On July 10, 2015, the SEC staff issued a no-action letter to Jackson National Life Insurance Company and affiliates that should reduce registration fee payments by fund registrants organized in three-tier structures. Generally, under Section 24(f)(2) of the 1940 Act and Rule 24f-2 thereunder, a registered fund must pay registration fees to the SEC based on the fund’s “aggregate net sales.” In the case of master-feeder or three-tiered fund structure, this can lead to registration fees being paid two or three times on the same initial investment.
Jackson National Life Insurance Company and Jackson National Life Insurance Company of New York (“Jackson”) and certain Jackson separate accounts and feeder funds have a three-tiered structure consisting of insurance company separate accounts registered as unit investment trusts (the “Divisions”) that invest in feeder funds (“Feeder Funds”). The Jackson-managed Feeder Funds invest substantially all of their assets in shares of corresponding unaffiliated registered funds (each a “Master Fund”). In the no-action letter, the SEC staff agreed with Jackson that “triple Rule 24f-2 registration fees” were being paid for the same investment proceeds from contract owners of variable insurance products that were invested in the Divisions that purchased Feeder Fund (and, indirectly, Master Fund) shares. Accordingly, the staff agreed that each Division and Feeder Fund, in calculating its portion of annual Rule 24f-2 registration fees, could exclude from the aggregate net sales of its securities the aggregate net sales of Master Fund shares that are, in effect, sold through a Feeder Fund to a Division, provided the Rule 24f-2 registration fees had been paid on the aggregate net sales of Master Fund shares to a Feeder Fund.