BlackRock Advisors, LLC, et al.; Notice of Application, 63183-63186 [2014-25083]
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Federal Register / Vol. 79, No. 204 / Wednesday, October 22, 2014 / Notices
(i) The Fund’s annualized distribution
rate for the six months ending on the
last day of the month ended
immediately prior to the most recent
distribution record date,5 expressed as a
percentage of NAV as of the date, is no
more than 1 percentage point greater
than the Fund’s average annual total
return for the 5-year period ending on
the date; 6 and
(ii) the transmittal letter
accompanying any registration
statement filed with the Commission in
connection with the offering discloses
that the Fund has received an order
under section 19(b) to permit it to make
periodic distributions of long-term
capital gains with respect to its common
shares as frequently as twelve times
each year, and as frequently as
distributions are specified by or
determined in accordance with the
terms of any outstanding preferred
shares as the Fund may issue.
7. Amendments to Rule 19b–1
The requested order will expire on the
effective date of any amendment to rule
19b–1 that provides relief permitting
certain closed-end investment
companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common shares as frequently as twelve
times each year.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–25082 Filed 10–21–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31291; File No. 812–13784]
BlackRock Advisors, LLC, et al.; Notice
of Application
October 16, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
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AGENCY:
5 If the Fund has been in operation fewer than six
months, the measured period will begin
immediately following the Fund’s first public
offering.
6 If the Fund has been in operation fewer than five
years, the measured period will begin immediately
following the Fund’s first public offering.
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Applicants
request an order that would permit them
to enter into and materially amend
subadvisory agreements with WhollyOwned Subadvisers (as defined below)
and non-affiliated subadvisers without
shareholder approval and would grant
relief from certain disclosure
requirements.
APPLICANTS: BlackRock Advisors, LLC
(‘‘BlackRock Advisors’’), BlackRock
Funds (the ‘‘Trust’’), and FDP Series,
Inc. (the ‘‘Corporation’’).
FILING DATES: The application was filed
on June 17, 2010, and amended on
November 22, 2013, May 9, 2014, and
October 3, 2014.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on November 10, 2014, 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: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
Applicants, 55 East 52nd Street, New
York, NY 10055.
FOR FURTHER INFORMATION CONTACT:
David J. Marcinkus, Senior Counsel, at
(202) 551–6882, or David P. Bartels,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s 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 for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
SUMMARY OF APPLICATION:
Applicants’ Representations
1. The Corporation is an open-end
management investment company
registered under the Act that is
organized as a Maryland corporation.
The Corporation is organized as a series
fund (each, an ‘‘FDP Series’’) and
currently consists of four FDP Series.
The Trust is an open-end management
investment company registered under
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63183
the Act that is organized as a
Massachusetts business trust. The Trust
is organized as a series fund and
currently consists of thirty-four series,
only one of which, the BlackRock MultiManager Alternative Strategies Fund
(the ‘‘Multi-Manager Fund’’), currently
intends to operate under the manager of
managers structure described in the
application (the ‘‘Manager of Managers
Structure’’). BlackRock Advisors is a
Delaware limited liability company that
is registered with the Commission as an
investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’).
2. Applicants request an order to
permit the Adviser,1 subject to the
approval of the board of directors or
trustees of the Corporation or the Trust,
as applicable (each a ‘‘Board’’),2
including a majority of the directors or
trustees who are not ‘‘interested
persons’’ as defined in section 2(a)(19)
of the Act of the Corporation or the
Trust, as applicable, or of the Adviser
(the ‘‘Independent Directors’’), to take
certain actions without obtaining
shareholder approval as follows: (i)
Select certain wholly-owned an nonaffiliated investment advisers (each a
‘‘Subadviser’’ 3) to manage all or a
portion of the assets of one of more of
the Subadvised Funds (as defined
below) pursuant to an investment
subadvisory agreement with each
Subadviser (each a ‘‘Subadvisory
Agreement’’), and (ii) materially amend
Subadvisory Agreement with such
Subadvisers.4 Applicants request that
1 The term ‘‘Adviser’’ means (i) BlackRock
Advisors and (ii) any entity controlling, controlled
by or under common control with, BlackRock
Advisors or its successor. For purposes of the
requested order, ‘‘successor’’ is limited to an entity
that results from a reorganization into another
jurisdiction or a change in the type of business
organization.
2 The term ‘‘Board’’ includes the board of
directors or trustees of a Subadvised Fund.
3 A ‘‘Subadviser’’ for a Subadvised Fund is (a) an
indirect or direct ‘‘wholly-owned subsidiary’’ (as
such term is defined in the Act) of the Adviser for
that Subadvised Fund; (b) a sister company of the
Adviser for that Subadvised Fund that is an indirect
or direct ‘‘wholly-owned subsidiary’’ (as such term
is defined in the Act) of the same company that,
indirectly or directly, wholly owns the Adviser
(each of (a) and (b), a ‘‘Wholly-Owned Subadviser’’
and collectively, the ‘‘Wholly-Owned
Subadvisers’’), or (c) not an ‘‘affiliated person’’ (as
such term is defined in section 2(a)(3) of the Act)
of the applicable Subadvised Fund, the Corporation
or the Trust, as applicable, or the Adviser, except
to the extent that an affiliation arises solely because
the Subadviser serves as a subadviser to a
Subadvised Fund (each, a ‘‘Non-Affiliated
Subadviser’’).
