
[Federal Register Volume 78, Number 80 (Thursday, April 25, 2013)]
[Notices]
[Pages 24445-24447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09772]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30472; 812-14081]


Symetra Mutual Funds Trust, et al.; Notice of Application

April 19, 2013
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (``Act'') for an exemption from section 
15(a) of the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements.

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Summary of the Application: Applicants request an order that would 
permit them to enter into and materially amend subadvisory agreements 
without shareholder approval and would grant relief from certain 
disclosure requirements.

Applicants: Symetra Mutual Funds Trust (the ``Trust'') and Symetra 
Investment Management, Inc. (the ``Adviser'').

Filing Dates: The application was filed on October 3, 2012, and amended 
on March 25, 2013.

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 13, 2013 and should be accompanied by proof of service on 
applicants, in the form of an affidavit or, for lawyers, a certificate 
of service. Hearing requests should state the nature of the writer's 
interest, the reason for the request, and the issues contested. Persons 
who wish to be notified of a hearing may request notification by 
writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants, 
Symetra Financial Corporation, 777 108th Avenue, Suite 1200, Bellevue, 
WA 98004.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Senior Counsel, at 
(202) 551-6868, or Daniele Marchesani, 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 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. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company and currently offers 
three series which are advised by the Adviser.\1\ The Adviser, a 
Washington state corporation, is, and any future Adviser will be, 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (``Advisers Act''). The Adviser will serve as investment 
adviser to the Funds under an investment advisory

