FEG Absolute Access TEI Fund LLC and FEG Investors, LLC; Notice of Application, 50356-50358 [2015-20410]
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50356
Federal Register / Vol. 80, No. 160 / Wednesday, August 19, 2015 / Notices
exemption is consistent with the public
interest and the protection of investors.
7. Applicants submit that for the
reasons stated in the Reference Order:
(1) With respect to the relief requested
pursuant to section 6(c) of the Act, the
relief is 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; (2) with respect to
the relief request pursuant to section
17(b) of the Act, the proposed
transactions are reasonable and fair and
do not involve overreaching on the part
of any person concerned, are consistent
with the policies of each registered
investment company concerned and
consistent with the general purposes of
the Act; and (3) with respect to the relief
requested pursuant to section 12(d)(1)(J)
of the Act, the relief is consistent with
the public interest and the protection of
investors.
By the Division of Investment
Management, pursuant to delegated
authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–20411 Filed 8–18–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31758; 812–14352]
FEG Absolute Access TEI Fund LLC
and FEG Investors, LLC; Notice of
Application
August 13, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (the ‘‘Act’’) for an
exemption from sections 18(c) and 18(i)
of the Act and for an order pursuant to
section 17(d) of the Act and rule 17d–
1 under the Act.
ACTION:
Applicants
request an order to permit certain
registered closed-end management
investment companies to issue multiple
classes of limited liability company
units (‘‘Units’’) with sales loads and/or
asset-based distribution and/or service
fees and contingent deferred sales loads
(‘‘CDSCs’’).
tkelley on DSK3SPTVN1PROD with NOTICES
SUMMARY OF APPLICATION:
FEG Absolute Access TEI
Fund LLC (the ‘‘Fund’’), FEG Absolute
Access Fund LLC (the ‘‘Master Fund’’),
and FEG Investors, LLC (the ‘‘Adviser’’).
APPLICANTS:
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19:14 Aug 18, 2015
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The application was filed
on August 22, 2014, and amended on
January 9, 2015, and June 26, 2015.
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 September 8, 2015, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, 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, 201 East Fifth Street, Suite
1600, Cincinnati, OH 45202.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879 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.
FILING DATES:
Applicants’ Representations
1. The Fund and the Master Fund are
non-diversified closed-end management
investment companies registered under
the Act and organized as Delaware
limited liability companies.1 The
Adviser, a Delaware limited liability
company, is registered with the
Commission as an investment adviser
under the Investment Advisers Act of
1 The Fund currently serves as the sole feeder
fund in a master-feeder structure operating in
accordance with section 12(d)(1)(E) of the Act and
invests substantially all of its assets in the Master
Fund through a Cayman Islands limited duration
company (the ‘‘Offshore Fund’’). Applicants state
that, consistent with section 12(d)(1)(E) of the 1940
Act, the Fund holds no investment security other
than the securities of the Master Fund. If the
requested relief is granted, the Offshore Fund will
be dissolved and the Fund will invest directly in
the Master Fund in compliance with section
12(d)(1)(E) of the 1940 Act.
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1940 and serves as investment adviser
to the Master Fund. Foreside Fund
Services, LLC, a registered broker-dealer
under the Securities Exchange Act of
1934 (‘‘1934 Act’’), currently acts as
Distributor (as defined below) for the
Units 2 of the Fund. Any future
placement agent or distributor/principal
underwriter of the Fund (the
‘‘Distributor’’) will be unaffiliated with
the Adviser.
2. The Fund continuously offers Units
in private placements in reliance on the
provisions of Regulation D under the
Securities Act of 1933, as amended
(‘‘Securities Act’’).3 Concurrent with
this application for exemptive relief, the
Fund is planning to publicly offer its
Units. Units of the Fund will not be
listed on any national securities
exchange and do not trade on an overthe-counter system such as NASDAQ.
Applicants do not currently expect that
a substantial and regular secondary
market for the Units will develop.