4 Shareholder approval will continue to be
required for any other subadviser changes and
material amendments to an existing subadvisory
agreement with any subadviser other than a NonAffiliated Subadviser or Wholly-Owned Sub-
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the relief apply to the named applicants,
as well as to any future FDP Series of
the Corporation, any other existing or
future series of the Trust, and any other
existing or future registered open-end
management investment company or
series thereof 5 that relies on the
requested relief and (a) is advised by an
Adviser, (b) uses Manager of Managers
Structure, and (c) complies with the
terms and conditions set forth in the
application (the ‘‘Subadvised Funds,’’
and each a ‘‘Subadvised Fund’’).6 The
requested relief will not extend to any
subadviser, other than a Wholly-Owned
Subadviser, who is an affiliated person,
as defined in section 2(a)(3) of the Act,
of the Subadvised Fund or of the
Adviser, other than by reason of serving
as a subadviser to one or more of the
Subadvised Funds (‘‘Affiliated SubAdviser’’).
3. BlackRock Advisors currently
serves as investment adviser to each
FDP Series and to the Multi-Manager
Fund, pursuant to investment advisory
agreements with the Corporation and
the Trust, respectively (each, an
‘‘Investment Advisory Agreement’’).7
Any other Adviser will be registered
with the Commission as an investment
adviser under the Advisers Act. The
terms of each Investment Advisory
Agreement comply with section 15(a) of
the Act, and applicants are not seeking
an exemption from the provisions of the
Act with respect to the Investment
Advisory Agreements.
4. Applicants state that, under the
terms of each Investment Advisory
Agreement, subject to and in accordance
with the investment objective and
policies of a Subadvised Fund and any
directions which the Board may issue to
the Adviser, the Adviser has overall
responsibility for the general
management and investment of the
Adviser (all such changes referred to as ‘‘Ineligible
Subadviser Changes’’), except as otherwise
permitted by applicable law or by rule.
5 Any such existing or future series or investment
company and any existing or future series of the
Corporation or the Trust, a ‘‘Fund.’’
6 All registered open-end investment companies
that currently intend to rely on the requested order
are named as applicants. All funds that currently
are, or that currently intend to be, Subadvised
Funds (as defined below) are identified in the
application. Any entity that relies on the requested
order will do so only in accordance with the terms
and conditions contained in the application. If the
name of any Subadvised Fund contains the name
of a Subadviser (as defined below), the name of the
Adviser that serves as the primary adviser to that
Subadvised Fund, or a trademark or trade name that
is owned by or publicly used to identify that
Adviser, will precede the name of the Subadviser.
7 The term ‘‘Investment Advisory Agreement’’
includes each investment advisory agreement
entered into by an Adviser with, or on behalf of,
a Subadvised Fund that in the future seeks to rely
on the order.
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assets and securities portfolios of the
Subadvised Fund. In addition, the
Adviser shall develop the overall
investment program and strategies for
the Subadvised Fund, or segments
thereof, shall revise such program as
necessary, and shall monitor and report
periodically to the Board concerning the
implementation of the program. For the
investment management services it
provides to a Subadvised Fund, the
Adviser receives the fee specified in the
Investment Advisory Agreement. Each
Investment Advisory Agreement permits
the Adviser, subject to the approval of
the Board, to appoint one or more
subadvisers to perform investment
advisory services with respect to a
Subadvised Fund. Applicants represent
that, to the extent applicable, the
Adviser shall research and evaluate
subadvisers and shall advise the Board
of the subadvisers that the Adviser
believes are best-suited to invest the
assets of a Subadvised Fund; shall
monitor and evaluate the performance
of each Subadviser; shall determine the
portion of a Subadvised Fund’s assets to
be managed by each Subadviser; shall
recommend to the Board changes or
additions of Subadvisers when
appropriate; and shall coordinate the
investment activities of the Subadvisers.
In addition, Applicants state that the
Adviser may directly manage a portion
or, from time to time, all of the assets
of a Subadvised Fund.
5. Pursuant to the authority under the
Investment Advisory Agreements, the
Adviser has entered into subadvisory
agreements with subadvisers with
respect to the existing FDP Series and
the Multi-Manager Fund. Applicants
state that each of the current
subadvisory agreements relating to the
FDP Series and the Multi-Manager Fund
has been approved by the respective
Board, including by a majority of the
Independent Directors, and the
shareholders of the respective FDP
Series and the Multi-Manager Fund, in
accordance with Sections 15(a) and
15(c) of the Act and Rule 18f–2 under
the 1940 Act. Applicants further state
that, in the future, the Adviser may
enter into new, additional or amended
Subadvisory Agreements on behalf of
the FDP Series, the Multi-Manager Fund
or other Subadvised Funds, subject to (i)
applicable Board and Independent
Director approval and (ii) (a) any
required shareholder approval or (b) any
and all applicable terms and conditions
set forth in the application. The terms
of each Subadvisory Agreement will
comply fully with the requirements of
Section 15(a) of the Act.
6. Each current subadviser is, and any
future Subadviser will be either
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registered with the Commission as an
investment adviser under the Advisers
Act or not subject to such registration.
Applicants state that the specific
investment decisions for each
Subadvised Fund will be made by that
Subadviser which has discretionary
authority to invest the assets or a
portion of the assets of that Subadvised
Fund, subject to the general supervision
of the Adviser and the Board. For its
services to a Subadvised Fund, a
Subadviser will receive a fee paid by the
Adviser from the fee the Adviser
receives from the Subadvised Fund.
None of the Subadvised Funds is
responsible for paying subadvisory fees
to any Subadviser.
