Columbia ETF Trust I, et al.; Notice of Application, 28915-28917 [2016-10984]
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asabaliauskas on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 81, No. 90 / Tuesday, May 10, 2016 / Notices
Advisors under their respective
advisory agreements with the Regulated
Entities and the Affiliated Investors, be
shared by the Regulated Entities and the
Affiliated Investors in proportion to the
relative amounts of the securities held
or to be acquired or disposed of, as the
case may be.
13. Any transaction fee (including
break-up or commitment fees but
excluding brokers’ fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable) 13 received in connection
with a Co-Investment Transaction will
be distributed to the participating
Regulated Entities and Affiliated
Investors on a pro rata basis based on
the amount they invested or committed,
as the case may be, in such CoInvestment Transaction. If any
transaction fee is to be held by an
Advisor pending consummation of the
transaction, the fee will be deposited
into an account maintained by the
Advisor at a bank or banks having the
qualifications prescribed in section
26(a)(1) of the Act, and the account will
earn a competitive rate of interest that
will also be divided pro rata among the
participating Regulated Entities and
Affiliated Investors based on the amount
they invest in the Co-Investment
Transaction. None of the other
Regulated Entities, Affiliated Investors,
the Advisors nor any affiliated person of
the Regulated Entities or the Affiliated
Investors will receive additional
compensation or remuneration of any
kind as a result of or in connection with
a Co-Investment Transaction (other than
(a) in the case of the Regulated Entities
and the Affiliated Investors, the pro rata
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(c) and (b) in the case
of the Advisors, investment advisory
fees paid in accordance with the
Regulated Entities’ and the Affiliated
Investors’ investment advisory
agreements).
14. The Advisors to the Regulated
Entities and Affiliated Investors will
maintain written policies and
procedures reasonably designed to
ensure compliance with the foregoing
conditions. These policies and
procedures will require, among other
things, that each of the Advisors to each
Regulated Entity will be notified of all
Potential Co-Investment Transactions
that fall within a Regulated Entity’s
then-current Objectives and Strategies
and will be given sufficient information
to make its independent determination
13 Applicants are not requesting and the
Commission is not providing any relief for
transaction fees received in connection with any
Co-Investment Transaction.
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and recommendations under conditions
1, 2(a), 7 and 8.
15. If the Holders own in the aggregate
more than 25 percent of the shares of a
Regulated Entity, then the Holders will
vote such shares as directed by an
independent third party when voting on
(1) the election of directors or trustees;
(2) the removal of one or more directors
or trustees; or (3) any matters requiring
approval by the vote of a majority of the
outstanding voting securities, as defined
in section 2(a)(42) of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–10960 Filed 5–9–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32107; 812–14552]
Columbia ETF Trust I, et al.; Notice of
Application
May 5, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application for
an order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), and 22(e) of the
Act and rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) index-based series of certain
open-end management investment
companies (‘‘Funds’’) to issue shares
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
SUMMARY:
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28915
shares of the Funds; and (f) certain
Funds (‘‘Feeder Funds’’) to create and
redeem Creation Units in-kind in a
master-feeder structure.
APPLICANTS: Columbia Management
Investment Advisers, LLC (the ‘‘Initial
Adviser’’), a Minnesota limited liability
company registered as an investment
adviser under the Investment Advisers
Act of 1940, Columbia ETF Trust I (the
‘‘Trust’’), a Massachusetts business trust
registered under the Act as an open-end
management investment company with
multiple series, and Columbia
Management Investment Distributors,
Inc. (the ‘‘Distributor’’), a Delaware
corporation and broker-dealer registered
under the Securities Exchange Act of
1934 (‘‘Exchange Act’’).
DATES: FILING DATES: The application
was filed on September 28, 2015, and
amended on January 19, 2016, April 15,
2016, April 27, 2016, and May 5, 2016.
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 May 27, 2016, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit, or for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants: Columbia ETF Trust I and
Columbia Management Investment
Distributors, Inc., 225 Franklin Street,
Boston, Massachusetts 02110; Columbia
Management Investment Advisers, LLC,
100 Park Avenue, 8th Floor, New York,
New York 10017.
FOR FURTHER INFORMATION CONTACT: Jill
Ehrlich, Senior Counsel at (202) 551–
6819, or David J. Marcinkus, 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
E:\FR\FM\10MYN1.SGM
10MYN1
28916
Federal Register / Vol. 81, No. 90 / Tuesday, May 10, 2016 / Notices
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as index
exchange traded funds (‘‘ETFs’’).1 Fund
shares will be purchased and redeemed
at their NAV in Creation Units only. All
orders to purchase Creation Units and
all redemption requests will be placed
by or through an ‘‘Authorized
Participant’’, which will have signed a
participant agreement with the
Distributor. Shares will be listed and
traded individually on a national
securities exchange, where share prices
will be based on the current bid/offer
market. Certain Funds may operate as
Feeder Funds in a master-feeder
structure. Any order granting the
requested relief would be subject to the
terms and conditions stated in the
application.