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agreement with the Trust (``Advisory Agreement'') that will have been 
approved by each respective Fund's shareholders and the Trust's Board 
of Trustees (``Board''),\2\ including a majority of the trustees who 
are not ``interested persons,'' as defined in section 2(a)(19) of the 
Act, of either the Trust or the Adviser (``Independent Trustees'') in 
the manner required by sections 15(a) and (c) of the Act and rule 18f-2 
under the Act.
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    \1\ Applicants request relief with respect to any existing and 
any future series of the Trust and any other existing and future 
registered open-end management company or series thereof that: (a) 
is advised by the Adviser, or any entity controlling, controlled by, 
or under common control with the Adviser or its successor (each, 
also an ``Adviser''); (b) uses the manager of managers structure 
described in the application; and (c) complies with the terms and 
conditions of the requested order (each, a ``Fund'' and 
collectively, the ``Funds''). The only existing registered open-end 
management investment company that currently intends to rely on the 
requested order is named as an applicant and each series that 
currently intends to be a Fund is identified in the application. For 
purposes of the requested order, ``successor'' is limited to an 
entity or entities that result from a reorganization into another 
jurisdiction or a change in the type of business organization. If 
the name of any Fund contains the name of a Subadviser (as defined 
below), that name will be preceded by the name of the Adviser.
    \2\ The term ``Board'' also includes the board of trustees or 
directors of a future Fund.
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    2. Under the terms of the Advisory Agreement, and subject to the 
authority of the Board, the Adviser is responsible for the overall 
management of each Fund's business affairs and selecting each Fund's 
investments according to that Fund's investment objectives, policies, 
and restrictions. For the investment management services it will 
provide to each Fund, the Adviser will receive the fee specified in the 
Advisory Agreement from such Fund based on the average daily net assets 
of the Fund. The Advisory Agreement permits the Adviser, subject to the 
approval of the Board, to delegate certain responsibilities to one or 
more subadvisers (``Subadvisers''). The Adviser expects to enter into 
subadvisory agreements with various Subadvisers (``Subadvisory 
Agreements'') to provide investment advisory services to the Funds.\3\ 
Each Subadviser is or will be an investment adviser as defined in 
section 2(a)(20) of the Act as well as registered, or not subject to 
registration, with the Commission as an ``investment adviser'' under 
the Advisers Act. The Adviser evaluates, allocates assets to and 
oversees the Subadvisers, and makes recommendations about their hiring, 
termination and replacement to the Board, at all times subject to the 
authority of the Board. The Adviser will compensate the Subadvisers out 
of the advisory fee paid by a Fund to the Adviser under the Advisory 
Agreement.
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    \3\ The Adviser has entered into Subadvisory Agreements with 
DoubleLine Capital LP and Yacktman Asset Management L.P.
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    3. Applicants request an order to permit the Adviser, subject to 
Board approval, to select certain Subadvisers to manage all or a 
portion of the assets of a Fund or Funds pursuant to a Subadvisory 
Agreement and materially amend Subadvisory Agreements without obtaining 
shareholder approval. The requested relief will not extend to any 
Subadviser that is an affiliated person, as defined in section 2(a)(3) 
of the Act, of the Trust, a Fund, or of the Adviser, other than by 
reason of serving as a subadviser to one or more of the Funds 
(``Affiliated Subadviser'').
    4. Applicants also request an order exempting the Funds from 
certain disclosure provisions described below that may require a Fund 
to disclose fees paid by the Adviser to each Subadviser. Applicants 
seek an order to permit the Trust to disclose for a Fund (as both a 
dollar amount and as a percentage of the Fund's net assets): (a) The 
aggregate fees paid to the Adviser and any Affiliated Subadviser; and 
(b) the aggregate fees paid to Subadvisers other than Affiliated 
Subadvisers (collectively, ``Aggregate Fee Disclosure''). Any Fund that 
employs an Affiliated Subadviser will provide separate disclosure of 
any fees paid to the Affiliated Subadviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by a vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 19(a)(3) of Form N-1A requires disclosure of 
the method and amount of the investment adviser's compensation.
    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to an investment company to comply with Schedule 14A under the 
Securities Exchange Act of 1934 (``1934 Act''). Items 22(c)(1)(ii), 
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together, 
require a proxy statement for a shareholder meeting at which the 
advisory contract will be voted upon to include the ``rate of 
compensation of the investment adviser,'' the ``aggregate amount of the 
investment adviser's fees,'' a description of the ``terms of the 
contract to be acted upon,'' and, if a change in the advisory fee is 
proposed, the existing and proposed fees and the difference between the 
two fees.
    4. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of a registered investment 
company's registration statement and shareholder reports filed with the 
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require 
a registered investment company to include in its financial statement 
information about investment advisory fees.
    5. Section 6(c) 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 provisions of the Act, or 
from any rule thereunder, 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. Applicants state that the requested relief meets this standard for 
the reasons discussed below.
    6. Applicants assert that the shareholders expect the Adviser 
subject to the review and approval of the Board, to select the 
Subadvisers who are best suited to achieve the Fund's investment 
objectives. Applicants assert that, from the perspective of the 
shareholder, the role of the Subadvisers is substantially equivalent to 
that of the individual portfolio managers employed by traditional 
investment company advisory firms. Applicants state that requiring 
shareholder approval of each Subadvisory Agreement would impose 
unnecessary delays and expenses on the Funds and may preclude the Funds 
from acting promptly when the Adviser and Board consider it appropriate 
to hire Subadvisers or amend Subadvisory Agreements. Applicants note 
that the Advisory Agreements and any Subadvisory Agreements with 
Affiliated Subadvisers will remain subject to the shareholder approval 
requirements of section 15(a) of the Act and rule 18f-2 under the Act.
    7. If a new Subadviser is retained in reliance on the requested 
order, the Funds will inform shareholders of the hiring of a new 
Subadviser pursuant to the following procedures (``Modified Notice and 
Access Procedures''): (a) Within 90 days after a new Subadviser is 
hired for any Fund, that Fund will send its shareholders either a 
Multi-manager Notice or a Multi-manager Notice and Multi-manager 
Information Statement; \4\ and (b) the Fund will make

[[Page 24447]]

