
[Federal Register Volume 79, Number 189 (Tuesday, September 30, 2014)]
[Notices]
[Pages 58832-58837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23227]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31262; File No. 812-14252]


Great-West Funds, Inc., et al.; Notice of Application

September 24, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 12(d)(1)(J) 
of the Investment Company Act of 1940 (the ``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

[[Page 58833]]

exemption from sections 17(a)(1) and (2) of the Act, and under section 
6(c) of the Act for an exemption from rule 12d1-2(a) under the Act.

-----------------------------------------------------------------------

    Summary of the Application: The requested order would (a) permit 
certain registered open-end management investment companies that 
operate as ``funds of funds'' to acquire shares of certain registered 
open-end management investment companies and unit investment trusts 
(``UITs'') that are within and outside the same group of investment 
companies as the acquiring investment companies, and (b) permit funds 
of funds relying on rule 12d1-2 under the Act to invest in certain 
financial instruments.
    Applicants: Great-West Funds, Inc. (``Great-West Funds''), Great-
West Capital Management, LLC (``Adviser''), and GWFS Equities, Inc. 
(the ``Distributor'').
    Filing Dates: The application was filed on December 18, 2013 and 
amended on May 13, 2014, and on August 27, 2014.
    Hearing or Notification of Hearing: An order granting the requested 
relief 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 October 17, 2014 and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, 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: Brent J. Fields, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: c/
o Renee M. Hardt, Vedder Price P.C., 222 N. LaSalle Street, Suite 2600, 
Chicago, Illinois 60601.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Senior Counsel, at 
(202) 551-6868, or Daniele Marchesani, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

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 for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. Great-West Funds, a Maryland corporation, is registered under 
the Act as an open-end management investment company and currently 
offers shares of 63 series (``Funds''), each of which pursues different 
investment objectives and principal investment strategies.\1\
---------------------------------------------------------------------------

    \1\ Applicants request that the order apply to each existing and 
future series of Great-West Funds and to each existing and future 
registered open-end management investment company or series thereof 
that is advised by the Adviser or any entity controlling, controlled 
by or under common control with the Adviser and is part of the same 
``group of investment companies'' (as defined in section 
12(d)(1)(G)(ii) of the Act), as Great-West Funds (each, a ``Fund'' 
and collectively, ``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. The Adviser, a Colorado limited liability company, is registered 
as an investment adviser under the Investment Advisers Act of 1940, as 
amended (``Advisers Act'') and serves as investment adviser to the 
Funds.
    3. The Distributor, a Delaware corporation, is registered as a 
broker-dealer under the Securities Exchange Act of 1934 (the ``Exchange 
Act''). The Distributor will serve as principal underwriter and 
distributor for the shares of the Funds.
    4. Applicants request an order to permit (a) a Fund that operates 
as a ``fund of funds'' (each a ``Fund of Funds'') to acquire shares of 
(i) registered open-end management investment companies that are not 
part of the same ``group of investment companies,'' within the meaning 
of section 12(d)(1)(G)(ii) of the Act, as the Fund of Funds 
(``Unaffiliated Investment Companies'') and unit investment trusts 
(``UITs'') that are not part of the same group of investment companies 
as the Fund of Funds (``Unaffiliated Trusts,'' together with the 
Unaffiliated Investment Companies, ``Unaffiliated Funds'') \2\ or (ii) 
registered open-end management companies or UITs that are part of the 
same ``group of investment companies,'' within the meaning of section 
12(d)(1)(G) (ii) of the Act, as the Fund of Funds (collectively, 
``Affiliated Funds,'' together with the Unaffiliated Funds, 
``Underlying Funds'') and (b) each Underlying Fund, the Distributor or 
any principal underwriter for the Underlying Fund, and any broker or 
dealer registered under the Exchange Act (``Broker'') to sell shares of 
the Underlying Fund to the Fund of Funds in amounts in excess of limits 
set forth in section 12(d)(1)(B). 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.
---------------------------------------------------------------------------

    \2\ Certain of the Unaffiliated Funds may be registered under 
the Act as either UITs or open-end management investment companies 
and have received exemptive relief to permit their shares to be 
listed and traded on a national securities exchange at negotiated 
prices (``ETFs'').
---------------------------------------------------------------------------

    5. Applicants also request an exemption under section 6(c) from 
rule 12d1-2 under the Act to permit any existing or future Fund that 
relies on section 12(d)(1)(G) of the Act (``Same Group Fund of Funds'') 
and that otherwise complies with rule 12d1-2 to also invest, to the 
extent consistent with its 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'').