2. Each Fund will hold investment
positions selected to correspond
generally to the performance of an
Underlying Index. In the case of SelfIndexing Funds, an affiliated person, as
defined in section 2(a)(3) of the Act
(‘‘Affiliated Person’’), or an affiliated
person of an Affiliated Person (‘‘SecondTier Affiliate’’), of the Trust or a Fund,
of the Adviser, of any sub-adviser to or
promoter of a Fund, or of the Distributor
will compile, create, sponsor or
maintain the Underlying Index.2
3. Shares will be purchased and
redeemed in Creation Units and
generally on an in-kind basis. Except
where the purchase or redemption will
include cash under the limited
circumstances specified in the
application, purchasers will be required
to purchase Creation Units by
depositing specified instruments
(‘‘Deposit Instruments’’), and
shareholders redeeming their shares
will receive specified instruments
(‘‘Redemption Instruments’’). The
1 Applicants request that the order apply to the
initial funds and any additional series of the Trust,
and any other open-end management investment
company or series thereof, that may be created in
the future (each, included in the term ‘‘Fund’’),
each of which will operate as an ETF and will track
a specified index comprised of domestic or foreign
equity and/or fixed income securities (each, an
‘‘Underlying Index’’). Any Fund will (a) be advised
by the Initial Adviser or an entity controlling,
controlled by, or under common control with the
Initial Adviser (each, an ‘‘Adviser’’) and (b) comply
with the terms and conditions of the application.
2 Each Self-Indexing Fund will post on its Web
site the identities and quantities of the investment
positions that will form the basis for the Fund’s
calculation of its NAV at the end of the day.
Applicants believe that requiring Self-Indexing
Funds to maintain full portfolio transparency will
help address, together with other protections,
conflicts of interest with respect to such Funds.
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Deposit Instruments and the
Redemption Instruments will each
correspond pro rata to the positions in
the Fund’s portfolio (including cash
positions) except as specified in the
application.
4. Because shares will not be
individually redeemable, applicants
request an exemption from section
5(a)(1) and section 2(a)(32) of the Act
that would permit the Funds to register
as open-end management investment
companies and issue shares that are
redeemable in Creation Units only.
5. Applicants also request an
exemption from section 22(d) of the Act
and rule 22c-1 under the Act as
secondary market trading in shares will
take place at negotiated prices, not at a
current offering price described in a
Fund’s prospectus, and not at a price
based on NAV. Applicants state that (a)
secondary market trading in shares does
not involve a Fund as a party and will
not result in dilution of an investment
in shares, and (b) to the extent different
prices exist during a given trading day,
or from day to day, such variances occur
as a result of third-party market forces,
such as supply and demand. Therefore,
applicants assert that secondary market
transactions in shares will not lead to
discrimination or preferential treatment
among purchasers. Finally, applicants
represent that share market prices will
be disciplined by arbitrage
opportunities, which should prevent
shares from trading at a material
discount or premium from NAV.
6. With respect to Funds that effect
creations and redemptions of Creation
Units in kind and that are based on
certain Underlying Indexes that include
foreign securities, applicants request
relief from the requirement imposed by
section 22(e) in order to allow such
Funds to pay redemption proceeds
within fourteen calendar days following
the tender of Creation Units for
redemption. Applicants assert that the
requested relief would not be
inconsistent with the spirit and intent of
section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the
actual payment of redemption proceeds.
7. Applicants request an exemption to
permit Funds of Funds to acquire Fund
shares beyond the limits of section
12(d)(1)(A) of the Act; and the Funds,
and any principal underwriter for the
Funds, and/or any broker or dealer
registered under the Exchange Act, to
sell shares to Funds of Funds beyond
the limits of section 12(d)(1)(B) of the
Act. The application’s terms and
conditions are designed to, among other
things, help prevent any potential (i)
undue influence over a Fund through
control or voting power, or in
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connection with certain services,
transactions, and underwritings, (ii)
excessive layering of fees, and (iii)
overly complex fund structures, which
are the concerns underlying the limits
in sections 12(d)(1)(A) and (B) of the
Act.
