[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