Applicants' Legal Analysis

A. Investments in Underlying Funds--Section 12(d)(1)

    1. Section 12(d)(1)(A) of the Act, in relevant part, 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 investment company's shares to another 
investment company if the sale will cause the acquiring company to own 
more than 3% of the acquired company's total outstanding voting stock, 
or if the sale will cause more than 10% of the acquired company's total 
outstanding 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 to permit a Fund of Funds to acquire shares of 
the Underlying Funds in excess of the limits in section 12(d)(1)(A), 
and an

[[Page 58834]]

Underlying Fund, any principal underwriter for an Underlying Fund, and 
any Broker to sell shares of an Underlying Fund to a Fund of Funds in 
excess of the limits in section 12(d)(1)(B) of the Act.
    3. Applicants state that the terms and conditions of 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 believe that the proposed arrangement will not result 
in the exercise of undue influence by the Fund of Funds or a Fund of 
Funds Affiliate over the Unaffiliated Funds.\3\ To limit the control 
that the Fund of Funds may have over an Unaffiliated Fund, applicants 
propose a condition prohibiting the Adviser, any person controlling, 
controlled by, or under common control with the 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 that is advised or sponsored 
by the Adviser or any person controlling, controlled by, or under 
common control with the Adviser (the ``Advisory Group'') from 
controlling (individually or in the aggregate) an Unaffiliated Fund 
within the meaning of section 2(a)(9) of the Act. The same prohibition 
would apply to any other 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 (the ``Subadvisory Group''). 
Applicants propose other conditions to limit the potential for undue 
influence over the Unaffiliated Funds, including that 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 Underwriting Affiliate (``Affiliated Underwriting''). 
An ``Underwriting Affiliate'' is a principal underwriter in any 
underwriting or selling syndicate that is an officer, director, 
trustee, advisory board member, investment adviser, Subadviser, or 
employee of the Fund of Funds, or a person of which any such officer, 
director, trustee, advisory board member, investment adviser, 
Subadviser, or employee is an affiliated person. An Underwriting 
Affiliate does not include any person whose relationship to an 
Unaffiliated Fund is covered by section 10(f) of the Act.
---------------------------------------------------------------------------

    \3\ A ``Fund of Funds Affiliate'' is the Adviser, any Subadviser 
(as defined below), 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. An ``Unaffiliated Fund 
Affiliate'' is an investment adviser, sponsor, promoter, or 
principal underwriter of an Unaffiliated Fund, as well as any person 
controlling, controlled by, or under common control with any of 
those entities.
---------------------------------------------------------------------------

    5. To further ensure 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 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 an agreement stating, without 
limitation, that their respective board of directors or trustees (for 
any entity, the ``Board'') 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 its right at all times to reject any investment by 
a Fund of Funds.\4\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    6. Applicants state that they do not believe that the proposed 
arrangement will involve excessive layering of fees. The Board of each 
Fund of Funds, including a majority of the directors who are not 
``interested persons'' (within the meaning of section 2(a)(19) of the 
Act) (``Independent Directors''), will find that the advisory fees 
charged under investment advisory or management contract(s) are based 
on services provided that will be in addition to, rather than 
duplicative of, the services provided under such advisory contract(s) 
of any Underlying Fund in which the Fund of Funds may invest. In 
addition, the 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 under 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 an Unaffiliated Investment Company, in connection 
with the investment by the Fund of Funds in the Unaffiliated Fund. Any 
sales charges and/or service fees charged with respect to shares of a 
Fund of Funds will not exceed the limits applicable to a fund of funds 
as set forth in Rule 2830 of the Conduct Rules of the NASD (``NASD 
Conduct Rule 2830'').\5\
---------------------------------------------------------------------------

    \5\ Any references to NASD Conduct Rule 2830 include any 
successor or replacement rule of FINRA to NASD Conduct Rule 2830.
---------------------------------------------------------------------------

    7. Applicants submit that the proposed arrangement will not create 
an overly complex fund structure. Applicants note that no Underlying 
Fund will acquire 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) of the Act, except in certain 
circumstances identified in condition 11 below.

