Neuberger Berman ETF Trust and Neuberger Berman Management LLC; Notice of Application, 19542-19549 [2013-07415]
Download as PDF
<![CDATA[
19542
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
entering the comment submissions into
ADAMS.
Dated at Rockville, Maryland, this 26th day
of March 2013.
For the Nuclear Regulatory Commission.
Cindy K. Bladey,
Chief, Rules, Announcements, and Directives
Branch, Division of Administrative Services,
Office of Administration.
[FR Doc. 2013–07437 Filed 3–29–13; 8:45 am]
BILLING CODE 7590–01–P
PENSION BENEFIT GUARANTY
CORPORATION
Proposed Submission of Information
Collection for OMB Review; Comment
Request; Reconsideration of Initial
Determinations
Pension Benefit Guaranty
Corporation.
ACTION: Notice of intent to request
extension of OMB approval of
information collection.
pmangrum on DSK3VPTVN1PROD with NOTICES
AGENCY:
SUMMARY: The Pension Benefit Guaranty
Corporation (‘‘PBGC’’) intends to
request the Office of Management and
Budget (‘‘OMB’’) to extend approval,
under the Paperwork Reduction Act, of
a collection of information under its
regulation on Rules for Administrative
Review of Agency Decisions. This
notice informs the public of PBGC’s
intent and solicits public comment on
the collection of information.
DATES: Comments should be submitted
by May 31, 2013.
ADDRESSES: Comments may be
submitted by any of the following
methods:
Federal eRulemaking Portal: https://
www.regulations.gov. Follow the Web
site instructions for submitting
comments.
Email:
paperwork.comments@pbgc.gov.
Fax: 202–326–4224.
Mail or Hand Delivery: Regulatory
Affairs Group, Office of the General
Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street NW.,
Washington, DC 20005–4026.
PBGC will make all comments
available on its Web site, www.pbgc.gov.
Copies of the collection of
information may also be obtained
without charge by writing to the
Disclosure Division of the Office of the
General Counsel of PBGC at the above
address or by visiting the Disclosure
Division or calling 202–326–4040
during normal business hours. (TTY and
TDD users may call the Federal relay
service toll-free at 1–800–877–8339 and
ask to be connected to 202–326–4040.)
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
PBGC’s regulation on Administrative
Appeals may be accessed on PBGC’s
Web site at www.pbgc.gov.
FOR FURTHER INFORMATION CONTACT:
Catherine B. Klion, Assistant General
Counsel, or Donald McCabe, Attorney,
Regulatory Affairs Group, Office of the
General Counsel, Pension Benefit
Guaranty Corporation, 1200 K Street
NW., Washington, DC 20005–4026, 202–
326–4024. (For TTY and TDD, call 800–
877–8339 and request connection to
202–326–4024.)
SUPPLEMENTARY INFORMATION: PBGC’s
regulation on Rules for Administrative
Review of Agency Decisions (29 CFR
part 4003) prescribes rules governing
the issuance of initial determinations by
PBGC and the procedures for requesting
and obtaining administrative review of
initial determinations through
reconsideration or appeal. Subpart A of
the regulation specifies which initial
determinations are subject to
reconsideration. Subpart C prescribes
rules on who may request
reconsideration, when to make such a
request, where to submit it, form and
content of reconsideration requests, and
other matters relating to
reconsiderations.
Any person aggrieved by an initial
determination of PBGC under
§ 4003.1(b)(1) (determinations that a
plan is covered by section 4021 of
ERISA), § 4003.1(b)(2) (determinations
concerning premiums, interest, and late
payment penalties under section 4007 of
ERISA), § 4003.1(b)(3) (determinations
concerning voluntary terminations),
§ 4003.1(b)(4) (determinations
concerning allocation of assets under
section 4044 of ERISA), or § 4003.1(b)(5)
(determinations with respect to
penalties under section 4071 of ERISA)
may request reconsideration of the
initial determination. Requests for
reconsideration must be in writing, be
clearly designated as requests for
reconsideration, contain a statement of
the grounds for reconsideration and the
relief sought, and contain or reference
all pertinent information.
OMB has approved the
reconsiderations collection of
information under control number
1212–0063 through July 31, 2013. PBGC
intends to request that OMB extend
approval of this collection of
information for three years. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid OMB control
number.
PBGC estimates that an average of
about 700 appellants per year will
respond to this collection of
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
information. PBGC further estimates
that the average annual burden of this
collection of information is about onehalf hour and about $500 per person,
with an average total annual burden of
about 240 hours and about $380,000.
PBGC is soliciting public comments
to—
• Evaluate whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
collection of information, including the
validity of the methodology and
assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Issued in Washington, DC, this 25th day of
March 2013.
Judith Starr,
General Counsel, Pension Benefit Guaranty
Corporation.
[FR Doc. 2013–07468 Filed 3–29–13; 8:45 am]
BILLING CODE 7709–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30436; File No. 812–13848]
Neuberger Berman ETF Trust and
Neuberger Berman Management LLC;
Notice of Application
March 25, 2013.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d) and 22(e) of the
Act and rule 22c–1 under the Act, and
under sections 6(c) and 17(b) of the Act
for an exemption from sections 17(a)(1)
and (2) of the Act, and under section
12(d)(1)(J) of the Act for an exemption
from sections 12(d)(1)(A) and (B) of the
Act.
AGENCY:
Neuberger Berman ETF
Trust (the ‘‘Trust’’) and Neuberger
Berman Management LLC (‘‘NBM’’ or
APPLICANTS:
E:\FR\FM\01APN1.SGM
01APN1
pmangrum on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
‘‘Adviser’’ or ‘‘Distributor’’)
(collectively, the ‘‘Applicants’’).
SUMMARY: Summary of Application:
Applicants request an order that
permits: (a) Series of certain activelymanaged open-end management
investment companies to issue shares
(‘‘Shares’’) redeemable in large
aggregations only (‘‘Creation Units’’); (b)
secondary market transactions in Shares
to occur at negotiated market prices; (c)
certain series to pay redemption
proceeds, under certain circumstances,
more than seven days after the tender of
Shares for redemption; (d) certain
affiliated persons of the series to deposit
securities into, and receive securities
from, the series in connection with the
purchase and redemption of Creation
Units; and (e) certain registered
management investment companies and
unit investment trusts outside of the
same group of investment companies as
the series to acquire Shares.
DATES: Filing Dates: The application
was filed on November 19, 2010, and
amended on April 27, 2011, November
22, 2011, May 15, 2012, October 26,
2012 and March 18, 2013.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
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 April 19, 2013, 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
Commission’s Secretary.
ADDRESSES: Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
Applicants: 605 Third Avenue, New
York, NY 10158.
FOR FURTHER INFORMATION CONTACT: Jean
E. Minarick, Senior Counsel, at (202)
551–6811 or Daniele Marchesani,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Exemptive Applications Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an Applicant using the
Company name box, at https://
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Trust will be registered as an
open-end management investment
company under the Act and is organized
as a Delaware statutory trust. The Trust
will initially offer one series, the
Neuberger Berman Real Return Active
ETF (the ‘‘Initial Fund’’). The
investment objective of the Initial Fund
will be to provide risk-adjusted returns
through investments in U.S. and foreign
equity and fixed income markets. NBM,
a Delaware limited liability company,
will serve as the investment adviser to
the Initial Fund. Each Adviser (as
defined below) is or will be registered
as an investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’).
2. Applicants request that the order
apply to the Initial Fund and any future
series of the Trust or of any other openend management investment company
that is an actively managed exchangetraded fund (‘‘ETF’’) and (a) advised by
NBM or an entity controlling, controlled
by, or under common control with NBM
(an ‘‘NBM Affiliate,’’ and each of NBM
and such NBM Affiliates that serve as an
investment adviser to a Fund, an
‘‘Adviser’’) and (b) complies with the
terms and conditions of the application
(collectively, ‘‘Future Funds,’’ and
together with the Initial Fund, the
‘‘Funds’’).1 An Adviser may enter into
subadvisory agreements with respect to
the management of the Funds with an
NBM Affiliate or other subadviser (each,
a ‘‘Subadviser’’). Any Subadviser will be
registered or not subject to registration
under the Advisers Act. NBM, also a
broker-dealer registered under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’), will serve as the
principal underwriter and distributor of
the Funds’ shares (‘‘Distributor’’). An
NBM Affiliate or another broker-dealer
that is not an NBM Affiliate may serve
as a Fund’s Distributor. Any Distributor
to any Fund will be registered as a
broker-dealer under the Exchange Act.
3. Each Fund will consist of a
portfolio of securities (including equity
securities and/or fixed income
securities), currencies, shares of other
ETFs and shares of money market
mutual funds or other investment
companies that invest primarily in
short-term fixed income securities, and
1 All entities that currently intend to rely on the
order are named as Applicants. Any other entity
that relies on the order in the future will comply
with the terms and conditions of the application.
An Investing Fund (as defined below) may rely on
the order only to invest in Funds and not in any
other registered investment company.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
19543
other assets traded in the U.S. or nonU.S. markets.2 Certain Funds may invest
in equity securities or fixed income
securities traded in international
markets (the ‘‘International Funds’’).
Certain Funds may also invest in
‘‘Depositary Receipts.’’ 3 Certain Funds
may also invest in future ETFs advised
by an Adviser pursuant to section
12(d)(1)(G) of the Act or as otherwise
permissible under section 12(d)(1) of the
Act and the rules thereunder.
4. Applicants anticipate that a
Creation Unit will consist of at least
50,000 Shares and that the price of a
Share will range from $10 and $100. All
orders to purchase Creation Units must
be placed with the Distributor by or
through a party that has entered into a
participant agreement with the Trust,
the Distributor and the transfer agent of
the Trust (‘‘Authorized Participant’’)
with respect to the creation and
redemption of Creation Units. An
Authorized Participant is either: (a) A
broker or dealer registered under the
Exchange Act (‘‘Broker’’) or other
participant in the Continuous Net
Settlement System of the National
Securities Clearing Corporation, a
clearing agency registered with the
Commission and affiliated with the
Depository Trust Company (‘‘DTC’’) or
(b) a participant in DTC (such
participant, ‘‘DTC Participant’’). The
Shares will be purchased and redeemed
in Creation Units and generally on an
in-kind basis. Except where the
purchase or redemption will include
cash under the limited circumstances
specified below, purchasers will be
required to purchase Creation Units by
making an in-kind deposit of specified
instruments (‘‘Deposit Instruments’’),
and shareholders redeeming their
Shares will receive an in-kind transfer
of specified instruments (‘‘Redemption
2 The Fund’s portfolio securities and other assets
and positions are referred to herein as ‘‘Portfolio
Instruments.’’ If a Fund invests in derivatives: (a)
The Board periodically will review and approve (i)
the Fund’s use of derivatives and (ii) how the
Fund’s investment adviser assesses and manages
risk with respect to the Fund’s use of derivatives;
and (b) the Fund’s disclosure of its use of
derivatives in its offering documents and periodic
reports will be consistent with relevant Commission
and staff guidance.
3 Depositary Receipts are typically issued by a
financial institution, a ‘‘depositary,’’ and evidence
ownership in a security or pool of securities that
have been deposited with the depositary. A Fund
will not invest in any Depositary Receipts that the
Adviser or Subadviser deems to be illiquid or for
which pricing information is not readily available.