3. The Fund currently issues a single
class of Units (the ‘‘Initial Class’’) at net
asset value per Unit. The Initial Class is
not currently subject to any distribution
and/or service fees. Units that are not
subject to a sales load or distribution
and/or service fees when purchased will
not subsequently be subject to a sales
load or distribution and/or service fees.
Investors who subscribe for Units and
are admitted to the Fund become
members (‘‘Members’’) of the Fund. If
the requested relief is granted, the Fund
intends to redesignate its Initial Class as
‘‘Class I.’’ Additionally, if the requested
relief is granted, the Fund currently
intends to continuously offer at least
two additional classes of Units, ‘‘Class
II’’ and ‘‘Class III,’’ with each class
having its own fee and expense
structure. For Class III Units, sales of the
Units will be subject to a front-end sales
load based on the offering price of the
Units (i.e., net asset value) for the
Distributor’s services in conjunction
with the sale of Units and/or the
services provided to Members (the
‘‘Distribution Fee’’). Any waiver of,
scheduled variation in, or elimination of
a Distribution Fee will comply with the
requirements of rule 22d–1 under the
Act as if that rule applied to closed-end
management investment companies.
Each class may (but would not
necessarily) be subject to asset-based
distribution and/or service fees. Each
2 ‘‘Units’’ includes any other equivalent
designation of a proportionate ownership interest of
the Fund (or any other registered closed-end
management investment company relying on the
requested order).
3 Units of the Fund are only sold to ‘‘accredited
investors,’’ as defined in Regulation D under the
Securities Act.
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tkelley on DSK3SPTVN1PROD with NOTICES
class would be subject to minimum
purchase requirements.
4. In order to provide a limited degree
of liquidity to Members, the Fund may
from time to time offer to repurchase
Units at their then current net asset
value pursuant to rule 13e–4 under the
1934 Act pursuant to written tenders by
Members.4 Repurchases will be made at
such times, in such amounts and on
such terms as may be determined by the
Fund’s board of directors (‘‘Board’’), in
its sole discretion.5 The Adviser expects
to ordinarily recommend that the Board
authorize the Fund to offer to
repurchase Units from Members semiannually with June 30 and December 31
valuation dates.
5. Applicants request that the order
also apply to any other continuously
offered registered closed-end
management investment company
existing now or in the future for which
the Adviser or any entity controlling,
controlled by, or under common control
with the Adviser acts as investment
adviser, and which provides periodic
liquidity with respect to its Units
pursuant to rule 13e–4 under the 1934
Act.6
6. Applicants represent that any assetbased service and/or distribution fees
will comply with the provisions of rule
2830(d) of the Conduct Rules of the
National Association of Securities
Dealers, Inc. (‘‘NASD Conduct Rule
2830’’).7 Applicants also represent that
the Fund will disclose in its prospectus
the fees, expenses and other
characteristics of each class of Units
offered for sale by the prospectus as is
required for open-end multiple class
funds under Form N–1A. The Fund will
4 Likewise, the Master Fund’s repurchase offers
will be conducted pursuant to rule 13e–4 under the
1934 Act.
5 Units will be subject to an early repurchase fee
at a rate of 2% of the aggregate net asset value of
the Member’s Units repurchased by the Fund (the
‘‘Early Repurchase Fee’’) if the interval between the
date of purchase of the Units and the valuation date
with respect to the repurchase of those Units is less
than eighteen months. The Early Repurchase Fee
will apply equally to all classes of Units of the
Fund, consistent with section 18 of the Act and rule
18f–3 under the Act. To the extent the Fund
determines to waive, impose scheduled variations
of, or eliminate the Early Repurchase Fee, it will do
so consistently with the requirements of rule 22d–
1 under the Act and the Fund’s waiver of,
scheduled variation in, or elimination of, the Early
Repurchase Fee will apply uniformly to all classes
of shares of the Fund.
6 Any Fund relying on this relief will do so in a
manner consistent with the terms and conditions of
the application. Applicants represent that each
investment company presently intending to rely on
the order requested in the application is listed as
an applicant.