8. Applicants request an exemption
from sections 17(a)(1) and 17(a)(2) of the
Act to permit persons that are Affiliated
Persons, or Second Tier Affiliates, of the
Funds, solely by virtue of certain
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions and Deposit Instrument
and Redemption Instruments will be
valued in the same manner as those
investment positions currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.3
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Applicants also request relief to
permit a Feeder Fund to acquire shares
of another registered investment
company managed by the Adviser
having substantially the same
investment objectives as the Feeder
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and
permit the Master Fund, and any
principal underwriter for the Master
Fund, to sell shares of the Master Fund
to the Feeder Fund beyond the
limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the
Commission to exempt any persons 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. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
3 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control
with an Adviser provides investment advisory
services to that Fund of Funds.
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Federal Register / Vol. 81, No. 90 / Tuesday, May 10, 2016 / Notices
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.
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 (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–10984 Filed 5–9–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32105; 812–14566]
Franklin Templeton ETF Trust, et al.;
Notice of Application
May 5, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), and 22(e) of the
Act and rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) index-based series of certain
open-end management investment
companies (‘‘Funds’’) to issue shares
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
asabaliauskas on DSK3SPTVN1PROD with NOTICES
AGENCY:
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investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
shares of the Funds; and (f) certain
Funds (‘‘Feeder Funds’’) to create and
redeem Creation Units in-kind in a
master-feeder structure.
28917
1. Applicants request an order that
would allow Funds to operate as index
exchange traded funds (‘‘ETFs’’).1 Fund
shares will be purchased and redeemed
at their NAV in Creation Units only. All
orders to purchase Creation Units and
all redemption requests will be placed
by or through an ‘‘Authorized
Applicants: Franklin Templeton ETF
Participant’’, which will have signed a
Trust (the ‘‘Trust’’), a Delaware statutory participant agreement with the
trust that will register under the Act as
Distributor. Shares will be listed and
an open-end management investment
traded individually on a national
company with multiple series, Franklin securities exchange, where share prices
Advisers, Inc. (the ‘‘Initial Adviser), a
will be based on the current bid/offer
California Corporation that is registered market. Certain Funds may operate as
as an investment adviser under the
Feeder Funds in a master-feeder
Investment Advisers Act of 1940, and
structure. Any order granting the
Franklin Templeton Distributors, Inc., a requested relief would be subject to the
New York Corporation (together with
terms and conditions stated in the
any future distributor, the
application.
‘‘Distributor’’).
2. Each Fund will hold investment
DATES: Filing Dates: The application was positions selected to correspond
filed on October 16, 2015, and amended generally to the performance of an
Underlying Index. In the case of Selfon April 11, 2016.
Hearing or Notification of Hearing: An Indexing Funds, an affiliated person, as
defined in section 2(a)(3) of the Act
order granting the requested relief will
be issued unless the Commission orders (‘‘Affiliated Person’’), or an affiliated
person of an Affiliated Person (‘‘Seconda hearing. Interested persons may
Tier Affiliate’’), of the Trust or a Fund,
request a hearing by writing to the
of the Adviser, of any sub-adviser to or
Commission’s Secretary and serving
promoter of a Fund, or of the Distributor
applicants with a copy of the request,
will compile, create, sponsor or
personally or by mail. Hearing requests
maintain the Underlying Index.2
should be received by the Commission
3. Shares will be purchased and
by 5:30 p.m. on May 27, 2016, and
redeemed in Creation Units and
should be accompanied by proof of
generally on an in-kind basis. Except
service on applicants, in the form of an
where the purchase or redemption will
affidavit, or for lawyers, a certificate of
include cash under the limited
service. Pursuant to rule 0–5 under the
circumstances specified in the
Act, hearing requests should state the
application, purchasers will be required
nature of the writer’s interest, any facts
to purchase Creation Units by
bearing upon the desirability of a
hearing on the matter, the reason for the depositing specified instruments
(‘‘Deposit Instruments’’), and
request, and the issues contested.
shareholders redeeming their shares
Persons who wish to be notified of a
will receive specified instruments
hearing may request notification by
(‘‘Redemption Instruments’’). The
writing to the Commission’s Secretary.
Deposit Instruments and the
ADDRESSES: Secretary, Securities and
Redemption Instruments will each
Exchange Commission, 100 F Street NE., correspond pro rata to the positions in
Washington, DC 20549–1090;
the Fund’s portfolio (including cash
Applicants: Franklin Templeton
Investments, One Franklin Parkway,
1 Applicants request that the order apply to the
San Mateo, California 94403–1906.
initial series of the Trust and any additional series
of the Trust, and any other existing or future openFOR FURTHER INFORMATION CONTACT:
end management investment company or series
Deepak T. Pai, Senior Counsel, at (202)
thereof (each, included in the term ‘‘Fund’’), each
551–6876 or Mary Kay Frech, at (202)
of which will operate as an ETF and will track a
551–6821 (Division of Investment
specified index comprised of domestic or foreign
equity and/or fixed income securities (each, an
Management, Chief Counsel’s Office).