No affiliated persons of the Applicants, any Future
Fund, Adviser or Subadviser will serve as the
depositary for any Depositary Receipts held by a
Fund.
E:\FR\FM\01APN1.SGM
01APN1
19544
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
pmangrum on DSK3VPTVN1PROD with NOTICES
Instruments’’).4 On any given Business
Day 5 the names and quantities of the
instruments that constitute the Deposit
Instruments and the names and
quantities of the instruments that
constitute the Redemption Instruments
will be identical, and these instruments
may be referred to, in the case of either
a purchase or a redemption, as the
‘‘Creation Basket.’’ In addition, the
Creation Basket will correspond pro rata
to the positions in a Fund’s portfolio
(including cash positions),6 except: (a)
In the case of bonds, for minor
differences when it is impossible to
break up bonds beyond certain
minimum sizes needed for transfer and
settlement; (b) for minor differences
when rounding is necessary to eliminate
fractional shares or lots that are not
tradeable round lots; 7 or (c) TBA
transactions,8 short positions and other
positions that cannot be transferred in
kind 9 will be excluded from the
Creation Basket.10 If there is a difference
between the net asset value (‘‘NAV’’)
attributable to a Creation Unit and the
aggregate market value of the Creation
Basket exchanged for the Creation Unit,
the party conveying instruments with
the lower value will also pay to the
other an amount in cash equal to that
difference (the ‘‘Balancing Amount’’).
5. Purchases and redemptions of
Creation Units may be made in whole or
in part on a cash basis, rather than in
kind solely under the following
circumstances: (a) To the extent there is
4 The Funds must comply with the federal
securities laws in accepting Deposit Instruments
and satisfying redemptions with Redemption
Instruments, including that the Deposit Instruments
and Redemption Instruments are sold in
transactions that would be exempt from registration
under the Securities Act of 1933 (‘‘Securities Act’’).
In accepting Deposit Instruments and satisfying
redemptions with Redemption Instruments that are
restricted securities eligible for resale pursuant to
rule 144A under the Securities Act, the Funds will
comply with the conditions of rule 144A.
5 Each Fund will sell and redeem Creation Units
on any day the Fund is open, including as required
by section 22(e) of the Act (each, a ‘‘Business Day’’).
6 The portfolio used for this purpose will be the
same portfolio used to calculate the Fund’s NAV for
that Business Day.
7 A tradeable round lot for a security will be the
standard unit of trading in that particular type of
security in its primary market.
8 A TBA transaction is a method of trading
mortgage-backed securities. In a TBA transaction,
the buyer and seller agree upon general trade
parameters such as agency, settlement date, par
amount and prices. The actual pools delivered
generally are determined two days prior to the
settlement date.
9 This includes instruments that can be
transferred in kind only with the consent of the
original counterparty to the extent the Fund does
not intend to seek such consents.
10 Because these instruments will be excluded
from the Creation Basket, their value will be
reflected in the determination of the Balancing
Amount (defined below).
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
a Balancing Amount, as described
above; (b) if, on a given Business Day,
a Fund announces before the open of
trading that all purchases, all
redemptions or all purchases and
redemptions on that day will be made
entirely in cash; (c) if, upon receiving a
purchase or redemption order from an
Authorized Participant, a Fund
determines to require the purchase or
redemption, as applicable, to be made
entirely in cash; 11 (d) if, on a given
Business Day, a Fund requires all
Authorized Participants purchasing or
redeeming Shares on that day to deposit
or receive (as applicable) cash in lieu of
some or all of the Deposit Instruments
or Redemption Instruments,
respectively, solely because (i) such
instruments are not eligible for transfer
through either the NSCC Process or DTC
Process; or (ii) in the case of
International Funds, such instruments
are not eligible for trading due to local
trading restrictions, local restrictions on
securities transfers or other similar
circumstances; or (e) if a Fund permits
an Authorized Participant to deposit or
receive (as applicable) cash in lieu of
some or all of the Deposit Instruments
or Redemption Instruments,
respectively, solely because (i) such
instruments are, in the case of the
purchase of a Creation Unit, not
available in sufficient quantity; (ii) such
instruments are not eligible for trading
by an Authorized Participant or the
investor on whose behalf the
Authorized Participant is acting; or (iii)
a holder of Shares of an International
Fund would be subject to unfavorable
income tax treatment if the holder
receives redemption proceeds in kind.12
6. Each Business Day, before the open
of trading on a national securities
exchange, as defined in section 2(a)(26)
of the Act (‘‘Exchange’’), on which
Shares are listed, each Fund will cause
to be published through the NSCC the
names and quantities of the instruments
comprising the Creation Basket, as well
as the estimated Balancing Amount (if
any), for that day. The published
Creation Basket will apply until a new
11 In determining whether a particular Fund will
sell or redeem Creation Units entirely on a cash or
in-kind basis (whether for a given day or a given
order), the key consideration will be the benefit that
would accrue to the Fund and its investors.
Purchases of Creation Units either on an all cash
basis or in-kind are expected to be neutral to the
Funds from a tax perspective. In contrast, cash
redemptions typically require selling portfolio
holdings, which may result in adverse tax
consequences for the remaining Fund shareholders
that would not occur with an in-kind redemption.
As a result, tax considerations may warrant in-kind
redemptions.
12 A ‘‘custom order’’ is any purchase or
redemption of Shares made in whole or in part on
a cash basis in reliance on clause (e)(i) or (e)(ii).
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
Creation Basket is announced on the
following Business Day, and there will
be no intra-day changes to the Creation
Basket except to correct errors in the
published Creation Basket. An Exchange
will disseminate every 15 seconds
throughout the trading day through the
facilities of the Consolidated Tape
Association an amount representing, on
a per Share basis, the sum of the current
value of the Portfolio Instruments that
were publicly disclosed prior to the
commencement of trading in Shares on
the Exchange that day.
7. An investor purchasing or
redeeming a Creation Unit from a Fund
will be charged a fee (‘‘Transaction
Fee’’) to protect existing shareholders of
the Fund from the dilutive costs
associated with the purchase and
redemption of Creation Units.13 All
orders to purchase Creation Units must
be placed with the Distributor by or
through an Authorized Participant and
the Distributor will transmit such orders
to the relevant Fund. The Distributor
also will be responsible for delivering a
prospectus (‘‘Prospectus’’) to those
persons purchasing Creation Units and
for maintaining records of both the
orders placed with it and the
confirmations of acceptance furnished
by it.
8. Shares will be listed and traded at
negotiated prices on an Exchange and
traded in the secondary market.
Applicants expect that Exchange
specialists (‘‘Specialists’’) or market
makers (‘‘Market Makers’’) will be
assigned to Shares. The price of Shares
trading on the Exchange will be based
on a current bid/offer market.
Transactions involving the purchases
and sales of Shares on the secondary
market will be subject to customary
brokerage commissions and charges.
9. Applicants expect that purchasers
of Creation Units will include
institutional investors and arbitrageurs.
Specialists, or Market Makers, acting in
their role to provide a fair and orderly
secondary market for Shares, also may
purchase Creation Units for use in their
own market making activities.14
13 Where a Fund permits an in-kind purchaser to
substitute cash in lieu of depositing one or more of
the Deposit Instruments, the purchaser may be
assessed a higher Transaction Fee to offset the cost
to the Fund of purchasing those particular Deposit
Instruments.
14 If Shares are listed on NASDAQ, no Specialist
will be contractually obligated to make a market in
Shares. Rather, under NASDAQ’s listing
requirements, two or more Market Makers will be
registered as Market Makers in Shares and required
to make a continuous, two-sided market or be
subject to regulatory sanctions. No Market Maker or
Specialist will be an affiliated person, or an
affiliated person of an affiliated person, of the
Funds, except within the meaning of Section
E:\FR\FM\01APN1.SGM
01APN1
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
Applicants expect that secondary
market purchasers of Shares will
include both institutional and retail
investors.15 Applicants expect that
arbitrage opportunities created by the
ability to continually purchase or
redeem Creation Units at their NAV
should ensure that the Shares will not
trade at a material discount or premium
in relation to their NAV.
10. Neither the Trust nor any Fund
will be marketed or otherwise held out
as a ‘‘mutual fund.’’ Instead, each Fund
will be marketed as an ‘‘activelymanaged exchange-traded fund.’’ Any
advertising material where features of
obtaining, buying or selling Creation
Units or Shares traded on the Exchange
are described or refer to redeemability,
will prominently disclose that Shares
are not individually redeemable and
will disclose that the owners of Shares
may acquire those Shares from a Fund
or tender those Shares for redemption to
a Fund in Creation Units only.
11. The Funds’ Web site, which will
be publicly available prior to the public
offering of Shares, will include the
Prospectus and additional quantitative
information updated on a daily basis,
including, on a per Share basis for each
Fund, the prior Business Day’s NAV and
the market closing price or mid-point of
the bid/ask spread at the time of
calculation of such NAV (‘‘Bid/Ask
Price’’), and a calculation of the
premium and discount of the market
closing price or the Bid/Ask Price
against such NAV. On each Business
Day, before commencement of trading in
Shares on the Exchange, the Fund will
disclose on its Web site the identities
and quantities of the Portfolio
Instruments held by the Fund that will
form the basis for the Fund’s calculation
of NAV at the end of the Business Day.16
Applicants’ Legal Analysis
pmangrum on DSK3VPTVN1PROD with NOTICES
1. Applicants request an order under
section 6(c) of the Act granting an
exemption from sections 2(a)(32),
5(a)(1), 22(d) and 22(e) of the Act and
rule 22c-1 under the Act, under sections
6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
2(a)(3)(A) or (C) of the Act due solely to ownership
of Shares as discussed below.
15 Shares will be registered in book-entry form
only. DTC or its nominee will be the registered
owner of all outstanding Shares. Beneficial
ownership of Shares will be shown on the records
of DTC or DTC Participants.
16 Applicants note that under accounting
procedures followed by the Funds, trades made on
the prior Business Day (‘‘T’’) will be booked and
reflected in NAV on the current Business Day (T+1).
Accordingly, the Funds will be able to disclose at
the beginning of the Business Day the portfolio that
will form the basis for the NAV calculation at the
end of the Business Day.
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
(a)(2) of the Act, and under section
12(d)(1)(J) of the Act for an exemption
from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act.
2. Section 6(c) of the Act provides that
the Commission may exempt any
person, security or transaction, or any
class of persons, securities or
transactions, from any provisions of the
Act, if and to the extent that such
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. Section 17(b)
of the Act authorizes the Commission to
exempt a proposed transaction from
section 17(a) of the Act if evidence
establishes that the terms of the
transaction, including the consideration
to be paid or received, are reasonable
and fair and do not involve
overreaching on the part of any person
concerned, and the proposed
transaction is consistent with the
policies of the registered investment
company and the general provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Sections 5(a)(1) and 2(a)(32) of the Act
3. Section 5(a)(1) of the Act defines an
‘‘open-end company’’ as a management
investment company that is offering for
sale or has outstanding any redeemable
security of which it is the issuer.
