(1)(A)(i), 
condition 8 requires that the Fund of Funds and the Unaffiliated Fund 
execute an agreement stating, without limitation, that their boards of 
directors or trustees 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 Underlying Fund (other than an ETF 
whose shares are purchased by a Fund of Funds in the secondary market) 
will retain the right to reject an 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 limit in section 12(d)(1)(A)(i) of the Act by declining to 
execute the Participation Agreement.
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    7. Applicants do not believe that the proposed arrangement will 
involve excessive layering of fees. With respect to investment advisory 
fees, applicants state that, prior to approval of any investment 
advisory contract under section 15 of the Act, the board of directors 
or trustees of each Fund of Funds (``Board''), including a majority of 
the directors or trustees who are not ``interested persons,'' as 
defined in section 2(a)(19) of the Act (``Disinterested Trustees''), 
will find that the investment advisory fees charged under the contract 
are based on services provided that are in addition to, rather than 
duplicative of, services provided pursuant to any Affiliated Underlying 
Fund's or
    Unaffiliated Fund's advisory contract(s). Applicants further state 
that each Fund of Funds Adviser will waive fees otherwise payable to it 
by the Fund of Funds in an amount at least equal to any compensation 
(including fees received pursuant to any plan adopted by an 
Unaffiliated Fund under rule 12b-1 under the Act) received by the Fund 
of Funds Adviser or an affiliated person of the Fund of Funds Adviser 
from an Unaffiliated Underlying Fund, other than any advisory fees paid 
to the Fund of Funds Adviser or its affiliated person by an 
Unaffiliated Fund, in connection with the investment by the Fund of 
Funds in the Unaffiliated Underlying Fund.
    8. Applicants state that the proposed arrangement will not create 
an overly complex fund structure. Applicants note that an Underlying 
Fund will be prohibited from acquiring securities of any 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), 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. Applicants also represent 
that a Fund of Funds' prospectus and sales literature will contain 
concise, ``plain English'' disclosure designed to inform investors of 
the unique characteristics of the proposed Fund of Funds structure, 
including, but not limited to, its expense structure and the additional 
expenses of investing in Underlying Funds. Each Fund of Fund will 
comply with the disclosure requirements concerning the cost of 
investing in Underlying Funds as set forth in Investment Company Act 
Release No. 27399.

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 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 
Underlying Funds might be deemed to be under common control of the 
Adviser and therefore affiliated persons of one another. Applicants 
also state that the Funds of Funds and the Underlying Funds might be 
deemed to be affiliated persons of one another 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. 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 involved; 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, security 
or transactions or any class or classes of persons, securities 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 structure satisfies the 
standards for relief under sections 17(b) and 6(c) of the Act.\3\ 
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 state 
that the proposed investment will be consistent with the policies of 
each Fund of Funds and

