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25346 Federal Register / Vol. 72, No.

86 / Friday, May 4, 2007 / Notices

Applicants state that the proposed sale provisions, policies and purposes of the ACTION: Notice of application for an
by the Trust of a portion of its assets to Act, and the extent to which the order under section 6(c) of the
the Healthcare Trust in exchange for the participation is on a basis different from Investment Company Act of 1940 (the
securities of the Healthcare Trust will be or less advantageous than that of the ‘‘Act’’) for an exemption from section
based on the fair value of those assets other participants. Applicants request 15(a) of the Act and rule 18f–2 under
computed on the day of the proposed an order pursuant to rule 17d–1 to the the Act, as well as from certain
transfer in the same manner as for extent that the participation of the disclosure requirements.
purposes of the daily net asset valuation applicants in the Transaction may be
for the Trust. Applicants further state deemed to constitute a prohibited joint APPLICANTS: Old Westbury Funds, Inc.
that such assets are anticipated to transaction. (the ‘‘Corporation’’) and Bessemer
consist largely or exclusively of cash 7. Applicants state that the Investment Management LLC (the
and short-term fixed income Transaction will not place any of the ‘‘Adviser’’).
instruments and thus will likely pose Trust, the Healthcare Trust, or existing
few, if any, issues with respect to shareholders of the Trust in a position FILING DATES: The application was filed
valuation. The Healthcare Trust shares less advantageous than that of any other on April 24, 2006, and amended on
distributed by the Trust in the person. As noted, the value of the April 26, 2007.
Transaction will be valued based on the Trust’s assets transferred to the HEARING OR NOTIFICATION OF HEARING: An
value of the Healthcare Trust’s assets. Healthcare Trust (and the common order granting the application will be
‘‘Value’’ for those purposes will be shares received in return) will be based issued unless the Commission orders a
determined in accordance with the on their fair value as computed on the hearing. Interested persons may request
provisions of section 2(a)(41) of the Act day of the transfer in accordance with a hearing by writing to the
and rule 2a–4 under the Act. the requirements of the Act. The shares Commission’s Secretary and serving
4. With respect to the Transaction, of the Healthcare Trust will be applicants with a copy of the request,
each of the Trust’s Board and the distributed as a dividend to the personally or by mail. Hearing requests
Healthcare Trust’s Board, including a shareholders, leaving the shareholders should be received by the Commission
majority of the Disinterested Directors of in the same investment posture by 5:30 p.m. on May 22, 2007, and
each Board, determined that the immediately following the Transaction should be accompanied by proof of
participation in the Transaction is in the as before, subject only to changes in service on the applicants, in the form of
best interests of the Trust or the market price of the underlying assets an affidavit, or, for lawyers, a certificate
Healthcare Trust, as applicable, and that subsequent to the Transaction. of service. Hearing requests should state
the interests of the existing shareholders 8. Applicants assert that the
of the Trust or the Healthcare Trust, as the nature of the writer’s interest, the
Transaction has been proposed in order reason for the request, and the issues
applicable, will not be diluted as a to benefit the shareholders of the Trust
result of the Transaction. These contested. Persons who wish to be
as well as the Healthcare Trust, and notified of a hearing may request
findings, and the basis upon which the neither Gabelli nor any other affiliated
findings were made, will be recorded notification by writing to the
person of the Trust or the Healthcare Commission’s Secretary.
fully in the minute book of the Trust or Trust will receive fees solely as a result
the Healthcare Trust, as applicable. of the Transaction. The fee indirectly ADDRESSES: Secretary, U.S. Securities &
5. Applicants state that the Exchange Commission, 100 F Street,
payable to Gabelli by the Healthcare
Transaction will be consistent with the NE., Washington, DC 20549–1090;
Trust’s shareholders will be the same as
stated investment policies of the Trust Applicants, c/o Robert M. Kurucza,
the fee currently indirectly payable to
and the Healthcare Trust as disclosed to Morrison & Foerster LLP, 2000
shareholders. The distribution of the Gabelli by the Trust’s shareholders. In
addition, by creating the Healthcare Pennsylvania Avenue, NW., Suite 5500,
Healthcare Trust shares will not initially Washington, DC 20006.
change the position of the Trust’s Trust through the Transaction, the Trust
shareholders with respect to the is effectively enabling its shareholders FOR FURTHER INFORMATION CONTACT:
underlying investments that they then to receive securities without the costs Bruce R. MacNeil, Senior Counsel, at
own. A proxy statement/prospectus of associated with a public offering. (202) 551–6817 or Julia Kim Gilmer,
the Trust and the Healthcare Trust is For the Commission, by the Division of Branch Chief, at (202) 551–6821
being used to solicit the approval of the Investment Management, under delegated (Division of Investment Management,
Trust’s shareholders of the Transaction authority. Office of Investment Company
at a vote to take place following the Florence E. Harmon, Regulation).
issuance of the exemptive order. The Deputy Secretary.
Trust’s shareholders will have the [FR Doc. E7–8504 Filed 5–3–07; 8:45 am]
following is a summary of the
opportunity to vote on the Transaction BILLING CODE 8010–01–P
application. The complete application
after having received disclosure
may be obtained for a fee at the
concerning the Transaction.
6. Applicants also seek an order under Commission’s Public Reference Branch,
section 17(d) of the Act and rule 17d– 100 F Street, NE., Washington, DC
1 under the Act. Section 17(d) and rule 20549–0102 (telephone (202) 551–5850).
17d–1 prohibit affiliated persons from [Investment Company Act Release No.
27807; 812–13286] Applicants’ Representations
participating in joint arrangements with
a registered investment company unless 1. The Corporation, a Maryland
Old Westbury Funds, Inc. and
authorized by the Commission. In corporation, is registered under the Act
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Bessemer Investment Management