Section 2(a)(32) of the Act defines a
redeemable security as any security,
other than short-term paper, under the
terms of which the holder, upon its
presentation to the issuer, is entitled to
receive approximately a proportionate
share of the issuer’s current net assets,
or the cash equivalent. Because Shares
will not be individually redeemable,
applicants request an order that would
permit the Trust (and any Fund, if
applicable) to register as an open-end
management investment company and
redeem Shares in Creation Units only.
Applicants state that investors may
purchase Shares in Creation Units from
each Fund and redeem Creation Units
from each Fund. Applicants further
state that because the market price of
Creation Units will be disciplined by
arbitrage opportunities, investors should
be able to sell Shares in the secondary
market at prices that do not vary
materially from their NAV.
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
19545
Section 22(d) of the Act and Rule
22c–1 Under the Act
4. Section 22(d) of the Act, among
other things, prohibits a dealer from
selling a redeemable security, that is
currently being offered to the public by
or through a principal underwriter,
except at a current public offering price
described in the prospectus. Rule 22c–
1 under the Act generally requires that
a dealer selling, redeeming, or
repurchasing a redeemable security do
so only at a price based on its NAV.
Applicants state that secondary market
trading in Shares will take place at
negotiated prices, not at a current
offering price described in the
Prospectus, and not at a price based on
NAV. Thus, purchases and sales of
Shares in the secondary market will not
comply with section 22(d) of the Act
and rule 22c–1 under the Act.
Applicants request an exemption under
section 6(c) from these provisions.
5. Applicants assert that the concerns
sought to be addressed by section 22(d)
of the Act and rule 22c–1 under the Act
with respect to pricing are equally
satisfied by the proposed method of
pricing Shares. Applicants maintain that
while there is little legislative history
regarding section 22(d), its provisions,
as well as those of rule 22c–1, appear to
have been designed to (a) prevent
dilution caused by certain risklesstrading schemes by principal
underwriters and contract dealers, (b)
prevent unjust discrimination or
preferential treatment among buyers
resulting from sales at different prices,
and (c) assure an orderly distribution of
investment company shares by
eliminating price competition from
Brokers offering shares at less than the
published sales price and repurchasing
shares at more than the published
redemption price.
6. Applicants believe that none of
these purposes will be thwarted by
permitting Shares to trade in the
secondary market at negotiated prices.
Applicants state that (a) secondary
market trading in Shares does not
involve the Funds as parties and cannot
result in dilution of an investment in
Shares, and (b) to the extent different
prices exist during a given trading day,
or from day to day, such variances occur
as a result of third-party market forces,
such as supply and demand. Therefore,
applicants assert that secondary market
transactions in Shares will not lead to
discrimination or preferential treatment
among purchasers. Finally, applicants
contend that the proposed distribution
system will be orderly because arbitrage
activity should ensure that the
E:\FR\FM\01APN1.SGM
01APN1
19546
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
difference between the market price of
Shares and their NAV remains narrow.
pmangrum on DSK3VPTVN1PROD with NOTICES
Section 22(e) of the Act
7. Section 22(e) of the Act generally
prohibits a registered investment
company from suspending the right of
redemption or postponing the date of
payment of redemption proceeds for
more than seven days after the tender of
a security for redemption. Applicants
observe that settlement of redemptions
of the International Funds will be
contingent not only on the settlement
cycle of the U.S. securities markets but
also on the delivery cycles present in
foreign markets where the International
Funds invest. Applicants have been
advised that, under certain
circumstances, the delivery cycles for
transferring Redemption Instruments to
redeeming investors, coupled with local
market holiday schedules, will require a
delivery process longer than 7 calendar
days for International Funds. Applicants
therefore request relief from section
22(e) to provide payment or satisfaction
of redemptions within the maximum
number of calendar days required for
such payment or satisfaction in the
principal local markets where
transactions in the Portfolio Instruments
of each International Fund customarily
clear and settle, up to a maximum of 14
calendar days.17 With respect to Future
Funds that are International Funds,
applicants seek the same relief from
section 22(e) only to the extent that
circumstances exist similar to those
described in the application. Except as
set forth in the application or as
disclosed in the SAI for a Fund,
deliveries of redemption proceeds for
International Funds are expected to be
made within seven days.18
8. Applicants submit that Congress
adopted section 22(e) to prevent
unreasonable, undisclosed or
unforeseen delays in the actual payment
of redemption proceeds. Applicants
state that allowing redemption
payments for Creation Units of a Fund
to be made within a maximum of 14
calendar days would not be inconsistent
with the spirit and intent of section
22(e). Applicants are not seeking relief
17 Rule 15c6–1 under the Exchange Act requires
that most transactions be settled within three
business days of the trade date. Applicants
acknowledge that no relief obtained from the
requirements of section 22(e) will affect any
obligations Applicants may have under rule
15c6–1.
18 Applicants state that the SAI will disclose
those local holidays (over the period of at least one
year following the date of the SAI), if any, that are
expected to prevent the delivery of redemption
proceeds in seven calendar days and the maximum
number of days needed to deliver the proceeds for
each International Fund.
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
from section 22(e) with respect to
International Funds that do not effect
creations and redemptions of Creation
Units in-kind.
Section 12(d)(1) of the Act
1. Section 12(d)(1)(A) of the Act
prohibits a registered investment
company from acquiring shares of an
investment company if the securities
represent more than 3% of the total
outstanding voting stock of the acquired
company, more than 5% of the total
assets of the acquiring company, or,
together with the securities of any other
investment companies, more than 10%
of the total assets of the acquiring
company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end
investment company, its principal
underwriter, or any other broker or
dealer from selling its shares to another
investment company if the sale will
cause the acquiring company to own
more than 3% of the acquired
company’s voting stock, or if the sale
will cause more than 10% of the
acquired company’s voting stock to be
owned by investment companies
generally.
2. Applicants request relief to permit
Investing Funds (as defined below) to
acquire Shares in excess of the limits in
section 12(d)(1)(A) of the Act and to
permit the Funds, their principal
underwriters and any Brokers to sell
Shares to Investing Funds in excess of
the limits in section 12(d)(l)(B) of the
Act (‘‘Investing Fund Relief’’).
Applicants request that these
exemptions apply to each management
investment company or unit investment
trust registered under the Act that is not
part of the same ‘‘group of investment
companies’’ as the Funds within the
meaning of section 12(d)(1)(G)(ii) of the
Act and that enters into a Participation
Agreement (as defined below) with a
Fund (such management investment
companies are referred to herein as
‘‘Investing Management Companies,’’
such unit investment trusts are referred
to herein as ‘‘Investing Trusts,’’ and
Investing Management Companies and
Investing Trusts together are referred to
herein as ‘‘Investing Funds’’). Investing
Funds do not include the Funds. Each
Investing Trust will have a sponsor
(‘‘Sponsor’’) and each Investing
Management Company will have an
investment adviser within the meaning
of section 2(a)(20)(A) of the Act
(‘‘Investing Fund Adviser’’) that does
not control, is not controlled by or
under common control with the
Adviser. Each Investing Management
Company may also have one or more
investment advisers within the meaning
of section 2(a)(20)(B) of the Act (each,
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
an ‘‘Investing Fund Subadviser’’).19
Each Investing Fund Adviser and any
Investing Fund Subadviser will be
registered or not subject to registration
as an investment adviser under the
Advisers Act.
3. Applicants submit that the
proposed conditions to the requested
relief are designed to address the
concerns underlying the limits in
section 12(d)(1), which include
concerns about undue influence,
excessive layering of fees and overly
complex structures.
4. Applicants propose a condition to
prohibit an Investing Fund or Investing
Fund Affiliate from causing an
investment by an Investing Fund in a
Fund to influence the terms of services
or transactions between an Investing
Fund an Investing Fund Affiliate and
the Fund or Fund Affiliate.20 Applicants
propose a condition to limit the ability
of the Investing Fund Adviser, Sponsor,
any person controlling, controlled by, or
under common control with such
Adviser or Sponsor, and any investment
company or issuer that would be an
investment company but for sections
3(c)(1) or 3(c)(7) of the Act that is
advised or sponsored by the Investing
Fund Adviser, the Sponsor, or any
person controlling, controlled by, or
under common control with such
Adviser or Sponsor (‘‘Investing Fund’s
Advisory Group’’) from (individually or
in the aggregate) controlling a Fund
within the meaning of section 2(a)(9) of
the Act. The same prohibition would
apply to any Investing Fund Subadviser,
any person controlling, controlled by, or
under common control with the
Investing Fund Subadviser, and any
investment company or issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
(or portion of such investment company
or issuer) advised or sponsored by the
Investing Fund Subadviser, or any
person controlling, controlled by, or
under common control with the
Investing Fund Subadviser (‘‘Investing
Fund’s Subadvisory Group’’).
5. Applicants propose other
conditions to limit the potential for an
Investing Fund and certain affiliates of
an Investing Fund (including
Underwriting Affiliates) to exercise
undue influence over a Fund and
19 An Adviser may serve as subadviser to an
Investing Fund.
20 An ‘‘Investing Fund Affiliate’’ is any Investing
Fund Adviser, Investing Fund Subadviser, Sponsor,
promoter or principal underwriter of an Investing
Fund, and any person controlling, controlled by or
under common control with any of these entities.
‘‘Fund Affiliate’’ is an investment adviser, promoter
or principal underwriter of a Fund or any person
controlling, controlled by or under common control
with any of these entities.
E:\FR\FM\01APN1.SGM
01APN1
pmangrum on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
certain of its affiliates, including that no
Investing Fund or Investing Fund
Affiliate (except to the extent it is acting
in its capacity as an investment adviser
to a Fund) will cause a Fund to
purchase a security in an offering of
securities during the existence of an
underwriting or selling syndicate of
which a principal underwriter is an
Underwriting Affiliate (‘‘Affiliated
Underwriting’’). An ‘‘Underwriting
Affiliate’’ is a principal underwriter in
any underwriting or selling syndicate
that is an officer, director, member of an
advisory board, Investing Fund Adviser,
Investing Fund Subadviser, employee or
Sponsor of the Investing Fund, or a
person of which any such officer,
director, member of an advisory board,
Investing Fund Adviser, Investing Fund
Subadviser, employee or Sponsor is an
affiliated person. An Underwriting
Affiliate does not include any person
whose relationship to the Fund is
covered by section 10(f) of the Act.
6. Applicants propose several
conditions to address the concerns
regarding layering of fees and expenses.
Applicants note that the board of
directors or trustees of any Investing
Management Company, including a
majority of the directors or trustees who
are not ‘‘interested persons’’ within the
meaning of section 2(a)(19) of the Act
(‘‘disinterested directors or trustees’’),
will be required to find that the advisory
fees charged under the contract are
based on services provided that will be
in addition to, rather than duplicative
of, services provided under the advisory
contract of any Fund in which the
Investing Management Company may
invest. In addition, an Investing Fund
Adviser, trustee of an Investing Trust
(‘‘Trustee’’) or Sponsor, as applicable,
will waive fees otherwise payable to it
by the Investing Fund in an amount at
least equal to any compensation
(including fees received pursuant to any
plan adopted by a Fund under rule 12b–
1 under the Act) received from a Fund
by the Investing Fund Adviser, Trustee
or Sponsor or an affiliated person of the
Investing Fund Adviser, Trustee or
Sponsor, other than any advisory fees
paid to the Investing Fund Adviser,
Trustee or Sponsor or its affiliated
person by a Fund, in connection with
the investment by the Investing Fund in
the Fund. Applicants also propose a
condition to prevent any sales charges
or service fees charged with respect to
shares of an Investing Fund from
exceeding the limits applicable to a
fund of funds set forth in NASD
Conduct Rule 2830.21
7. Applicants submit that the
proposed arrangement will not create an
overly complex fund structure.