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 a Fund of Funds and the Affiliated Funds 
managed by the same Adviser might be deemed to be under common control 
of the Adviser and therefore affiliated persons of one another. 
Applicants also state that the Fund of Funds and the Unaffiliated Funds 
might be deemed to be affiliated persons of one another if the Fund of 
Funds acquires 5% or more of an Unaffiliated Fund's outstanding voting 
securities. In light of these and

[[Page 58835]]

other 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 persons 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.\6\ 
Applicants state that the terms of the transactions are reasonable and 
fair 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 the 
Underlying Fund.\7\ Applicants state that the proposed transactions 
will be consistent with the policies of each Fund of Funds and each 
Underlying Fund and with the general purposes of the Act.
---------------------------------------------------------------------------

    \6\ 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 a 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.
    \7\ To the extent purchases and sales of shares of an ETF occur 
in the secondary market (and not through principal transactions 
directly between a Fund of Funds and an ETF), relief from section 
17(a) of the Act would not be necessary. The requested relief is 
intended to cover, however, transactions directly between ETFs and a 
Fund of Funds. Applicants are not seeking relief from section 17(a) 
of the Act for, and the requested relief will not apply to, 
transactions where an ETF could be deemed an affiliated person, or 
an affiliated person of an affiliated person, of a Fund of Funds 
because the investment adviser to the ETF, or an entity controlling, 
controlled by, or under common control with the investment adviser 
to the ETF, is an investment adviser to the Fund of Funds.
---------------------------------------------------------------------------

C. Other Investments by Same Group Fund 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 a 
Same Group Fund of Funds may invest a portion of its 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 Fund of 
Funds to invest in Other Investments. Applicants assert that permitting 
Same Group Fund 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.
    4. Consistent with its fiduciary obligations under the Act, the 
Board of each Same Group Fund of Funds will review the advisory fees 
charged by the Same Group Fund of Funds' 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' Conditions

Investments by Funds of Funds in Underlying Funds
    Applicants agree that the relief to permit Funds of Funds to invest 
in Underlying Funds shall be subject to the following conditions:
    1. The members of an Advisory 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 Subadvisory 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 Advisory 
Group or a Subadvisory Group, each in the aggregate, becomes a holder 
of more than 25 percent of the outstanding voting securities of the 
Unaffiliated Fund, then the Advisory Group or the Subadvisory Group 
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 Subadvisory 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 as the sponsor 
(in the case of an Unaffiliated Trust).
    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 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 Directors, will adopt procedures reasonably designed to 
ensure that its Adviser and any Subadviser(s) to the Fund of Funds are 
conducting the investment program of the Fund of Funds without taking 
into account any

[[Page 58836]]

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 Directors, 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 Directors, 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 the Unaffiliated Investment Company will take 
any appropriate actions based on its review, including, if appropriate, 
the institution of procedures designed to ensure that purchases of 
securities in Affiliated Underwritings are in the best interests of 
shareholders.
    7. Each Unaffiliated Investment Company shall 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 shall maintain and preserve for a period 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 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 of the names 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 Directors, shall find that the advisory fees charged under 
such 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 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 under 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 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 its affiliated person 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 applicable Fund of Funds.
    11. 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

[[Page 58837]]

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 investment companies for short-
term cash management purposes, or (ii) engage in interfund borrowing 
and lending transactions.
    12. Any sales charges and/or service fees charged with respect to 
shares of a Fund of Funds will not exceed the limits applicable to fund 
of funds set forth in NASD Conduct Rule 2830.
Other Investments by Same Group Fund of Funds
    Applicants agree that the relief to permit Same Group Fund of Funds 
to invest in Other Investments shall be subject to the following 
condition:
    13. 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
 Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23227 Filed 9-29-14; 8:45 am]
BILLING CODE 8011-01-P


