[Federal Register Volume 64, Number 175 (Friday, September 10, 1999)]
[Notices]
[Pages 49254-49255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23608]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-23990, 812-11468]
Liberty Funds Trust IX, et al.; Notice of Application
September 2, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
section 15(a) of the Act and rule 18f-2 under the Act.
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Summary of Application: Applicants, Liberty Funds Trust IX (the
``Trust'') and Liberty Asset Management Company (``Adviser''), request
an order that would permit applicants to enter into and materially
amend subadvisory agreements without obtaining shareholder approval.
Filing Dates: The application was filed on January 13, 1999, and
amended on April 28, 1999. Applicants have agreed to file an amendment
during the notice period, the substance of which is included in this
notice.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on September 27,
1999, and should be accompanied by proof of service on the 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
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549-
0609; Liberty Funds Trust IX, One Financial Center, Boston, MA 02111,
and Liberty Asset Management Company, Federal Reserve Plaza, 600
Atlantic Avenue, Boston, MA 02210-2214.
FOR FURTHER INFORMATION CONTACT: John K. Forst, Attorney-Advisor, at
(202) 942-0549, or Michael W. Mundt, Branch Chief at (202) 942-0564,
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch, 450 Fifth Street, NW, Washington, DC
20549-0102 (telephone 202-942-8090).
Applicants' Representations
1. The Trust, a Massachusetts business trust, is registered under
the Act as an open-end management investment company currently offering
one series, the Liberty All-Star Growth and Income Fund (``Fund'').\1\
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\1\ Applicants also request relief with respect to future series
of the Trust that are advised by the Adviser and operated in
substantially the same manner as the Fund and that comply with the
terms and conditions contained in the application (``Future
Funds'').
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2. The Adviser, registered under the Investment Advisers Act of
1940 (``Advisers Act''), serves as the investment adviser to the Fund
pursuant to an investment advisory agreement (``Advisory Agreement'').
Under the Advisory Agreement, the Adviser, subject to the supervision
of the board of trustees of the Trust (the ``Board'') sets overall
investment strategies for the Fund, recommends subadvisers for the
Fund, allocates and reallocates the Fund's portfolio among two or more
subadvisers, and monitors and evaluates the investment performance of
the subadvisers, including their compliance with the Fund's investment
objective, policies and restrictions. The Adviser pays the subadvisers'
fees out of the fees the Adviser receives from the Fund.
3. Under subadvisory agreements between the subadvisers and the
Fund (``Subadvisory Agreements''), the subadvisers' responsibility is
limited to the investment management of the respective portions of the
Fund's assets assigned to them by the Adviser and related recordkeeping
and reporting. The Fund currently has five subadvisers. All subadvisers
of the Fund are registered as investment advisers under the Advisers
Act.
4. Applicants request an order to permit the Adviser to enter into
and materially amend Subadvisory Agreements without obtaining
shareholder approval. The requested relief will not extend to a
subadviser that is an affiliated person, as defined in section 2(a)(3)
of the Act, of the Trust or
[[Page 49255]]
the Adviser, other than by reason of serving as subadviser to the Fund
or a Future Fund (``affiliated Subadviser'').
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except under a written contract approved by a
majority of the investment company's outstanding voting shares. Rule
18f-2 under the Act provides that each series or class of stock in a
series company affected by a matter must approve the matter if the Act
requires shareholder approval.
2. Section 6(c) of the Act authorizes the Commission to exempt
persons or transactions from the provisions of the Act to the extent
that the exemption is necessary or appropriate in the public interest
and consistent with the protection of investors and the purposes fairly
intended by the policies and provisions of the Act. Applicants believe
that their requested relief meets this standard for the reasons
discussed below.
3. Applicants assert that the Fund's investors rely on the Adviser
to select, monitor, and replace subadvisers best suited to manage the
Fund's portfolio. Applicants represent that the Adviser has experience
in performing these functions. Applicants submit that, from the
perspective of an investor, the role of the subadvisers is comparable
to that of individual portfolio managers employed by other investment
company advisory firms. Applicants submit that the requested relief
will allow the multi-manager structure of the Fund to operate more
efficiently. Applicants note that the Advisory Agreement will remain
subject to section 15(a) of the Act and rule 18f-2 under the Act.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Future Fund may rely on the requested order, the
operation of the Future Fund in the manner described in the application
will be approved by its initial shareholder before shares of the Future
Fund are made available to the public.
2. The Trust will disclose in its prospectus the existence,
substance, and effect of any order granted pursuant to the application.
In addition, the Fund and any Future Fund will hold itself out to the
public as employing the sub-adviser structure described in the
application. The prospectus with respect to the Fund and any Future
Fund will prominently disclose that the Adviser is responsible for
overseeing the subadvisers and recommending their hiring, termination,
and replacement.
3. Neither the Fund nor any Future Fund will enter into a
Subadvisory Agreement with any Affiliated Subadviser, without the
Subadvisory Agreement, including the compensation to be paid under that
Agreement, being approved by the shareholders of the applicable Fund.
4. At all times, a majority of the Board will be persons each of
whom is not an ``interested person'' of the Fund or any Future Fund as
defined in section 2(a)(19) of the Act (``Independent Trustees''), and
the nomination of new or additional Independent Trustees will be at the
discretion of the then-existing Independent Trustees.
5. No trustee of officer of the Trust or director or officer of the
Adviser will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by the trustee, director, or
officer) any interest in any subadviser, except for (i) ownership of
interests in the Adviser or any other entity that controls, is
controlled by, or is under common control with the Adviser; or (ii)
ownership of less than one percent of the outstanding securities of any
class of equity or debt of a publicly-traded company that is either a
subadviser or any entity that controls, is controlled by, or is under
common control with a subadviser.
6. When a change of a subadviser is proposed for the Fund or any
Future Fund with an Affiliated Subadviser, the Board, including a
majority of the Independent Trustees, will make a separate finding,
reflected in the Board's minutes, that the change is in the best
interests of the Fund or in the Future 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. Within 90 days of the hiring of a subadviser for the Fund or any
Future Fund, its shareholders will be furnished all information about
the subadviser that would be included in a proxy statement, including
any change in such disclosure caused by the addition of the new
subadviser. The Adviser will meet this condition by providing
shareholders, within 90 days of the hiring of a subadviser, with an
information statement meeting the requirements of Regulation 14C,
Schedule 14C, and Item 22 of Schedule 14A under the Securities Exchange
Act of 1934.
8. The Adviser, subject to review and approval by the Board, will
provide general investment management services to the Fund and any
Future Fund, including overall supervisory responsibility for the
general management and investment of such Fund's portfolio. In this
capacity, the Adviser will: (i) set overall investment strategies for
the Fund; (ii) recommend subadvisers for the Fund; (iii) when
appropriate allocate and reallocate the Fund's assets among
subadvisers; and (iv) monitor and evaluate the investment performance
of the subadvisers, including their compliance with the Fund's
investment objective, policies, and restrictions.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-23608 Filed 9-9-99 8:45 am]
BILLING CODE 8010-01-M