Janus Investment Fund, et al.; Notice of Application, 50341-50347 [2015-20413]
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Federal Register / Vol. 80, No. 160 / Wednesday, August 19, 2015 / Notices
the provision that allows a construction
employer to resume covered work after
three years of withdrawal opposed to
the standard five year restriction, is not
applicable to withdrawing commercial
building cleaning industry employers.
Therefore, in the event of a mass
withdrawal, there is still a five year
restriction on resuming covered work in
the jurisdiction of the Plan. The request
includes the actuarial data on which the
Plan relies to support its contention that
the amendment will not pose a
significant risk to the insurance system
under Title IV of ERISA.
Comments
All interested persons are invited to
submit written comments on the
pending exemption request. All
comments will be made part of the
administrative record.
Issued in Washington, DC, on this 12th day
of August, 2015.
Alice C. Maroni,
Acting Director, Pension Benefit Guaranty
Corporation.
[FR Doc. 2015–20505 Filed 8–18–15; 8:45 am]
BILLING CODE 7709–02–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31753; File No. 812–14412]
Janus Investment Fund, et al.; Notice
of Application
August 13, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 12(d)(1)(J) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
12(d)(1)(A), 12(d)(1)(B) and 12(d)(1)(C)
of the Act, under sections 6(c) and 17(b)
of the Act for an exemption from section
17(a) of the Act, and under section 6(c)
of the Act for an exemption from rule
12d1–2(a) under the Act.
AGENCY:
The
requested order would (a) permit certain
registered open-end management
investment companies that operate as
‘‘funds of funds’’ to acquire shares of
certain registered open-end management
investment companies, registered
closed-end management companies,
business development companies as
defined by section 2(a)(48) of the Act
(‘‘business development companies’’),
and registered unit investment trusts
(‘‘UITs’’) that are within and outside the
same group of investment companies as
the acquiring investment companies,
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SUMMARY OF THE APPLICATION:
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and (b) permit funds of funds relying on
rule 12d1–2 under the Act to invest in
certain financial instruments.
APPLICANTS: Janus Investment Fund,
Janus Aspen Series (together with Janus
Investment Fund, the ‘‘Trusts’’), Janus
Capital Management LLC (‘‘Initial
Adviser’’) and Janus Distributors LLC
(‘‘Distributor’’).
FILING DATES: The application was filed
on January 6, 2015 and amended on
April 14, 2015 and on July 31, 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 the 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, 151 Detroit Street, Denver
CO 80206.
FOR FURTHER INFORMATION CONTACT:
Robert Shapiro, Senior Counsel, at (202)
551–7758 or Mary Kay Frech, 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. Janus Investment Fund is organized
as a Massachusetts business trust and
Janus Aspen Series is registered as a
Delaware statutory trust. Each Trust is
registered with the Commission as an
open-end management investment
company under the Act with multiple
series.1 Each Fund will pursue distinct
1 Applicants request that the order apply not only
to any existing series of the Trusts, but that the
order also extend to any future series of a Trust and
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50341
investment objectives and strategies,
will hold securities and may hold other
instruments as well. A Fund may serve
as a funding vehicle for variable annuity
and variable life contracts (‘‘Contracts,’’
and owners of such Contracts, ‘‘Contract
Owners’’) offered through separate
accounts that are registered under the
Act (‘‘Registered Separate Accounts’’) or
exempt from registration under the Act
(‘‘Unregistered Separate Accounts,’’ and
together with Registered Separate
Accounts, ‘‘Separate Accounts’’).2
2. The Initial Adviser is organized as
a Delaware limited liability company
and is registered as an ‘‘investment
adviser’’ under the Investment Advisers
Act of 1940 (the ‘‘Advisers Act’’). The
Initial Adviser, or an entity controlling,
controlled by, or under common control
with the Initial Adviser, serves, or will
serve, as the investment adviser for each
of the Funds.3 The Adviser may enter
into sub-advisory agreements with one
or more additional investment advisers
to act as ‘‘Sub-Advisers’’ with respect to
particular Funds (each, a ‘‘SubAdviser’’). Any Sub-Adviser to a Fund
will be registered with the Commission
as an investment adviser under the
Advisers Act or not subject to such
registration. The Distributor is a Broker
(as defined below) and serves as the
existing Funds’ principal underwriter
and distributor.
3. Applicants request relief to the
extent necessary to permit: (a) Each
Fund (each, a ‘‘Fund of Funds,’’ and
collectively, the ‘‘Funds of Funds’’) to
acquire shares of registered open-end
management investment companies
(each an ‘‘Unaffiliated Open-End
Investment Company’’), registered
closed-end management investment
any other existing or future registered open-end
management investment companies and any series
thereof that are part of the same ‘‘group of
investment companies,’’ as defined in section
12(d)(1)(G)(ii) of the Act, as a Trust and are, or may
in the future be, advised by the Initial Adviser or
any other investment adviser controlling, controlled
by, or under common control with the Initial
Adviser (together with the existing series of the
Trusts, each series a ‘‘Fund,’’ and collectively, the
‘‘Funds’’). All entities that currently intend to rely
on the requested order are named as applicants.
Any other entity that relies on the order in the
future will comply with the terms and conditions
of the application and the requested order.
2 Applicants state that series of the Janus Aspen
Series currently serve as funding vehicles for
Separate Accounts, and that future Funds may also
serve as funding vehicles for Separate Accounts.
3 All references to the ‘‘Initial Adviser’’ include
any successors in interest to Janus Capital
Management LLC. A ‘‘successor’’ is limited to an
entity that results from a reorganization into
another jurisdiction or a change in the type of
business organization. The term ‘‘Adviser’’ includes
(i) the Initial Adviser and (ii) any entity controlling,
controlled by, or under common control with the
Initial Adviser that serves as an investment adviser
to the Funds.
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companies, business development
companies (each registered closed-end
management investment company and
each business development company,
an ‘‘Unaffiliated Closed-End Investment
Company’’ and, together with the
Unaffiliated Open-End Investment
Companies, the ‘‘Unaffiliated
Investment Companies’’), and UITs (the
‘‘Unaffiliated UITs,’’ and, collectively
with the Unaffiliated Investment
Companies, the ‘‘Unaffiliated Funds’’),
in each case, that are not part of the
same ‘‘group of investment companies’’
as the Funds of Funds; 4 (b) the
Unaffiliated Funds, their principal
underwriters and any broker or dealer
registered under the Securities
Exchange Act of 1934 (the ‘‘1934 Act’’)
(‘‘Broker’’) to sell shares of such
Unaffiliated Funds to the Funds of
Funds; (c) the Funds of Funds to acquire
shares of other registered investment
companies, including open-end
management investment companies and
series thereof, registered closed-end
management investment companies and
business development companies, and
UITs (if any), in the same group of
investment companies as the Funds of
Funds (collectively, the ‘‘Affiliated
Funds,’’ and, together with the
Unaffiliated Funds, the ‘‘Underlying
Funds’’); 5 and (d) the Affiliated Funds,
their principal underwriters and any
Broker to sell shares of the Affiliated
Funds to the Funds of Funds.6
4 For purposes of the request for relief, the term
‘‘group of investment companies’’ means any two
or more registered investment companies, including
closed-end investment companies and business
development companies, that hold themselves out
to investors as related companies for purposes of
investment and investor services.
5 Certain of the Underlying Funds may be
registered under the Act as either UITs or open-end
management investment companies and have
obtained exemptions from the Commission
necessary to permit their shares to be listed and
traded on a national securities exchange at
negotiated prices and, accordingly, to operate as
exchange-traded funds (collectively, ‘‘ETFs’’ and
each, an ‘‘ETF’’). In addition, certain of the
Underlying Funds may in the future pursue their
investment objectives through a master-feeder
arrangement in reliance on section 12(d)(1)(E) of the
Act. In accordance with condition 12, a Fund of
Funds may not invest in an Underlying Fund that
operates as a feeder fund unless the feeder fund is
part of the same ‘‘group of investment companies’’
as its corresponding master fund or the Fund of
Funds. If a Fund of Funds invests in an Affiliated
Fund that operates as a feeder fund and the
corresponding master fund is not within the same
‘‘group of investment companies’’ as the Fund of
Funds and Affiliated Fund, the master fund would
be an Unaffiliated Fund for purposes of the
application and its conditions.
6 Applicants state that they do not believe that
investments in business development companies
present any particular considerations or concerns
that may be different from those presented by
investments in registered closed-end investment
companies. In addition, applicants represent that
the Funds of Funds will not invest in reliance on
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Applicants also request an order under
sections 6(c) and 17(b) of the Act to
exempt applicants from section 17(a) to
the extent necessary to permit
Underlying Funds to sell their shares to
Funds of Funds and to redeem their
shares from Funds of Funds.
4. Certain Underlying Investment
Companies may invest up to 25% of
their assets in a wholly-owned and
controlled subsidiary of the Underlying
Investment Company, organized under
the laws of the Cayman Islands as an
exempted company or under the laws of
another non-U.S. jurisdiction (each, a
‘‘Wholly-Owned Subsidiary’’), in order
to invest in commodity-related
instruments and certain other
instruments. For an Underlying
Investment Company that invests in a
Wholly-Owned Subsidiary, an
investment adviser to the Underlying
Investment Company would serve as
investment adviser to the WhollyOwned Subsidiary.
5. Applicants also request an
exemption under section 6(c) from rule
12d1–2 under the Act to permit any
existing or future Fund that relies on
section 12(d)(1)(G) of the Act (‘‘Section
12(d)(1)(G) Fund of Funds’’) and that
otherwise complies with rule 12d1–2(a)
under the Act to also invest, to the
extent consistent with its investment
objective(s), policies, strategies, and
limitations, in financial instruments that
may not be securities within the
meaning of section 2(a)(36) of the Act
(‘‘Other Investments’’).