‘‘Underlying Index’’). Any Fund will (a) be advised
SUPPLEMENTARY INFORMATION: The
by the Initial Adviser or an entity controlling,
controlled by, or under common control with the
following is a summary of the
Initial Adviser (each, an ‘‘Adviser’’) and (b) comply
application. The complete application
with the terms and conditions of the application.
may be obtained via the Commission’s
2 Each Self-Indexing Fund will post on its Web
Web site by searching for the file
site the identities and quantities of the investment
number, or for an applicant using the
positions that will form the basis for the Fund’s
calculation of its NAV at the end of the day.
Company name box, at https://
Applicants believe that requiring Self-Indexing
www.sec.gov/search/search.htm or by
Funds to maintain full portfolio transparency will
calling (202) 551–8090.
help address, together with other protections,
conflicts of interest with respect to such Funds.
Summary of the Application
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]]>Agencies
[Federal Register Volume 81, Number 90 (Tuesday, May 10, 2016)]
[Notices]
[Pages 28915-28917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-10984]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32107; 812-14552]
Columbia ETF Trust I, et al.; Notice of Application
May 5, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: Notice of an application for an order under section 6(c) of
the Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1
under the Act, under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under
section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act. The requested order would permit (a) index-
based series of certain open-end management investment companies
(``Funds'') to issue shares redeemable in large aggregations only
(``Creation Units''); (b) secondary market transactions in Fund shares
to occur at negotiated market prices rather than at net asset value
(``NAV''); (c) certain Funds to pay redemption proceeds, under certain
circumstances, more than seven days after the tender of shares for
redemption; (d) certain affiliated persons of a Fund to deposit
securities into, and receive securities from, the Fund in connection
with the purchase and redemption of Creation Units; (e) certain
registered management investment companies and unit investment trusts
outside of the same group of investment companies as the Funds (``Funds
of Funds'') to acquire shares of the Funds; and (f) certain Funds
(``Feeder Funds'') to create and redeem Creation Units in-kind in a
master-feeder structure.
Applicants: Columbia Management Investment Advisers, LLC (the
``Initial Adviser''), a Minnesota limited liability company registered
as an investment adviser under the Investment Advisers Act of 1940,
Columbia ETF Trust I (the ``Trust''), a Massachusetts business trust
registered under the Act as an open-end management investment company
with multiple series, and Columbia Management Investment Distributors,
Inc. (the ``Distributor''), a Delaware corporation and broker-dealer
registered under the Securities Exchange Act of 1934 (``Exchange
Act'').
DATES: Filing Dates: The application was filed on September 28, 2015,
and amended on January 19, 2016, April 15, 2016, April 27, 2016, and
May 5, 2016.
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 May 27, 2016, and should be accompanied by proof of
service on applicants, in the form of an affidavit, or for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090; Applicants: Columbia ETF Trust I and
Columbia Management Investment Distributors, Inc., 225 Franklin Street,
Boston, Massachusetts 02110; Columbia Management Investment Advisers,
LLC, 100 Park Avenue, 8th Floor, New York, New York 10017.
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel at (202)
551-6819, or David J. Marcinkus, 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
[[Page 28916]]
Company name box, at https://www.sec.gov/search/search.htm or by calling
(202) 551-8090.
Summary of the Application
1. Applicants request an order that would allow Funds to operate as
index exchange traded funds (``ETFs'').\1\ Fund shares will be
purchased and redeemed at their NAV in Creation Units only. All orders
to purchase Creation Units and all redemption requests will be placed
by or through an ``Authorized Participant'', which will have signed a
participant agreement with the Distributor. Shares will be listed and
traded individually on a national securities exchange, where share
prices will be based on the current bid/offer market. Certain Funds may
operate as Feeder Funds in a master-feeder structure. Any order
granting the requested relief would be subject to the terms and
conditions stated in the application.
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to the initial funds
and any additional series of the Trust, and any other open-end
management investment company or series thereof, that may be created
in the future (each, included in the term ``Fund''), each of which
will operate as an ETF and will track a specified index comprised of
domestic or foreign equity and/or fixed income securities (each, an
``Underlying Index''). Any Fund will (a) be advised by the Initial
Adviser or an entity controlling, controlled by, or under common
control with the Initial Adviser (each, an ``Adviser'') and (b)
comply with the terms and conditions of the application.