7 All references to NASD Conduct Rule 2830
include any successor or replacement rule that may
be adopted by the Financial Industry Regulatory
Authority (‘‘FINRA’’).
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disclose fund expenses borne by
Members as if it were an open-end
management investment company
during the reporting period in Member
reports and describe in its prospectus
any arrangements that result in
breakpoints in, or elimination of, sales
loads with respect to each class of Units
offered for sale by that prospectus.8 The
Fund will also comply with any
requirements that may be adopted by
the Commission or FINRA regarding
disclosure at the point of sale and in
transaction confirmations about the
costs and conflicts of interest arising out
of the distribution of open-end
investment company shares, and
regarding prospectus disclosure of sales
loads and revenue sharing arrangements
as if those requirements applied to the
Fund.9 In addition, applicants will
comply with applicable enhanced fee
disclosure requirements for fund of
funds, including registered funds of
hedge funds.10
7. The Fund will allocate all expenses
incurred by it among the various classes
of Units based on the net assets of the
Fund attributable to each class, except
that the net asset value and expenses of
each class will reflect distribution fees,
service fees, and any other incremental
expenses of that class. Expenses of a
Fund allocated to a particular class of
Units will be borne on a pro rata basis
by each outstanding Unit of that class.
Applicants state that the Fund will
comply with the provisions of rule 18f–
3 under the Act as if it were an openend investment company.
8. Although the Fund does not
currently intend to impose CDSCs, the
Fund will only impose a CDSC in
compliance with rule 6c–10 as if that
rule applied to closed-end management
investment companies. Applicants
further state that, in the event it imposes
CDSCs, the Fund will apply the CDSCs
(and any waivers or scheduled
8 See Shareholder Reports and Quarterly Portfolio
Disclosure of Registered Management Investment
Companies, Investment Company Act Release No.
26372 (Feb. 27, 2004) (adopting release) (requiring
open-end investment companies to disclose fund
expenses in shareholder reports); and Disclosure of
Breakpoint Discounts by Mutual Funds, Investment
Company Act Release No. 26464 (June 7, 2004)
(adopting release) (requiring open-end investment
companies to provide prospectus disclosure of
certain sales load information).
9 See Confirmation Requirements and Point of
Sale Disclosure Requirements for Transactions in
Certain Mutual Funds and Other Securities, and
Other Confirmation Requirement Amendments, and
Amendments to the Registration Form for Mutual
Funds, Investment Company Act Release No. 26341
(Jan. 29, 2004) (proposing release).
10 Fund of Funds Investments, Investment
Company Act Rel. Nos. 26198 (Oct. 1, 2003)
(proposing release) and 27399 (Jun. 20, 2006)
(adopting release). See also Rules 12d1–1, et seq. of
the Act.
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50357
variations of the CDSCs) uniformly to all
Members of a given class and
consistently with the requirements of
rule 22d–1 under the Act.
Applicants’ Legal Analysis
Multiple Classes of Shares
1. Section 18(c) of the Act provides,
in relevant part, that a closed-end
investment company may not issue or
sell any senior security if, immediately
thereafter, the company has outstanding
more than one class of senior security.
Applicants state that the creation of
multiple classes of Units of the Fund
may be prohibited by section 18(c).
2. Section 18(i) of the Act provides
that each share of stock issued by a
registered management investment
company will be a voting stock and
have equal voting rights with every
other outstanding voting stock.
Applicants state that permitting
multiple classes of Units of the Fund
may violate section 18(i) of the Act
because each class would be entitled to
exclusive voting rights with respect to
matters solely related to that class.
3. Section 6(c) 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 the
Act, or from any rule under the Act, if
and to the extent 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
request an exemption under section 6(c)
from sections 18(c) and 18(i) to permit
the Fund to issue multiple classes of
Units.
4. Applicants believe that the
proposed allocation of expenses relating
to distribution and voting rights is
equitable and will not discriminate
against any group or class of Members.
