[Federal Register Volume 66, Number 166 (Monday, August 27, 2001)]
[Notices]
[Pages 45067-45068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21557]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25118; 812-12148]


Accessor Funds, Inc. and Accessor Capital Management LP; Notice 
of Application

August 21, 2001.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of an application pursuant to section 17(d) of the 
Investment Company Act of 1940 (``Act'') and rule 17d-1 under the Act.

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SUMMARY: Applicants request an order that would permit certain 
registered open-end management investment companies relying on section 
12(d)((1)(G) of the Act to enter into a special servicing agreement.
    Applicants: Accessor Funds, Inc. (``Accessor Funds''), on behalf of 
its existing series, and Accessor Capital Management LP (``ACM''). 
Applicants also request relief for future series of Accessor Funds 
which operate as Underlying Funds or Funds of Funds (in each case as 
defined below), and for each existing or future registered open-end 
management investment company and series thereof, that is part of the 
same group of investment companies as the Accessor Funds under section 
12(d)(1)(G)(ii) of the Act, and which is, or will be, advised by ACM or 
any entity controlling, controlled by, or under common control with ACM 
(collectively, ``Future Funds'').\1\
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    \1\All existing entities that intend to rely on the order have 
been named as applicants, and any Future Fund that may subsequently 
rely on the order will comply with the terms and conditions in the 
application.
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    Filing Dates: The application was filed on July 3, 2000, and 
amended on June 29, 2001. Applicants have agreed to file an amendment 
during he notice period, the substance of which is reflected 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 he SEC by 5:30 p.m. on September 
17, 2001 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 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549-
0609. Applicants, 1420 Fifth Fifth Avenue, suite 3600, Seattle, 
Washington 98101.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
(202) 942-0527 (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 
20459-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. Accessor Funds, a Maryland corporation, is an open-end 
management investment company registered under the Act. Accessor Funds 
has nine existing series (the ``Underlying Funds'') and has created six 
additional series (the ``Funds of Funds'',\2\ each of which offers two 
classes of shares, the Advisor class (the ``Advisor Class'') and the 
Investor class (``the Investor Class''), which are issued in accordance 
with rule 18f-3 under the Act. the Funds of Funds will invest in mixes 
of four to nine Advisor Class shares of the following Underlying Funds 
in reliance on section 12(d)(1)(G) of the Act: Growth Fund, Value Fund, 
Small to Mid Cap Fund, International Equity fund, Intermediate Fixed-
Income Fund, short-Inermediate Fixed-Income Fund, Mortgage Securities 
Fund, U.S. Government Money Fund, and High Yield Bond Fund.\3\ Advisor 
Class shares of the Funds of Funds and the Underlying Funds have no 
sales charges and pay no distribution or shareholder service or 
administrative service fees.
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    \2\``Funds of Funds'' refers to each existing and future 
registered open-end management investment company or any series of 
that company that (1) is part of the same group of investment 
companies as the Underlying Funds under section 12(d)(1)(G)(ii) of 
the Act and is, or will be, advised by ACM or any entity 
controlling, controlled by, or under common control with ACM, and 
(2) intends to invest substantially all of its assets in the 
Underlying Funds.
    \3\No Fund of Funds may be an Underlying Fund and no Funds will 
invest in another Fund of Funds.
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    3. ACM is the investment adviser for the Accessor Funds. ACM 
advises the U.S. Government Money Fund, one of the Underlying Funds; 
unaffiliated investment management organizations (``Money Managers'') 
serve as sub-advisers to the other eight Underlying Funds. ACM and the 
Money Managers are registered under the Investment Advisers Act of 
1940. ACM also provides transfer agent, administrative, and 
recordkeeping services to the Underlying Funds.
    3. Applicants propose that the Underlying Funds and the Funds of 
Funds enter into a Funds of Funds Service Agreement (``Service 
Agreement''). Under the Service Agreement, the Underlying Fund will 
bear some portion or all of the Fund of Funds' expenses (except for (a) 
any administrative or distribution fees on Investor Class shares and 
(b) the management fee paid to ACM) in proportion to the average daily 
value of the Underlying Fund's shares owned by the Fund of Funds. 
Payments by an Underlying Fund pursuant to the Service Agreement will 
be a fund-wide expense of the Underlying Fund.