7. Subadvised Funds will inform
shareholders of the hiring of a new
Subadviser pursuant to the following
procedures (‘‘Modified Notice and
Access Procedures’’): (a) Within 90 days
after a new Subadviser is hired for any
Subadvised Fund, that Subadvised
Fund will send its shareholders either a
Multi-manager Notice or a Multimanager Notice and Multi-manager
Information Statement; 8 and (b) the
Subadvised Fund will make the Multimanager Information Statement
available on the Web site identified in
the Multi-manager Notice no later than
when the Multi-manager Notice (or
Multi-manager Notice and Multimanager Information Statement) is first
sent to shareholders, and will maintain
it on that Web site for at least 90 days.
Applicants state that, in the
circumstances described in the
application, a proxy solicitation to
approve the appointment of new
Subadvisers provides no more
meaningful information to shareholders
than the proposed Multi-manager
Information Statement. Applicants also
state that the applicable Board would
comply with the requirements of
8 A ‘‘Multi-manager Notice’’ will be modeled on
a Notice of Internet Availability as defined in rule
14a–16 under the Securities Exchange Act of 1934
(‘‘Exchange Act’’), and specifically will, among
other things: (a) Summarize the relevant
information regarding the new Subadviser; (b)
inform shareholders that the Multi-manager
Information Statement is available on a Web site;
(c) provide the Web site address; (d) state the time
period during which the Multi-manager Information
Statement will remain available on that Web site;
(e) provide instructions for accessing and printing
the Multi-manager Information Statement; and (f)
instruct the shareholder that a paper or email copy
of the Multi-manager Information Statement may be
obtained, without charge, by contacting the
Subadvised Funds.
A ‘‘Multi-manager Information Statement’’ will
meet the requirements of Regulation 14C, Schedule
14C and Item 22 of Schedule 14A under the
Exchange Act for an information statement, except
as modified to permit Aggregate Fee Disclosure.
Multi-manager Information Statements will be filed
with the Commission via the EDGAR system.
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sections 15(a) and 15(c) of the Act
before entering into or amending
Subadvisory Agreements.
8. Applicants also request an order
under section 6(c) of the Act exempting
the Subadvised Fund from certain
disclosure obligations that may require
each Subadvised Fund to disclose fees
paid by the Adviser to a subadviser.
Applicants seek relief to permit each
Subadvised Fund to disclose (as a dollar
amount and a percentage of the
Subadvised Fund’s net assets) only: (a)
The aggregate fees paid to the
Subadvised Fund’s Adviser and any
Wholly-Owned Subadvisers; (b) the
aggregate fees paid to Non-Affiliated
Subadvisers; and (c) the fee paid to each
Affiliated Subadviser (collectively, the
‘‘Aggregate Fee Disclosure’’). All other
items required by Sections 6–07(2)(a),
(b) and (c) of Regulation S–X will be
disclosed.
Applicants’ Legal Analysis
1. Section 15(a) of the Act states, in
part, that it is unlawful for any person
to act as an investment adviser to a
registered investment company ‘‘except
pursuant to a written contract, which
contract, whether with such registered
company or with an investment adviser
of such registered company, has been
approved by the vote of a majority of the
outstanding voting securities of such
registered company.’’ Rule 18f–2 under
the Act provides that each series or class
of stock in a series investment company
affected by a matter must approve that
matter if the Act requires shareholder
approval.
2. Form N–1A is the registration
statement used by open-end investment
companies. Item 19(a)(3) of Form N–1A
requires a registered investment
company to disclose in its statement of
additional information the method of
computing the ‘‘advisory fee payable’’
by the investment company, including
the total dollar amounts that the
investment company ‘‘paid to the
adviser (aggregated with amounts paid
to affiliated advisers, if any), and any
advisers who are not affiliated persons
of the adviser, under the investment
advisory contract for the last three fiscal
years.’’
3. Rule 20a–1 under the Act requires
proxies solicited with respect to a
registered investment company to
comply with Schedule 14A under the
Exchange Act. Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
Schedule 14A, taken together, may
require a Subadvised Fund to disclose
the fees paid to a Subadviser in
connection with a Subadvisory
Agreement or with shareholder action
with respect to entering into, or
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materially amending, an advisory
agreement or establishing, or increasing,
advisory fees.
4. Regulation S–X sets forth the
requirements for financial statements
required to be included as part of a
registered investment company’s
registration statement and shareholder
reports filed with the Commission.
Sections 6–07(2)(a), (b), and (c) of
Regulation S–X require a registered
investment company to include in its
financial statement information about
the investment advisory fees. These
provisions could require a Subadvised
Fund’s financial statements to disclose
information concerning fees paid to a
subadviser.
5. Section 6(c) of the Act provides that
the Commission by order upon
application may conditionally or
unconditionally exempt any person,
security, or transaction or any class or
classes of persons, securities, or
transactions from any provisions of the
Act, or from any rule thereunder, if 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. Applicants
assert that their requested relief meets
this standard for the reasons discussed
below.
6. Applicants assert that the
shareholders expect the Adviser, subject
to the review and approval of the Board,
to select the Subadvisers that the
Adviser has reasonably determined are
well suited to achieve the Subadvised
Fund’s investment objective. Applicants
assert that, from the perspective of the
shareholder, the role of the Subadviser
is substantially equivalent to the role of
the individual portfolio managers
employed by an investment adviser to a
traditional investment company with a
single investment adviser (a ‘‘SingleManager Fund’’). Applicants believe
that permitting the Adviser to perform
the duties for which the shareholders of
the Subadvised Fund are paying the
Adviser (which include the selection,
supervision and evaluation of the
Subadvisers)—without incurring
unnecessary delays or expenses is
appropriate in the interest of the
Subadvised Fund’s shareholders and
will allow such Subadvised Fund to
operate more efficiently.