Applicants’ Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in
relevant part, prohibits a registered
investment company from acquiring
shares of an investment company if the
securities represent more than 3% of the
total outstanding voting stock of the
acquired company, more than 5% of the
total assets of the acquiring company,
or, together with the securities of any
other investment companies, more than
10% of the total assets of the acquiring
company. Section 12(d)(1)(B) of the Act
prohibits a registered open-end
investment company, its principal
underwriter, and any broker or dealer
from selling the investment company’s
shares to another investment company if
the sale will cause the acquiring
company to own more than 3% of the
acquired company’s total outstanding
voting stock, or if the sale will cause
more than 10% of the acquired
company’s total outstanding voting
the order in business development companies or
closed-end investment companies that are not listed
and traded on a national securities exchange.
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stock to be owned by investment
companies generally. Section 12(d)(1)(C)
prohibits an investment company from
acquiring any security issued by a
registered closed-end investment
company if such acquisition would
result in the acquiring company, any
other investment companies having the
same investment adviser, and
companies controlled by such
investment companies, collectively,
owning more than 10% of the
outstanding voting stock of the
registered closed-end investment
company.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants seek an exemption under
section 12(d)(1)(J) of the Act from the
limitations of sections 12(d)(1)(A), (B)
and (C) to the extent necessary to
permit: (i) The Funds of Funds to
acquire shares of Underlying Funds in
excess of the limits set forth in section
12(d)(1)(A) and (C) of the Act; and (ii)
the Underlying Funds, their principal
underwriters and any Broker to sell
shares of the Underlying Funds to the
Funds of Funds in excess of the limits
set forth in section 12(d)(1)(B) of the
Act.
3. Applicants state that the proposed
arrangement will not give rise to the
policy concerns underlying sections
12(d)(1)(A), (B) and (C), which include
concerns about undue influence by a
fund of funds over underlying funds,
excessive layering of fees, and overly
complex fund structures. Accordingly,
applicants believe that the requested
exemption is consistent with the public
interest and the protection of investors.
4. Applicants submit that the
proposed structure will not result in the
exercise of undue influence by the Fund
of Funds or its affiliated persons over
the Underlying Funds. Applicants assert
that the concern about undue influence
does not arise in connection with a
Fund of Funds’ investment in the
Affiliated Funds because they are part of
the same group of investment
companies. To limit the control a Fund
of Funds or Fund of Funds Affiliate 7
7 A ‘‘Fund of Funds Affiliate’’ is the Adviser, any
Sub-Adviser, promoter or principal underwriter of
a Fund of Funds, as well as any person controlling,
controlled by or under common control with any
of those entities. An ‘‘Unaffiliated Fund Affiliate’’
is an investment adviser(s), sponsor, promoter or
principal underwriter of any Unaffiliated Fund or
any person controlling, controlled by or under
common control with any of those entities.
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may have over an Unaffiliated Fund,
applicants propose a condition
prohibiting the Adviser and any person
controlling, controlled by or under
common control with the Adviser, and
any investment company and any issuer
that would be an investment company
but for section 3(c)(1) or section 3(c)(7)
of the Act advised or sponsored by the
Adviser or any person controlling,
controlled by or under common control
with the Adviser (collectively, the
‘‘Group’’) from controlling (individually
or in the aggregate) an Unaffiliated Fund
within the meaning of section 2(a)(9) of
the Act. The same prohibition would
apply to any Sub-Adviser to a Fund of
Funds and any person controlling,
controlled by or under common control
with the Sub-Adviser, and any
investment company or issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
(or portion of such investment company
or issuer) advised or sponsored by the
Sub-Adviser or any person controlling,
controlled by or under common control
with the Sub-Adviser (collectively, the
‘‘Sub-Adviser Group’’).
5. With respect to closed-end
Underlying Funds, applicants note that
although closed-end funds may not be
unduly influenced by a holder’s right of
redemption, closed-end Underlying
Funds may be unduly influenced by a
holder’s ability to vote a large block of
stock. To address this concern,
applicants submit that, with respect to
a Fund’s investment in an Unaffiliated
Closed-End Investment Company, (i)
each member of the Group or SubAdviser Group that is an investment
company or an issuer that would be an
investment company but for section
3(c)(1) or 3(c)(7) of the Act will vote its
shares of the Unaffiliated Closed-End
Investment Company in the manner
prescribed by section 12(d)(1)(E) of the
Act and (ii) each other member of the
Group or Sub-Adviser Group will vote
its shares of the Unaffiliated Closed-End
Investment Company in the same
proportion as the vote of all other
holders of the same type of such
Unaffiliated Closed-End Investment
Company’s shares. Applicants state that,
in this way, an Unaffiliated Closed-End
Investment Company will be protected
from undue influence by a Fund of
Funds through the voting of the
Unaffiliated Closed-End Investment
Company’s shares.
6. With respect to Separate Accounts,
applicants state that a Registered
Separate Account will seek voting
instructions from its Contract Owners
and will vote its shares of an
Unaffiliated Fund in accordance with
the instructions received and will vote
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those shares for which no instructions
were received in the same proportion as
the shares for which instructions were
received. An Unregistered Separate
Account will either: (i) Vote its shares
of the Unaffiliated Fund in the same
proportion as the vote of all other
holders of the Unaffiliated Fund’s
shares; or (ii) seek voting instructions
from its Contract Owners and vote its
shares of the Unaffiliated Fund in
accordance with the instructions
received and vote those shares for
which no instructions were received in
the same proportion as the shares for
which instructions were received.
7. Applicants propose other
conditions to limit the potential for
undue influence over the Unaffiliated
Funds, including that no Fund of Funds
or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an
investment adviser to an Unaffiliated
Investment Company or sponsor to an
Unaffiliated Trust) will cause an
Unaffiliated Fund to purchase a security
in an offering of securities during the
existence of any underwriting or selling
syndicate of which a principal
underwriter is an Underwriting Affiliate
(‘‘Affiliated Underwriting’’).8
8. To further ensure that an
Unaffiliated Investment Company
understands the implications of a Fund
of Funds’ investment under the
requested exemptive relief, prior to its
investment in the shares of an
Unaffiliated Investment Company in
excess of the limit of section
12(d)(1)(A)(i) of the Act, a Fund of
Funds and the Unaffiliated Investment
Company will execute an agreement
stating, without limitation, that each of
their boards of directors or trustees (for
any entity, the ‘‘Board’’) and their
investment advisers understand the
terms and conditions of the order and
agree to fulfill their responsibilities
under the order (the ‘‘Participation
Agreement’’). Applicants note that an
Unaffiliated Investment Company
(including an ETF or an Unaffiliated
Closed-End Investment Company)
would also retain its right to reject any
initial investment by a Fund of Funds
in excess of the limits in section
12(d)(1)(A)(i) of the Act by declining to
execute the Participation Agreement
with the Fund of Funds. In addition, an
8 An ‘‘Underwriting Affiliate’’ is a principal
underwriter in any underwriting or selling
syndicate that is an officer, director, trustee,
advisory board member, investment adviser, subadviser or employee of the Fund of Funds, or a
person of which any such officer, director, trustee,
investment adviser, sub-adviser, member of an
advisory board or employee is an affiliated person.
An Underwriting Affiliate does not include any
person whose relationship to an Unaffiliated Fund
is covered by section 10(f) of the Act.
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50343
Unaffiliated Investment Company (other
than an ETF or closed-end fund whose
shares are purchased by a Fund of
Funds in the secondary market) will
retain its right at all times to reject any
investment by a Fund of Funds. Finally,
subject solely to the giving of notice to
a Fund of Funds and the passage of a
reasonable notice period, an
Unaffiliated Fund (including an ETF or
an Unaffiliated Closed-End Investment
Company) could terminate a
Participation Agreement with the Fund
of Funds.
9. Applicants state that they do not
believe that the proposed arrangement
will result in excessive layering of fees.
The Board of each Fund of Funds,
including a majority of the trustees who
are not ‘‘interested persons’’ within the
meaning of section 2(a)(19) of the Act
(the ‘‘Independent Trustees’’), will find
that the management or advisory fees
charged under a Fund of Funds’
advisory contract are based on services
provided that are in addition to, rather
than duplicative of, services provided
under the advisory contract(s) of any
Underlying Fund in which the Fund of
Funds may invest. In addition, the
Adviser will waive fees otherwise
payable to it by a Fund of Funds in an
amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Unaffiliated Investment Company under
rule 12b-1 under the Act) received from
an Unaffiliated Fund by the Adviser, or
an affiliated person of the Adviser, other
than any advisory fees paid to the
Adviser or an affiliated person of the
Adviser by the Unaffiliated Investment
Company, in connection with the
investment by the Fund of Funds in the
Unaffiliated Fund.
10. Applicants state that, with respect
to Registered Separate Accounts that
invest in a Fund of Funds, no sales load
will be charged at the Fund of Funds
level or at the Underlying Fund level.
Other sales charges and services fees, as
defined in Rule 2830 of the NASD
Conduct Rules (‘‘NASD Conduct Rule
2830’’), if any, will only be charged at
the Fund of Funds level or at the
Underlying Fund level, not both.9 With
respect to other investments in a Fund
of Funds, any sales charges and/or
service fees charged with respect to
shares of a Fund of Funds will not
exceed the limits applicable to funds of
funds as set forth in NASD Conduct
Rule 2830.
11. Applicants represent that each
Fund of Funds will represent in the
9 Any references to NASD Conduct Rule 2830
include any successor or replacement FINRA rule
to NASD Conduct Rule 2830.
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Participation Agreement that no
insurance company sponsoring a
Registered Separate Account funding
Contracts will be permitted to invest in
the Fund of Funds unless the insurance
company has certified to the Fund of
Funds that the aggregate of all fees and
charges associated with each contract
that invests in the Fund of Funds,
including fees and charges at the
Separate Account, Fund of Funds, and
the Underlying Fund levels, are
reasonable in relation to the services
rendered, the expenses expected to be
incurred, and the risks assumed by the
insurance company.