Applicants submit that the proposed
arrangements would permit the Fund to
facilitate the distribution of its Units
and provide investors with a broader
choice of Member options. Applicants
assert that the proposed closed-end
investment company multiple class
structure does not raise the concerns
underlying section 18 of the Act to any
greater degree than open-end
investment companies’ multiple class
structures that are permitted by rule
18f–3 under the Act. Applicants state
that the Fund will comply with the
provisions of rule 18f–3 as if it were an
open-end investment company.
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50358
Federal Register / Vol. 80, No. 160 / Wednesday, August 19, 2015 / Notices
CDSCs
or distribution fees. Applicants have
agreed to comply with rules 12b–1 and
17d–3 as if those rules applied to
closed-end investment companies.
For the reasons stated above,
applicants submit that the exemptions
requested under section 6(c) are
necessary and appropriate in the public
interest and are consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act. Applicants also
believe that the requested relief meets
the standards for relief in section 17(d)
of the Act and rule 17d–1 thereunder.
1. Rule 6c–10 under the Act permits
open-end investment companies to
impose CDSCs, subject to certain
conditions. Applicants state that
although the Fund does not currently
intend to impose CDSCs, the Fund will
only impose a CDSC in compliance with
rule 6c–10 as if that rule applied to
closed-end management investment
companies. The Fund would also make
required disclosures in accordance with
the requirements of Form N–1A
concerning CDSCs as if the Fund were
an open-end investment company.
Applicants further state that, in the
event it imposes CDSCs, the Fund will
apply the CDSCs (and any waivers or
scheduled variations of the CDSCs)
uniformly to all Members of a given
class and consistently with the
requirements of rule 22d–1 under the
Act.
Early Repurchase Fees
1. To the extent the Fund determines
to waive, impose scheduled variations
of, or eliminate the Early Repurchase
Fee, it will do so consistently with the
requirements of Rule 22d–1 under the
Act and the Fund’s waiver of, scheduled
variation in, or elimination of, the Early
Repurchase Fee will apply uniformly to
all classes of Units of the Fund.
tkelley on DSK3SPTVN1PROD with NOTICES
Asset-Based Service and/or Distribution
Fees
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit an
affiliated person of a registered
investment company or an affiliated
person of such person, acting as
principal, from participating in or
effecting any transaction in connection
with any joint enterprise or joint
arrangement in which the investment
company participates unless the
Commission issues an order permitting
the transaction. In reviewing
applications submitted under section
17(d) and rule 17d–1, the Commission
considers whether the participation of
the investment company in a joint
enterprise or joint arrangement is
consistent with the provisions, policies
and purposes of the Act, and the extent
to which the participation is on a basis
different from or less advantageous than
that of other participants.
2. Rule 17d–3 under the Act provides
an exemption from section 17(d) and
rule 17d–1 to permit open-end
investment companies to enter into
distribution arrangements pursuant to
rule 12b–1 under the Act. Applicants
request an order under section 17(d) and
rule 17d–1 under the Act to permit the
Fund to impose asset-based service and/
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Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Each Fund relying on the order will
comply with the provisions of rules
6c–10, 12b–1, 17d–3, 18f–3 and 22d–1
under the Act, as amended from time to
time or replaced, as if those rules
applied to closed-end management
investment companies, and will comply
with the NASD Conduct Rule 2830, as
amended from time to time, as if that
rule applied to all closed-end
management investment companies.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–20410 Filed 8–18–15; 8:45 am]
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NASDAQ proposes to list and trade
the shares of the 1–3 Month Enhanced
Short Duration ETF 3 (the ‘‘Fund’’), a
series of Plus Trust (the ‘‘Trust’’), under
NASDAQ Rule 5735, entitled Managed
Fund Shares (‘‘Managed Fund
Shares’’).4 The shares of the Fund are
collectively referred to herein as the
‘‘Shares.’’