7. Applicants state that a Subadvised
Fund will be required to obtain
shareholder approval of the Manager of
Managers Structure before relying on
the requested order. Applicants assert
that conditions 6, 10, and 11 are
designed to provide the Board with
sufficient independence and the
resources and information it needs to
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63185
monitor and address any conflicts of
interest.
8. Applicants believe that relief from
disclosure of the individual fees that the
Adviser would pay to the Subadvisers is
necessary or appropriate in the public
interest, consistent with the protection
of investors and consistent with the
purposes fairly intended by the policy
and provisions of the Act, and should be
granted for the following reasons: (1)
The Adviser will operate the
Subadvised Funds using the services of
one or more Subadvisers in a manner
different from that of Single-Manager
Funds such that disclosure of the
individual fees that the Adviser or
Subadvised Funds would pay to each
Subadviser would not be relevant to a
shareholder or prospective shareholder
in understanding the aggregate amount
that the fund would pay for investment
advisory services; (2) the relief would
benefit shareholders by enabling the
Subadvised Funds to operate in a less
costly and more efficient manner, for
example, by facilitating the Adviser’s
ability to negotiate and manage
subadvisory relationships; and (3) the
relief is subject to a number of
conditions that adequately address
disclosure concerns.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions: 9
1. Before a Subadvised Fund may rely
on the order requested in the
application, the operation of the
Subadvised Fund in the manner
described in the application, including
the hiring of Wholly-Owned
Subadvisers, will be approved by a
majority of the Subadvised Fund’s
outstanding voting securities as defined
in the Act, or, in the case of a
Subadvised Fund whose public
shareholders purchase shares on the
basis of a prospectus containing the
disclosure contemplated by condition 2
below, by the initial shareholder before
such Subadvised Fund’s shares are
offered to the public.
2. The prospectus for each
Subadvised Fund will disclose the
existence, substance and effect of any
order granted pursuant to the
application. In addition, each
Subadvised Fund will hold itself out to
the public as employing the Manager of
Managers Structure. The prospectus will
prominently disclose that the Adviser
has the ultimate responsibility, subject
9 A Subadvised Fund relying on the order granted
hereunder will comply with conditions 7, 8, 9 and
12 only if it relies on the relief that would allow
it to provide Aggregate Fee Disclosure.
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to oversight by the Board, to oversee the
Subadvisers and recommend their
hiring, termination, and replacement.
3. The Adviser will provide general
management services to each
Subadvised Fund, including overall
supervisory responsibility for the
general management and investment of
the Subadvised Fund’s assets, and,
subject to the review and approval by
the Board, the Adviser will (a) set a
Subadvised Fund’s overall investment
strategies, (b) evaluate, select, and
recommend Subadvisers to manage all
or a portion of the Subadvised Fund’s
assets, and (c) implement procedures
reasonably designed to ensure that the
Subadvisers comply with the
Subadvised Fund’s investment
objectives, policies and restrictions.
Subject to review by the Board, the
Adviser will (a) when appropriate,
allocate and reallocate the Subadvised
Fund’s assets among multiple
Subadvisers; and (b) monitor and
evaluate the performance of the
Subadvisers.
4. A Subadvised Fund will not make
any Ineligible Subadviser Changes
without the approval of the
shareholders of the applicable
Subadvised Fund.
5. Subadvised Funds will inform
shareholders of the hiring of a new
Subadviser within 90 days after the
hiring of the new Subadviser pursuant
to the Modified Notice and Access
Procedures.
6. At all times, at least a majority of
the Board will be Independent
Directors, and the selection and
nomination of new or additional
Independent Directors will be placed
within the discretion of the thenexisting Independent Directors.
7. Independent Legal Counsel, as
defined in rule 0–1(a)(16) under the Act,
will be engaged to represent the
Independent Directors. The selection of
such counsel will be within the
discretion of the then-existing
Independent Directors.
8. The Adviser will provide the
Board, no less frequently than quarterly,
with information about the profitability
of the Adviser on a per Subadvised
Fund basis. The information will reflect
the impact on profitability of the hiring
or termination of any subadviser during
the applicable quarter.
9. Whenever a subadviser is hired or
terminated, the Adviser will provide the
Board with information showing the
expected impact on the profitability of
the Adviser.
10. Whenever a subadviser change is
proposed for a Subadvised Fund with
an Affiliated Subadviser or a WhollyOwned Sub-Adviser, the Board,
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including a majority of the Independent
Directors, will make a separate finding,
reflected in the Board minutes, that
such change is in the best interests of
the Subadvised Fund and its
shareholders, and does not involve a
conflict of interest from which the
Adviser or the Affiliated Subadviser or
Wholly-Owned Subadviser derives an
inappropriate advantage.
11. No Director or officer of the Trust,
the Corporation, a Subadvised Fund, or
partner, director or officer of the
Adviser, will own directly or indirectly
(other than through a pooled investment
vehicle that is not controlled by such
person) any interest in a Subadviser
except for (a) ownership of interests in
the Adviser or any entity, other than a
Wholly-Owned Subadviser, that
controls, is controlled by, or is under
common control with the Adviser, or (b)
ownership of less than 1% of the
outstanding securities of any class of
equity or debt of any publicly traded
company that is either a Subadviser or
an entity that controls, is controlled by,
or under common control with a
Subadviser.