12. Applicants submit that the
proposed arrangement will not create an
overly complex fund structure.
Applicants note that no Underlying
Fund will acquire securities of any other
investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
in certain circumstances identified in
condition 12 below.
13. Applicants state that investments
by an Underlying Investment Company
in a Wholly-Owned Subsidiary also do
not raise concerns about undue
influence, layering of fees and complex
structures. Applicants represent that,
with respect to each Underlying
Investment Company in which a Fund
of Funds will invest that has a WhollyOwned Subsidiary: (1) Such Underlying
Investment Company will be the sole
and legal beneficial owner of its WhollyOwned Subsidiary; (2) an investment
adviser to such Underlying Investment
Company will manage the investments
of both the Underlying Investment
Company and its Wholly-Owned
Subsidiary; (3) such Underlying
Investment Company’s investment in
the Wholly-Owned Subsidiary enables
the Underlying Investment Company to
continue to qualify as a regulated
investment company under subchapter
M of the Internal Revenue Code of 1986;
and (4) there will be no inappropriate
layering of fees and expenses as a result
of such Underlying Investment
Company investing in a Wholly-Owned
Subsidiary. Applicants further represent
that an Underlying Investment
Company that invests in a WhollyOwned Subsidiary will consolidate its
financial statements with the WhollyOwned Subsidiary’s financial
statements, provided that the applicable
accounting standards permit
consolidation. In addition, in assessing
compliance with the asset coverage
requirements under section 18(f) of the
Act, an Underlying Investment
Company will deem the assets,
liabilities and indebtedness of a Wholly-
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Owned Subsidiary in which the
Underlying Investment Company
invests as its own. In addition, the
expenses of the Wholly-Owned
Subsidiary are included in the total
annual fund operating expenses in the
prospectus of the relevant Underlying
Investment Company.
B. Section 17(a)
1. Section 17(a) of the Act generally
prohibits sales or purchases of securities
between a registered investment
company and its affiliated persons or
affiliated persons of such persons.
Section 2(a)(3) of the Act defines an
‘‘affiliated person’’ of another person to
include (a) any person directly or
indirectly owning, controlling, or
holding with power to vote, 5% or more
of the outstanding voting securities of
the other person; (b) any person 5% or
more of whose outstanding voting
securities are directly or indirectly
owned, controlled, or held with power
to vote by the other person; and (c) any
person directly or indirectly controlling,
controlled by, or under common control
with the other person.
2. Applicants state that the Funds of
Funds and the Affiliated Funds may be
deemed to be under the common control
of the Adviser and, therefore, affiliated
persons of one another. Applicants also
state that a Fund of Funds and an
Unaffiliated Fund also may be deemed
to be affiliated persons of one another if
the Fund of Funds owns 5% or more of
the outstanding voting securities of such
Unaffiliated Fund. Applicants state that
the sale of shares by the Unaffiliated
Open-End Investment Companies or
Unaffiliated UITs to the Funds of Funds
and the redemption of those shares by
the Funds of Funds could be deemed to
violate section 17(a) of the Act.10
3. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (i) The terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (ii) the
proposed transaction is consistent with
the policies of each registered
investment company concerned; and
(iii) the proposed transaction is
consistent with the general purposes of
the Act. Section 6(c) of the Act permits
10 Applicants acknowledge that receipt of any
compensation by (a) an affiliated person of a Fund
of Funds, or an affiliated person of such person, for
the purchase by the Fund of Funds of shares of an
Underlying Fund or (b) an affiliated person of an
Underlying Fund, or an affiliated person of such
person, for the sale by the Underlying Fund of its
shares to a Fund of Funds may be prohibited by
section 17(e) (1) of the Act. The Participation
Agreement also will include this acknowledgement.
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the Commission to exempt any person
or transactions from any provision of
the Act 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.
4. Applicants submit that the
proposed transactions satisfy the
standards for relief under sections 17(b)
and 6(c) of the Act. Applicants state that
the terms of the transactions are
reasonable and fair and do not involve
overreaching. Applicants state that the
terms upon which an Underlying Fund
will sell its shares to or purchase its
shares from a Fund of Funds will be in
accordance with the rules and
regulations under the Act.11 Applicants
also state that the proposed transactions
will be consistent with the policies of
each Fund of Funds and each
Underlying Fund, and with the general
purposes of the Act.
C. Other Investments by Section
12(d)(1)(G) Funds of Funds
1. Section 12(d)(1)(G) of the Act
provides that section 12(d)(1) will not
apply to securities of an acquired
company purchased by an acquiring
company if: (i) The acquiring company
and acquired company are part of the
same ‘‘group of investment companies,’’
as defined in section 12(d)(1)(G)(ii) of
the Act; (ii) the acquiring company
holds only securities of acquired
companies that are part of the same
‘‘group of investment companies,’’ as
defined in section 12(d)(1)(G)(ii) of the
Act, government securities, and shortterm paper; (iii) the aggregate sales loads
and distribution-related fees of the
acquiring company and the acquired
company are not excessive under rules
adopted pursuant to section 22(b) or
section 22(c) of the Act by a securities
11 Applicants note that a Fund of Funds generally
would purchase and sell shares of an Underlying
Fund that operates as an ETF or a closed-end fund
through secondary market transactions rather than
through principal transactions with the Underlying
Fund. Applicants nevertheless request relief from
sections 17(a)(1) and (2) to permit each ETF or
closed-end fund that is an affiliated person, or an
affiliated person of an affiliated person, as defined
in section 2(a)(3) of the Act, of a Fund of Funds to
sell shares to or redeem shares from the Fund of
Funds. This includes, in the case of sales and
redemptions of shares of ETFs, in-kind transactions
that accompany such sales and redemptions.
Applicants are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where an ETF or closed-end fund
could be deemed an affiliated person, or an
affiliated person of an affiliated person, of a Fund
of Funds because an investment adviser to the ETF
or closed-end fund or an entity controlling,
controlled by or under common control with the
investment adviser to the ETF or closed-end fund,
is also an investment adviser to the Fund of Funds.
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association registered under section 15A
of the 1934 Act or by the Commission;
and (iv) the acquired company has a
policy that prohibits it from acquiring
securities of registered open-end
management investment companies or
registered UITs in reliance on section
12(d)(1)(F) or (G) of the Act.
2. Rule 12d1–2 under the Act permits
a registered open-end investment
company or a registered UIT that relies
on section 12(d)(1)(G) of the Act to
acquire, in addition to securities issued
by another registered investment
company in the same group of
investment companies, government
securities, and short-term paper: (1)
Securities issued by an investment
company that is not in the same group
of investment companies, when the
acquisition is in reliance on section
12(d)(1)(A) or 12(d)(1)(F) of the Act; (2)
securities (other than securities issued
by an investment company); and (3)
securities issued by a money market
fund, when the investment is in reliance
on rule 12d1–1 under the Act. For the
purposes of rule 12d1–2, ‘‘securities’’
means any security as defined in section
2(a)(36) of the Act.
3. Applicants state that the proposed
arrangement would comply with rule
12d1–2 under the Act, but for the fact
that the Section 12(d)(1)(G) Funds of
Funds may invest a portion of their
assets in Other Investments. Applicants
request an order under section 6(c) of
the Act for an exemption from rule
12d1–2(a) to allow the Section
12(d)(1)(G) Funds of Funds to invest in
Other Investments. Applicants assert
that permitting a Section 12(d)(1)(G)
Fund of Funds to invest in Other
Investments as described in the
application would not raise any of the
concerns that section 12(d)(1) of the Act
was intended to address.
4. Consistent with its fiduciary
obligations under the Act, a Section
12(d)(1)(G) Fund of Funds’ Board will
review the advisory fees charged by the
Section 12(d)(1)(G) Fund of Funds’
investment adviser(s) to ensure that the
fees are based on services provided that
are in addition to, rather than
duplicative of, services provided
pursuant to the advisory agreement of
any investment company in which the
Section 12(d)(1)(G) Fund of Funds may
invest.
Applicants’ Conditions
A. Investments by Funds of Funds in
Underlying Funds
Applicants agree that the order
granting the requested relief to permit
Funds of Funds to invest in Underlying
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Funds shall be subject to the following
conditions:
1. The members of the Group will not
control (individually or in the aggregate)
an Unaffiliated Fund within the
meaning of section 2(a)(9) of the Act.
The members of a Sub-Adviser Group
will not control (individually or in the
aggregate) an Unaffiliated Fund within
the meaning of section 2(a)(9) of the Act.
With respect to a Fund’s investment in
an Unaffiliated Closed-End Investment
Company, (i) each member of the Group
or Sub-Adviser Group that is an
investment company or an issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
will vote its shares of the Unaffiliated
Closed-End Investment Company in the
manner prescribed by section
12(d)(1)(E) of the Act and (ii) each other
member of the Group or Sub-Adviser
Group will vote its shares of the
Unaffiliated Closed-End Investment
Company in the same proportion as the
vote of all other holders of the same
type of such Unaffiliated Closed-End
Investment Company’s shares. If, as a
result of a decrease in the outstanding
voting securities of any other
Unaffiliated Fund, the Group or a SubAdviser Group, each in the aggregate,
becomes a holder of more than 25% of
the outstanding voting securities of such
Unaffiliated Fund, then the Group or the
Sub-Adviser Group (except for any
member of the Group or Sub-Adviser
Group that is a Separate Account) will
vote its shares of the Unaffiliated Fund
in the same proportion as the vote of all
other holders of the Unaffiliated Fund’s
shares. A Registered Separate Account
will seek voting instructions from its
Contract Owners and will vote its shares
of an Unaffiliated Fund in accordance
with the instructions received and will
vote those shares for which no
instructions were received in the same
proportion as the shares for which
instructions were received. An
Unregistered Separate Account will
either: (i) Vote its shares of the
Unaffiliated Fund in the same
proportion as the vote of all other
holders of the Unaffiliated Fund’s
shares; or (ii) seek voting instructions
from its Contract Owners and vote its
shares in accordance with the
instructions received and vote those
shares for which no instructions were
received in the same proportion as the
shares for which instructions were
received. This condition will not apply
to a Sub-Adviser Group with respect to
an Unaffiliated Fund for which the SubAdviser or a person controlling,
controlled by, or under common control
with the Sub-Adviser acts as the
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50345
investment adviser within the meaning
of section 2(a)(20)(A) of the Act (in the
case of an Unaffiliated Investment
Company) or as the sponsor (in the case
of an Unaffiliated UIT).