Applicants note that a Fund will be
prohibited from acquiring securities of
any investment company or company
relying on sections 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent permitted by exemptive
relief from the Commission permitting
the Fund to purchase shares of other
investment companies for short-term
cash management purposes.
8. To ensure that the Investing Funds
understand and comply with the terms
and conditions of the requested order,
any Investing Fund that intends to
invest in a Fund in reliance on the
requested order will be required to enter
into a participation agreement
(‘‘Participation Agreement’’) with the
Fund. The Participation Agreement will
include an acknowledgment from the
Investing Fund that it may rely on the
order only to invest in the Funds and
not in any other investment company.
21 Any references to NASD Conduct Rule 2830
include any successor or replacement rule to NASD
Conduct Rule 2830 that may be adopted by the
Financial Industry Regulatory Authority.
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
Sections 17(a)(1) and (2) of the Act
9. Section 17(a) of the Act generally
prohibits an affiliated person of a
registered investment company, or an
affiliated person of such person
(‘‘second-tier affiliate’’), from selling any
security to or purchasing any security
from the company. Section 2(a)(3) of the
Act defines ‘‘affiliated person’’ to
include any person directly or indirectly
owning, controlling, or holding with
power to vote 5% or more of the
outstanding voting securities of the
other person and any person directly or
indirectly controlling, controlled by, or
under common control with, the other
person. Section 2(a)(9) of the Act
defines ‘‘control’’ as the power to
exercise a controlling influence over the
management or policies of a company
and provides that a control relationship
will be presumed where one person
owns more than 25% of another
person’s voting securities. Each Fund
may be deemed to be controlled by an
Adviser and hence affiliated persons of
each other. In addition, the Funds may
be deemed to be under common control
with any other registered investment
company (or series thereof) advised by
an Adviser (an ‘‘Affiliated Fund’’).
10. Applicants request an exemption
under sections 6(c) and 17(b) of the Act
from sections 17(a)(1) and 17(a)(2) of the
Act to permit in-kind purchases and
redemptions of Creation Units from the
Funds by persons that are affiliated
persons or second tier affiliates of the
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
19547
Funds solely by virtue of one or more
of the following: (a) Holding 5% or
more, or in excess of 25% of the
outstanding Shares of one or more
Funds; (b) having an affiliation with a
person with an ownership interest
described in (a); or (c) holding 5% or
more, or more than 25% of the Shares
of one or more Affiliated Funds.22
Applicants also request an exemption in
order to permit a Fund to sell its Shares
to and redeem its Shares from, and
engage in the transactions that would
accompany such sales and redemptions
with, certain Investing Funds of which
the Funds are affiliated persons or
second-tier affiliates.23
11. Applicants assert that no useful
purpose would be served by prohibiting
such affiliated persons from making inkind purchases or in-kind redemptions
of Shares of a Fund in Creation Units.
Except as described above, the Deposit
Instruments and the Redemption
Instruments will be the same regardless
of the identity of the purchaser or
redeemer, respectively, and will
correspond pro rata to the Fund’s
Portfolio Instruments. Both the deposit
procedures for in-kind purchases of
Creation Units and the redemption
procedures for in-kind redemptions will
be the same for all purchases and
redemptions. Deposit Instruments and
Redemption Instruments will be valued
in the same manner as the Portfolio
Instruments held by the relevant Funds.
Therefore, applicants state that such
valuation method creates no
opportunity for affiliated persons or
second-tier affiliates to effect a
transaction detrimental to other holders
of Shares of that Fund. Applicants also
believe that in-kind purchases and
redemptions will not result in selfdealing or overreaching of any Fund.
12. Applicants also submit that the
sale of Shares to and redemption of
Shares from an Investing Fund meets
the standards for relief under sections
17(b) and 6(c) of the Act. Applicants
22 Applicants are not seeking relief from section
17(a) for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
affiliated person, or an affiliated person of an
affiliated person, of an Investing Fund because the
Adviser to the Funds is also an investment adviser
to an Investing Fund.
23 Applicants believe most Investing Funds will
purchase Shares in the secondary market and will
not purchase Creation Units directly from a Fund.
To the extent that purchases and sales of Shares
occur in the secondary market and not through
principal transactions directly between an Investing
Fund and a Fund, relief from section 17(a) would
not be necessary. However, the requested relief
would apply to direct sales of Shares in Creation
Units by a Fund to an Investing Fund and
redemption of those Shares. The requested relief
also is intended to cover the in-kind transactions
that may accompany such sales and redemptions.
E:\FR\FM\01APN1.SGM
01APN1
19548
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
note that any consideration paid for the
purchase or redemption of Creation
Units directly from a Fund will be based
on the NAV of the Fund in accordance
with policies and procedures set forth in
the Fund’s registration statement.24
Applicants also state that the proposed
transactions are consistent with the
general purposes of the Act and
appropriate in the public interest.
Applicants’ Conditions
The Applicants agree that any order of
the Commission granting the requested
relief will be subject to the following
conditions:
A. ETF Relief
pmangrum on DSK3VPTVN1PROD with NOTICES
1. As long as a Fund operates in
reliance on the requested order, the
Shares of the Fund will be listed on an
Exchange.
2. Neither the Trust nor any Fund will
be advertised or marketed as an openend investment company or a mutual
fund. Any advertising material that
describes the purchase or sale of
Creation Units or refers to redeemability
will prominently disclose that the
Shares are not individually redeemable
and that owners of the Shares may
acquire those Shares from the Fund and
tender those Shares for redemption to
the Fund in Creation Units only.
3. The Web site for the Funds, which
is and will be publicly accessible at no
charge, will contain, on a per Share
basis, for each Fund the prior Business
Day’s NAV and the market closing price
or Bid/Ask Price, and a calculation of
the premium or discount of the market
closing price or Bid/Ask Price against
such NAV.
4. On each Business Day, before
commencement of trading in Shares on
the Exchange, the Fund will disclose on
its Web site the identities and quantities
of the Portfolio Instruments held by the
Fund that will form the basis for the
Fund’s calculation of NAV at the end of
the Business Day.
5. No Adviser or Subadviser, directly
or indirectly, will cause any Authorized
Participant (or any investor on whose
behalf an Authorized Participant may
transact with the Fund) to acquire any
Deposit Instrument for the Fund
through a transaction in which the Fund
could not engage directly.
24 Applicants acknowledge that the receipt of
compensation by (a) an affiliated person of an
Investing Fund, or an affiliated person of such
person, for the purchase by the Investing Fund of
Shares of a Fund or (b) an affiliated person of a
Fund, or an affiliated person of such person, for the
sale by the Fund of its Shares to an Investing Fund,
may be prohibited by section 17(e)(1) of the Act.
The Participation Agreement also will include this
acknowledgment.
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
6. The requested relief to permit ETF
operations will expire on the effective
date of any Commission rule under the
Act that provides relief permitting the
operation of actively managed ETFs.
B. Section 12(d)(1) Relief
1. The members of the Investing
Fund’s Advisory Group will not control
(individually or in the aggregate) a Fund
within the meaning of section 2(a)(9) of
the Act. The members of the Investing
Fund’s Subadvisory Group will not
control (individually or in the aggregate)
a Fund within the meaning of section
2(a)(9) of the Act. If, as a result of a
decrease in the outstanding voting
securities of a Fund, the Investing
Fund’s Advisory Group or the Investing
Fund’s Subadvisory Group, each in the
aggregate, becomes a holder of more
than 25 percent of the outstanding
voting securities of a Fund, it will vote
its Shares of the Fund in the same
proportion as the vote of all other
holders of the Fund’s Shares. This
condition does not apply to the
Investing Fund’s Subadvisory Group
with respect to a Fund for which the
Investing Fund Subadviser or a person
controlling, controlled by or under
common control with the Investing
Fund Subadviser acts as the investment
adviser within the meaning of section
2(a)(20)(A) of the Act.
2. No Investing Fund or Investing
Fund Affiliate will cause any existing or
potential investment by the Investing
Fund in a Fund to influence the terms
of any services or transactions between
the Investing Fund or an Investing Fund
Affiliate and the Fund or a Fund
Affiliate.
3. The board of directors or trustees of
an Investing Management Company,
including a majority of the disinterested
directors or trustees, will adopt
procedures reasonably designed to
ensure that the Investing Fund Adviser
and any Investing Fund Subadviser are
conducting the investment program of
the Investing Management Company
without taking into account any
consideration received by the Investing
Management Company or an Investing
Fund Affiliate from a Fund or a Fund
Affiliate in connection with any services
or transactions.
4. Once an investment by an Investing
Fund in the Shares of a Fund exceeds
the limit in section 12(d)(1)(A)(i) of the
Act, the Board of a Fund, including a
majority of the disinterested Board
members, will determine that any
consideration paid by the Fund to the
Investing Fund or an Investing Fund
Affiliate in connection with any services
or transactions: (i) Is fair and reasonable
in relation to the nature and quality of
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
the services and benefits received by the
Fund; (ii) is within the range of
consideration that the Fund would be
required to pay to another unaffiliated
entity in connection with the same
services or transactions; and (iii) does
not involve overreaching on the part of
any person concerned. This condition
does not apply with respect to any
services or transactions between a Fund
and its investment adviser(s), or any
person controlling, controlled by or
under common control with such
investment adviser(s).
5. The Investing Fund Adviser, or
Trustee or Sponsor, as applicable, will
waive fees otherwise payable to it by the
Investing Fund in an amount at least
equal to any compensation (including
fees received pursuant to any plan
adopted by a Fund under rule 12b–1
under the Act) received from a Fund by
the Investing Fund Adviser, or Trustee
or Sponsor, or an affiliated person of the
Investing Fund Adviser, or Trustee or
Sponsor, other than any advisory fees
paid to the Investing Fund Adviser, or
Trustee or Sponsor, or its affiliated
person by the Fund, in connection with
the investment by the Investing Fund in
the Fund. Any Investing Fund
Subadviser will waive fees otherwise
payable to the Investing Fund
Subadviser, directly or indirectly, by the
Investing Management Company in an
amount at least equal to any
compensation received from a Fund by
the Investing Fund Subadviser, or an
affiliated person of the Investing Fund
Subadviser, other than any advisory fees
paid to the Investing Fund Subadviser
or its affiliated person by the Fund, in
connection with the investment by the
Investing Management Company in the
Fund made at the direction of the
Investing Fund Subadviser. In the event
that the Investing Fund Subadviser
waives fees, the benefit of the waiver
will be passed through to the Investing
Management Company.
6. No Investing Fund or Investing
Fund Affiliate (except to the extent it is
acting in its capacity as an investment
adviser to a Fund) will cause a Fund to
purchase a security in an Affiliated
Underwriting.