12. Each Subadvised Fund will
disclose in its registration statement the
Aggregate Fee Disclosure.
13. In the event the Commission
adopts a rule under the Act providing
substantially similar relief to that
requested in the application, the
requested order will expire on the
effective date of that rule.
14. Any new subadvisory agreement
or any amendment to a Subadvised
Fund’s existing Investment Advisory
Agreement or subadvisory agreement
that directly or indirectly results in an
increase in the aggregate advisory fee
rate payable by the Subadvised Fund
will be submitted to the Subadvised
Fund’s shareholders for approval.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–25083 Filed 10–21–14; 8:45 am]
BILLING CODE 8011–01–P
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 an Open Meeting
on Wednesday, October 22, 2014 at 10
a.m., in the Auditorium, Room L–002.
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The subject matter of the Open
Meeting will be:
• The Commission will consider
whether to adopt rules relating to credit
risk retention by securitizers of assetbacked securities, as mandated by
Section 15G of the Exchange Act and
Section 941(b) of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act.
The duty officer has determined that
no earlier notice was practicable.
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: October 17, 2014.
Brent J. Fields,
Secretary.
[FR Doc. 2014–25208 Filed 10–20–14; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73371; File No. SR–CME–
2014–14]
Self-Regulatory Organizations;
Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend Rule 850 Regarding
Fees
October 16, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder 2
notice is hereby given that, on October
3, 2014, Chicago Mercantile Exchange
Inc. (‘‘CME’’) 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
primarily by CME. CME filed the
proposal pursuant to Section 19(b)(3)(A)
of the Act,3 and Rule 19b–4(f)(1) 4
thereunder, so that the proposal was
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(1).
2 17
E:\FR\FM\22OCN1.SGM
22OCN1
]]>Agencies
[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Pages 63183-63186]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25083]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31291; File No. 812-13784]
BlackRock Advisors, LLC, et al.; Notice of Application
October 16, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act and rule 18f-2 under the Act, as well as from certain
disclosure requirements.
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Summary of Application: Applicants request an order that would permit
them to enter into and materially amend subadvisory agreements with
Wholly-Owned Subadvisers (as defined below) and non-affiliated
subadvisers without shareholder approval and would grant relief from
certain disclosure requirements.
Applicants: BlackRock Advisors, LLC (``BlackRock Advisors''), BlackRock
Funds (the ``Trust''), and FDP Series, Inc. (the ``Corporation'').
Filing Dates: The application was filed on June 17, 2010, and amended
on November 22, 2013, May 9, 2014, and October 3, 2014.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on November 10, 2014, 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: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants, 55 East 52nd Street,
New York, NY 10055.
FOR FURTHER INFORMATION CONTACT: David J. Marcinkus, Senior Counsel, at
(202) 551-6882, or David P. Bartels, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's 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 for 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 Corporation is an open-end management investment company
registered under the Act that is organized as a Maryland corporation.
The Corporation is organized as a series fund (each, an ``FDP Series'')
and currently consists of four FDP Series. The Trust is an open-end
management investment company registered under the Act that is
organized as a Massachusetts business trust. The Trust is organized as
a series fund and currently consists of thirty-four series, only one of
which, the BlackRock Multi-Manager Alternative Strategies Fund (the
``Multi-Manager Fund''), currently intends to operate under the manager
of managers structure described in the application (the ``Manager of
Managers Structure''). BlackRock Advisors is a Delaware limited
liability company that is registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940 (the
``Advisers Act'').
2. Applicants request an order to permit the Adviser,\1\ subject to
the approval of the board of directors or trustees of the Corporation
or the Trust, as applicable (each a ``Board''),\2\ including a majority
of the directors or trustees who are not ``interested persons'' as
defined in section 2(a)(19) of the Act of the Corporation or the Trust,
as applicable, or of the Adviser (the ``Independent Directors''), to
take certain actions without obtaining shareholder approval as follows:
(i) Select certain wholly-owned an non-affiliated investment advisers
(each a ``Subadviser'' \3\) to manage all or a portion of the assets of
one of more of the Subadvised Funds (as defined below) pursuant to an
investment subadvisory agreement with each Subadviser (each a
``Subadvisory Agreement''), and (ii) materially amend Subadvisory
Agreement with such Subadvisers.\4\ Applicants request that
[[Page 63184]]
the relief apply to the named applicants, as well as to any future FDP
Series of the Corporation, any other existing or future series of the
Trust, and any other existing or future registered open-end management
investment company or series thereof \5\ that relies on the requested
relief and (a) is advised by an Adviser, (b) uses Manager of Managers
Structure, and (c) complies with the terms and conditions set forth in
the application (the ``Subadvised Funds,'' and each a ``Subadvised
Fund'').\6\ The requested relief will not extend to any subadviser,
other than a Wholly-Owned Subadviser, who is an affiliated person, as
defined in section 2(a)(3) of the Act, of the Subadvised Fund or of the
Adviser, other than by reason of serving as a subadviser to one or more
of the Subadvised Funds (``Affiliated Sub-Adviser'').
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\1\ The term ``Adviser'' means (i) BlackRock Advisors and (ii)
any entity controlling, controlled by or under common control with,
BlackRock Advisors or its successor. For purposes of the requested
order, ``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization.
\2\ The term ``Board'' includes the board of directors or
trustees of a Subadvised Fund.