passing on applications for these orders, as an open-end management investment
LLC; Notice of Application
rule 17d–1 provides that the company. The Corporation currently is
Commission will consider whether the April 27, 2007. comprised of seven series (each a
participation of the investment AGENCY:Securities and Exchange ‘‘Fund’’ and collectively, the ‘‘Funds’’),
company is consistent with the Commission (‘‘Commission’’). each with separate investment

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Federal Register / Vol. 72, No. 86 / Friday, May 4, 2007 / Notices 25347

objectives, policies and restrictions.1 4. Applicants also request an statements and shareholder reports filed
The Adviser is registered as an exemption from the various disclosure with the Commission. Sections 6–
investment adviser under the provisions described below that may 07(2)(a), (b), and (c) of Regulation S–X
Investment Advisers Act of 1940 require a Fund to disclose fees paid by require that investment companies
(‘‘Advisers Act’’) and serves as the Adviser to each Subadviser. An include in their financial statements
investment adviser to each of the Funds exemption is requested to permit the information about investment advisory
pursuant to an investment advisory Corporation to disclose for each Fund fees.
agreement (‘‘Advisory Agreement’’) with (as both a dollar amount and as a 6. Section 6(c) of the Act provides that
the Corporation. The Advisory percentage of each Fund’s net assets): (a) the Commission may exempt any
Agreement has been approved by the The aggregate fees paid to the Adviser person, security, or transaction or any
Corporation’s board of directors (the and any Affiliated Subadvisers; and (b) class or classes of persons, securities, or
‘‘Board’’), including a majority of the the aggregate fees paid to Subadvisers transactions from any provisions of the
directors who are not ‘‘interested other than Affiliated Subadvisers Act, or from any rule thereunder, if such
persons,’’ as defined in section 2(a)(19) (collectively ‘‘Aggregate Fee exemption is necessary or appropriate
of the Act, of the Corporation or the Disclosure’’). For any Fund that in the public interest and consistent
Adviser (‘‘Independent Directors’’), as employs an Affiliated Subadviser, the with the protection of investors and the
well as by the shareholders of each Fund will provide separate disclosure of purposes fairly intended by the policy
Fund. any fees paid to the Affiliated and provisions of the Act. Applicants
2. Under the terms of the Advisory Subadviser. state that their requested relief meets
Agreement, the Adviser provides this standard for the reasons discussed
investment advisory services to each Applicants’ Legal Analysis below.
Fund, supervises the investment 1. Section 15(a) of the Act provides, 7. Applicants assert that the
program for each Fund, and has the in relevant part, that it is unlawful for shareholders are relying on the
authority, subject to Board approval, to any person to act as an investment Adviser’s experience to select the
enter into investment subadvisory adviser to a registered investment Subadviser best suited to achieve a
agreements (‘‘Subadvisory Agreements’’) company except under a written Fund’s investment objectives.
with one or more subadvisers contract that has been approved by the Applicants assert that, from the
(‘‘Subadvisers’’). Each Subadviser is vote of a majority of the company’s perspective of the investor, the role of
registered under the Advisers Act. The outstanding voting securities. Rule 18f– the Subadvisers is comparable to that of
Adviser monitors and evaluates the 2 under the Act provides that each the individual portfolio managers
Subadvisers and recommends to the series or class of stock in a series employed by traditional investment
Board their hiring, retention or company affected by a matter must company advisory firms. Applicants
termination. Subadvisers recommended approve such matter if the Act requires state that requiring shareholder
to the Board by the Adviser are selected shareholder approval. approval of each Subadvisory
and approved by the Board, including a 2. Form N–1A is the registration Agreement would impose costs and
majority of the Independent Directors. statement used by open-end investment unnecessary delays on the Funds, and
Each Subadviser has discretionary companies. Item 14(a)(3) of Form N–1A may preclude the Adviser from acting
authority to invest the assets or a requires disclosure of the method and promptly in a manner considered
portion of the assets of a particular amount of the investment adviser’s advisable by the Board. Applicants note
Fund. The Adviser compensates each compensation. that the Advisory Agreement and any
Subadviser out of the fees paid to the 3. Rule 20a–1 under the Act requires Subadvisory Agreement with an
Adviser under the Advisory Agreement. proxies solicited with respect to an Affiliated Subadviser will remain
3. Applicants request an order to investment company to comply with subject to section 15(a) of the Act and
permit the Adviser, subject to Board Schedule 14A under the Securities rule 18f–2 under the Act.
approval, to enter into and materially Exchange Act of 1934 (‘‘1934 Act’’). 8. Applicants assert that some
amend Subadvisory Agreements Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) Subadvisers use a ‘‘posted’’ rate
without obtaining shareholder approval. and 22(c)(9) of Schedule 14A, taken schedule to set their fees. Applicants
The requested relief will not extend to together, require a proxy statement for a state that while Subadvisers are willing
any Subadviser that is an affiliated shareholder meeting at which the to negotiate fees that are lower than
person, as defined in section 2(a)(3) of advisory contract will be voted upon to those posted on the schedule, they are
the Act, of the Corporation or of the include the ‘‘rate of compensation of the reluctant to do so where the fees are
Adviser, other than by reason of serving investment adviser,’’ the ‘‘aggregate disclosed to other prospective and
as a Subadviser to one or more of the amount of the investment adviser’s existing customers. Applicants submit
Funds (‘‘Affiliated Sub-Adviser’’). fees,’’ a description of the ‘‘terms of the that the requested relief will benefit
contract to be acted upon,’’ and, if a Fund shareholders because it would
1 Applicants also request relief with respect to change in the advisory fee is proposed, improve the Adviser’s ability to
future series of the Corporation and any other the existing and proposed fees and the negotiate the fees paid to the
existing or future registered open-end management
investment company or series thereof that: (a) Is
difference between the two fees. Subadvisers.
advised by the Adviser, (b) uses the management 4. Form N–SAR is the semi-annual
structure described in the application; and (c) report filed with the Commission by Applicants’ Conditions
complies with the terms and conditions of the registered investment companies. Item Applicants agree that any order
application (included in the term ‘‘Funds’’). The 48 of Form N–SAR requires investment granting the requested relief will be
only existing registered open-end management
investment company that currently intends to rely companies to disclose the rate schedule subject to the following conditions:
for fees paid to their investment 1. Before a Fund may rely on the
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on the requested order is named as an applicant. All