The text of the proposed rule change
is available at https://
nasdaq.cchwallstreet.com/, at
NASDAQ’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASDAQ included statements
concerning the purpose of, and basis for,
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below.
NASDAQ has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
BILLING CODE 8011–01–P
3 ‘‘ETF’’
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75694; File No. SR–
NASDAQ–2015–089]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change
Relating to the Listing and Trading of
the 1–3 Month Enhanced Short
Duration ETF, a Series of Plus Trust
August 13, 2015.
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 July 29,
2015, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in in
Items I and II below, which Items have
been prepared by NASDAQ. The
Commission is publishing this notice to
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00097
Fmt 4703
Sfmt 4703
is exchange-traded fund.
Commission approved NASDAQ Rule 5735
in Securities Exchange Act Release No. 57962 (June
13, 2008) 73 FR 35175 (June 20, 2008) (SR–
NASDAQ–2008–039). The Commission has already
considered and approved the listing of several
actively-managed funds on the Exchange pursuant
to Rule 5735. See, e.g., Securities Exchange Act
Release Nos. 66489 (February 29, 2012), 77 FR
13379 (March 6, 2012) (SR–NASDAQ–2012–004)
(order approving listing and trading of WisdomTree
Emerging Markets Corporate Bond Fund); 70829
(November 7, 2013), 78 FR 68482 (November 14,
2013) (SR–NASDAQ–2013–122) (order approving
listing and trading of the First Trust High Income
Fund of First Trust Exchange-Traded Fund VI); and
74448 (March 5, 2015), 80 FR 12832 (March 11,
2015) (SR–NASDAQ–2015–012) (order approving
listing and trading of WisdomTree Western
Unconstrained Bond Fund). Additionally, the
Commission has previously approved the listing of
actively-managed funds on NYSE Arca, Inc.
(‘‘Arca’’) pursuant to Rule 8.600 of that exchange.
See, e.g., Securities Exchange Act Release Nos.
64643 (June 10, 2011), 76 FR 35062 (June 15, 2011)
(SR–NYSEArca–2011–21) (order approving listing
and trading of WisdomTree Global Real Return
Fund); and 67559 (August 1, 2012), 77 FR 47482
(August 8, 2012) (SR–NYSEArca–2012–57) (order
approving listing and trading of QAM Equity Hedge
ETF). The Exchange believes the proposed rule
change raises no significant issues not previously
addressed by the Commission.
4 The
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Agencies
[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)]
[Notices]
[Pages 50356-50358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20410]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31758; 812-14352]
FEG Absolute Access TEI Fund LLC and FEG Investors, LLC; Notice
of Application
August 13, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c)
and 18(i) of the Act and for an order pursuant to section 17(d) of the
Act and rule 17d-1 under the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order to permit certain
registered closed-end management investment companies to issue multiple
classes of limited liability company units (``Units'') with sales loads
and/or asset-based distribution and/or service fees and contingent
deferred sales loads (``CDSCs'').
Applicants: FEG Absolute Access TEI Fund LLC (the ``Fund''), FEG
Absolute Access Fund LLC (the ``Master Fund''), and FEG Investors, LLC
(the ``Adviser'').
Filing Dates: The application was filed on August 22, 2014, and amended
on January 9, 2015, and June 26, 2015.
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 September 8, 2015, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, 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, 201 East Fifth
Street, Suite 1600, Cincinnati, OH 45202.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879 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 Fund and the Master Fund are non-diversified closed-end
management investment companies registered under the Act and organized
as Delaware limited liability companies.\1\ The Adviser, a Delaware
limited liability company, is registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940 and serves
as investment adviser to the Master Fund. Foreside Fund Services, LLC,
a registered broker-dealer under the Securities Exchange Act of 1934
(``1934 Act''), currently acts as Distributor (as defined below) for
the Units \2\ of the Fund. Any future placement agent or distributor/
principal underwriter of the Fund (the ``Distributor'') will be
unaffiliated with the Adviser.
