
[Federal Register: June 11, 2010 (Volume 75, Number 112)]
[Notices]               
[Page 33369-33374]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jn10-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29294; File No. 812-13706]

 
EQ Advisors Trust, et al.; Notice of Application

June 4, 2010.
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, under sections 6(c) and 17(b) 
of the Act for an exemption from section 17(a) of the Act and under 
section 6(c) of the Act for an exemption from rule 12d1-2 under the 
Act.

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SUMMARY: Summary of the Application: Applicants request an order that 
would (a) permit certain series of 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 or outside the same group of investment companies, and 
(b) permit certain series of registered open-end management investment 
companies relying on rule 12d1-2 under the Act to invest in certain 
financial instruments.
    Applicants: EQ Advisors Trust, AXA Premier VIP Trust (together with 
EQ Advisors Trust, the ``Trusts'') and AXA Equitable Life Insurance 
Company (the ``Manager'').

DATES: Filing Dates: The application was filed on September 29, 2009 
and amended on March 17, 2010 and June 3, 2010.
    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 29, 2010, 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, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090; Applicants: c/o Steven M. Joenk, AXA 
Equitable Life Insurance Company, 1290 Avenue of the Americas, New 
York, New York 10104.

FOR FURTHER INFORMATION CONTACT: John Yoder, Senior Counsel, at (202) 
551-6878, or Michael W. Mundt, 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 via the 
Commission's Web site by searching for the file number, or 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 organized as a Delaware statutory trust. Each 
Trust is registered under the Act as an open-end management investment 
company and offers multiple series (``Funds'').\1\ Each Trust is 
offered to (a) insurance company separate accounts registered under the 
Act (``Registered Separate Accounts'') and insurance company separate 
accounts exempt from registration under the Act (``Unregistered 
Separate Accounts,'' and together with the Registered Separate 
Accounts, ``Separate Accounts'') in connection with the variable life 
insurance contracts and variable annuity certificates and contracts 
(``Variable Contracts'') issued by the Manager and other affiliated or 
unaffiliated insurance companies, (b) retirement plans, including the 
401(k) plan sponsored by the Manager and (c) series of each Trust. 
Certain Funds pursue their investment objectives through a master-
feeder arrangement in reliance on section 12(d)(1)(E) of the Act.\2\
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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 Manager or any other investment 
adviser controlling, controlled by, or under common control with the 
Manager (included in the term, ``Funds''). All entities that 
currently intend to rely on the requested order are named as 
applicants. Any other entity that relies on the order in the future 
will comply with the terms and conditions of the application.
    \2\ A Fund of Funds may not invest in an Underlying Fund that 
operates as a feeder fund unless the feeder fund is part of the same 
group of investment companies (as defined in section 12(d)(1)(G)(ii) 
of the Act) as its corresponding master fund.
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    2. The Manager is a New York stock life insurance company 
registered under the Investment Advisers Act of 1940 (``Advisers Act'') 
and serves as investment adviser to the Trusts. The Manager is a wholly 
owned subsidiary of AXA Financial, Inc., a holding company. AXA 
Financial, Inc., is a wholly owned subsidiary of AXA, a French holding 
company for an international group of insurance and related financial 
services companies.
    3. Applicants request relief to permit: (a) A Fund (a ``Fund of 
Funds'') to acquire shares of registered open-end management investment 
companies or their series (the ``Unaffiliated 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 
Fund of Funds (``Unaffiliated Trusts,'' and

[[Page 33370]]

together with the Unaffiliated Investment Companies, the ``Unaffiliated 
Funds''); \3\ (b) the Unaffiliated Funds, their principal underwriters 
and any broker or dealer registered under the Securities Exchange Act 
of 1934 (``Broker'') to sell shares of the Unaffiliated Funds to the 
Fund of Funds; (c) the Funds of Funds to acquire shares of other Funds 
in the ``same group of investment companies'' (as defined in section 
12(d)(1)(G)(ii) of the Act) as the Fund of Funds (collectively, the 
``Affiliated Funds,'' and together with the Unaffiliated Funds, the 
``Underlying Funds''); and (d) the Affiliated Funds, their principal 
underwriters and any Broker to sell shares of the Affiliated Funds to 
the Fund of Funds. Applicants also request an order under sections 6(c) 
and 17(b) of the Act to exempt applicants from section 17(a) to the 
extent necessary to permit Underlying Funds to sell their shares to 
Funds of Funds and redeem their shares from Funds of Funds.
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    \3\ Certain of the Unaffiliated Funds may be registered under 
the Act as either UITs or open-end management investment companies 
and have obtained exemptions from the Commission necessary to permit 
their shares to be listed and traded on a national securities 
exchange at negotiated prices (``ETFs'').
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    4. Applicants also request an exemption to the extent necessary to 
permit Funds that invest in Underlying Funds in reliance on section 
12(d)(1)(G) of the Act, and that are eligible to invest in securities 
(as defined in section 2(a)(36) of the Act) in reliance on rule 12d1-2 
under the Act (``Same Group Funds of Funds''), to also invest, to the 
extent consistent with their investment objective, policies, strategies 
and limitations, in financial instruments that may not be securities 
within the meaning of section 2(a)(36) of the Act (``Other 
Investments'').
    5. Consistent with its fiduciary obligations under the Act, each 
Same Group Fund of Fund's board of trustees will review the advisory 
fees charged by the Same Group Fund of Fund's investment adviser to 
ensure that they are based on services provided that are in addition 
to, rather than duplicative of, services provided pursuant to the 
advisory agreement of any investment company in which the Same Group 
Fund of Funds may invest.