2. No Fund of Funds or Fund of
Funds Affiliate will cause any existing
or potential investment by the Fund of
Funds in an Unaffiliated Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund of Funds Affiliate and the
Unaffiliated Fund or an Unaffiliated
Fund Affiliate.
3. The Board of each Fund of Funds,
including a majority of the Independent
Trustees, will adopt procedures
reasonably designed to ensure that the
Adviser and any Sub-Adviser to the
Fund of Funds are conducting the
investment program of the Fund of
Funds without taking into account any
consideration received by the Fund of
Funds or Fund of Funds Affiliate from
an Unaffiliated Fund or an Unaffiliated
Fund Affiliate in connection with any
services or transactions.
4. Once an investment by a Fund of
Funds in the securities of an
Unaffiliated Investment Company
exceeds the limit of section
12(d)(1)(A)(i) of the Act, the Board of
the Unaffiliated Investment Company,
including a majority of the Independent
Trustees, will determine that any
consideration paid by the Unaffiliated
Investment Company to a Fund of
Funds or a Fund of Funds Affiliate in
connection with any services or
transactions: (a) Is fair and reasonable in
relation to the nature and quality of the
services and benefits received by the
Unaffiliated Investment Company; (b) is
within the range of consideration that
the Unaffiliated Investment Company
would be required to pay to another
unaffiliated entity in connection with
the same services or transactions; and
(c) does not involve overreaching on the
part of any person concerned. This
condition does not apply with respect to
any services or transactions between an
Unaffiliated Investment Company and
its investment adviser(s), or any person
controlling, controlled by, or under
common control with such investment
adviser(s).
5. No Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
adviser to an Unaffiliated Investment
Company or sponsor to an Unaffiliated
UIT) will cause an Unaffiliated Fund to
purchase a security in any Affiliated
Underwriting.
6. The Board of an Unaffiliated
Investment Company, including a
majority of the Independent Trustees,
will adopt procedures reasonably
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designed to monitor any purchases of
securities by the Unaffiliated Investment
Company in an Affiliated Underwriting
once an investment by a Fund of Funds
in the securities of the Unaffiliated
Investment Company exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly
from an Underwriting Affiliate. The
Board of the Unaffiliated Investment
Company will review these purchases
periodically, but no less frequently than
annually, to determine whether the
purchases were influenced by the
investment by the Fund of Funds in the
Unaffiliated Investment Company. The
Board of the Unaffiliated Investment
Company will consider, among other
things: (a) Whether the purchases were
consistent with the investment
objectives and policies of the
Unaffiliated Investment Company; (b)
how the performance of securities
purchased in an Affiliated Underwriting
compares to the performance of
comparable securities purchased during
a comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (c)
whether the amount of securities
purchased by the Unaffiliated
Investment Company in Affiliated
Underwritings and the amount
purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board of the Unaffiliated Investment
Company will take any appropriate
actions based on its review, including,
if appropriate, the institution of
procedures designed to ensure that
purchases of securities in Affiliated
Underwritings are in the best interest of
shareholders.
7. Each Unaffiliated Investment
Company will maintain and preserve
permanently, in an easily accessible
place, a written copy of the procedures
described in the preceding condition,
and any modifications to such
procedures, and will maintain and
preserve for a period of not less than six
years from the end of the fiscal year in
which any purchase in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in an Affiliated Underwriting
once an investment by a Fund of Funds
in the securities of an Unaffiliated
Investment Company exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
setting forth (1) the party from whom
the securities were acquired, (2) the
identity of the underwriting syndicate’s
members, (3) the terms of the purchase,
and (4) the information or materials
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19:14 Aug 18, 2015
Jkt 235001
upon which the determinations of the
Board of the Unaffiliated Investment
Company were made.
8. Prior to its investment in shares of
an Unaffiliated Investment Company in
excess of the limit set forth in section
12(d)(1)(A)(i) of the Act, the Fund of
Funds and the Unaffiliated Investment
Company will execute a Participation
Agreement stating, without limitation,
that their Boards and their investment
advisers understand the terms and
conditions of the order and agree to
fulfill their responsibilities under the
order. At the time of its investment in
shares of an Unaffiliated Investment
Company in excess of the limit set forth
in section 12(d)(1)(A)(i), a Fund of
Funds will notify the Unaffiliated
Investment Company of the investment.
At such time, the Fund of Funds will
also transmit to the Unaffiliated
Investment Company a list of the names
of each Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Unaffiliated
Investment Company of any changes to
the list as soon as reasonably practicable
after a change occurs. The Unaffiliated
Investment Company and the Fund of
Funds will maintain and preserve a
copy of the order, the Participation
Agreement, and the list with any
updated information for the duration of
the investment and for a period of not
less than six years thereafter, the first
two years in an easily accessible place.
9. Before approving any advisory
contract under section 15 of the Act, the
Board of each Fund of Funds, including
a majority of the Independent Trustees,
shall find that the advisory fees charged
under the advisory contract are based on
services provided that are in addition to,
rather than duplicative of, services
provided under the advisory contract(s)
of any Underlying Fund in which the
Fund of Funds may invest. Such
finding, and the basis upon which the
finding was made, will be recorded fully
in the minute books of the appropriate
Fund of Funds.
10. The Adviser will waive fees
otherwise payable to it by a Fund of
Funds in an amount at least equal to any
compensation (including fees received
pursuant to any plan adopted by an
Unaffiliated Investment Company
pursuant to rule 12b-1 under the Act)
received from an Unaffiliated Fund (or
its Wholly-Owned Subsidiary) by the
Adviser, or an affiliated person of the
Adviser, other than any advisory fees
paid to the Adviser or its affiliated
person by the Unaffiliated Investment
Company (or its Wholly-OwnedSubsidiary), in connection with the
investment by the Fund of Funds in the
Unaffiliated Fund. Any Sub-Adviser
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will waive fees otherwise payable to the
Sub-Adviser, directly or indirectly, by
the Fund of Funds in an amount at least
equal to any compensation received by
the Sub-Adviser, or an affiliated person
of the Sub-Adviser, from an Unaffiliated
Fund (or its Wholly-Owned Subsidiary),
other than any advisory fees paid to the
Sub-Adviser or its affiliated person by
the Unaffiliated Investment Company
(or its Wholly-Owned Subsidiary), in
connection with the investment by the
Fund of Funds in the Unaffiliated Fund
made at the direction of the SubAdviser. In the event that the SubAdviser waives fees, the benefit of the
waiver will be passed through to the
applicable Fund of Funds.
11. With respect to Registered
Separate Accounts that invest in a Fund
of Funds, no sales load will be charged
at the Fund of Funds level or at the
Underlying Fund level. Other sales
charges and service fees, as defined in
NASD Conduct Rule 2830, if any, will
only be charged at the Fund of Funds
level or at the Underlying Fund level,
not both. With respect to other
investments in a Fund of Funds, any
sales charges and/or service fees
charged with respect to shares of a Fund
of Funds will not exceed the limits
applicable to funds of funds set forth in
NASD Conduct Rule 2830.
12. No Underlying Fund will acquire
securities of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act, in excess of
the limits contained in section
12(d)(1)(A) of the Act, other than any
Wholly-Owned Subsidiary as described
in the application, and except to the
extent that such Underlying Fund: (a)
Acquires such securities in compliance
with section 12(d)(1)(E) of the Act and
is either an Affiliated Fund or is in the
same ‘‘group of investment companies’’
as its corresponding master fund; (b)
receives securities of another
investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
the purpose of evading section 12(d)(1)
of the Act); or (c) acquires (or is deemed
to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund to: (i)
Acquire securities of one or more
investment companies for short-term
cash management purposes or (ii)
engage in inter-fund borrowing and
lending transactions. Further, no
Wholly-Owned Subsidiary will acquire
securities of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act other than
money market funds that comply with
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rule 2a–7 for short-term cash
management purposes.
B. Other Investments by Section
12(d)(1)(G) Funds of Funds
In addition, applicants agree that the
order granting the requested relief to
permit Section 12(d)(1)(G) Funds of
Funds to invest in Other Investments
shall be subject to the following
condition:
1. Applicants will comply with all
provisions of rule 12d1–2 under the Act,
except for paragraph (a)(2) to the extent
that it restricts any Section 12(d)(1)(G)
Fund of Funds from investing in Other
Investments as described in the
application.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–20413 Filed 8–18–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75697; File No. SR–FINRA–
2015–020]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of a Longer Period for Commission
Action on a Proposed Rule Change To
Expand FINRA’s Alternative Trading
System (‘‘ATS’’) Transparency
Initiative To Publish OTC Equity
Volume Executed Outside ATSs
tkelley on DSK3SPTVN1PROD with NOTICES
August 13, 2015.
On June 23, 2015, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to expand FINRA’s alternative
trading system transparency initiative to
publish the remaining equity volume
executed over-the-counter by FINRA
members, including, among other
trading activity, non-ATS electronic
trading systems and internalized trades.
The proposed rule change was
published for comment in the Federal
Register on July 9, 2015.3 The
Commission received two comments on
the proposal.4
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 75356
(July 2, 2015), 80 FR 39463 (July 9, 2015)
(‘‘Notice’’).