the Multi-manager Information Statement available on the Web site 
identified in the Multi-manager Notice no later than when the Multi-
manager Notice (or Multi-manager Notice and Multi-manager Information 
Statement) is first sent to shareholders, and will maintain it on that 
Web site for at least 90 days. In the circumstances described in the 
application, a proxy solicitation to approve the appointment of new 
Subadvisers provides no more meaningful information to shareholders 
than the proposed Multi-manager Information Statement. Moreover, the 
applicable Board will comply with the requirements of sections 15(a) 
and 15(c) of the 1940 Act before entering into or amending Subadvisory 
Agreements.
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    \4\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Exchange 
Act, and specifically will, among other things: (a) summarize the 
relevant information regarding the new Subadviser; (b) inform 
shareholders that the Multi-manager Information Statement is 
available on a Web site; (c) provide the Web site address; (d) state 
the time period during which the Multi-manager Information Statement 
will remain available on that Web site; (e) provide instructions for 
accessing and printing the Multi-manager Information Statement; and 
(f) instruct the shareholder that a paper or email copy of the 
Multi-manager Information Statement may be obtained, without charge, 
by contacting the Funds.
    A ``Multi-manager Information Statement'' will meet the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Exchange Act for an information statement, except as 
modified by the requested order to permit Aggregate Fee Disclosure. 
Multi-manager Information Statements will be filed electronically 
with the Commission via the EDGAR system.
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    8. Applicants assert that the requested disclosure relief would 
benefit shareholders of the Funds because it would improve the 
Adviser's ability to negotiate the fees paid to Subadvisers. Applicants 
state that the Adviser may be able to negotiate rates that are below a 
Subadviser's ``posted'' amounts if the Adviser is not required to 
disclose the Subadvisers' fees to the public.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions: \5\
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    \5\ Applicants will only comply with conditions 7, 8, 9 and 12 
if they rely on the relief that would allow them to provide 
Aggregate Fee Disclosure.
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    1. Before a Fund may rely on the order requested in the 
application, the operation of the Fund in the manner described in the 
application will be approved by a majority of the Fund's outstanding 
voting securities, as defined in the Act, or, in the case of a Fund 
whose public shareholders purchase shares on the basis of a prospectus 
containing the disclosure contemplated by condition 2 below, by the 
sole initial shareholder before offering the Fund's shares to the 
public.
    2. The prospectus for each Fund will disclose the existence, 
substance, and effect of any order granted pursuant to the application. 
Each Fund will hold itself out to the public as employing the manager 
of managers structure described in the application. The prospectus will 
prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight by the Board) to oversee the Subadvisers and 
recommend their hiring, termination, and replacement.
    3. Funds will inform shareholders of the hiring of a new Subadviser 
within 90 days after the hiring of a new Subadviser pursuant to the 
Modified Notice and Access Procedures.
    4. The Adviser will not enter into a Subadvisory Agreement with any 
Affiliated Subadviser without that agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination and selection of new or 
additional Independent Trustees will be placed within the discretion of 
the then-existing Independent Trustees.
    6. When a Subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
applicable Board minutes, that such change is in the best interests of 
the Fund and its shareholders and does not involve a conflict of 
interest from which the Adviser or the Affiliated Subadviser derives an 
inappropriate advantage.
    7. Independent legal counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Trustees. The 
selection of such counsel will be within the discretion of the then 
existing Independent Trustees.
    8. The Adviser will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Adviser on a 
per-Fund basis. The information will reflect the impact on 
profitability of the hiring or termination of any Subadviser during the 
applicable quarter.
    9. Whenever a Subadviser is hired or terminated, the Adviser will 
provide the Board with information showing the expected impact on the 
profitability of the Adviser.
    10. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of the Fund's assets and, subject to review 
and approval of the Board, will (i) set each Fund's overall investment 
strategies; (ii) evaluate, select and recommend Subadvisers to manage 
all or part of a Fund's assets; (iii) when appropriate, allocate and 
reallocate a Fund's assets among multiple Subadvisers; (iv) monitor and 
evaluate the performance of Subadvisers; and (v) implement procedures 
reasonably designed to ensure that the Subadvisers comply with each 
Fund's investment objective, policies and restrictions.
    11. No trustee or officer of the Trust, or of a Fund, or director 
or officer of the Adviser, will own directly or indirectly (other than 
through a pooled investment vehicle that is not controlled by such 
person) any interest in a Subadviser, except for (a) ownership of 
interests in the Adviser or any entity that controls, is controlled by, 
or is under common control with the Adviser; or (b) ownership of less 
than 1% of the outstanding securities of any class of equity or debt of 
a publicly traded company that is either a Subadviser or an entity that 
controls, is controlled by, or is under common control with a 
Subadviser.
    12. Each Fund will disclose in its registration statement the 
Aggregate Fee Disclosure.
    13. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-09772 Filed 4-24-13; 8:45 am]
BILLING CODE 8011-01-P