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\1\ The Fund currently serves as the sole feeder fund in a
master-feeder structure operating in accordance with section
12(d)(1)(E) of the Act and invests substantially all of its assets
in the Master Fund through a Cayman Islands limited duration company
(the ``Offshore Fund''). Applicants state that, consistent with
section 12(d)(1)(E) of the 1940 Act, the Fund holds no investment
security other than the securities of the Master Fund. If the
requested relief is granted, the Offshore Fund will be dissolved and
the Fund will invest directly in the Master Fund in compliance with
section 12(d)(1)(E) of the 1940 Act.
\2\ ``Units'' includes any other equivalent designation of a
proportionate ownership interest of the Fund (or any other
registered closed-end management investment company relying on the
requested order).
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2. The Fund continuously offers Units in private placements in
reliance on the provisions of Regulation D under the Securities Act of
1933, as amended (``Securities Act'').\3\ Concurrent with this
application for exemptive relief, the Fund is planning to publicly
offer its Units. Units of the Fund will not be listed on any national
securities exchange and do not trade on an over-the-counter system such
as NASDAQ. Applicants do not currently expect that a substantial and
regular secondary market for the Units will develop.
---------------------------------------------------------------------------
\3\ Units of the Fund are only sold to ``accredited investors,''
as defined in Regulation D under the Securities Act.
---------------------------------------------------------------------------
3. The Fund currently issues a single class of Units (the ``Initial
Class'') at net asset value per Unit. The Initial Class is not
currently subject to any distribution and/or service fees. Units that
are not subject to a sales load or distribution and/or service fees
when purchased will not subsequently be subject to a sales load or
distribution and/or service fees. Investors who subscribe for Units and
are admitted to the Fund become members (``Members'') of the Fund. If
the requested relief is granted, the Fund intends to redesignate its
Initial Class as ``Class I.'' Additionally, if the requested relief is
granted, the Fund currently intends to continuously offer at least two
additional classes of Units, ``Class II'' and ``Class III,'' with each
class having its own fee and expense structure. For Class III Units,
sales of the Units will be subject to a front-end sales load based on
the offering price of the Units (i.e., net asset value) for the
Distributor's services in conjunction with the sale of Units and/or the
services provided to Members (the ``Distribution Fee''). Any waiver of,
scheduled variation in, or elimination of a Distribution Fee will
comply with the requirements of rule 22d-1 under the Act as if that
rule applied to closed-end management investment companies. Each class
may (but would not necessarily) be subject to asset-based distribution
and/or service fees. Each
[[Page 50357]]
class would be subject to minimum purchase requirements.
4. In order to provide a limited degree of liquidity to Members,
the Fund may from time to time offer to repurchase Units at their then
current net asset value pursuant to rule 13e-4 under the 1934 Act
pursuant to written tenders by Members.\4\ Repurchases will be made at
such times, in such amounts and on such terms as may be determined by
the Fund's board of directors (``Board''), in its sole discretion.\5\
The Adviser expects to ordinarily recommend that the Board authorize
the Fund to offer to repurchase Units from Members semi-annually with
June 30 and December 31 valuation dates.
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\4\ Likewise, the Master Fund's repurchase offers will be
conducted pursuant to rule 13e-4 under the 1934 Act.
\5\ Units will be subject to an early repurchase fee at a rate
of 2% of the aggregate net asset value of the Member's Units
repurchased by the Fund (the ``Early Repurchase Fee'') if the
interval between the date of purchase of the Units and the valuation
date with respect to the repurchase of those Units is less than
eighteen months. The Early Repurchase Fee will apply equally to all
classes of Units of the Fund, consistent with section 18 of the Act
and rule 18f-3 under the Act. To the extent the Fund determines to
waive, impose scheduled variations of, or eliminate the Early
Repurchase Fee, it will do so consistently with the requirements of
rule 22d-1 under the Act and the Fund's waiver of, scheduled
variation in, or elimination of, the Early Repurchase Fee will apply
uniformly to all classes of shares of the Fund.