4 See letter from Kerry Baker Relf, Head of
Content Acquisition and Rights Management,
2 17
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19:14 Aug 18, 2015
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Section 19(b)(2) of the Act 5 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is August 23, 2015. The Commission is
extending this 45-day time period. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change,
comments received, and any response to
comments submitted by FINRA.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,6
designates October 7, 2015, as the date
by which the Commission shall
approve, disapprove, or institute
proceedings to determine whether to
disapprove the proposed rule change
(File Number SR–FINRA–2015–020).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Brent J. Fields,
Secretary.
[FR Doc. 2015–20414 Filed 8–18–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31754; 812–14356]
Pulteney Street Capital Management,
LLC and PSP Family of Funds; Notice
of Application
August 13, 2015.
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 in rule
20a-1 under the Act, Item 19(a)(3) of
AGENCY:
Thomson Reuters to Brent J. Fields, Secretary,
Commission, dated July 20, 2015 and letter from
Theodore R. Lazo, Managing Director and Associate
General Counsel, Securities Industry and Financial
Markets Association, to Brent J. Fields, Secretary,
Commission, dated July 30, 2015.
5 15 U.S.C. 78s(b)(2).
6 Id.
7 17 CFR 200.30–3(a)(31).
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50347
Form N–1A, Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
Schedule 14A under the Securities
Exchange Act of 1934, and sections 6–
07(2)(a), (b), and (c) of Regulation S–X
(‘‘Disclosure Requirements’’). The
requested exemption would permit an
investment adviser to hire and replace
certain subadvisers without shareholder
approval and grant relief from the
Disclosure Requirements as they relate
to fees paid to the subadvisers.
PSP Family of Funds (the
‘‘Trust’’), a Delaware statutory trust
registered under the Act as an open-end
management investment company, and
Pulteney Street Capital Management,
LLC, a Delaware limited liability
company registered as an investment
adviser under the Investment Advisers
Act of 1940 (the ‘‘Adviser,’’ and,
collectively with the Trust, the
‘‘Applicants’’).
FILING DATES: The application was filed
on September 5, 2014 and amended on
December 18, 2014, June 10, 2015, and
July 27, 2015.
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 September 8, 2015, and
should be accompanied by proof of
service on the 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: Sean M. McCooey, PSP
Family of Funds, 1345 Avenue of the
Americas, 3rd Floor, New York, NY
10105; and Jeffrey T. Skinner, Esq.,
Kilpatrick, Townsend & Stockton LLP,
1001 W. Fourth Street, Winston-Salem,
NC 27101.
FOR FURTHER INFORMATION CONTACT:
Parisa Haghshenas, Senior Counsel, at
(202) 551–6723, or Holly Hunter-Ceci,
Branch Chief, at (202) 551–6869
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
APPLICANTS:
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[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)]
[Notices]
[Pages 50341-50347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20413]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31753; File No. 812-14412]
Janus Investment Fund, et al.; Notice of Application
August 13, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 12(d)(1)(J)
of the Investment Company Act of 1940 (the ``Act'') for an exemption
from sections 12(d)(1)(A), 12(d)(1)(B) and 12(d)(1)(C) of the Act,
under sections 6(c) and 17(b) of the Act for an exemption from section
17(a) of the Act, and under section 6(c) of the Act for an exemption
from rule 12d1-2(a) under the Act.
-----------------------------------------------------------------------
Summary of the Application: The requested order would (a) permit
certain registered open-end management investment companies that
operate as ``funds of funds'' to acquire shares of certain registered
open-end management investment companies, registered closed-end
management companies, business development companies as defined by
section 2(a)(48) of the Act (``business development companies''), and
registered unit investment trusts (``UITs'') that are within and
outside the same group of investment companies as the acquiring
investment companies, and (b) permit funds of funds relying on rule
12d1-2 under the Act to invest in certain financial instruments.
Applicants: Janus Investment Fund, Janus Aspen Series (together with
Janus Investment Fund, the ``Trusts''), Janus Capital Management LLC
(``Initial Adviser'') and Janus Distributors LLC (``Distributor'').
Filing Dates: The application was filed on January 6, 2015 and amended
on April 14, 2015 and on July 31, 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 the 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, 151 Detroit Street,
Denver CO 80206.
FOR FURTHER INFORMATION CONTACT: Robert Shapiro, Senior Counsel, at
(202) 551-7758 or Mary Kay Frech, 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. Janus Investment Fund is organized as a Massachusetts business
trust and Janus Aspen Series is registered as a Delaware statutory
trust. Each Trust is registered with the Commission as an open-end
management investment company under the Act with multiple series.\1\
Each Fund will pursue distinct investment objectives and strategies,
will hold securities and may hold other instruments as well. A Fund may
serve as a funding vehicle for variable annuity and variable life
contracts (``Contracts,'' and owners of such Contracts, ``Contract
Owners'') offered through separate accounts that are registered under
the Act (``Registered Separate Accounts'') or exempt from registration
under the Act (``Unregistered Separate Accounts,'' and together with
Registered Separate Accounts, ``Separate Accounts'').\2\
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\1\ Applicants request that the order apply not only to any
existing series of the Trusts, but that the order also extend to any
future series of a Trust and any other existing or future registered
open-end management investment companies and any series thereof that
are part of the same ``group of investment companies,'' as defined
in section 12(d)(1)(G)(ii) of the Act, as a Trust and are, or may in
the future be, advised by the Initial Adviser or any other
investment adviser controlling, controlled by, or under common
control with the Initial Adviser (together with the existing series
of the Trusts, each series a ``Fund,'' and collectively, the
``Funds''). All entities that currently intend to rely on the
requested order are named as applicants. Any other entity that
relies on the order in the future will comply with the terms and
conditions of the application and the requested order.
\2\ Applicants state that series of the Janus Aspen Series
currently serve as funding vehicles for Separate Accounts, and that
future Funds may also serve as funding vehicles for Separate
Accounts.
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2. The Initial Adviser is organized as a Delaware limited liability
company and is registered as an ``investment adviser'' under the
Investment Advisers Act of 1940 (the ``Advisers Act''). The Initial
Adviser, or an entity controlling, controlled by, or under common
control with the Initial Adviser, serves, or will serve, as the
investment adviser for each of the Funds.\3\ The Adviser may enter into
sub-advisory agreements with one or more additional investment advisers
to act as ``Sub-Advisers'' with respect to particular Funds (each, a
``Sub-Adviser''). Any Sub-Adviser to a Fund will be registered with the
Commission as an investment adviser under the Advisers Act or not
subject to such registration. The Distributor is a Broker (as defined
below) and serves as the existing Funds' principal underwriter and
distributor.
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\3\ All references to the ``Initial Adviser'' include any
successors in interest to Janus Capital Management LLC. A
``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization. The term ``Adviser'' includes (i) the Initial
Adviser and (ii) any entity controlling, controlled by, or under
common control with the Initial Adviser that serves as an investment
adviser to the Funds.
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3. Applicants request relief to the extent necessary to permit: (a)
Each Fund (each, a ``Fund of Funds,'' and collectively, the ``Funds of
Funds'') to acquire shares of registered open-end management investment
companies (each an ``Unaffiliated Open-End Investment Company''),
registered closed-end management investment
[[Page 50342]]
companies, business development companies (each registered closed-end
management investment company and each business development company, an
``Unaffiliated Closed-End Investment Company'' and, together with the
Unaffiliated Open-End Investment Companies, the ``Unaffiliated
Investment Companies''), and UITs (the ``Unaffiliated UITs,'' and,
collectively with the Unaffiliated Investment Companies, the
``Unaffiliated Funds''), in each case, that are not part of the same
``group of investment companies'' as the Funds of Funds; \4\ (b) the
Unaffiliated Funds, their principal underwriters and any broker or
dealer registered under the Securities Exchange Act of 1934 (the ``1934
Act'') (``Broker'') to sell shares of such Unaffiliated Funds to the
Funds of Funds; (c) the Funds of Funds to acquire shares of other
registered investment companies, including open-end management
investment companies and series thereof, registered closed-end
management investment companies and business development companies, and
UITs (if any), in the same group of investment companies as the Funds
of Funds (collectively, the ``Affiliated Funds,'' and, together with
the Unaffiliated Funds, the ``Underlying Funds''); \5\ and (d) the
Affiliated Funds, their principal underwriters and any Broker to sell
shares of the Affiliated Funds to the Funds of Funds.\6\ Applicants
also request an order under sections 6(c) and 17(b) of the Act to
exempt applicants from section 17(a) to the extent necessary to permit
Underlying Funds to sell their shares to Funds of Funds and to redeem
their shares from Funds of Funds.
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\4\ For purposes of the request for relief, the term ``group of
investment companies'' means any two or more registered investment
companies, including closed-end investment companies and business
development companies, that hold themselves out to investors as
related companies for purposes of investment and investor services.
\5\ Certain of the Underlying Funds may be registered under the
Act as either UITs or open-end management investment companies and
have obtained exemptions from the Commission necessary to permit
their shares to be listed and traded on a national securities
exchange at negotiated prices and, accordingly, to operate as
exchange-traded funds (collectively, ``ETFs'' and each, an ``ETF'').
In addition, certain of the Underlying Funds may in the future
pursue their investment objectives through a master-feeder
arrangement in reliance on section 12(d)(1)(E) of the Act. In
accordance with condition 12, a Fund of Funds may not invest in an
Underlying Fund that operates as a feeder fund unless the feeder
fund is part of the same ``group of investment companies'' as its
corresponding master fund or the Fund of Funds. If a Fund of Funds
invests in an Affiliated Fund that operates as a feeder fund and the
corresponding master fund is not within the same ``group of
investment companies'' as the Fund of Funds and Affiliated Fund, the
master fund would be an Unaffiliated Fund for purposes of the
application and its conditions.