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Underlying Fund, and with the general purposes of the Act.
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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.
    \4\ 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 at market prices rather 
than through principal transactions with the Underlying Fund at net 
asset value. Applicants would not rely on the requested relief from 
section 17(a) for such secondary market transactions. A Fund of 
Funds that owns more than 5% of the outstanding voting securities of 
an ETF could seek to transact in ``Creation Units'' directly with 
the ETF pursuant to the requested Section 17(a) relief.
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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 Underlying Fund within the meaning of 
section 2(a)(9) of the Act. The members of the Sub-Adviser Group will 
not control (individually or in the aggregate) an Unaffiliated 
Underlying Fund within the meaning of section 2(a)(9) of the Act. If, 
as a result of a decrease in the outstanding voting securities of an 
Unaffiliated Underlying Fund, the Group or the Sub-Adviser Group, each 
in the aggregate, becomes a holder of more than 25% of the outstanding 
voting securities of the Unaffiliated Underlying Fund, then the Group 
or the Sub-Advisor 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 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 the Sub-Adviser Group with respect to an 
Unaffiliated Underlying 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 section 
2(a)(20)(A) of the Act (in the case of an Unaffiliated Fund) or as 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: (i) 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 (ii) 
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.
    2. No Fund of Funds or Fund of Funds Affiliate will cause any 
existing or potential investment by the Fund of Funds in shares of an 
Unaffiliated Underlying Fund to influence the terms of any services or 
transactions between the Fund of Funds or a Fund of Funds Affiliate and 
the Unaffiliated Underlying Fund or an Unaffiliated Fund Affiliate.
    3. The Board of each Fund of Funds, including a majority of the 
Disinterested Trustees, will adopt procedures reasonably designed to 
assure that the Adviser and any Fund of Fund Sub-Adviser are conducting 
the investment program of the Fund of Funds without taking into account 
any consideration received by the Fund of Funds or a Fund of Funds 
Affiliate from an Unaffiliated Underlying 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 Fund exceeds the limit of section 12(d)(1)(A)(i) of the 
Act, the Board of the Unaffiliated Fund, including a majority of the 
Disinterested Trustees, will determine that any consideration paid by 
the Unaffiliated Fund 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 Fund; (b) is within the range of 
consideration that the Unaffiliated Fund 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 Fund 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 Fund or sponsor to an Unaffiliated Trust) will cause an 
Unaffiliated Underlying Fund to purchase a security in an Affiliated 
Underwriting.
    6. The Board of an Unaffiliated Fund, including a majority of the 
Disinterested Trustees, will adopt procedures reasonably designed to 
monitor any purchases of securities by the Unaffiliated Fund in an 
Affiliated Underwriting, once an investment by a Fund of Funds in the 
securities of the Unaffiliated Fund 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 Fund 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 shares of the Unaffiliated Fund. The 
Board of the Unaffiliated Fund will consider, among other things: (a) 
Whether the purchases were consistent with the investment objectives 
and policies of the Unaffiliated Fund; (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 Fund in Affiliated 
Underwritings and the amount purchased directly from an Underwriting 
Affiliate have changed significantly from prior years. The Board of the 
Unaffiliated Fund 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 Fund 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 Fund exceeds the limit of section 
12(d)(1)(A)(i) of the Act, setting forth from whom the securities were 
acquired, the identity of the underwriting syndicate's members, the 
terms of the purchase, and the information or materials upon which the 
determinations of the Board of the Unaffiliated Fund were made.
    8. Prior to its investment in shares of an Unaffiliated Fund in 
excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of 
Funds and the Unaffiliated Fund will execute a Participation Agreement 
stating, without limitation, that their boards of directors or trustees 
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 Fund in 
excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will 
notify the Unaffiliated Fund

[[Page 27344]]

of the investment. At such time, the Fund of Funds will also transmit 
to the Unaffiliated Fund a list of the names of each Fund of Funds 
Affiliate and Underwriting Affiliate. The Fund of Funds will notify the 
Unaffiliated Fund of any changes to the list as soon as reasonably 
practicable after a change occurs. The Unaffiliated Fund 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. Prior to approving any advisory contract under section 15 of the 
Act, the Board of each Fund of Funds, including a majority of the 
Disinterested 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, the services provided under 
the advisory contract(s) of any Affiliated Underlying Fund or 
Unaffiliated Funds in which the Fund of Funds may invest. This 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 Fund of Funds Advisers 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 Fund under rule 12b-1 under the Act) received by the Fund 
of Funds Adviser, or an affiliated person of the Fund of Funds Adviser, 
other than any advisory fees paid to the Fund of Funds Adviser or its 
affiliated person by the Unaffiliated Fund, in connection with the 
investment by the Fund of Funds in the Unaffiliated Underlying Fund. 
Any Fund of Funds Sub-Adviser will waive fees otherwise payable to the 
Fund of Funds Sub-Adviser, directly or indirectly, by the Fund of Funds 
in an amount at least equal to any compensation received from an 
Unaffiliated Underlying Fund by the Fund of Funds Sub-Adviser, or an 
affiliated person of the Fund of Funds Sub-Adviser, other than any 
advisory fees paid to the Fund of Funds Sub-Adviser or its affiliated 
person by an Unaffiliated Fund, in connection with the investment by 
the Fund of Funds in the Unaffiliated Fund made at the direction of the 
Fund of Funds Sub-Adviser. In the event that the Fund of Funds 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 rule 2830 of the Conduct Rules of the National 
Association of Securities Dealers (``NASD''), if any, 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 set forth in rule 
2830 of the NASD Conduct Rules.
    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,
 Deputy Secretary.
 [FR Doc. E7-9270 Filed 5-14-07; 8:45 am]

BILLING CODE 8010-01-P