\3\ A ``Subadviser'' for a Subadvised Fund is (a) an indirect or
direct ``wholly-owned subsidiary'' (as such term is defined in the
Act) of the Adviser for that Subadvised Fund; (b) a sister company
of the Adviser for that Subadvised Fund that is an indirect or
direct ``wholly-owned subsidiary'' (as such term is defined in the
Act) of the same company that, indirectly or directly, wholly owns
the Adviser (each of (a) and (b), a ``Wholly-Owned Subadviser'' and
collectively, the ``Wholly-Owned Subadvisers''), or (c) not an
``affiliated person'' (as such term is defined in section 2(a)(3) of
the Act) of the applicable Subadvised Fund, the Corporation or the
Trust, as applicable, or the Adviser, except to the extent that an
affiliation arises solely because the Subadviser serves as a
subadviser to a Subadvised Fund (each, a ``Non-Affiliated
Subadviser'').
\4\ Shareholder approval will continue to be required for any
other subadviser changes and material amendments to an existing
subadvisory agreement with any subadviser other than a Non-
Affiliated Subadviser or Wholly-Owned Sub-Adviser (all such changes
referred to as ``Ineligible Subadviser Changes''), except as
otherwise permitted by applicable law or by rule.
\5\ Any such existing or future series or investment company and
any existing or future series of the Corporation or the Trust, a
``Fund.''
\6\ All registered open-end investment companies that currently
intend to rely on the requested order are named as applicants. All
funds that currently are, or that currently intend to be, Subadvised
Funds (as defined below) are identified in the application. Any
entity that relies on the requested order will do so only in
accordance with the terms and conditions contained in the
application. If the name of any Subadvised Fund contains the name of
a Subadviser (as defined below), the name of the Adviser that serves
as the primary adviser to that Subadvised Fund, or a trademark or
trade name that is owned by or publicly used to identify that
Adviser, will precede the name of the Subadviser.
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3. BlackRock Advisors currently serves as investment adviser to
each FDP Series and to the Multi-Manager Fund, pursuant to investment
advisory agreements with the Corporation and the Trust, respectively
(each, an ``Investment Advisory Agreement'').\7\ Any other Adviser will
be registered with the Commission as an investment adviser under the
Advisers Act. The terms of each Investment Advisory Agreement comply
with section 15(a) of the Act, and applicants are not seeking an
exemption from the provisions of the Act with respect to the Investment
Advisory Agreements.
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\7\ The term ``Investment Advisory Agreement'' includes each
investment advisory agreement entered into by an Adviser with, or on
behalf of, a Subadvised Fund that in the future seeks to rely on the
order.
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4. Applicants state that, under the terms of each Investment
Advisory Agreement, subject to and in accordance with the investment
objective and policies of a Subadvised Fund and any directions which
the Board may issue to the Adviser, the Adviser has overall
responsibility for the general management and investment of the assets
and securities portfolios of the Subadvised Fund. In addition, the
Adviser shall develop the overall investment program and strategies for
the Subadvised Fund, or segments thereof, shall revise such program as
necessary, and shall monitor and report periodically to the Board
concerning the implementation of the program. For the investment
management services it provides to a Subadvised Fund, the Adviser
receives the fee specified in the Investment Advisory Agreement. Each
Investment Advisory Agreement permits the Adviser, subject to the
approval of the Board, to appoint one or more subadvisers to perform
investment advisory services with respect to a Subadvised Fund.
Applicants represent that, to the extent applicable, the Adviser shall
research and evaluate subadvisers and shall advise the Board of the
subadvisers that the Adviser believes are best-suited to invest the
assets of a Subadvised Fund; shall monitor and evaluate the performance
of each Subadviser; shall determine the portion of a Subadvised Fund's
assets to be managed by each Subadviser; shall recommend to the Board
changes or additions of Subadvisers when appropriate; and shall
coordinate the investment activities of the Subadvisers. In addition,
Applicants state that the Adviser may directly manage a portion or,
from time to time, all of the assets of a Subadvised Fund.
5. Pursuant to the authority under the Investment Advisory
Agreements, the Adviser has entered into subadvisory agreements with
subadvisers with respect to the existing FDP Series and the Multi-
Manager Fund. Applicants state that each of the current subadvisory
agreements relating to the FDP Series and the Multi-Manager Fund has
been approved by the respective Board, including by a majority of the
Independent Directors, and the shareholders of the respective FDP
Series and the Multi-Manager Fund, in accordance with Sections 15(a)
and 15(c) of the Act and Rule 18f-2 under the 1940 Act. Applicants
further state that, in the future, the Adviser may enter into new,
additional or amended Subadvisory Agreements on behalf of the FDP
Series, the Multi-Manager Fund or other Subadvised Funds, subject to
(i) applicable Board and Independent Director approval and (ii) (a) any
required shareholder approval or (b) any and all applicable terms and
conditions set forth in the application. The terms of each Subadvisory
Agreement will comply fully with the requirements of Section 15(a) of
the Act.
6. Each current subadviser is, and any future Subadviser will be
either registered with the Commission as an investment adviser under
the Advisers Act or not subject to such registration. Applicants state
that the specific investment decisions for each Subadvised Fund will be
made by that Subadviser which has discretionary authority to invest the
assets or a portion of the assets of that Subadvised Fund, subject to
the general supervision of the Adviser and the Board. For its services
to a Subadvised Fund, a Subadviser will receive a fee paid by the
Adviser from the fee the Adviser receives from the Subadvised Fund.
None of the Subadvised Funds is responsible for paying subadvisory fees
to any Subadviser.