\6\ Applicants state that they do not believe that investments
in business development companies present any particular
considerations or concerns that may be different from those
presented by investments in registered closed-end investment
companies. In addition, applicants represent that the Funds of Funds
will not invest in reliance on the order in business development
companies or closed-end investment companies that are not listed and
traded on a national securities exchange.
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4. Certain Underlying Investment Companies may invest up to 25% of
their assets in a wholly-owned and controlled subsidiary of the
Underlying Investment Company, organized under the laws of the Cayman
Islands as an exempted company or under the laws of another non-U.S.
jurisdiction (each, a ``Wholly-Owned Subsidiary''), in order to invest
in commodity-related instruments and certain other instruments. For an
Underlying Investment Company that invests in a Wholly-Owned
Subsidiary, an investment adviser to the Underlying Investment Company
would serve as investment adviser to the Wholly-Owned Subsidiary.
5. Applicants also request an exemption under section 6(c) from
rule 12d1-2 under the Act to permit any existing or future Fund that
relies on section 12(d)(1)(G) of the Act (``Section 12(d)(1)(G) Fund of
Funds'') and that otherwise complies with rule 12d1-2(a) under the Act
to also invest, to the extent consistent with its investment
objective(s), policies, strategies, and limitations, in financial
instruments that may not be securities within the meaning of section
2(a)(36) of the Act (``Other Investments'').
Applicants' Legal Analysis
A. Section 12(d)(1)
1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a
registered investment company from acquiring shares of an investment
company if the securities represent more than 3% of the total
outstanding voting stock of the acquired company, more than 5% of the
total assets of the acquiring company, or, together with the securities
of any other investment companies, more than 10% of the total assets of
the acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter, and
any broker or dealer from selling the investment company's shares to
another investment company if the sale will cause the acquiring company
to own more than 3% of the acquired company's total outstanding voting
stock, or if the sale will cause more than 10% of the acquired
company's total outstanding voting stock to be owned by investment
companies generally. Section 12(d)(1)(C) prohibits an investment
company from acquiring any security issued by a registered closed-end
investment company if such acquisition would result in the acquiring
company, any other investment companies having the same investment
adviser, and companies controlled by such investment companies,
collectively, owning more than 10% of the outstanding voting stock of
the registered closed-end investment company.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or transaction, or any class or classes of
persons, securities, or transactions, from any provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Applicants seek an exemption under section
12(d)(1)(J) of the Act from the limitations of sections 12(d)(1)(A),
(B) and (C) to the extent necessary to permit: (i) The Funds of Funds
to acquire shares of Underlying Funds in excess of the limits set forth
in section 12(d)(1)(A) and (C) of the Act; and (ii) the Underlying
Funds, their principal underwriters and any Broker to sell shares of
the Underlying Funds to the Funds of Funds in excess of the limits set
forth in section 12(d)(1)(B) of the Act.
3. Applicants state that the proposed arrangement will not give
rise to the policy concerns underlying sections 12(d)(1)(A), (B) and
(C), which include concerns about undue influence by a fund of funds
over underlying funds, excessive layering of fees, and overly complex
fund structures. Accordingly, applicants believe that the requested
exemption is consistent with the public interest and the protection of
investors.
4. Applicants submit that the proposed structure will not result in
the exercise of undue influence by the Fund of Funds or its affiliated
persons over the Underlying Funds. Applicants assert that the concern
about undue influence does not arise in connection with a Fund of
Funds' investment in the Affiliated Funds because they are part of the
same group of investment companies. To limit the control a Fund of
Funds or Fund of Funds Affiliate \7\
[[Page 50343]]
may have over an Unaffiliated Fund, applicants propose a condition
prohibiting the Adviser and any person controlling, controlled by or
under common control with the Adviser, and any investment company and
any issuer that would be an investment company but for section 3(c)(1)
or section 3(c)(7) of the Act advised or sponsored by the Adviser or
any person controlling, controlled by or under common control with the
Adviser (collectively, the ``Group'') from controlling (individually or
in the aggregate) an Unaffiliated Fund within the meaning of section
2(a)(9) of the Act. The same prohibition would apply to any Sub-Adviser
to a Fund of Funds and any person controlling, controlled by or under
common control with the Sub-Adviser, and any investment company or
issuer that would be an investment company but for section 3(c)(1) or
3(c)(7) of the Act (or portion of such investment company or issuer)
advised or sponsored by the Sub-Adviser or any person controlling,
controlled by or under common control with the Sub-Adviser
(collectively, the ``Sub-Adviser Group'').
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\7\ A ``Fund of Funds Affiliate'' is the Adviser, any Sub-
Adviser, promoter or principal underwriter of a Fund of Funds, as
well as any person controlling, controlled by or under common
control with any of those entities. An ``Unaffiliated Fund
Affiliate'' is an investment adviser(s), sponsor, promoter or
principal underwriter of any Unaffiliated Fund or any person
controlling, controlled by or under common control with any of those
entities.
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5. With respect to closed-end Underlying Funds, applicants note
that although closed-end funds may not be unduly influenced by a
holder's right of redemption, closed-end Underlying Funds may be unduly
influenced by a holder's ability to vote a large block of stock. To
address this concern, applicants submit that, with respect to a Fund's
investment in an Unaffiliated Closed-End Investment Company, (i) each
member of the Group or Sub-Adviser Group that is an investment company
or an issuer that would be an investment company but for section
3(c)(1) or 3(c)(7) of the Act will vote its shares of the Unaffiliated
Closed-End Investment Company in the manner prescribed by section
12(d)(1)(E) of the Act and (ii) each other member of the Group or Sub-
Adviser Group will vote its shares of the Unaffiliated Closed-End
Investment Company in the same proportion as the vote of all other
holders of the same type of such Unaffiliated Closed-End Investment
Company's shares. Applicants state that, in this way, an Unaffiliated
Closed-End Investment Company will be protected from undue influence by
a Fund of Funds through the voting of the Unaffiliated Closed-End
Investment Company's shares.
6. With respect to Separate Accounts, applicants state that a
Registered Separate Account will seek voting instructions from its
Contract Owners and will vote its shares of an Unaffiliated Fund in
accordance with the instructions received and will vote those shares
for which no instructions were received in the same proportion as the
shares for which instructions were received. An Unregistered Separate
Account will either: (i) Vote its shares of the Unaffiliated Fund in
the same proportion as the vote of all other holders of the
Unaffiliated Fund's shares; or (ii) seek voting instructions from its
Contract Owners and vote its shares of the Unaffiliated Fund in
accordance with the instructions received and vote those shares for
which no instructions were received in the same proportion as the
shares for which instructions were received.
7. Applicants propose other conditions to limit the potential for
undue influence over the Unaffiliated Funds, including that no Fund of
Funds or Fund of Funds Affiliate (except to the extent it is acting in
its capacity as an investment adviser to an Unaffiliated Investment
Company or sponsor to an Unaffiliated Trust) will cause an Unaffiliated
Fund to purchase a security in an offering of securities during the
existence of any underwriting or selling syndicate of which a principal
underwriter is an Underwriting Affiliate (``Affiliated
Underwriting'').\8\
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\8\ An ``Underwriting Affiliate'' is a principal underwriter in
any underwriting or selling syndicate that is an officer, director,
trustee, advisory board member, investment adviser, sub-adviser or
employee of the Fund of Funds, or a person of which any such
officer, director, trustee, investment adviser, sub-adviser, member
of an advisory board or employee is an affiliated person. An
Underwriting Affiliate does not include any person whose
relationship to an Unaffiliated Fund is covered by section 10(f) of
the Act.
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8. To further ensure that an Unaffiliated Investment Company
understands the implications of a Fund of Funds' investment under the
requested exemptive relief, prior to its investment in the shares of an
Unaffiliated Investment Company in excess of the limit of section
12(d)(1)(A)(i) of the Act, a Fund of Funds and the Unaffiliated
Investment Company will execute an agreement stating, without
limitation, that each of their boards of directors or trustees (for any
entity, the ``Board'') and their investment advisers understand the
terms and conditions of the order and agree to fulfill their
responsibilities under the order (the ``Participation Agreement'').
Applicants note that an Unaffiliated Investment Company (including an
ETF or an Unaffiliated Closed-End Investment Company) would also retain
its right to reject any initial investment by a Fund of Funds in excess
of the limits in section 12(d)(1)(A)(i) of the Act by declining to
execute the Participation Agreement with the Fund of Funds. In
addition, an Unaffiliated Investment Company (other than an ETF or
closed-end fund whose shares are purchased by a Fund of Funds in the
secondary market) will retain its right at all times to reject any
investment by a Fund of Funds. Finally, subject solely to the giving of
notice to a Fund of Funds and the passage of a reasonable notice
period, an Unaffiliated Fund (including an ETF or an Unaffiliated
Closed-End Investment Company) could terminate a Participation
Agreement with the Fund of Funds.
9. Applicants state that they do not believe that the proposed
arrangement will result in excessive layering of fees. The Board of
each Fund of Funds, including a majority of the trustees who are not
``interested persons'' within the meaning of section 2(a)(19) of the
Act (the ``Independent Trustees''), will find that the management or
advisory fees charged under a Fund of Funds' advisory contract are
based on services provided that are in addition to, rather than
duplicative of, services provided under the advisory contract(s) of any
Underlying Fund in which the Fund of Funds may invest. In addition, the
Adviser will waive fees otherwise payable to it by a Fund of Funds in
an amount at least equal to any compensation (including fees received
pursuant to any plan adopted by an Unaffiliated Investment Company
under rule 12b-1 under the Act) received from an Unaffiliated Fund by
the Adviser, or an affiliated person of the Adviser, other than any
advisory fees paid to the Adviser or an affiliated person of the
Adviser by the Unaffiliated Investment Company, in connection with the
investment by the Fund of Funds in the Unaffiliated Fund.