[[Page 45068]]

    4. Applicants state that an investment by the Funds of Funds in the 
Underlying Funds increases the assets of the Underlying Funds, which 
should enable the Underlying Funds to control and reduce their expense 
ratios because their expenses will be spread over a larger asset base. 
Applicants further state that an Underlying Fund may experience savings 
because it would be servicing only one account 9i.e., the Fund of 
Funds), instead of multiple accounts of the shareholders of the Fund of 
Funds. No Underlying Fund will bear any expenses of a Fund of Funds 
that exceed Net Benefits, as defined in the condition below, to the 
Underlying Fund from the arrangement.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act provide 
that an affiliated person of a registered investment company, or an 
affiliate of such person, acting as principal, shall not participate 
in, or effect any transaction in connection with, any joint enterprise 
or other joint arrangement in which the registered investment company 
is a participant unless the Commission has issued an order approving 
the arrangement. Each of the Underlying Funds and Funds of Funds 
advised by ACM could be deemed to be under common control with all the 
other Underlying Funds and Funds of Funds, and therefore, affiliated 
persons of each other. Consequently, the Service Agreement could be 
deemed to be a joint transaction.
    2. Rule 17d-1 under the Act provides that, in passing upon a joint 
arrangement under the rule, the Commission considers whether the 
investment company's participation in the joint enterprise is 
consistent with the provisions, policies, and purposes of the Act, and 
the extent to which the participation is on a basis different from, or 
less advantageous than that of other participants.
    3. Applicants request an order under section 17(d) and rule 17d-1 
to permit them to enter into and operate under the Service Agreement. 
Applicants contend that each Underlying Fund will pay a Fund of Funds' 
expenses only in direct proportion to the average daily value of each 
Underlying Fund's shares owned by the Fund of Funds to ensure that the 
Fund of Funds' expenses are borne proportionately and fairly. 
Applicants also state that prior to an Underlying Fund's entering into 
the Service Agreement, and at least annually thereafter, the board of 
directors of the Underlying Fund (the ``Board''), including a majority 
of directors who are not interested persons of the Underlying Fund as 
defined in section 2(a)(19) of the Act (``Disinterested Directors''), 
must determine that the Service Agreement will result in Net Benefits, 
as defined in the condition below, to the Underlying Fund. In making 
the annual determination, one of the factors that the Board must 
consider is the amount of Net Benefits actually experienced by each 
class of shareholders of the Underlying Fund and the Underlying Fund as 
a whole during the preceding year. For these reasons, applicants 
believe that the requested relief meets the standards of section 17(d) 
and rule 17d-1.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Prior to an Underlying Fund's entering into a Service Agreement, 
and at least annually thereafter, the Board of the Underlying Fund, 
including a majority of the Disinterested Directors, must determine 
that the Service Agreement will result in quantifiable benefits to each 
class of shareholders of the Underlying Fund and to the Underlying Fund 
as a whole that will exceed the costs of the Service Agreement borne by 
each class of shareholders of the Underlying Fund and by the Underlying 
Fund as a whole (``Net Benefits''). In making the annual determination, 
one of the factors the Board must consider is the amount of Net 
Benefits actually experienced by each class of shareholders of the 
Underlying Fund and the Underlying Fund as a whole during the preceding 
year. The Underlying Fund will preserve for a period of not less than 
six years from the date of a Board determination, the first two years 
in an easily accessible place, a record of the determination and the 
basis and information upon which the determination was made. This 
record will be subject to examination by the Commission and its staff.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-21557 Filed 8-24-01; 8:45 am]
BILLING CODE 8010-01-M