CONCLUSION For the foregoing reasons, the Complaint must be dismissed. Respectfully submitted, s/ Matthew M. Hoffman_______________ Michael K. Isenman (pro hac vice) Matthew M. Hoffman (MH-2668) GOODWIN PROCTER LLP 901 New York Ave., N.W. Washington, DC 20001 Tel: (202) 346-4000 Fax: (202) 346-4444 James S. Dittmar (pro hac vice) GOODWIN PROCTER LLP Exchange Place 53 State St. Boston, MA 02109 Tel: (617) 570-1000 Fax: (617) 523-1231 Case 1:06-cv-04099-NRB Document 20 Filed 10/24/06 Page 36 of 53 30 Jeffrey A. Simes (JS-7060) GOODWIN PROCTER LLP 599 Lexington Avenue New York, NY 10022 Tel: (212)813-8800 Fax: (212) 355-3333 Attorney for Defendants and for Nominal Defendant CitiFunds Trust III Dated: October 23, 2006 Case 1:06-cv-04099-NRB Document 20 Filed 10/24/06 Page 37 of 53 ADDENDUM OF KEY STATUTORY AND REGULATORY PROVISIONS CITED IN MEMORANDUM Investment Company Act of 1940, as amended 15 U.S.C. § 80a-2............................................................................................... A-1 15 U.S.C. § 80a-15.............................................................................................

9 The ICA sets forth specific bright-line rules for determining whether a director is "interested." See 15 U.S.C. § 80a-2(a)(19); see also id. § 80a-2(a)(3).

Bartlett v. New York, N.H. & H. 17 An individual also is “interested” within the meaning of the ICA if he or she, among other things, (i) has engaged in principal transactions with, or distributed shares for the investment company or another investment company with the same adviser; (ii) has loaned money or property to the investment company; (iii) is on the advisory board of the investment company’s investment adviser; or (iv) in the previous two years, has been determined by the SEC to have had a material business or professional relationship with the investment company. 15 US.C. §§ 80a-2(a)(3), (19). None of these provisions is implicated here.

With respect to the independence of the Independent Directors, as noted in Prospect’s Opening Brief, the ICA expressly presumes that a fund’s directors are independent so long as they meet the relevant statutory definition. 15 U.S.C. § 80a-2(a)(9). “[A] plaintiff’s burden to overcome this presumption is a heavy one,” and Plaintiff comes nowhere near meeting it.

54 See Compl. at 1. 55 15 U.S.C. § 80a-2(a)(9). Case 1:16-cv-02990-LLS Document 13 Filed 06/30/16 Page 28 of 31 - 23 - independently in approving PSEC’s fees.56 See Hoffman, 591 F. Supp. 2d at 540 (general allegations insufficient to survive dismissal because of express presumption of director independence).

As the Fourth Circuit has stated, The fact that directors of the funds might be busy does not suggest that they were in any way "interested" as defined by the ICA. See 15 U.S.C. § 80a-2(a)(19). Likewise, plaintiffs' assertions that the directors were dependent on the investment advisers for information sheds no light on the question of whether the directors are disinterested.

Instead, Plaintiffs offer a series of assertions that can quickly be rejected. For example, Plaintiffs argue that because the Independent Trustees approved CA’s Management Agreement they must not be independent.64 This quintessentially circular argument that “do[es] not go beyond asserting that the Trustees had approved transactions that are alleged to have been wrongful,” not only ignores the statutory presumption of independence accorded to the Fund’s Independent Trustees, but it has been rejected by courts time and again at the pleadings stage.65 Similarly, Plaintiffs’ suggestion that the Independent Trustees are not independent because they receive compensation for their services,66 does nothing to alter the statutory presumption of independence or to provide a plausible basis for a Section 36(b) claim—as numerous courts also have concluded.67 63 15 U.S.C. § 80a-2(a)(9); see Amron, 464 F.3d at 344 (“the 40 Act contains an express presumption that mutual fund trustees and natural persons who do not own 25% of the voting securities are disinterested”). 64 See, e.g., Compl.

In fact, a full nine out of ten (or 90%) of the trustees on the EQAT Funds’ Board are, by statutory definition, “independent trustees.” (See DSMF ¶ 17; 15 U.S.C. § 80a-2(19).) The Independent Trustees’ Comprehensive Year-Round Contract 2.

65 See 15 U.S.C. §§ 80a-2(a)(19) & 80-2(a)(3). 66 15 U.S.C. § 80a-2(a)(9). Case3:05-cv-04518-WHA Document65 Filed05/02/06 Page21 of 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 17 - Motion to Dismiss Count VI of Complaint No.

Unlike traditional corporations, open-end mutual funds such as the MFS Funds are required to issue “redeemable securities,”30 which are defined as “any security . . . under the terms of which the holder, upon its presentation to the issuer . . . is entitled . . . to receive approximately his proportionate share of the issuer’s current net assets, or the cash equivalent thereof.” 15 U.S.C. § 80a-2(a)(32). The excessive fees and other charges about which Plaintiffs complain immediately reduced the Funds’ NAV per share.