10. Applicants state that, with respect to Registered Separate
Accounts that invest in a Fund of Funds, no sales load will be charged
at the Fund of Funds level or at the Underlying Fund level. Other sales
charges and services fees, as defined in Rule 2830 of the NASD Conduct
Rules (``NASD Conduct Rule 2830''), if any, will only be charged at the
Fund of Funds level or at the Underlying Fund level, not both.\9\ With
respect to other investments in a Fund of Funds, any sales charges and/
or service fees charged with respect to shares of a Fund of Funds will
not exceed the limits applicable to funds of funds as set forth in NASD
Conduct Rule 2830.
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\9\ Any references to NASD Conduct Rule 2830 include any
successor or replacement FINRA rule to NASD Conduct Rule 2830.
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11. Applicants represent that each Fund of Funds will represent in
the
[[Page 50344]]
Participation Agreement that no insurance company sponsoring a
Registered Separate Account funding Contracts will be permitted to
invest in the Fund of Funds unless the insurance company has certified
to the Fund of Funds that the aggregate of all fees and charges
associated with each contract that invests in the Fund of Funds,
including fees and charges at the Separate Account, Fund of Funds, and
the Underlying Fund levels, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
12. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that no Underlying
Fund will acquire securities of any other investment company or company
relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the
limits contained in section 12(d)(1)(A) of the Act, except in certain
circumstances identified in condition 12 below.
13. Applicants state that investments by an Underlying Investment
Company in a Wholly-Owned Subsidiary also do not raise concerns about
undue influence, layering of fees and complex structures. Applicants
represent that, with respect to each Underlying Investment Company in
which a Fund of Funds will invest that has a Wholly-Owned Subsidiary:
(1) Such Underlying Investment Company will be the sole and legal
beneficial owner of its Wholly-Owned Subsidiary; (2) an investment
adviser to such Underlying Investment Company will manage the
investments of both the Underlying Investment Company and its Wholly-
Owned Subsidiary; (3) such Underlying Investment Company's investment
in the Wholly-Owned Subsidiary enables the Underlying Investment
Company to continue to qualify as a regulated investment company under
subchapter M of the Internal Revenue Code of 1986; and (4) there will
be no inappropriate layering of fees and expenses as a result of such
Underlying Investment Company investing in a Wholly-Owned Subsidiary.
Applicants further represent that an Underlying Investment Company that
invests in a Wholly-Owned Subsidiary will consolidate its financial
statements with the Wholly-Owned Subsidiary's financial statements,
provided that the applicable accounting standards permit consolidation.
In addition, in assessing compliance with the asset coverage
requirements under section 18(f) of the Act, an Underlying Investment
Company will deem the assets, liabilities and indebtedness of a Wholly-
Owned Subsidiary in which the Underlying Investment Company invests as
its own. In addition, the expenses of the Wholly-Owned Subsidiary are
included in the total annual fund operating expenses in the prospectus
of the relevant Underlying Investment Company.
B. Section 17(a)
1. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and its
affiliated persons or affiliated persons of such persons. Section
2(a)(3) of the Act defines an ``affiliated person'' of another person
to include (a) any person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting
securities of the other person; (b) any person 5% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote by the other person; and (c) any
person directly or indirectly controlling, controlled by, or under
common control with the other person.
2. Applicants state that the Funds of Funds and the Affiliated
Funds may be deemed to be under the common control of the Adviser and,
therefore, affiliated persons of one another. Applicants also state
that a Fund of Funds and an Unaffiliated Fund also may be deemed to be
affiliated persons of one another if the Fund of Funds owns 5% or more
of the outstanding voting securities of such Unaffiliated Fund.
Applicants state that the sale of shares by the Unaffiliated Open-End
Investment Companies or Unaffiliated UITs to the Funds of Funds and the
redemption of those shares by the Funds of Funds could be deemed to
violate section 17(a) of the Act.\10\
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\10\ Applicants acknowledge that receipt of any compensation by
(a) an affiliated person of a Fund of Funds, or an affiliated person
of such person, for the purchase by the Fund of Funds of shares of
an Underlying Fund or (b) an affiliated person of an Underlying
Fund, or an affiliated person of such person, for the sale by the
Underlying Fund of its shares to a Fund of Funds may be prohibited
by section 17(e) (1) of the Act. The Participation Agreement also
will include this acknowledgement.
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3. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
it finds that (i) The terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (ii) the proposed transaction is consistent with the
policies of each registered investment company concerned; and (iii) the
proposed transaction is consistent with the general purposes of the
Act. Section 6(c) of the Act permits the Commission to exempt any
person or transactions from any provision of the Act 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.
4. Applicants submit that the proposed transactions satisfy the
standards for relief under sections 17(b) and 6(c) of the Act.
Applicants state that the terms of the transactions are reasonable and
fair and do not involve overreaching. Applicants state that the terms
upon which an Underlying Fund will sell its shares to or purchase its
shares from a Fund of Funds will be in accordance with the rules and
regulations under the Act.\11\ Applicants also state that the proposed
transactions will be consistent with the policies of each Fund of Funds
and each Underlying Fund, and with the general purposes of the Act.
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\11\ Applicants note that a Fund of Funds generally would
purchase and sell shares of an Underlying Fund that operates as an
ETF or a closed-end fund through secondary market transactions
rather than through principal transactions with the Underlying Fund.
Applicants nevertheless request relief from sections 17(a)(1) and
(2) to permit each ETF or closed-end fund that is an affiliated
person, or an affiliated person of an affiliated person, as defined
in section 2(a)(3) of the Act, of a Fund of Funds to sell shares to
or redeem shares from the Fund of Funds. This includes, in the case
of sales and redemptions of shares of ETFs, in-kind transactions
that accompany such sales and redemptions. Applicants are not
seeking relief from section 17(a) for, and the requested relief will
not apply to, transactions where an ETF or closed-end fund could be
deemed an affiliated person, or an affiliated person of an
affiliated person, of a Fund of Funds because an investment adviser
to the ETF or closed-end fund or an entity controlling, controlled
by or under common control with the investment adviser to the ETF or
closed-end fund, is also an investment adviser to the Fund of Funds.
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C. Other Investments by Section 12(d)(1)(G) Funds of Funds
1. Section 12(d)(1)(G) of the Act provides that section 12(d)(1)
will not apply to securities of an acquired company purchased by an
acquiring company if: (i) The acquiring company and acquired company
are part of the same ``group of investment companies,'' as defined in
section 12(d)(1)(G)(ii) of the Act; (ii) the acquiring company holds
only securities of acquired companies that are part of the same ``group
of investment companies,'' as defined in section 12(d)(1)(G)(ii) of the
Act, government securities, and short-term paper; (iii) the aggregate
sales loads and distribution-related fees of the acquiring company and
the acquired company are not excessive under rules adopted pursuant to
section 22(b) or section 22(c) of the Act by a securities
[[Page 50345]]
association registered under section 15A of the 1934 Act or by the
Commission; and (iv) the acquired company has a policy that prohibits
it from acquiring securities of registered open-end management
investment companies or registered UITs in reliance on section
12(d)(1)(F) or (G) of the Act.
2. Rule 12d1-2 under the Act permits a registered open-end
investment company or a registered UIT that relies on section
12(d)(1)(G) of the Act to acquire, in addition to securities issued by
another registered investment company in the same group of investment
companies, government securities, and short-term paper: (1) Securities
issued by an investment company that is not in the same group of
investment companies, when the acquisition is in reliance on section
12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other than
securities issued by an investment company); and (3) securities issued
by a money market fund, when the investment is in reliance on rule
12d1-1 under the Act. For the purposes of rule 12d1-2, ``securities''
means any security as defined in section 2(a)(36) of the Act.
3. Applicants state that the proposed arrangement would comply with
rule 12d1-2 under the Act, but for the fact that the Section
12(d)(1)(G) Funds of Funds may invest a portion of their assets in
Other Investments. Applicants request an order under section 6(c) of
the Act for an exemption from rule 12d1-2(a) to allow the Section
12(d)(1)(G) Funds of Funds to invest in Other Investments. Applicants
assert that permitting a Section 12(d)(1)(G) Fund of Funds to invest in
Other Investments as described in the application would not raise any
of the concerns that section 12(d)(1) of the Act was intended to
address.
4. Consistent with its fiduciary obligations under the Act, a
Section 12(d)(1)(G) Fund of Funds' Board will review the advisory fees
charged by the Section 12(d)(1)(G) Fund of Funds' investment adviser(s)
to ensure that the fees are based on services provided that are in
addition to, rather than duplicative of, services provided pursuant to
the advisory agreement of any investment company in which the Section
12(d)(1)(G) Fund of Funds may invest.
Applicants' Conditions
A. Investments by Funds of Funds in Underlying Funds
Applicants agree that the order granting the requested relief to
permit Funds of Funds to invest in Underlying Funds shall be subject to
the following conditions:
1. The members of the Group will not control (individually or in
the aggregate) an Unaffiliated Fund within the meaning of section
2(a)(9) of the Act. The members of a Sub-Adviser Group will not control
(individually or in the aggregate) an Unaffiliated Fund within the
meaning of section 2(a)(9) of the Act. With respect to a Fund's
investment in an Unaffiliated Closed-End Investment Company, (i) each
member of the Group or Sub-Adviser Group that is an investment company
or an issuer that would be an investment company but for section
3(c)(1) or 3(c)(7) of the Act will vote its shares of the Unaffiliated
Closed-End Investment Company in the manner prescribed by section
12(d)(1)(E) of the Act and (ii) each other member of the Group or Sub-
Adviser Group will vote its shares of the Unaffiliated Closed-End
Investment Company in the same proportion as the vote of all other
holders of the same type of such Unaffiliated Closed-End Investment
Company's shares. If, as a result of a decrease in the outstanding
voting securities of any other Unaffiliated Fund, the Group or a Sub-
Adviser Group, each in the aggregate, becomes a holder of more than 25%
of the outstanding voting securities of such Unaffiliated Fund, then
the Group or the Sub-Adviser Group (except for any member of the Group
or Sub-Adviser Group that is a Separate Account) will vote its shares
of the Unaffiliated Fund in the same proportion as the vote of all
other holders of the Unaffiliated Fund's shares. A Registered Separate
Account will seek voting instructions from its Contract Owners and will
vote its shares of an Unaffiliated Fund in accordance with the
instructions received and will vote those shares for which no
instructions were received in the same proportion as the shares for
which instructions were received. An Unregistered Separate Account will
either: (i) Vote its shares of the Unaffiliated Fund in the same
proportion as the vote of all other holders of the Unaffiliated Fund's
shares; or (ii) seek voting instructions from its Contract Owners and
vote its shares in accordance with the instructions received and vote
those shares for which no instructions were received in the same
proportion as the shares for which instructions were received. This
condition will not apply to a Sub-Adviser Group with respect to an
Unaffiliated Fund for which the Sub-Adviser or a person controlling,
controlled by, or under common control with the Sub-Adviser acts as the
investment adviser within the meaning of section 2(a)(20)(A) of the Act
(in the case of an Unaffiliated Investment Company) or as the sponsor
(in the case of an Unaffiliated UIT).