7. The Board of a Fund, including a
majority of the disinterested Board
members, will adopt procedures
reasonably designed to monitor any
purchases of securities by the Fund in
an Affiliated Underwriting, once an
investment by an Investing Fund in the
securities of the Fund exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly
from an Underwriting Affiliate. The
Board will review these purchases
periodically, but no less frequently than
E:\FR\FM\01APN1.SGM
01APN1
pmangrum on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Notices
annually, to determine whether the
purchases were influenced by the
investment by the Investing Fund in the
Fund. The Board will consider, among
other things: (a) Whether the purchases
were consistent with the investment
objectives and policies of the Fund; (b)
how the performance of securities
purchased in an Affiliated Underwriting
compares to the performance of
comparable securities purchased during
a comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (c)
whether the amount of securities
purchased by the Fund in Affiliated
Underwritings and the amount
purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board will take any appropriate actions
based on its review, including, if
appropriate, the institution of
procedures designed to assure that
purchases of securities in Affiliated
Underwritings are in the best interest of
shareholders of the Fund.
8. Each Fund will maintain and
preserve permanently in an easily
accessible place a written copy of the
procedures described in the preceding
condition, and any modifications to
such procedures, and will maintain and
preserve for a period of not less than six
years from the end of the fiscal year in
which any purchase in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in Affiliated Underwritings
once an investment by an Investing
Fund in the securities of the Fund
exceeds the limit of section
12(d)(1)(A)(i) of the Act, setting forth
from whom the securities were
acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase, and the
information or materials upon which
the Board’s determinations were made.
9. Before investing in a Fund in
excess of the limit in section
12(d)(1)(A), an Investing Fund will
execute a Participation Agreement with
the Fund stating, without limitation,
that their respective boards of directors
or trustees and their investment
advisers, or Trustee and Sponsor, as
applicable, understand the terms and
conditions of the order, and agree to
fulfill their responsibilities under the
order. At the time of its investment in
Shares of a Fund in excess of the limit
in section 12(d)(1)(A)(i), an Investing
Fund will notify the Fund of the
investment. At such time, the Investing
Fund will also transmit to the Fund a
list of the names of each Investing Fund
VerDate Mar<15>2010
15:34 Mar 29, 2013
Jkt 229001
Affiliate and Underwriting Affiliate. The
Investing Fund will notify the Fund of
any changes to the list as soon as
reasonably practicable after a change
occurs. The Fund and the Investing
Fund will maintain and preserve a copy
of the order, the Participation
Agreement, and the list with any
updated information for the duration of
the investment and for a period of not
less than six years thereafter, the first
two years in an easily accessible place.
10. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company,
including a majority of the disinterested
directors or trustees, will find that the
advisory fees charged under such
contract are based on services provided
that will be in addition to, rather than
duplicative of, the services provided
under the advisory contract(s) of any
Fund in which the Investing
Management Company may invest.
These findings and their basis will be
recorded fully in the minute books of
the appropriate Investing Management
Company.
11. Any sales charges and/or service
fees charged with respect to shares of an
Investing Fund will not exceed the
limits applicable to a fund of funds as
set forth in NASD Conduct Rule 2830.
12. No Fund relying on the section
12(d)(1) Relief will acquire securities of
any investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent permitted by exemptive
relief from the Commission permitting
the Fund to purchase shares of other
investment companies for short-term
cash management purposes.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–07415 Filed 3–29–13; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, April 4, 2013 at 3:45 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
Frm 00106
Fmt 4703
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matters at the Closed
Meeting.
Commissioner Paredes, as duty
officer, voted to consider the items
listed for the Closed Meeting in a closed
session.
The subject matter of the Closed
Meeting will be:
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings;
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: March 28, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–07637 Filed 3–28–13; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69236; File No. SR–
NASDAQ–2013–049]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Fees and Rebates for Mini Options
March 26, 2013.
BILLING CODE 8011–01–P
PO 00000
19549
Sfmt 4703
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that, on March
15, 2013, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
1 15
2 17
E:\FR\FM\01APN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
01APN1
]]>Agencies
[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Notices]
[Pages 19542-19549]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07415]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30436; File No. 812-13848]
Neuberger Berman ETF Trust and Neuberger Berman Management LLC;
Notice of Application
March 25, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (``Act'') for an exemption from sections
2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the
Act, and under sections 6(c) and 17(b) of the Act for an exemption from
sections 17(a)(1) and (2) of the Act, and under section 12(d)(1)(J) of
the Act for an exemption from sections 12(d)(1)(A) and (B) of the Act.
-----------------------------------------------------------------------
Applicants: Neuberger Berman ETF Trust (the ``Trust'') and Neuberger
Berman Management LLC (``NBM'' or
[[Page 19543]]
``Adviser'' or ``Distributor'') (collectively, the ``Applicants'').
SUMMARY: Summary of Application: Applicants request an order that
permits: (a) Series of certain actively-managed open-end management
investment companies to issue shares (``Shares'') redeemable in large
aggregations only (``Creation Units''); (b) secondary market
transactions in Shares to occur at negotiated market prices; (c)
certain series to pay redemption proceeds, under certain circumstances,
more than seven days after the tender of Shares for redemption; (d)
certain affiliated persons of the series to deposit securities into,
and receive securities from, the series in connection with the purchase
and redemption of Creation Units; and (e) certain registered management
investment companies and unit investment trusts outside of the same
group of investment companies as the series to acquire Shares.
DATES: Filing Dates: The application was filed on November 19, 2010,
and amended on April 27, 2011, November 22, 2011, May 15, 2012, October
26, 2012 and March 18, 2013.
Hearing or Notification of Hearing: An order granting the requested
relief 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 April 19, 2013, 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 Commission's Secretary.
ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants:
605 Third Avenue, New York, NY 10158.
FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811 or Daniele Marchesani, Branch Chief, at (202) 551-6821
(Division of Investment Management, Exemptive Applications Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an Applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. The Trust will be registered as an open-end management
investment company under the Act and is organized as a Delaware
statutory trust. The Trust will initially offer one series, the
Neuberger Berman Real Return Active ETF (the ``Initial Fund''). The
investment objective of the Initial Fund will be to provide risk-
adjusted returns through investments in U.S. and foreign equity and
fixed income markets. NBM, a Delaware limited liability company, will
serve as the investment adviser to the Initial Fund. Each Adviser (as
defined below) is or will be registered as an investment adviser under
the Investment Advisers Act of 1940 (``Advisers Act'').
2. Applicants request that the order apply to the Initial Fund and
any future series of the Trust or of any other open-end management
investment company that is an actively managed exchange-traded fund
(``ETF'') and (a) advised by NBM or an entity controlling, controlled
by, or under common control with NBM (an ``NBM Affiliate,'' and each of
NBM and such NBM Affiliates that serve as an investment adviser to a
Fund, an ``Adviser'') and (b) complies with the terms and conditions of
the application (collectively, ``Future Funds,'' and together with the
Initial Fund, the ``Funds'').\1\ An Adviser may enter into subadvisory
agreements with respect to the management of the Funds with an NBM
Affiliate or other subadviser (each, a ``Subadviser''). Any Subadviser
will be registered or not subject to registration under the Advisers
Act. NBM, also a broker-dealer registered under the Securities Exchange
Act of 1934 (``Exchange Act''), will serve as the principal underwriter
and distributor of the Funds' shares (``Distributor''). An NBM
Affiliate or another broker-dealer that is not an NBM Affiliate may
serve as a Fund's Distributor. Any Distributor to any Fund will be
registered as a broker-dealer under the Exchange Act.
---------------------------------------------------------------------------
\1\ All entities that currently intend to rely on the order are
named as Applicants. Any other entity that relies on the order in
the future will comply with the terms and conditions of the
application. An Investing Fund (as defined below) may rely on the
order only to invest in Funds and not in any other registered
investment company.
---------------------------------------------------------------------------
3. Each Fund will consist of a portfolio of securities (including
equity securities and/or fixed income securities), currencies, shares
of other ETFs and shares of money market mutual funds or other
investment companies that invest primarily in short-term fixed income
securities, and other assets traded in the U.S. or non-U.S. markets.\2\
Certain Funds may invest in equity securities or fixed income
securities traded in international markets (the ``International
Funds''). Certain Funds may also invest in ``Depositary Receipts.'' \3\
Certain Funds may also invest in future ETFs advised by an Adviser
pursuant to section 12(d)(1)(G) of the Act or as otherwise permissible
under section 12(d)(1) of the Act and the rules thereunder.
---------------------------------------------------------------------------
\2\ The Fund's portfolio securities and other assets and
positions are referred to herein as ``Portfolio Instruments.'' If a
Fund invests in derivatives: (a) The Board periodically will review
and approve (i) the Fund's use of derivatives and (ii) how the
Fund's investment adviser assesses and manages risk with respect to
the Fund's use of derivatives; and (b) the Fund's disclosure of its
use of derivatives in its offering documents and periodic reports
will be consistent with relevant Commission and staff guidance.
\3\ Depositary Receipts are typically issued by a financial
institution, a ``depositary,'' and evidence ownership in a security
or pool of securities that have been deposited with the depositary.
A Fund will not invest in any Depositary Receipts that the Adviser
or Subadviser deems to be illiquid or for which pricing information
is not readily available. No affiliated persons of the Applicants,
any Future Fund, Adviser or Subadviser will serve as the depositary
for any Depositary Receipts held by a Fund.
---------------------------------------------------------------------------
4. Applicants anticipate that a Creation Unit will consist of at
least 50,000 Shares and that the price of a Share will range from $10
and $100. All orders to purchase Creation Units must be placed with the
Distributor by or through a party that has entered into a participant
agreement with the Trust, the Distributor and the transfer agent of the
Trust (``Authorized Participant'') with respect to the creation and
redemption of Creation Units. An Authorized Participant is either: (a)
A broker or dealer registered under the Exchange Act (``Broker'') or
other participant in the Continuous Net Settlement System of the
National Securities Clearing Corporation, a clearing agency registered
with the Commission and affiliated with the Depository Trust Company
(``DTC'') or (b) a participant in DTC (such participant, ``DTC
Participant''). The Shares will be purchased and redeemed in Creation
Units and generally on an in-kind basis. Except where the purchase or
redemption will include cash under the limited circumstances specified
below, purchasers will be required to purchase Creation Units by making
an in-kind deposit of specified instruments (``Deposit Instruments''),
and shareholders redeeming their Shares will receive an in-kind
transfer of specified instruments (``Redemption
[[Page 19544]]
Instruments'').\4\ On any given Business Day \5\ the names and
quantities of the instruments that constitute the Deposit Instruments
and the names and quantities of the instruments that constitute the
Redemption Instruments will be identical, and these instruments may be
referred to, in the case of either a purchase or a redemption, as the
``Creation Basket.'' In addition, the Creation Basket will correspond
pro rata to the positions in a Fund's portfolio (including cash
positions),\6\ except: (a) In the case of bonds, for minor differences
when it is impossible to break up bonds beyond certain minimum sizes
needed for transfer and settlement; (b) for minor differences when
rounding is necessary to eliminate fractional shares or lots that are
not tradeable round lots; \7\ or (c) TBA transactions,\8\ short
positions and other positions that cannot be transferred in kind \9\
will be excluded from the Creation Basket.\10\ If there is a difference
between the net asset value (``NAV'') attributable to a Creation Unit
and the aggregate market value of the Creation Basket exchanged for the
Creation Unit, the party conveying instruments with the lower value
will also pay to the other an amount in cash equal to that difference
(the ``Balancing Amount'').