7. Subadvised Funds will inform shareholders of the hiring of a new
Subadviser pursuant to the following procedures (``Modified Notice and
Access Procedures''): (a) Within 90 days after a new Subadviser is
hired for any Subadvised Fund, that Subadvised Fund will send its
shareholders either a Multi-manager Notice or a Multi-manager Notice
and Multi-manager Information Statement; \8\ and (b) the Subadvised
Fund will make the Multi-manager Information Statement available on the
Web site identified in the Multi-manager Notice no later than when the
Multi-manager Notice (or Multi-manager Notice and Multi-manager
Information Statement) is first sent to shareholders, and will maintain
it on that Web site for at least 90 days. Applicants state that, in the
circumstances described in the application, a proxy solicitation to
approve the appointment of new Subadvisers provides no more meaningful
information to shareholders than the proposed Multi-manager Information
Statement. Applicants also state that the applicable Board would comply
with the requirements of
[[Page 63185]]
sections 15(a) and 15(c) of the Act before entering into or amending
Subadvisory Agreements.
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\8\ A ``Multi-manager Notice'' will be modeled on a Notice of
Internet Availability as defined in rule 14a-16 under the Securities
Exchange Act of 1934 (``Exchange Act''), and specifically will,
among other things: (a) Summarize the relevant information regarding
the new Subadviser; (b) inform shareholders that the Multi-manager
Information Statement is available on a Web site; (c) provide the
Web site address; (d) state the time period during which the Multi-
manager Information Statement will remain available on that Web
site; (e) provide instructions for accessing and printing the Multi-
manager Information Statement; and (f) instruct the shareholder that
a paper or email copy of the Multi-manager Information Statement may
be obtained, without charge, by contacting the Subadvised Funds.
A ``Multi-manager Information Statement'' will meet the
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule
14A under the Exchange Act for an information statement, except as
modified to permit Aggregate Fee Disclosure. Multi-manager
Information Statements will be filed with the Commission via the
EDGAR system.
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8. Applicants also request an order under section 6(c) of the Act
exempting the Subadvised Fund from certain disclosure obligations that
may require each Subadvised Fund to disclose fees paid by the Adviser
to a subadviser. Applicants seek relief to permit each Subadvised Fund
to disclose (as a dollar amount and a percentage of the Subadvised
Fund's net assets) only: (a) The aggregate fees paid to the Subadvised
Fund's Adviser and any Wholly-Owned Subadvisers; (b) the aggregate fees
paid to Non-Affiliated Subadvisers; and (c) the fee paid to each
Affiliated Subadviser (collectively, the ``Aggregate Fee Disclosure'').
All other items required by Sections 6-07(2)(a), (b) and (c) of
Regulation S-X will be disclosed.
Applicants' Legal Analysis
1. Section 15(a) of the Act states, in part, that it is unlawful
for any person to act as an investment adviser to a registered
investment company ``except pursuant to a written contract, which
contract, whether with such registered company or with an investment
adviser of such registered company, has been approved by the vote of a
majority of the outstanding voting securities of such registered
company.'' Rule 18f-2 under the Act provides that each series or class
of stock in a series investment company affected by a matter must
approve that matter if the Act requires shareholder approval.
2. Form N-1A is the registration statement used by open-end
investment companies. Item 19(a)(3) of Form N-1A requires a registered
investment company to disclose in its statement of additional
information the method of computing the ``advisory fee payable'' by the
investment company, including the total dollar amounts that the
investment company ``paid to the adviser (aggregated with amounts paid
to affiliated advisers, if any), and any advisers who are not
affiliated persons of the adviser, under the investment advisory
contract for the last three fiscal years.''
3. Rule 20a-1 under the Act requires proxies solicited with respect
to a registered investment company to comply with Schedule 14A under
the Exchange Act. Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and
22(c)(9) of Schedule 14A, taken together, may require a Subadvised Fund
to disclose the fees paid to a Subadviser in connection with a
Subadvisory Agreement or with shareholder action with respect to
entering into, or materially amending, an advisory agreement or
establishing, or increasing, advisory fees.
4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require
a registered investment company to include in its financial statement
information about the investment advisory fees. These provisions could
require a Subadvised Fund's financial statements to disclose
information concerning fees paid to a subadviser.
5. Section 6(c) of the Act provides that the Commission by order
upon application may conditionally or unconditionally exempt any
person, security, or transaction or any class or classes of persons,
securities, or transactions from any provisions of the Act, or from any
rule thereunder, if 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.
Applicants assert that their requested relief meets this standard for
the reasons discussed below.
6. Applicants assert that the shareholders expect the Adviser,
subject to the review and approval of the Board, to select the
Subadvisers that the Adviser has reasonably determined are well suited
to achieve the Subadvised Fund's investment objective. Applicants
assert that, from the perspective of the shareholder, the role of the
Subadviser is substantially equivalent to the role of the individual
portfolio managers employed by an investment adviser to a traditional
investment company with a single investment adviser (a ``Single-Manager
Fund''). Applicants believe that permitting the Adviser to perform the
duties for which the shareholders of the Subadvised Fund are paying the
Adviser (which include the selection, supervision and evaluation of the
Subadvisers)--without incurring unnecessary delays or expenses is
appropriate in the interest of the Subadvised Fund's shareholders and
will allow such Subadvised Fund to operate more efficiently.
7. Applicants state that a Subadvised Fund will be required to
obtain shareholder approval of the Manager of Managers Structure before
relying on the requested order. Applicants assert that conditions 6,
10, and 11 are designed to provide the Board with sufficient
independence and the resources and information it needs to monitor and
address any conflicts of interest.