references to the term ‘‘Adviser’’ include: (a) the advisers, including the Subadvisers. order requested in the application, the
Adviser, and (b) any entity controlling, controlled 5. Regulation S–X sets forth the operation of the Fund in the manner
by, or under common control with the Adviser. If
the name of any Fund contains the name of a
requirements for financial statements described in the application will be
Subadviser (as defined below), the name of the required to be included as part of approved by a majority of the Fund’s
Adviser will precede the name of the Subadviser. investment company registration outstanding voting securities, as defined

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25348 Federal Register / Vol. 72, No. 86 / Friday, May 4, 2007 / Notices

in the Act, or, in the case of a Fund Fund’s assets, and, subject to review SECURITIES AND EXCHANGE
whose public shareholders purchased and approval of the Board, will: (a) Set COMMISSION
shares on the basis of a prospectus each Fund’s overall investment
[Release No. 34–55676; File No. SR–CBOE–
containing the disclosure contemplated strategies, (b) evaluate, select and 2007–40]
by condition 2 below, by the sole initial recommend Subadvisers to manage all
shareholder before offering the Fund’s or a part of a Fund’s assets, (c) allocate Self-Regulatory Organizations;
shares to the public. and, when appropriate, reallocate a Chicago Board Options Exchange,
2. Each Fund will disclose in its Fund’s assets among multiple Incorporated; Notice of Filing and
prospectus the existence, substance, and Subadvisers; (d) monitor and evaluate Immediate Effectiveness of Proposed
effect of any order granted pursuant to the performance of the Subadvisers, and Rule Change To Extend the Duration of
the application. In addition, each Fund CBOE Rule 6.45A(b) Pertaining to
(e) implement procedures reasonably
will hold itself out to the public as Orders Represented in Open Outcry
designed to ensure that the Subadvisers
employing the management structure
described in the application. The comply with each relevant Fund’s April 27, 2007.
prospectus will prominently disclose investment objective, policies and Pursuant to Section 19(b)(1) of the
that the Adviser has ultimate restrictions. Securities Exchange Act of 1934 (the
responsibility, subject to oversight by 8. No director or officer of the Funds ‘‘Act’’),1 and Rule 19b–4 thereunder,2
the Board, to oversee Subadvisers and or the Adviser, will own directly or notice is hereby given that on April 25,
recommend their hiring, termination, indirectly (other than through a pooled 2007, the Chicago Board Options
and replacement. investment vehicle that is not controlled Exchange, Incorporated (‘‘CBOE’’ or
3. Within 90 days of the hiring of a by such person), any interest in a ‘‘Exchange’’) filed with the Securities
new Subadviser, the affected Fund Subadviser, except for: (a) ownership of and Exchange Commission (the
shareholders will be furnished all the interests in the Adviser or any entity ‘‘Commission’’) the proposed rule
information about the new Subadviser that controls, is controlled by, or is change as described in Items I and II
that would be included in a proxy under common control with the below, which Items have been
statement, except as modified to permit Adviser, or (b) ownership of less than substantially prepared by the CBOE.
Aggregate Fee Disclosure. This 1% of the outstanding securities of any The Exchange filed the proposal as a
information will include Aggregate Fee ‘‘non-controversial’’ proposed rule
class of equity or debt of a publicly
Disclosure and any change in such change pursuant to Section
traded company that is either a
disclosure caused by the addition of the 19(b)(3)(A)(iii) of the Act 3 and Rule
new Subadviser. To meet this Subadviser or an entity that controls, is
