[Federal Register Volume 66, Number 219 (Tuesday, November 13, 2001)]
[Notices]
[Pages 56867-56869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28354]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25255; 812-12494]


Lindner Investments and Lindner Asset Management, Inc.; Notice of 
Application

November 6, 2001.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application 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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[[Page 56868]]

SUMMARY OF APPLICATION: The requested order would permit applicants to 
enter into and materially amend subadvisory agreements without 
shareholder approval.

Applicants: Lindner Investments (``Trust'') and Lindner Asset 
Management, Inc. (``Adviser'').

FILING DATES: The application was filed on April 11, 2001 and amended 
on November 6, 2001.

Hearing or Notification of Hearing: An order granting the application 
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 November 29, 2001, 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 Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609; Applicants, 520 Lake Cook Road, Suite 381, Deerfield, IL 
60015.

FOR FURTHER INFORMATION CONTACT: Stacy L. Fuller, Senior Counsel, at 
(202) 942-0553, or Nadya B. Roytblat, Assistant Director, 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 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102, telephone (202) 942-8090.

Applicant's Representations

    1. The Trust, a Massachusetts business trust, is registered under 
the Act as an open-end management investment company of the ``series'' 
type. The Trust currently has six separate series (``Funds''), each 
with its own distinct investment objectives, policies and 
restrictions.\1\ The Adviser is registered as an investment adviser 
registered under the Investment Advisers Act of 1940.
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to future series of the Trust and toany other 
registered open-end management investment company and its series 
that (a) are advised by the Adviser or any entity controlling, 
controlled by or under common control with the Adviser; (b) use the 
multi-manager structure described in the application; and (c) comply 
with the terms and conditions in the application (``Future Funds,'' 
included in the term ``Funds''). No Fund will have in its name the 
name of a Subadviser, as defined below.
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    2. The Adviser serves as investment adviser to the Funds pursuant 
to an investment advisory agreement between the Trust and the Adviser 
that has been approved by the Trust's board of trustees (``Board''), 
including a majority of the trustees who are not ``interested persons'' 
as defined in section 2(a)(1) of the Act (``Disinterested Trustees''), 
and by a majority of each Fund's shareholders (``Master Management 
Agreement''). The Master Management Agreement permits the Adviser to 
enter into investment advisory agreements (``Subadvisory Agreements'') 
with subadvisers (``Subadvisers'') and delegate to the Subadvisers the 
responsibility for providing investment advice and making investment 
decisions for a Fund. Under the Master Management Agreement, the 
Adviser, among other things, set each Fund's overall investment 
strategy, monitors and evaluates the Subadvisers' performance, and 
recommends their hiring, termination and replacement. The Adviser 
compensates the subadvisers out of the fees paid to the Adviser by the 
Fund.
    3. Applicants requests relief to permit the Adviser to enter into 
and materially amend Subadvisory Agreements without obtaining 
shareholder approval. The requested relief will not extend to any 
Subadvisers that is an affiliated person, as defined in section 2(a)(3) 
of the Act, of the Trust or the Adviser, other than by reason of 
serving as a Subadviser to one or more of the Funds (``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 pursuant to a written contract that has been 
approved by a majority of the investment company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series company affected by a matter must approved 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 state 
that the requested relief meets this standard for the reasons discussed 
below.
    3. Applicants assert that each Fund's shareholders have determined 
to rely on the Adviser to select, monitor and replace Subadvisers. 
Applicants assert that, in this regard, the role of the Subadvisers is 
comparable to that of individual portfolio managers employed by 
traditional investment management organizations, and that shareholder 
approval should not be required for changes to Subadvisers or 
Subadvisory Agreements any more than it should be required for changes 
(in traditional investment companies) of individual portfolio managers 
or portfolio managers' contracts. Applicants state that the Master 
Management Agreement will remain fully subject to sections 15(a) and 
15(c) of the Act and rule 18f-2 under the Act. Applicants further 
submit that requiring shareholder approval of each Subadvisory 
Agreement would impose unnecessary costs and delays on the Funds, and 
may preclude the Adviser from acting promptly in a manner considered 
advisable by the Board.

Applicant's Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the requested order, the operation of 
the Fund as described in the application will be approved by the vote 
of a majority of the Fund's outstanding voting securities, as defined 
in the Act, or in the case of a Fund whose public shareholders 
purchased shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the initial shareholders before 
offering shares of that Fund to the public.
    2. Each Fund relying on the requested order will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to the application. In addition, each Fund will hold itself 
out to the public as employing the management structure described in 
the application. The prospectus will prominently disclose that the 
Adviser has the ultimate responsibility (subject to oversight by the 
Board) to monitor and evaluate Subadvisers and recommend their hiring, 
termination and replacement.
    3. At all times, a majority of the Board will be Disinterested 
Trustees, and the nomination of new or additional Disinterested 
Trustees will be placed

[[Page 56869]]

within the discretion of the then existing Disinterested Trustees.
    4. Neither the Trust nor the Adviser will enter into a Subadvisory 
Agreement for a Fund with any Affiliated Subadviser without such 
agreement, including the compensation to be paid thereunder, being 
approved by the shareholders of the applicable Fund.
    5. When a change of Subadviser is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Disinterested Trustees, will make a separate finding, reflected in the 
minutes of the meeting of the Board, that such change is in the best 
interests of the Fund and its shareholders and does not involve a 
conflict of interest from which the Adviser or the Affiliated 
Subadviser derives an inappropriate advantage.
    6. Within 90 days of the hiring of any new Subadviser, the Adviser 
will furnish shareholders of the Fund with all information about the 
new Subadviser that would be contained 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 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.
    7. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of each Fund's assets, and, subject to review 
and approval by the Board, will: (i) Set the Funds' overall investment 
strategies, (ii) evaluate, select and recommend Subadvisers to manage 
all or a part of a Fund's assets, (iii) when appropriate, allocate and 
reallocate a Fund's assets among multiple Subadvisers, (iv) monitor and 
evaluate the performance of the Subadvisers, and (v) ensure that the 
Subadvisers comply with each fund's investment objectives, policies and 
restrictions by, among other things, implementing procedures reasonably 
designed to ensure compliance.
    8. No trustee or 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 such person) any interest 
in a Subadviser, except for (i) ownership of interests in the Adviser 
or any entity that controls, is controlled by or is under common 
control with the Adviser; or (ii) ownership of less than 1% of the 
outstanding securities of any class of equity or debt of a publicly-
traded company that is either a Subadviser or an entity that controls, 
is controlled by or is under common control with a Subadviser.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-28354 Filed 11-9-01; 8:45 am]
BILLING CODE 8010-01-M