---------------------------------------------------------------------------
\4\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the Securities Act of 1933 (``Securities
Act''). In accepting Deposit Instruments and satisfying redemptions
with Redemption Instruments that are restricted securities eligible
for resale pursuant to rule 144A under the Securities Act, the Funds
will comply with the conditions of rule 144A.
\5\ Each Fund will sell and redeem Creation Units on any day the
Fund is open, including as required by section 22(e) of the Act
(each, a ``Business Day'').
\6\ The portfolio used for this purpose will be the same
portfolio used to calculate the Fund's NAV for that Business Day.
\7\ A tradeable round lot for a security will be the standard
unit of trading in that particular type of security in its primary
market.
\8\ A TBA transaction is a method of trading mortgage-backed
securities. In a TBA transaction, the buyer and seller agree upon
general trade parameters such as agency, settlement date, par amount
and prices. The actual pools delivered generally are determined two
days prior to the settlement date.
\9\ This includes instruments that can be transferred in kind
only with the consent of the original counterparty to the extent the
Fund does not intend to seek such consents.
\10\ Because these instruments will be excluded from the
Creation Basket, their value will be reflected in the determination
of the Balancing Amount (defined below).
---------------------------------------------------------------------------
5. Purchases and redemptions of Creation Units may be made in whole
or in part on a cash basis, rather than in kind solely under the
following circumstances: (a) To the extent there is a Balancing Amount,
as described above; (b) if, on a given Business Day, a Fund announces
before the open of trading that all purchases, all redemptions or all
purchases and redemptions on that day will be made entirely in cash;
(c) if, upon receiving a purchase or redemption order from an
Authorized Participant, a Fund determines to require the purchase or
redemption, as applicable, to be made entirely in cash; \11\ (d) if, on
a given Business Day, a Fund requires all Authorized Participants
purchasing or redeeming Shares on that day to deposit or receive (as
applicable) cash in lieu of some or all of the Deposit Instruments or
Redemption Instruments, respectively, solely because (i) such
instruments are not eligible for transfer through either the NSCC
Process or DTC Process; or (ii) in the case of International Funds,
such instruments are not eligible for trading due to local trading
restrictions, local restrictions on securities transfers or other
similar circumstances; or (e) if a Fund permits an Authorized
Participant to deposit or receive (as applicable) cash in lieu of some
or all of the Deposit Instruments or Redemption Instruments,
respectively, solely because (i) such instruments are, in the case of
the purchase of a Creation Unit, not available in sufficient quantity;
(ii) such instruments are not eligible for trading by an Authorized
Participant or the investor on whose behalf the Authorized Participant
is acting; or (iii) a holder of Shares of an International Fund would
be subject to unfavorable income tax treatment if the holder receives
redemption proceeds in kind.\12\
---------------------------------------------------------------------------
\11\ In determining whether a particular Fund will sell or
redeem Creation Units entirely on a cash or in-kind basis (whether
for a given day or a given order), the key consideration will be the
benefit that would accrue to the Fund and its investors. Purchases
of Creation Units either on an all cash basis or in-kind are
expected to be neutral to the Funds from a tax perspective. In
contrast, cash redemptions typically require selling portfolio
holdings, which may result in adverse tax consequences for the
remaining Fund shareholders that would not occur with an in-kind
redemption. As a result, tax considerations may warrant in-kind
redemptions.
\12\ A ``custom order'' is any purchase or redemption of Shares
made in whole or in part on a cash basis in reliance on clause
(e)(i) or (e)(ii).
---------------------------------------------------------------------------
6. Each Business Day, before the open of trading on a national
securities exchange, as defined in section 2(a)(26) of the Act
(``Exchange''), on which Shares are listed, each Fund will cause to be
published through the NSCC the names and quantities of the instruments
comprising the Creation Basket, as well as the estimated Balancing
Amount (if any), for that day. The published Creation Basket will apply
until a new Creation Basket is announced on the following Business Day,
and there will be no intra-day changes to the Creation Basket except to
correct errors in the published Creation Basket. An Exchange will
disseminate every 15 seconds throughout the trading day through the
facilities of the Consolidated Tape Association an amount representing,
on a per Share basis, the sum of the current value of the Portfolio
Instruments that were publicly disclosed prior to the commencement of
trading in Shares on the Exchange that day.
7. An investor purchasing or redeeming a Creation Unit from a Fund
will be charged a fee (``Transaction Fee'') to protect existing
shareholders of the Fund from the dilutive costs associated with the
purchase and redemption of Creation Units.\13\ All orders to purchase
Creation Units must be placed with the Distributor by or through an
Authorized Participant and the Distributor will transmit such orders to
the relevant Fund. The Distributor also will be responsible for
delivering a prospectus (``Prospectus'') to those persons purchasing
Creation Units and for maintaining records of both the orders placed
with it and the confirmations of acceptance furnished by it.
---------------------------------------------------------------------------
\13\ Where a Fund permits an in-kind purchaser to substitute
cash in lieu of depositing one or more of the Deposit Instruments,
the purchaser may be assessed a higher Transaction Fee to offset the
cost to the Fund of purchasing those particular Deposit Instruments.
---------------------------------------------------------------------------
8. Shares will be listed and traded at negotiated prices on an
Exchange and traded in the secondary market. Applicants expect that
Exchange specialists (``Specialists'') or market makers (``Market
Makers'') will be assigned to Shares. The price of Shares trading on
the Exchange will be based on a current bid/offer market. Transactions
involving the purchases and sales of Shares on the secondary market
will be subject to customary brokerage commissions and charges.
9. Applicants expect that purchasers of Creation Units will include
institutional investors and arbitrageurs. Specialists, or Market
Makers, acting in their role to provide a fair and orderly secondary
market for Shares, also may purchase Creation Units for use in their
own market making activities.\14\
[[Page 19545]]
Applicants expect that secondary market purchasers of Shares will
include both institutional and retail investors.\15\ Applicants expect
that arbitrage opportunities created by the ability to continually
purchase or redeem Creation Units at their NAV should ensure that the
Shares will not trade at a material discount or premium in relation to
their NAV.
---------------------------------------------------------------------------
\14\ If Shares are listed on NASDAQ, no Specialist will be
contractually obligated to make a market in Shares. Rather, under
NASDAQ's listing requirements, two or more Market Makers will be
registered as Market Makers in Shares and required to make a
continuous, two-sided market or be subject to regulatory sanctions.
No Market Maker or Specialist will be an affiliated person, or an
affiliated person of an affiliated person, of the Funds, except
within the meaning of Section 2(a)(3)(A) or (C) of the Act due
solely to ownership of Shares as discussed below.
\15\ Shares will be registered in book-entry form only. DTC or
its nominee will be the registered owner of all outstanding Shares.
Beneficial ownership of Shares will be shown on the records of DTC
or DTC Participants.
---------------------------------------------------------------------------
10. Neither the Trust nor any Fund will be marketed or otherwise
held out as a ``mutual fund.'' Instead, each Fund will be marketed as
an ``actively-managed exchange-traded fund.'' Any advertising material
where features of obtaining, buying or selling Creation Units or Shares
traded on the Exchange are described or refer to redeemability, will
prominently disclose that Shares are not individually redeemable and
will disclose that the owners of Shares may acquire those Shares from a
Fund or tender those Shares for redemption to a Fund in Creation Units
only.
11. The Funds' Web site, which will be publicly available prior to
the public offering of Shares, will include the Prospectus and
additional quantitative information updated on a daily basis,
including, on a per Share basis for each Fund, the prior Business Day's
NAV and the market closing price or mid-point of the bid/ask spread at
the time of calculation of such NAV (``Bid/Ask Price''), and a
calculation of the premium and discount of the market closing price or
the Bid/Ask Price against such NAV. On each Business Day, before
commencement of trading in Shares on the Exchange, the Fund will
disclose on its Web site the identities and quantities of the Portfolio
Instruments held by the Fund that will form the basis for the Fund's
calculation of NAV at the end of the Business Day.\16\
---------------------------------------------------------------------------
\16\ Applicants note that under accounting procedures followed
by the Funds, trades made on the prior Business Day (``T'') will be
booked and reflected in NAV on the current Business Day (T+1).
Accordingly, the Funds will be able to disclose at the beginning of
the Business Day the portfolio that will form the basis for the NAV
calculation at the end of the Business Day.
---------------------------------------------------------------------------
Applicants' Legal Analysis
1. Applicants request an order under section 6(c) of the Act
granting an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e)
of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b)
of the Act for an exemption from sections 17(a)(1) and (a)(2) of the
Act, and under section 12(d)(1)(J) of the Act for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of the Act.
2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provisions of the Act, if and to
the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and the proposed transaction is
consistent with the policies of the registered investment company and
the general provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Sections 5(a)(1) and 2(a)(32) of the Act
3. Section 5(a)(1) of the Act defines an ``open-end company'' as a
management investment company that is offering for sale or has
outstanding any redeemable security of which it is the issuer. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the holder, upon
its presentation to the issuer, is entitled to receive approximately a
proportionate share of the issuer's current net assets, or the cash
equivalent. Because Shares will not be individually redeemable,
applicants request an order that would permit the Trust (and any Fund,
if applicable) to register as an open-end management investment company
and redeem Shares in Creation Units only. Applicants state that
investors may purchase Shares in Creation Units from each Fund and
redeem Creation Units from each Fund. Applicants further state that
because the market price of Creation Units will be disciplined by
arbitrage opportunities, investors should be able to sell Shares in the
secondary market at prices that do not vary materially from their NAV.
Section 22(d) of the Act and Rule 22c-1 Under the Act
4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security, that is currently being offered to
the public by or through a principal underwriter, except at a current
public offering price described in the prospectus. Rule 22c-1 under the
Act generally requires that a dealer selling, redeeming, or
repurchasing a redeemable security do so only at a price based on its
NAV. Applicants state that secondary market trading in Shares will take
place at negotiated prices, not at a current offering price described
in the Prospectus, and not at a price based on NAV. Thus, purchases and
sales of Shares in the secondary market will not comply with section
22(d) of the Act and rule 22c-1 under the Act. Applicants request an
exemption under section 6(c) from these provisions.
5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Shares.
Applicants maintain that while there is little legislative history
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by
certain riskless-trading schemes by principal underwriters and contract
dealers, (b) prevent unjust discrimination or preferential treatment
among buyers resulting from sales at different prices, and (c) assure
an orderly distribution of investment company shares by eliminating
price competition from Brokers offering shares at less than the
published sales price and repurchasing shares at more than the
published redemption price.
6. Applicants believe that none of these purposes will be thwarted
by permitting Shares to trade in the secondary market at negotiated
prices. Applicants state that (a) secondary market trading in Shares
does not involve the Funds as parties and cannot result in dilution of
an investment in Shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
Shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants contend that the proposed distribution
system will be orderly because arbitrage activity should ensure that
the
[[Page 19546]]
difference between the market price of Shares and their NAV remains
narrow.