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2. Each Fund will hold investment positions selected to correspond
generally to the performance of an Underlying Index. In the case of
Self-Indexing Funds, an affiliated person, as defined in section
2(a)(3) of the Act (``Affiliated Person''), or an affiliated person of
an Affiliated Person (``Second-Tier Affiliate''), of the Trust or a
Fund, of the Adviser, of any sub-adviser to or promoter of a Fund, or
of the Distributor will compile, create, sponsor or maintain the
Underlying Index.\2\
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\2\ Each Self-Indexing Fund will post on its Web site the
identities and quantities of the investment positions that will form
the basis for the Fund's calculation of its NAV at the end of the
day. Applicants believe that requiring Self-Indexing Funds to
maintain full portfolio transparency will help address, together
with other protections, conflicts of interest with respect to such
Funds.
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3. Shares will be purchased and redeemed in Creation Units and
generally on an in-kind basis. Except where the purchase or redemption
will include cash under the limited circumstances specified in the
application, purchasers will be required to purchase Creation Units by
depositing specified instruments (``Deposit Instruments''), and
shareholders redeeming their shares will receive specified instruments
(``Redemption Instruments''). The Deposit Instruments and the
Redemption Instruments will each correspond pro rata to the positions
in the Fund's portfolio (including cash positions) except as specified
in the application.
4. Because shares will not be individually redeemable, applicants
request an exemption from section 5(a)(1) and section 2(a)(32) of the
Act that would permit the Funds to register as open-end management
investment companies and issue shares that are redeemable in Creation
Units only.
5. Applicants also request an exemption from section 22(d) of the
Act and rule 22c-1 under the Act as secondary market trading in shares
will take place at negotiated prices, not at a current offering price
described in a Fund's prospectus, and not at a price based on NAV.
Applicants state that (a) secondary market trading in shares does not
involve a Fund as a party and will not result in dilution of an
investment in shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants represent that share market prices will
be disciplined by arbitrage opportunities, which should prevent shares
from trading at a material discount or premium from NAV.
6. With respect to Funds that effect creations and redemptions of
Creation Units in kind and that are based on certain Underlying Indexes
that include foreign securities, applicants request relief from the
requirement imposed by section 22(e) in order to allow such Funds to
pay redemption proceeds within fourteen calendar days following the
tender of Creation Units for redemption. Applicants assert that the
requested relief would not be inconsistent with the spirit and intent
of section 22(e) to prevent unreasonable, undisclosed or unforeseen
delays in the actual payment of redemption proceeds.
7. Applicants request an exemption to permit Funds of Funds to
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the
Act; and the Funds, and any principal underwriter for the Funds, and/or
any broker or dealer registered under the Exchange Act, to sell shares
to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act.
The application's terms and conditions are designed to, among other
things, help prevent any potential (i) undue influence over a Fund
through control or voting power, or in connection with certain
services, transactions, and underwritings, (ii) excessive layering of
fees, and (iii) overly complex fund structures, which are the concerns
underlying the limits in sections 12(d)(1)(A) and (B) of the Act.
8. Applicants request an exemption from sections 17(a)(1) and
17(a)(2) of the Act to permit persons that are Affiliated Persons, or
Second Tier Affiliates, of the Funds, solely by virtue of certain
ownership interests, to effectuate purchases and redemptions in-kind.
The deposit procedures for in-kind purchases of Creation Units and the
redemption procedures for in-kind redemptions of Creation Units will be
the same for all purchases and redemptions and Deposit Instrument and
Redemption Instruments will be valued in the same manner as those
investment positions currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
a Fund of Funds, and to engage in the accompanying in-kind transactions
with the Fund of Funds.\3\ The purchase of Creation Units by a Fund of
Funds directly from a Fund will be accomplished in accordance with the
policies of the Fund of Funds and will be based on the NAVs of the
Funds.
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\3\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to a Fund of Funds and redemptions of
those shares. Applicants, moreover, are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where a Fund could be deemed an Affiliated Person, or a
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an
entity controlling, controlled by or under common control with an
Adviser provides investment advisory services to that Fund of Funds.
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9. Applicants also request relief to permit a Feeder Fund to
acquire shares of another registered investment company managed by the
Adviser having substantially the same investment objectives as the
Feeder Fund (``Master Fund'') beyond the limitations in section
12(d)(1)(A) and permit the Master Fund, and any principal underwriter
for the Master Fund, to sell shares of the Master Fund to the Feeder
Fund beyond the limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the Commission to exempt any
persons 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. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
[[Page 28917]]
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.
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 (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-10984 Filed 5-9-16; 8:45 am]
BILLING CODE 8011-01-P