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5. Applicants request that the order also apply to any other
continuously offered registered closed-end management investment
company existing now or in the future for which the Adviser or any
entity controlling, controlled by, or under common control with the
Adviser acts as investment adviser, and which provides periodic
liquidity with respect to its Units pursuant to rule 13e-4 under the
1934 Act.\6\
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\6\ Any Fund relying on this relief will do so in a manner
consistent with the terms and conditions of the application.
Applicants represent that each investment company presently
intending to rely on the order requested in the application is
listed as an applicant.
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6. Applicants represent that any asset-based service and/or
distribution fees will comply with the provisions of rule 2830(d) of
the Conduct Rules of the National Association of Securities Dealers,
Inc. (``NASD Conduct Rule 2830'').\7\ Applicants also represent that
the Fund will disclose in its prospectus the fees, expenses and other
characteristics of each class of Units offered for sale by the
prospectus as is required for open-end multiple class funds under Form
N-1A. The Fund will disclose fund expenses borne by Members as if it
were an open-end management investment company during the reporting
period in Member reports and describe in its prospectus any
arrangements that result in breakpoints in, or elimination of, sales
loads with respect to each class of Units offered for sale by that
prospectus.\8\ The Fund will also comply with any requirements that may
be adopted by the Commission or FINRA regarding disclosure at the point
of sale and in transaction confirmations about the costs and conflicts
of interest arising out of the distribution of open-end investment
company shares, and regarding prospectus disclosure of sales loads and
revenue sharing arrangements as if those requirements applied to the
Fund.\9\ In addition, applicants will comply with applicable enhanced
fee disclosure requirements for fund of funds, including registered
funds of hedge funds.\10\
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\7\ All references to NASD Conduct Rule 2830 include any
successor or replacement rule that may be adopted by the Financial
Industry Regulatory Authority (``FINRA'').
\8\ See Shareholder Reports and Quarterly Portfolio Disclosure
of Registered Management Investment Companies, Investment Company
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring
open-end investment companies to disclose fund expenses in
shareholder reports); and Disclosure of Breakpoint Discounts by
Mutual Funds, Investment Company Act Release No. 26464 (June 7,
2004) (adopting release) (requiring open-end investment companies to
provide prospectus disclosure of certain sales load information).
\9\ See Confirmation Requirements and Point of Sale Disclosure
Requirements for Transactions in Certain Mutual Funds and Other
Securities, and Other Confirmation Requirement Amendments, and
Amendments to the Registration Form for Mutual Funds, Investment
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
\10\ Fund of Funds Investments, Investment Company Act Rel. Nos.
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006)
(adopting release). See also Rules 12d1-1, et seq. of the Act.
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7. The Fund will allocate all expenses incurred by it among the
various classes of Units based on the net assets of the Fund
attributable to each class, except that the net asset value and
expenses of each class will reflect distribution fees, service fees,
and any other incremental expenses of that class. Expenses of a Fund
allocated to a particular class of Units will be borne on a pro rata
basis by each outstanding Unit of that class. Applicants state that the
Fund will comply with the provisions of rule 18f-3 under the Act as if
it were an open-end investment company.
8. Although the Fund does not currently intend to impose CDSCs, the
Fund will only impose a CDSC in compliance with rule 6c-10 as if that
rule applied to closed-end management investment companies. Applicants
further state that, in the event it imposes CDSCs, the Fund will apply
the CDSCs (and any waivers or scheduled variations of the CDSCs)
uniformly to all Members of a given class and consistently with the
requirements of rule 22d-1 under the Act.
Applicants' Legal Analysis
Multiple Classes of Shares
1. Section 18(c) of the Act provides, in relevant part, that a
closed-end investment company may not issue or sell any senior security
if, immediately thereafter, the company has outstanding more than one
class of senior security. Applicants state that the creation of
multiple classes of Units of the Fund may be prohibited by section
18(c).