Section 22(e) of the Act
7. Section 22(e) of the Act generally prohibits a registered
investment company from suspending the right of redemption or
postponing the date of payment of redemption proceeds for more than
seven days after the tender of a security for redemption. Applicants
observe that settlement of redemptions of the International Funds will
be contingent not only on the settlement cycle of the U.S. securities
markets but also on the delivery cycles present in foreign markets
where the International Funds invest. Applicants have been advised
that, under certain circumstances, the delivery cycles for transferring
Redemption Instruments to redeeming investors, coupled with local
market holiday schedules, will require a delivery process longer than 7
calendar days for International Funds. Applicants therefore request
relief from section 22(e) to provide payment or satisfaction of
redemptions within the maximum number of calendar days required for
such payment or satisfaction in the principal local markets where
transactions in the Portfolio Instruments of each International Fund
customarily clear and settle, up to a maximum of 14 calendar days.\17\
With respect to Future Funds that are International Funds, applicants
seek the same relief from section 22(e) only to the extent that
circumstances exist similar to those described in the application.
Except as set forth in the application or as disclosed in the SAI for a
Fund, deliveries of redemption proceeds for International Funds are
expected to be made within seven days.\18\
---------------------------------------------------------------------------
\17\ Rule 15c6-1 under the Exchange Act requires that most
transactions be settled within three business days of the trade
date. Applicants acknowledge that no relief obtained from the
requirements of section 22(e) will affect any obligations Applicants
may have under rule 15c6-1.
\18\ Applicants state that the SAI will disclose those local
holidays (over the period of at least one year following the date of
the SAI), if any, that are expected to prevent the delivery of
redemption proceeds in seven calendar days and the maximum number of
days needed to deliver the proceeds for each International Fund.
---------------------------------------------------------------------------
8. Applicants submit that Congress adopted section 22(e) to prevent
unreasonable, undisclosed or unforeseen delays in the actual payment of
redemption proceeds. Applicants state that allowing redemption payments
for Creation Units of a Fund to be made within a maximum of 14 calendar
days would not be inconsistent with the spirit and intent of section
22(e). Applicants are not seeking relief from section 22(e) with
respect to International Funds that do not effect creations and
redemptions of Creation Units in-kind.
Section 12(d)(1) of the Act
1. Section 12(d)(1)(A) of the Act prohibits a registered investment
company from acquiring shares of an investment company if the
securities represent more than 3% of the total outstanding voting stock
of the acquired company, more than 5% of the total assets of the
acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter, or
any other broker or dealer from selling its shares to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or if the sale
will cause more than 10% of the acquired company's voting stock to be
owned by investment companies generally.
2. Applicants request relief to permit Investing Funds (as defined
below) to acquire Shares in excess of the limits in section 12(d)(1)(A)
of the Act and to permit the Funds, their principal underwriters and
any Brokers to sell Shares to Investing Funds in excess of the limits
in section 12(d)(l)(B) of the Act (``Investing Fund Relief'').
Applicants request that these exemptions apply to each management
investment company or unit investment trust registered under the Act
that is not part of the same ``group of investment companies'' as the
Funds within the meaning of section 12(d)(1)(G)(ii) of the Act and that
enters into a Participation Agreement (as defined below) with a Fund
(such management investment companies are referred to herein as
``Investing Management Companies,'' such unit investment trusts are
referred to herein as ``Investing Trusts,'' and Investing Management
Companies and Investing Trusts together are referred to herein as
``Investing Funds''). Investing Funds do not include the Funds. Each
Investing Trust will have a sponsor (``Sponsor'') and each Investing
Management Company will have an investment adviser within the meaning
of section 2(a)(20)(A) of the Act (``Investing Fund Adviser'') that
does not control, is not controlled by or under common control with the
Adviser. Each Investing Management Company may also have one or more
investment advisers within the meaning of section 2(a)(20)(B) of the
Act (each, an ``Investing Fund Subadviser'').\19\ Each Investing Fund
Adviser and any Investing Fund Subadviser will be registered or not
subject to registration as an investment adviser under the Advisers
Act.
---------------------------------------------------------------------------
\19\ An Adviser may serve as subadviser to an Investing Fund.
---------------------------------------------------------------------------
3. Applicants submit that the proposed conditions to the requested
relief are designed to address the concerns underlying the limits in
section 12(d)(1), which include concerns about undue influence,
excessive layering of fees and overly complex structures.
4. Applicants propose a condition to prohibit an Investing Fund or
Investing Fund Affiliate from causing an investment by an Investing
Fund in a Fund to influence the terms of services or transactions
between an Investing Fund an Investing Fund Affiliate and the Fund or
Fund Affiliate.\20\ Applicants propose a condition to limit the ability
of the Investing Fund Adviser, Sponsor, any person controlling,
controlled by, or under common control with such Adviser or Sponsor,
and any investment company or issuer that would be an investment
company but for sections 3(c)(1) or 3(c)(7) of the Act that is advised
or sponsored by the Investing Fund Adviser, the Sponsor, or any person
controlling, controlled by, or under common control with such Adviser
or Sponsor (``Investing Fund's Advisory Group'') from (individually or
in the aggregate) controlling a Fund within the meaning of section
2(a)(9) of the Act. The same prohibition would apply to any Investing
Fund Subadviser, any person controlling, controlled by, or under common
control with the Investing Fund Subadviser, and any investment company
or issuer that would be an investment company but for section 3(c)(1)
or 3(c)(7) of the Act (or portion of such investment company or issuer)
advised or sponsored by the Investing Fund Subadviser, or any person
controlling, controlled by, or under common control with the Investing
Fund Subadviser (``Investing Fund's Subadvisory Group'').
---------------------------------------------------------------------------
\20\ An ``Investing Fund Affiliate'' is any Investing Fund
Adviser, Investing Fund Subadviser, Sponsor, promoter or principal
underwriter of an Investing Fund, and any person controlling,
controlled by or under common control with any of these entities.
``Fund Affiliate'' is an investment adviser, promoter or principal
underwriter of a Fund or any person controlling, controlled by or
under common control with any of these entities.
---------------------------------------------------------------------------
5. Applicants propose other conditions to limit the potential for
an Investing Fund and certain affiliates of an Investing Fund
(including Underwriting Affiliates) to exercise undue influence over a
Fund and
[[Page 19547]]
certain of its affiliates, including that no Investing Fund or
Investing Fund Affiliate (except to the extent it is acting in its
capacity as an investment adviser to a Fund) will cause a Fund to
purchase a security in an offering of securities during the existence
of an underwriting or selling syndicate of which a principal
underwriter is an Underwriting Affiliate (``Affiliated Underwriting'').
An ``Underwriting Affiliate'' is a principal underwriter in any
underwriting or selling syndicate that is an officer, director, member
of an advisory board, Investing Fund Adviser, Investing Fund
Subadviser, employee or Sponsor of the Investing Fund, or a person of
which any such officer, director, member of an advisory board,
Investing Fund Adviser, Investing Fund Subadviser, employee or Sponsor
is an affiliated person. An Underwriting Affiliate does not include any
person whose relationship to the Fund is covered by section 10(f) of
the Act.
6. Applicants propose several conditions to address the concerns
regarding layering of fees and expenses. Applicants note that the board
of directors or trustees of any Investing Management Company, including
a majority of the directors or trustees who are not ``interested
persons'' within the meaning of section 2(a)(19) of the Act
(``disinterested directors or trustees''), will be required to find
that the advisory fees charged under the contract are based on services
provided that will be in addition to, rather than duplicative of,
services provided under the advisory contract of any Fund in which the
Investing Management Company may invest. In addition, an Investing Fund
Adviser, trustee of an Investing Trust (``Trustee'') or Sponsor, as
applicable, will waive fees otherwise payable to it by the Investing
Fund in an amount at least equal to any compensation (including fees
received pursuant to any plan adopted by a Fund under rule 12b-1 under
the Act) received from a Fund by the Investing Fund Adviser, Trustee or
Sponsor or an affiliated person of the Investing Fund Adviser, Trustee
or Sponsor, other than any advisory fees paid to the Investing Fund
Adviser, Trustee or Sponsor or its affiliated person by a Fund, in
connection with the investment by the Investing Fund in the Fund.
Applicants also propose a condition to prevent any sales charges or
service fees charged with respect to shares of an Investing Fund from
exceeding the limits applicable to a fund of funds set forth in NASD
Conduct Rule 2830.\21\
---------------------------------------------------------------------------
\21\ Any references to NASD Conduct Rule 2830 include any
successor or replacement rule to NASD Conduct Rule 2830 that may be
adopted by the Financial Industry Regulatory Authority.
---------------------------------------------------------------------------
7. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that a Fund will be
prohibited from acquiring securities of any investment company or
company relying on sections 3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section 12(d)(1)(A) of the Act, except to the
extent permitted by exemptive relief from the Commission permitting the
Fund to purchase shares of other investment companies for short-term
cash management purposes.
8. To ensure that the Investing Funds understand and comply with
the terms and conditions of the requested order, any Investing Fund
that intends to invest in a Fund in reliance on the requested order
will be required to enter into a participation agreement
(``Participation Agreement'') with the Fund. The Participation
Agreement will include an acknowledgment from the Investing Fund that
it may rely on the order only to invest in the Funds and not in any
other investment company.
Sections 17(a)(1) and (2) of the Act
9. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such person (``second-tier affiliate''), from selling any security to
or purchasing any security from the company. Section 2(a)(3) of the Act
defines ``affiliated person'' to include any person directly or
indirectly owning, controlling, or holding with power to vote 5% or
more of the outstanding voting securities of the other person and any
person directly or indirectly controlling, controlled by, or under
common control with, the other person. Section 2(a)(9) of the Act
defines ``control'' as the power to exercise a controlling influence
over the management or policies of a company and provides that a
control relationship will be presumed where one person owns more than
25% of another person's voting securities. Each Fund may be deemed to
be controlled by an Adviser and hence affiliated persons of each other.
In addition, the Funds may be deemed to be under common control with
any other registered investment company (or series thereof) advised by
an Adviser (an ``Affiliated Fund'').
10. Applicants request an exemption under sections 6(c) and 17(b)
of the Act from sections 17(a)(1) and 17(a)(2) of the Act to permit in-
kind purchases and redemptions of Creation Units from the Funds by
persons that are affiliated persons or second tier affiliates of the
Funds solely by virtue of one or more of the following: (a) Holding 5%
or more, or in excess of 25% of the outstanding Shares of one or more
Funds; (b) having an affiliation with a person with an ownership
interest described in (a); or (c) holding 5% or more, or more than 25%
of the Shares of one or more Affiliated Funds.\22\ Applicants also
request an exemption in order to permit a Fund to sell its Shares to
and redeem its Shares from, and engage in the transactions that would
accompany such sales and redemptions with, certain Investing Funds of
which the Funds are affiliated persons or second-tier affiliates.\23\
---------------------------------------------------------------------------
\22\ Applicants are not seeking relief from section 17(a) for,
and the requested relief will not apply to, transactions where a
Fund could be deemed an affiliated person, or an affiliated person
of an affiliated person, of an Investing Fund because the Adviser to
the Funds is also an investment adviser to an Investing Fund.