2. No Fund of Funds or Fund of Funds Affiliate will cause any
existing or potential investment by the Fund of Funds in an
Unaffiliated Fund to influence the terms of any services or
transactions between the Fund of Funds or a Fund of Funds Affiliate and
the Unaffiliated Fund or an Unaffiliated Fund Affiliate.
3. The Board of each Fund of Funds, including a majority of the
Independent Trustees, will adopt procedures reasonably designed to
ensure that the Adviser and any Sub-Adviser to the Fund of Funds are
conducting the investment program of the Fund of Funds without taking
into account any consideration received by the Fund of Funds or Fund of
Funds Affiliate from an Unaffiliated Fund or an Unaffiliated Fund
Affiliate in connection with any services or transactions.
4. Once an investment by a Fund of Funds in the securities of an
Unaffiliated Investment Company exceeds the limit of section
12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Investment
Company, including a majority of the Independent Trustees, will
determine that any consideration paid by the Unaffiliated Investment
Company to a Fund of Funds or a Fund of Funds Affiliate in connection
with any services or transactions: (a) Is fair and reasonable in
relation to the nature and quality of the services and benefits
received by the Unaffiliated Investment Company; (b) is within the
range of consideration that the Unaffiliated Investment Company would
be required to pay to another unaffiliated entity in connection with
the same services or transactions; and (c) does not involve
overreaching on the part of any person concerned. This condition does
not apply with respect to any services or transactions between an
Unaffiliated Investment Company and its investment adviser(s), or any
person controlling, controlled by, or under common control with such
investment adviser(s).
5. No Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an
Unaffiliated Investment Company or sponsor to an Unaffiliated UIT) will
cause an Unaffiliated Fund to purchase a security in any Affiliated
Underwriting.
6. The Board of an Unaffiliated Investment Company, including a
majority of the Independent Trustees, will adopt procedures reasonably
[[Page 50346]]
designed to monitor any purchases of securities by the Unaffiliated
Investment Company in an Affiliated Underwriting once an investment by
a Fund of Funds in the securities of the Unaffiliated Investment
Company exceeds the limit of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly from an Underwriting Affiliate.
The Board of the Unaffiliated Investment Company will review these
purchases periodically, but no less frequently than annually, to
determine whether the purchases were influenced by the investment by
the Fund of Funds in the Unaffiliated Investment Company. The Board of
the Unaffiliated Investment Company will consider, among other things:
(a) Whether the purchases were consistent with the investment
objectives and policies of the Unaffiliated Investment Company; (b) how
the performance of securities purchased in an Affiliated Underwriting
compares to the performance of comparable securities purchased during a
comparable period of time in underwritings other than Affiliated
Underwritings or to a benchmark such as a comparable market index; and
(c) whether the amount of securities purchased by the Unaffiliated
Investment Company in Affiliated Underwritings and the amount purchased
directly from an Underwriting Affiliate have changed significantly from
prior years. The Board of the Unaffiliated Investment Company will take
any appropriate actions based on its review, including, if appropriate,
the institution of procedures designed to ensure that purchases of
securities in Affiliated Underwritings are in the best interest of
shareholders.
7. Each Unaffiliated Investment Company will maintain and preserve
permanently, in an easily accessible place, a written copy of the
procedures described in the preceding condition, and any modifications
to such procedures, and will maintain and preserve for a period of not
less than six years from the end of the fiscal year in which any
purchase in an Affiliated Underwriting occurred, the first two years in
an easily accessible place, a written record of each purchase of
securities in an Affiliated Underwriting once an investment by a Fund
of Funds in the securities of an Unaffiliated Investment Company
exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth
(1) the party from whom the securities were acquired, (2) the identity
of the underwriting syndicate's members, (3) the terms of the purchase,
and (4) the information or materials upon which the determinations of
the Board of the Unaffiliated Investment Company were made.
8. Prior to its investment in shares of an Unaffiliated Investment
Company in excess of the limit set forth in section 12(d)(1)(A)(i) of
the Act, the Fund of Funds and the Unaffiliated Investment Company will
execute a Participation Agreement stating, without limitation, that
their Boards and their investment advisers understand the terms and
conditions of the order and agree to fulfill their responsibilities
under the order. At the time of its investment in shares of an
Unaffiliated Investment Company in excess of the limit set forth in
section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated
Investment Company of the investment. At such time, the Fund of Funds
will also transmit to the Unaffiliated Investment Company a list of the
names of each Fund of Funds Affiliate and Underwriting Affiliate. The
Fund of Funds will notify the Unaffiliated Investment Company of any
changes to the list as soon as reasonably practicable after a change
occurs. The Unaffiliated Investment Company and the Fund of Funds will
maintain and preserve a copy of the order, the Participation Agreement,
and the list with any updated information for the duration of the
investment and for a period of not less than six years thereafter, the
first two years in an easily accessible place.
9. Before approving any advisory contract under section 15 of the
Act, the Board of each Fund of Funds, including a majority of the
Independent Trustees, shall find that the advisory fees charged under
the advisory contract are based on services provided that are in
addition to, rather than duplicative of, services provided under the
advisory contract(s) of any Underlying Fund in which the Fund of Funds
may invest. Such finding, and the basis upon which the finding was
made, will be recorded fully in the minute books of the appropriate
Fund of Funds.
10. The Adviser will waive fees otherwise payable to it by a Fund
of Funds in an amount at least equal to any compensation (including
fees received pursuant to any plan adopted by an Unaffiliated
Investment Company pursuant to rule 12b-1 under the Act) received from
an Unaffiliated Fund (or its Wholly-Owned Subsidiary) by the Adviser,
or an affiliated person of the Adviser, other than any advisory fees
paid to the Adviser or its affiliated person by the Unaffiliated
Investment Company (or its Wholly-Owned-Subsidiary), in connection with
the investment by the Fund of Funds in the Unaffiliated Fund. Any Sub-
Adviser will waive fees otherwise payable to the Sub-Adviser, directly
or indirectly, by the Fund of Funds in an amount at least equal to any
compensation received by the Sub-Adviser, or an affiliated person of
the Sub-Adviser, from an Unaffiliated Fund (or its Wholly-Owned
Subsidiary), other than any advisory fees paid to the Sub-Adviser or
its affiliated person by the Unaffiliated Investment Company (or its
Wholly-Owned Subsidiary), in connection with the investment by the Fund
of Funds in the Unaffiliated Fund made at the direction of the Sub-
Adviser. In the event that the Sub-Adviser waives fees, the benefit of
the waiver will be passed through to the applicable Fund of Funds.
11. With respect to Registered Separate Accounts that invest in a
Fund of Funds, no sales load will be charged at the Fund of Funds level
or at the Underlying Fund level. Other sales charges and service fees,
as defined in NASD Conduct Rule 2830, if any, will only be charged at
the Fund of Funds level or at the Underlying Fund level, not both. With
respect to other investments in a Fund of Funds, any sales charges and/
or service fees charged with respect to shares of a Fund of Funds will
not exceed the limits applicable to funds of funds set forth in NASD
Conduct Rule 2830.
12. No Underlying Fund will acquire securities of any other
investment company or company relying on section 3(c)(1) or 3(c)(7) of
the Act, in excess of the limits contained in section 12(d)(1)(A) of
the Act, other than any Wholly-Owned Subsidiary as described in the
application, and except to the extent that such Underlying Fund: (a)
Acquires such securities in compliance with section 12(d)(1)(E) of the
Act and is either an Affiliated Fund or is in the same ``group of
investment companies'' as its corresponding master fund; (b) receives
securities of another investment company as a dividend or as a result
of a plan of reorganization of a company (other than a plan devised for
the purpose of evading section 12(d)(1) of the Act); or (c) acquires
(or is deemed to have acquired) securities of another investment
company pursuant to exemptive relief from the Commission permitting
such Underlying Fund to: (i) Acquire securities of one or more
investment companies for short-term cash management purposes or (ii)
engage in inter-fund borrowing and lending transactions. Further, no
Wholly-Owned Subsidiary will acquire securities of any other investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act
other than money market funds that comply with
[[Page 50347]]
rule 2a-7 for short-term cash management purposes.
B. Other Investments by Section 12(d)(1)(G) Funds of Funds
In addition, applicants agree that the order granting the requested
relief to permit Section 12(d)(1)(G) Funds of Funds to invest in Other
Investments shall be subject to the following condition:
1. Applicants will comply with all provisions of rule 12d1-2 under
the Act, except for paragraph (a)(2) to the extent that it restricts
any Section 12(d)(1)(G) Fund of Funds from investing in Other
Investments as described in the application.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-20413 Filed 8-18-15; 8:45 am]
BILLING CODE 8011-01-P
