[Federal Register Volume 63, Number 50 (Monday, March 16, 1998)]
[Notices]
[Pages 12845-12846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6595]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23063; 812-10838]
Delaware Group Foundations Funds, et al.; Notice of Application
March 9, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under section 12(d)(1)(J) of
the Investment Company Act of 1940 (the ``Act'') for an exemption from
section 12(d)(1)(G)(i)(II).
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SUMMARY OF THE APPLICATIONS: Applicants seek an order that would permit
a fund of funds relying on section 12(d)(1)(G) of the Act to make
direct investments in securities and other instruments.
APPLICANTS: Delaware Group Foundation Funds, Delaware Group Equity
Funds I, Inc., Delaware Group Equity Funds II, Inc., Delaware Group
Equity Funds III, Inc., Delaware Group Equity Funds IV, Inc., Delaware
Group Equity Funds V, Inc., Delaware Group Income Funds, Inc., Delaware
Group Government Fund, Inc., Delaware Group Limited-Term Government
Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free
Money Fund, Inc., Delaware Group State Tax-Free Income Trust, Delaware
Group Tax-Free Fund, Inc., Delaware Pooled Trust, Inc., Delaware Group
Premium Fund, Inc., Delaware Group Global & International Funds, Inc.,
Delaware Group Adviser Funds, Inc. (collectively, the ``Delaware
Funds''), Voyageur Funds, Inc., Voyageur Insured Funds, Inc., Voyageur
Intermediate Tax Free Funds, Inc., Voyageur Investment Trust, Voyageur
Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual Funds
II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Tax Free Funds,
Inc. (collectively, the ``Delaware-Voyageur Funds''), any future
registered open-end management investment companies or series thereof
which are part of the same ``group of investment companies,'' as
defined in section 12(d)(1)(G)(ii) of the Act as: (a) the Delaware or
Delaware-Voyageur Funds; or (b) other registered open-end management
investment companies that are advised by Delaware Management Company,
Inc. or any entity that controls, is controlled by, or under common
control with Delaware Management Company, Inc. (together with any
future series of existing Delaware Funds or Delaware-Voyageur Funds,
the ``Future Funds'') (Delaware Funds, Delaware-Voyageur Funds, and
Future Funds, collectively, the ``Delaware Group Funds'') and Delaware
Management Company, Inc. (``DMC''), Delaware International Advisers
Ltd. (``DIAL'') (together, the ``Advisers''), and Delaware
Distributors, L.P. All existing entities that currently intend to rely
on the order are named as applicants.
FILING DATES: The application was filed on October 27, 1997 and amended
on December 16, 1997. Applicants have agreed to file an additional
amendment, the substance of which is incorporated in this notice,
during the notice period.
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 the
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 April 3, 1998,
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 request should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons may request
notification by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants, One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103.
FOR FURTHER INFORMATION CONTACT: Annmarie J. Zell, Staff Attorney, at
(202) 942-0532, or Christine Y. Greenlees, 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 from
the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington,
D.C. 20549 (telephone (202) 942-8090).
Applicants' Representations
1. Delaware Group Foundation Funds (the ``Asset Allocator Fund''),
a Delaware business trust, is registered under the act as an open-end
management investment company and currently intends to offer three
series, the Income Portfolio, the Balanced Portfolio and the Growth
Portfolio (collectively, the ``Asset Allocator Portfolios''). Each
Asset Allocator Portfolio will invest primarily in a combination of
Delaware Group Funds (the ``Underlying Funds'') and, pursuant to the
relief requested in the application, directly in individual securities,
such as equity or fixed income securities and investment instruments
including options and futures on securities or indices.
2. DMC, an investment adviser registered under the Investment
Advisers Act of 1940, will serve as investment adviser for the Asset
Allocator Portfolios. DMC will charge an investment advisory fee that
will be for services that are in addition to, rather than duplicative
of, advisory services provided to the Underlying Funds, including asset
allocation and re-allocation among the Underlying Funds and the
management of direct investments in securities or other instruments.
The Asset Allocator Portfolios will invest in the institutional class
of shares of the Underlying Funds. These shares will be sold to and
redeemed by the Asset Allocator Portfolios without the imposition of
any front-end or deferred sales charges or redemption fees and will not
carry rule 12b-1 fees.
Applicant's Legal Analysis
1. Section 12(d)(1)(A) of the Act provides that no registered
investment company may acquire securities of another investment company
if such securities represent more than 3% of the acquired company's
outstanding voting stock, more than 5% of the acquiring company's total
assets, or if such securities, together with the securities of other
investment companies, represent more than 10% of the acquiring
company's total assets. Section 12(d)(1)(B) provides that no registered
open-end investment company may sell its securities to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock to be owned by
investment companies.
2. 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: (a) The acquiring company and the acquired
company are part of the same group of investment companies; (b) the
acquiring company holds only securities of acquired companies that are
part of the same group of investment companies, government securities,
and short-term
[[Page 12846]]
paper; (c) the aggregate sales loads and distribution-related fees of
the acquiring company and the acquired company are limited; and (d) the
acquired company has a policy that prohibits it from acquiring
securities of registered open-end investment companies or registered
unit investment trusts in reliance on section 12(d)(1)(F) or (G).
3. The Asset Allocator Fund requests relief from section
12(d)(1)(G)(i)(II) to the extent necessary to permit an Asset Allocator
Portfolio and any Future Funds to operate as a fund of funds within
each requirement of section 12(d)(1)(G) of the Act, with the exception
of the requirement that the Asset Allocator Portfolios limit their
investments in individual securities to Government securities and
short-term paper.
4. Section 12(d)(1)(J) provides that the SEC may exempt persons or
transactions from any provision of section 12(d)(1) if and to the
extent the exemption is consistent with the public interest and the
protection of investors. Applicants believe that the structure of the
Asset Allocator Portfolios will be substantially the same as the
statutory fund of funds now permitted under section 12(d)(1)(G).
Applicants also believe that Asset Allocator Portfolios' proposed
direct investments in securities and instruments as described in the
application do not raise any of the concerns that the requirements of
section 12(d)(1)(G) were designed to address.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. Applicants will company with all provisions of section
12(d)(1)(G), except for section 12(d)(1)(G)(i)(II) to the extent that
it restricts the Asset Allocator Portfolios from investing in
individual securities or instruments described in the application.
2. Before approving any investment advisory contract for the Asset
Allocator Fund under section 15 of the Act, the Board of Trustees of
the Asset Allocator Fund, including a majority of the Trustees who are
not ``interested persons'' as defined in section 2(a)(19) of the Act,
shall find that the investment advisory fee, if any, charged under the
contract is based on services provided that are in addition to, rather
than duplicative of, services provided pursuant to any Underlying
Fund's investment advisory contract. The finding, and the basis upon
which the finding was made, will be recorded fully in the minute books
of the Asset Allocator Fund.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-6595 Filed 3-13-98; 8:45 am]
BILLING CODE 8010-01-M