8. Applicants believe that relief from disclosure of the individual
fees that the Adviser would pay to the Subadvisers is necessary or
appropriate in the public interest, consistent with the protection of
investors and consistent with the purposes fairly intended by the
policy and provisions of the Act, and should be granted for the
following reasons: (1) The Adviser will operate the Subadvised Funds
using the services of one or more Subadvisers in a manner different
from that of Single-Manager Funds such that disclosure of the
individual fees that the Adviser or Subadvised Funds would pay to each
Subadviser would not be relevant to a shareholder or prospective
shareholder in understanding the aggregate amount that the fund would
pay for investment advisory services; (2) the relief would benefit
shareholders by enabling the Subadvised Funds to operate in a less
costly and more efficient manner, for example, by facilitating the
Adviser's ability to negotiate and manage subadvisory relationships;
and (3) the relief is subject to a number of conditions that adequately
address disclosure concerns.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions: \9\
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\9\ A Subadvised Fund relying on the order granted hereunder
will comply with conditions 7, 8, 9 and 12 only if it relies on the
relief that would allow it to provide Aggregate Fee Disclosure.
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1. Before a Subadvised Fund may rely on the order requested in the
application, the operation of the Subadvised Fund in the manner
described in the application, including the hiring of Wholly-Owned
Subadvisers, will be approved by a majority of the Subadvised Fund's
outstanding voting securities as defined in the Act, or, in the case of
a Subadvised Fund whose public shareholders purchase shares on the
basis of a prospectus containing the disclosure contemplated by
condition 2 below, by the initial shareholder before such Subadvised
Fund's shares are offered to the public.
2. The prospectus for each Subadvised Fund will disclose the
existence, substance and effect of any order granted pursuant to the
application. In addition, each Subadvised Fund will hold itself out to
the public as employing the Manager of Managers Structure. The
prospectus will prominently disclose that the Adviser has the ultimate
responsibility, subject
[[Page 63186]]
to oversight by the Board, to oversee the Subadvisers and recommend
their hiring, termination, and replacement.
3. The Adviser will provide general management services to each
Subadvised Fund, including overall supervisory responsibility for the
general management and investment of the Subadvised Fund's assets, and,
subject to the review and approval by the Board, the Adviser will (a)
set a Subadvised Fund's overall investment strategies, (b) evaluate,
select, and recommend Subadvisers to manage all or a portion of the
Subadvised Fund's assets, and (c) implement procedures reasonably
designed to ensure that the Subadvisers comply with the Subadvised
Fund's investment objectives, policies and restrictions. Subject to
review by the Board, the Adviser will (a) when appropriate, allocate
and reallocate the Subadvised Fund's assets among multiple Subadvisers;
and (b) monitor and evaluate the performance of the Subadvisers.
4. A Subadvised Fund will not make any Ineligible Subadviser
Changes without the approval of the shareholders of the applicable
Subadvised Fund.
5. Subadvised Funds will inform shareholders of the hiring of a new
Subadviser within 90 days after the hiring of the new Subadviser
pursuant to the Modified Notice and Access Procedures.
6. At all times, at least a majority of the Board will be
Independent Directors, and the selection and nomination of new or
additional Independent Directors will be placed within the discretion
of the then-existing Independent Directors.
7. Independent Legal Counsel, as defined in rule 0-1(a)(16) under
the Act, will be engaged to represent the Independent Directors. The
selection of such counsel will be within the discretion of the then-
existing Independent Directors.
8. The Adviser will provide the Board, no less frequently than
quarterly, with information about the profitability of the Adviser on a
per Subadvised Fund basis. The information will reflect the impact on
profitability of the hiring or termination of any subadviser during the
applicable quarter.
9. Whenever a subadviser is hired or terminated, the Adviser will
provide the Board with information showing the expected impact on the
profitability of the Adviser.
10. Whenever a subadviser change is proposed for a Subadvised Fund
with an Affiliated Subadviser or a Wholly-Owned Sub-Adviser, the Board,
including a majority of the Independent Directors, will make a separate
finding, reflected in the Board minutes, that such change is in the
best interests of the Subadvised Fund and its shareholders, and does
not involve a conflict of interest from which the Adviser or the
Affiliated Subadviser or Wholly-Owned Subadviser derives an
inappropriate advantage.
11. No Director or officer of the Trust, the Corporation, a
Subadvised Fund, or partner, director or officer of the Adviser, will
own directly or indirectly (other than through a pooled investment
vehicle that is not controlled by such person) any interest in a
Subadviser except for (a) ownership of interests in the Adviser or any
entity, other than a Wholly-Owned Subadviser, that controls, is
controlled by, or is under common control with the Adviser, or (b)
ownership of less than 1% of the outstanding securities of any class of
equity or debt of any publicly traded company that is either a
Subadviser or an entity that controls, is controlled by, or under
common control with a Subadviser.
12. Each Subadvised Fund will disclose in its registration
statement the Aggregate Fee Disclosure.
13. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that requested in the
application, the requested order will expire on the effective date of
that rule.
14. Any new subadvisory agreement or any amendment to a Subadvised
Fund's existing Investment Advisory Agreement or subadvisory agreement
that directly or indirectly results in an increase in the aggregate
advisory fee rate payable by the Subadvised Fund will be submitted to
the Subadvised Fund's shareholders for approval.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-25083 Filed 10-21-14; 8:45 am]
BILLING CODE 8011-01-P