2. Section 18(i) of the Act provides that each share of stock
issued by a registered management investment company will be a voting
stock and have equal voting rights with every other outstanding voting
stock. Applicants state that permitting multiple classes of Units of
the Fund may violate section 18(i) of the Act because each class would
be entitled to exclusive voting rights with respect to matters solely
related to that class.
3. Section 6(c) 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 the Act, or from any
rule under the Act, if and to the extent 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 request an exemption under section
6(c) from sections 18(c) and 18(i) to permit the Fund to issue multiple
classes of Units.
4. Applicants believe that the proposed allocation of expenses
relating to distribution and voting rights is equitable and will not
discriminate against any group or class of Members. Applicants submit
that the proposed arrangements would permit the Fund to facilitate the
distribution of its Units and provide investors with a broader choice
of Member options. Applicants assert that the proposed closed-end
investment company multiple class structure does not raise the concerns
underlying section 18 of the Act to any greater degree than open-end
investment companies' multiple class structures that are permitted by
rule 18f-3 under the Act. Applicants state that the Fund will comply
with the provisions of rule 18f-3 as if it were an open-end investment
company.
[[Page 50358]]
CDSCs
1. Rule 6c-10 under the Act permits open-end investment companies
to impose CDSCs, subject to certain conditions. Applicants state that
although the Fund does not currently intend to impose CDSCs, the Fund
will only impose a CDSC in compliance with rule 6c-10 as if that rule
applied to closed-end management investment companies. The Fund would
also make required disclosures in accordance with the requirements of
Form N-1A concerning CDSCs as if the Fund were an open-end investment
company. Applicants further state that, in the event it imposes CDSCs,
the Fund will apply the CDSCs (and any waivers or scheduled variations
of the CDSCs) uniformly to all Members of a given class and
consistently with the requirements of rule 22d-1 under the Act.
Early Repurchase Fees
1. To the extent the Fund determines to waive, impose scheduled
variations of, or eliminate the Early Repurchase Fee, it will do so
consistently with the requirements of Rule 22d-1 under the Act and the
Fund's waiver of, scheduled variation in, or elimination of, the Early
Repurchase Fee will apply uniformly to all classes of Units of the
Fund.
Asset-Based Service and/or Distribution Fees
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an affiliated person of a registered investment company or an
affiliated person of such person, acting as principal, from
participating in or effecting any transaction in connection with any
joint enterprise or joint arrangement in which the investment company
participates unless the Commission issues an order permitting the
transaction. In reviewing applications submitted under section 17(d)
and rule 17d-1, the Commission considers whether the participation of
the investment company in a joint enterprise or joint arrangement is
consistent with the provisions, policies and purposes of the Act, and
the extent to which the participation is on a basis different from or
less advantageous than that of other participants.
2. Rule 17d-3 under the Act provides an exemption from section
17(d) and rule 17d-1 to permit open-end investment companies to enter
into distribution arrangements pursuant to rule 12b-1 under the Act.
Applicants request an order under section 17(d) and rule 17d-1 under
the Act to permit the Fund to impose asset-based service and/or
distribution fees. Applicants have agreed to comply with rules 12b-1
and 17d-3 as if those rules applied to closed-end investment companies.
For the reasons stated above, applicants submit that the exemptions
requested under section 6(c) are necessary and appropriate in the
public interest and are consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the Act.
Applicants also believe that the requested relief meets the standards
for relief in section 17(d) of the Act and rule 17d-1 thereunder.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Each Fund relying on the order will comply with the provisions of
rules 6c-10, 12b-1, 17d-3, 18f-3 and 22d-1 under the Act, as amended
from time to time or replaced, as if those rules applied to closed-end
management investment companies, and will comply with the NASD Conduct
Rule 2830, as amended from time to time, as if that rule applied to all
closed-end management investment companies.
For the Commission, by the Division of Investment Management,
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-20410 Filed 8-18-15; 8:45 am]
BILLING CODE 8011-01-P