19b–4(f)(6) thereunder,4 which renders
obligation, the Fund will provide controlled by, or is under common
it effective upon filing with the
shareholders within 90 days of the control with a Subadviser.
Commission.5 The Commission is
hiring of a new Subadviser with an 9. The Adviser will provide the publishing this notice to solicit
information statement meeting the Board, no less frequently than quarterly, comments on the proposed rule change
requirements of Regulation 14C, with information about the Adviser’s from interested persons.
Schedule 14C, and Item 22 of Schedule profitability on a per-Fund basis. Such
14A under the 1934 Act, except as I. Self-Regulatory Organization’s
information will reflect the impact on
modified by the order to permit Statement of the Terms of Substance of
the profitability of the hiring or
Aggregate Fee Disclosure. the Proposed Rule Change
termination of any Subadviser during
4. The Adviser will not enter into a the applicable quarter. The CBOE proposes to extend the
Subadvisory Agreement with any duration of CBOE Rule 6.45A(b) (the
10. Each Fund will disclose in its
Affiliated Subadviser without that ‘‘Rule’’), relating to the allocation of
agreement, including the compensation registration statement the Aggregate Fee
orders represented in open outcry in
to be paid thereunder, being approved Disclosure. equity option classes designated by the
by the shareholders of the applicable 11. The requested order will expire on Exchange to be traded on the CBOE
Fund. the effective date of rule 15a–5 under Hybrid Trading System (‘‘Hybrid’’)
5. At all times, at least a majority of the Act, if adopted. through July 31, 2007. No other changes
the Board will be Independent 12. Whenever a Subadviser is hired or are being made to the Rule. The text of
Directors, and the nomination of new or terminated, the Adviser will provide the the proposed rule change is available at
additional Independent Directors will Board with information showing the CBOE, the Commission’s Public
be placed within the discretion of the expected impact on the Adviser’s Reference Room, and (http://
then-existing Independent Directors. profitability.
6. When a Subadviser change is
proposed for a Fund with an Affiliated 13. Independent legal counsel, as II. Self-Regulatory Organization’s
Subadviser, the Board, including a defined in rule 0–1(a)(6) under the 1940 Statement of the Purpose of, and
majority of the Independent Directors, Act, will be engaged to represent the Statutory Basis for, the Proposed Rule
will make a separate finding, reflected Independent Directors. The selection of Change
in the Board minutes, that the change is such counsel will be within the In its filing with the Commission, the
in the best interests of the Fund and its discretion of the then existing CBOE included statements concerning
shareholders and does not involve a Independent Directors. the purpose of, and basis for, the
conflict of interest from which the For the Commission, by the Division of
Adviser or the Affiliated Subadviser Investment Management, under delegated
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
derives an inappropriate advantage.
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authority. 3 15 U.S.C. 78s(b)(3)(A)(iii).

7. The Adviser will provide general
Florence E. Harmon, 4 17 CFR 240.19b–4(f)(6).
management services to each Fund, 5 The Exchange has asked the Commission to
including overall supervisory Deputy Secretary.
waive the 30-day operative delay required by Rule
responsibility for the general [FR Doc. E7–8506 Filed 5–3–07; 8:45 am] 19b–4(f)(6)(iii), 17 CFR 240.19b–4(f)(6)(iii). See
management and investment of the BILLING CODE 8010–01–P discussion infra Section III.

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