\23\ Applicants believe most Investing Funds will purchase
Shares in the secondary market and will not purchase Creation Units
directly from a Fund. To the extent that purchases and sales of
Shares occur in the secondary market and not through principal
transactions directly between an Investing Fund and a Fund, relief
from section 17(a) would not be necessary. However, the requested
relief would apply to direct sales of Shares in Creation Units by a
Fund to an Investing Fund and redemption of those Shares. The
requested relief also is intended to cover the in-kind transactions
that may accompany such sales and redemptions.
---------------------------------------------------------------------------
11. Applicants assert that no useful purpose would be served by
prohibiting such affiliated persons from making in-kind purchases or
in-kind redemptions of Shares of a Fund in Creation Units. Except as
described above, the Deposit Instruments and the Redemption Instruments
will be the same regardless of the identity of the purchaser or
redeemer, respectively, and will correspond pro rata to the Fund's
Portfolio Instruments. Both the deposit procedures for in-kind
purchases of Creation Units and the redemption procedures for in-kind
redemptions will be the same for all purchases and redemptions. Deposit
Instruments and Redemption Instruments will be valued in the same
manner as the Portfolio Instruments held by the relevant Funds.
Therefore, applicants state that such valuation method creates no
opportunity for affiliated persons or second-tier affiliates to effect
a transaction detrimental to other holders of Shares of that Fund.
Applicants also believe that in-kind purchases and redemptions will not
result in self-dealing or overreaching of any Fund.
12. Applicants also submit that the sale of Shares to and
redemption of Shares from an Investing Fund meets the standards for
relief under sections 17(b) and 6(c) of the Act. Applicants
[[Page 19548]]
note that any consideration paid for the purchase or redemption of
Creation Units directly from a Fund will be based on the NAV of the
Fund in accordance with policies and procedures set forth in the Fund's
registration statement.\24\ Applicants also state that the proposed
transactions are consistent with the general purposes of the Act and
appropriate in the public interest.
---------------------------------------------------------------------------
\24\ Applicants acknowledge that the receipt of compensation by
(a) an affiliated person of an Investing Fund, or an affiliated
person of such person, for the purchase by the Investing Fund of
Shares of a Fund or (b) an affiliated person of a Fund, or an
affiliated person of such person, for the sale by the Fund of its
Shares to an Investing Fund, may be prohibited by section 17(e)(1)
of the Act. The Participation Agreement also will include this
acknowledgment.
---------------------------------------------------------------------------
Applicants' Conditions
The Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:
A. ETF Relief
1. As long as a Fund operates in reliance on the requested order,
the Shares of the Fund will be listed on an Exchange.
2. Neither the Trust nor any Fund will be advertised or marketed as
an open-end investment company or a mutual fund. Any advertising
material that describes the purchase or sale of Creation Units or
refers to redeemability will prominently disclose that the Shares are
not individually redeemable and that owners of the Shares may acquire
those Shares from the Fund and tender those Shares for redemption to
the Fund in Creation Units only.
3. The Web site for the Funds, which is and will be publicly
accessible at no charge, will contain, on a per Share basis, for each
Fund the prior Business Day's NAV and the market closing price or Bid/
Ask Price, and a calculation of the premium or discount of the market
closing price or Bid/Ask Price against such NAV.
4. On each Business Day, before commencement of trading in Shares
on the Exchange, the Fund will disclose on its Web site the identities
and quantities of the Portfolio Instruments held by the Fund that will
form the basis for the Fund's calculation of NAV at the end of the
Business Day.
5. No Adviser or Subadviser, directly or indirectly, will cause any
Authorized Participant (or any investor on whose behalf an Authorized
Participant may transact with the Fund) to acquire any Deposit
Instrument for the Fund through a transaction in which the Fund could
not engage directly.
6. The requested relief to permit ETF operations will expire on the
effective date of any Commission rule under the Act that provides
relief permitting the operation of actively managed ETFs.
B. Section 12(d)(1) Relief
1. The members of the Investing Fund's Advisory Group will not
control (individually or in the aggregate) a Fund within the meaning of
section 2(a)(9) of the Act. The members of the Investing Fund's
Subadvisory Group will not control (individually or in the aggregate) a
Fund within the meaning of section 2(a)(9) of the Act. If, as a result
of a decrease in the outstanding voting securities of a Fund, the
Investing Fund's Advisory Group or the Investing Fund's Subadvisory
Group, each in the aggregate, becomes a holder of more than 25 percent
of the outstanding voting securities of a Fund, it will vote its Shares
of the Fund in the same proportion as the vote of all other holders of
the Fund's Shares. This condition does not apply to the Investing
Fund's Subadvisory Group with respect to a Fund for which the Investing
Fund Subadviser or a person controlling, controlled by or under common
control with the Investing Fund Subadviser acts as the investment
adviser within the meaning of section 2(a)(20)(A) of the Act.
2. No Investing Fund or Investing Fund Affiliate will cause any
existing or potential investment by the Investing Fund in a Fund to
influence the terms of any services or transactions between the
Investing Fund or an Investing Fund Affiliate and the Fund or a Fund
Affiliate.
3. The board of directors or trustees of an Investing Management
Company, including a majority of the disinterested directors or
trustees, will adopt procedures reasonably designed to ensure that the
Investing Fund Adviser and any Investing Fund Subadviser are conducting
the investment program of the Investing Management Company without
taking into account any consideration received by the Investing
Management Company or an Investing Fund Affiliate from a Fund or a Fund
Affiliate in connection with any services or transactions.
4. Once an investment by an Investing Fund in the Shares of a Fund
exceeds the limit in section 12(d)(1)(A)(i) of the Act, the Board of a
Fund, including a majority of the disinterested Board members, will
determine that any consideration paid by the Fund to the Investing Fund
or an Investing Fund Affiliate in connection with any services or
transactions: (i) Is fair and reasonable in relation to the nature and
quality of the services and benefits received by the Fund; (ii) is
within the range of consideration that the Fund would be required to
pay to another unaffiliated entity in connection with the same services
or transactions; and (iii) does not involve overreaching on the part of
any person concerned. This condition does not apply with respect to any
services or transactions between a Fund and its investment adviser(s),
or any person controlling, controlled by or under common control with
such investment adviser(s).
5. The Investing Fund Adviser, or Trustee or Sponsor, as
applicable, will waive fees otherwise payable to it by the Investing
Fund in an amount at least equal to any compensation (including fees
received pursuant to any plan adopted by a Fund under rule 12b-1 under
the Act) received from a Fund by the Investing Fund Adviser, or Trustee
or Sponsor, or an affiliated person of the Investing Fund Adviser, or
Trustee or Sponsor, other than any advisory fees paid to the Investing
Fund Adviser, or Trustee or Sponsor, or its affiliated person by the
Fund, in connection with the investment by the Investing Fund in the
Fund. Any Investing Fund Subadviser will waive fees otherwise payable
to the Investing Fund Subadviser, directly or indirectly, by the
Investing Management Company in an amount at least equal to any
compensation received from a Fund by the Investing Fund Subadviser, or
an affiliated person of the Investing Fund Subadviser, other than any
advisory fees paid to the Investing Fund Subadviser or its affiliated
person by the Fund, in connection with the investment by the Investing
Management Company in the Fund made at the direction of the Investing
Fund Subadviser. In the event that the Investing Fund Subadviser waives
fees, the benefit of the waiver will be passed through to the Investing
Management Company.
6. No Investing Fund or Investing Fund Affiliate (except to the
extent it is acting in its capacity as an investment adviser to a Fund)
will cause a Fund to purchase a security in an Affiliated Underwriting.
7. The Board of a Fund, including a majority of the disinterested
Board members, will adopt procedures reasonably designed to monitor any
purchases of securities by the Fund in an Affiliated Underwriting, once
an investment by an Investing Fund in the securities of the Fund
exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any
purchases made directly from an Underwriting Affiliate. The Board will
review these purchases periodically, but no less frequently than
[[Page 19549]]
annually, to determine whether the purchases were influenced by the
investment by the Investing Fund in the Fund. The Board will consider,
among other things: (a) Whether the purchases were consistent with the
investment objectives and policies of the Fund; (b) how the performance
of securities purchased in an Affiliated Underwriting compares to the
performance of comparable securities purchased during a comparable
period of time in underwritings other than Affiliated Underwritings or
to a benchmark such as a comparable market index; and (c) whether the
amount of securities purchased by the Fund in Affiliated Underwritings
and the amount purchased directly from an Underwriting Affiliate have
changed significantly from prior years. The Board will take any
appropriate actions based on its review, including, if appropriate, the
institution of procedures designed to assure that purchases of
securities in Affiliated Underwritings are in the best interest of
shareholders of the Fund.
8. Each Fund will maintain and preserve permanently in an easily
accessible place a written copy of the procedures described in the
preceding condition, and any modifications to such procedures, and will
maintain and preserve for a period of not less than six years from the
end of the fiscal year in which any purchase in an Affiliated
Underwriting occurred, the first two years in an easily accessible
place, a written record of each purchase of securities in Affiliated
Underwritings once an investment by an Investing Fund in the securities
of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act,
setting forth from whom the securities were acquired, the identity of
the underwriting syndicate's members, the terms of the purchase, and
the information or materials upon which the Board's determinations were
made.
9. Before investing in a Fund in excess of the limit in section
12(d)(1)(A), an Investing Fund will execute a Participation Agreement
with the Fund stating, without limitation, that their respective boards
of directors or trustees and their investment advisers, or Trustee and
Sponsor, as applicable, understand the terms and conditions of the
order, and agree to fulfill their responsibilities under the order. At
the time of its investment in Shares of a Fund in excess of the limit
in section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of
the investment. At such time, the Investing Fund will also transmit to
the Fund a list of the names of each Investing Fund Affiliate and
Underwriting Affiliate. The Investing Fund will notify the Fund of any
changes to the list as soon as reasonably practicable after a change
occurs. The Fund and the Investing Fund will maintain and preserve a
copy of the order, the Participation Agreement, and the list with any
updated information for the duration of the investment and for a period
of not less than six years thereafter, the first two years in an easily
accessible place.
10. Before approving any advisory contract under section 15 of the
Act, the board of directors or trustees of each Investing Management
Company, including a majority of the disinterested directors or
trustees, will find that the advisory fees charged under such contract
are based on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contract(s) of
any Fund in which the Investing Management Company may invest. These
findings and their basis will be recorded fully in the minute books of
the appropriate Investing Management Company.
11. Any sales charges and/or service fees charged with respect to
shares of an Investing Fund will not exceed the limits applicable to a
fund of funds as set forth in NASD Conduct Rule 2830.
12. No Fund relying on the section 12(d)(1) Relief will acquire
securities of any investment company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in
section 12(d)(1)(A) of the Act, except to the extent permitted by
exemptive relief from the Commission permitting the Fund to purchase
shares of other investment companies for short-term cash management
purposes.
For the Commission, by the Division of Investment Management,
under delegated authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-07415 Filed 3-29-13; 8:45 am]
BILLING CODE 8011-01-P