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 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 Underlying Funds, 
their principal underwriters and any Broker to sell 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 propose a condition prohibiting: 
(a) The Manager and any person controlling, controlled by or under 
common control with the Manager, 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 Manager or any person 
controlling, controlled by or under common control with the Manager 
(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 
(``Subadviser''), any person controlling, controlled by or under common 
control with the Subadviser, 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 or 
sponsored by the Subadviser or any person controlling, controlled by or 
under common control with the Subadviser (collectively, the 
``Subadviser Group'') from controlling (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 precludes a Fund of 
Funds, the Manager, any Subadviser, promoter or principal underwriter 
of a Fund of Funds, and 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 the Fund of Funds or a Fund of Funds 
Affiliate and the Unaffiliated Fund or the Unaffiliated Fund's 
investment adviser(s), sponsor, promoter, principal underwriter or 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 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) 
from causing 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, member of an advisory board, investment adviser, Subadviser, 
or employee of the Fund of Funds, or a person of which any such 
officer, director, trustee, investment adviser, Subadviser, 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

[[Page 33371]]

Underwriting Affiliate is an ``Affiliated Underwriting.''
    6. As an additional assurance that an Unaffiliated Investment 
Company understands the implications of an investment by a Fund of 
Funds under the requested order, prior to a Fund of Funds' investment 
in the Unaffiliated Investment Company in excess of the limit in 
section 12(d)(1)(A)(i), condition 8 requires that the Fund of Funds and 
Unaffiliated Investment Company 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 
Investment Company (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.\4\
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    \4\ An Unaffiliated Investment Company, 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 with the Fund of 
Funds.
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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, in connection with the approval of any 
investment 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 the Manager 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 Manager, or an affiliated person of the 
Manager, other than any advisory fees paid to the Manager or an 
affiliated person of the Manager by an Unaffiliated Investment Company, 
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 NASD (``NASD Conduct Rule 2830''), 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 the Fund of Funds 
will not exceed the limits applicable to funds of funds as 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. 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) acquires such securities in 
compliance with section 12(d)(1)(E) of the Act; (b) 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 (c) 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 investment companies for 
short-term cash management purposes, or (ii) engage in interfund 
borrowing and lending transactions.

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 and therefore affiliated 
persons of one another. Applicants also state that the Funds of Funds 
and the Underlying Funds may 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.\5\
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    \5\ Applicants acknowledge that receipt of any compensation by 
(a) an affiliated person of a Funds 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 may be 
prohibited by section 17(e)(1) 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 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 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 
standards 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

[[Page 33372]]

Underlying Fund.\6\ 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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    \6\ 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. To the extent 
that a Fund of Funds purchases or redeems shares from an ETF that is 
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) of the Act for those in-kind transactions.
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C. Other Investments by Same Group Funds of Funds

    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. Applicants state that the proposed arrangement would comply with 
the provisions of rule 12d1-2 under the Act, but for the fact that the 
Same Group Funds of 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 Same Group Funds of 
Funds to invest in Other Investments. Applicants assert that permitting 
the Same Group Funds of 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 shall 
be subject to the following conditions:

Investments in Underlying Funds by Funds of Funds

    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 Subadviser 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 outstanding voting securities of an Unaffiliated Fund, the Group or 
a Subadviser 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 Subadviser Group (except for any member of the 
Group or the Subadviser 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 Subadviser Group with respect to an Unaffiliated 
Fund for which the Subadviser or a person controlling, controlled by, 
or under common control with the Subadviser 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 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 Manager and any Subadviser 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 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 will 
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

[[Page 33373]]

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 
purchases 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 in 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 
(a) the party from whom the securities were acquired, (b) the identity 
of the underwriting syndicate's members, (c) the terms of the purchase, 
and (d) the 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 of 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 set forth 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 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 Manager 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 Manager, or an affiliated person of the 
Manager, other than any advisory fees paid to the Manager or its 
affiliated person by an Unaffiliated Investment Company, in connection 
with the investment by the Fund of Funds in the Unaffiliated Fund. Any 
Subadviser will waive fees otherwise payable to the Subadviser, 
directly or indirectly, by the Fund of Funds in an amount at least 
equal to any compensation received by the Subadviser, or an affiliated 
person of the Subadviser, from an Unaffiliated Fund, other than any 
advisory fees paid to the Subadviser or an affiliated person of the 
Subadviser by an Unaffiliated Investment Company, in connection with 
the investment by the Fund of Funds in the Unaffiliated Fund made at 
the direction of the Subadviser. In the event that the Subadviser 
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 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.
    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) Acquires such 
securities in compliance with section 12(d)(1)(E) of the Act; (b) 
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 (c) 
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 investment companies for short-term cash management purposes, or 
(ii) engage in interfund borrowing and lending transactions.

Other Investments by Same Group Funds of Funds

    13. The 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 Same Group Fund of Funds from investing in Other 
Investments as described in the application.


[[Page 33374]]


    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14052 Filed 6-10-10; 8:45 am]
BILLING CODE 8010-01-P

