The Vanguard Group, Inc., et al., 43267-43269 [2017-19474]
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Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2017–061, and should be
submitted on or before October 5, 2017.
V. Accelerated Approval of the
Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 1, prior to
the thirtieth day after the date of
publication of Amendment No. 1 in the
Federal Register. In Amendment No. 1,
the Exchange proposes to remove
outdated references to Retail Orders and
RPI Orders, which are no longer offered
on the Exchange. The Commission
believes that deleting these outdated
references would help to bring clarity
and accuracy to the Exchange rules. The
Commission also believes that these
changes are of a technical nature and do
not materially or substantively alter the
proposed rule change. In addition, in
Amendment No. 1, the Exchange
provides an example to illustrate and
support its assertion that extending the
time period for the entry of LOC orders
until immediately prior to 3:55 p.m.
should facilitate the price discovery
mechanism of the Nasdaq Closing Cross.
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,44 to approve the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,45 that the
proposed rule change (SR–NASDAQ–
2017–061), as modified by Amendment
No. 1, be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.46
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–19478 Filed 9–13–17; 8:45 am]
asabaliauskas on DSKBBXCHB2PROD with NOTICES
BILLING CODE 8011–01–P
44 15
U.S.C. 78s(b)(2).
45 Id.
46 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32810; File No. 812–14691]
The Vanguard Group, Inc., et al.
September 8, 2017.
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) actively-managed 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 Creation Units 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; and
(e) certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Acquiring Funds’’) to acquire
shares of the Funds.
APPLICANTS: The Vanguard Group, Inc.
(‘‘Initial Adviser’’), a Pennsylvania
corporation registered as an investment
adviser under the Investment Advisers
Act of 1940, Vanguard Marketing
Corporation (‘‘Distributor’’), a whollyowned subsidiary of the Initial Adviser
and a broker-dealer registered under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’), and Vanguard
Admiral Funds, Vanguard Bond Index
Funds, Vanguard California Tax-Free
Funds, Vanguard Charlotte Funds,
Vanguard Chester Funds, Vanguard
Convertible Securities Fund, Vanguard
Explorer Fund, Vanguard Fenway
Funds, Vanguard Fixed Income
Securities Funds, Vanguard Horizon
Funds, Vanguard Index Funds,
Vanguard International Equity Index
Funds, Vanguard Malvern Funds,
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43267
Vanguard Massachusetts Tax-Exempt
Funds, Vanguard Money Market
Reserves, Vanguard Montgomery Funds,
Vanguard Morgan Growth Fund,
Vanguard Municipal Bond Funds,
Vanguard New Jersey Tax-Free Funds,
Vanguard New York Tax-Free Funds,
Vanguard Ohio Tax-Free Funds,
Vanguard Pennsylvania Tax-Free Funds,
Vanguard Quantitative Funds, Vanguard
Scottsdale Funds, Vanguard Specialized
Funds, Vanguard STAR Funds,
Vanguard Tax-Managed Funds,
Vanguard Trustees’ Equity Fund,
Vanguard Valley Forge Funds, Vanguard
Variable Insurance Funds, Vanguard
Wellesley Income Fund, Vanguard
Wellington Fund, Vanguard Whitehall
Funds, Vanguard Windsor Funds, and
Vanguard World Fund, each a Delaware
statutory trust registered under the Act
as an open-end management investment
company with multiple series (each a
‘‘Trust,’’ and together, the ‘‘Trusts’’).
FILING DATE: The application was filed
on August 17, 2016, and amended on
May 19, 2017, August 22, 2017, and
September 7, 2017.
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 October 3, 2017, 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: Brian P. Murphy, Esq., The
Vanguard Group, Inc., Mail Stop V26,
P.O. Box 2600, Valley Forge, PA 19482–
2600.
FOR FURTHER INFORMATION CONTACT:
Asen Parachkevov, Senior Counsel, or
Daniele Marchesani, Assistant Chief
Counsel, 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
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43268
Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as
actively-managed 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. Any order granting the
requested relief would be subject to the
terms and conditions stated in the
application.
2. Each Fund will consist of a
portfolio of securities, instruments,
other assets or positions (‘‘Portfolio
Positions’’). Each Fund will disclose on
its Web site the identities and quantities
of the Portfolio Positions that will form
the basis for the Fund’s calculation of
NAV at the end of the day.
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
1 Applicants request that the order apply to future
series of the Trusts and other open-end
management investment companies or series
thereof that currently exist or that may be created
in the future (each, included in the term ‘‘Fund’’),
each of which will operate as an actively-managed
ETF. Any series of the Trusts, or of other open-end
management investment companies, that have
multiple share classes will not be able to rely on
the order. 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 such entity or any successor thereto
is included in the term ‘‘Adviser’’) and (b) comply
with the terms and conditions of the application.
For purposes of the requested order, the term
‘‘successor’’ is limited to an entity that results from
a reorganization into another jurisdiction or a
change in the type of business organization.
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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 hold
non-U.S. Portfolio Positions and that
effect creations and redemptions of
Creation Units in kind, applicants
request relief from the requirement
imposed by section 22(e) in order to
allow such Funds to pay redemption
proceeds within fifteen 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 Acquiring 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 Acquiring 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
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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 Instruments
and Redemption Instruments will be
valued in the same manner as those
Portfolio 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 an Acquiring Fund, and to
engage in the accompanying in-kind
transactions with the Acquiring Fund.2
The purchase of Creation Units by an
Acquiring Fund directly from a Fund
will be accomplished in accordance
with the policies of the Acquiring Fund
and will be based on the NAVs of the
Funds.
9. 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
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.
2 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to an
Acquiring Fund 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 an Acquiring Fund because an
investment adviser to the Funds is also an
investment adviser to the Acquiring Fund.
E:\FR\FM\14SEN1.SGM
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Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–19474 Filed 9–13–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–213, OMB Control No.
3235–0220]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Extension:
Rule 30b2–1
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit the existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 30b2–1 (17 CFR 270.30b2–1)
under the Investment Company Act of
1940 (15 U.S.C. 80a–1 et seq.) (the
‘‘Investment Company Act’’) requires a
registered investment company (‘‘fund’’)
to (1) file a report with the Commission
on Form N–CSR (17 CFR 249.331 and
274.128) not later than 10 days after the
transmission of any report required to
be transmitted to shareholders under
rule 30e–1 under the Investment
Company Act, and (2) file with the
Commission a copy of every periodic or
interim report or similar communication
containing financial statements that is
transmitted by or on behalf of such fund
to any class of such fund’s security
holders and that is not required to be
filed with the Commission under (1)
above, not later than 10 days after the
transmission to security holders. The
purpose of the collection of information
required by rule 30b2–1 is to meet the
disclosure requirements of the
Investment Company Act and
certification requirements of the
Sarbanes-Oxley Act of 2002 (Pub. L.
107–204, 116 Stat. 745 (2002)), and to
provide investors with information
necessary to evaluate an interest in the
fund.
The Commission estimates that there
are 2,401 funds, with a total of 11,555
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portfolios, that are governed by the rule.
For purposes of this analysis, the
burden associated with the
requirements of rule 30b2–1 has been
included in the collection of
information requirements of rule 30e–1
and Form N–CSR, rather than the rule.
The Commission has, however,
requested a one hour burden for
administrative purposes.
The collection of information under
rule 30b2–1 is mandatory. The
information provided under rule 30b2–
1 is not kept confidential. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid OMB control
number.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Remi
Pavlik-Simon, 100 F Street NE.,
Washington, DC 20549; or send an email
to: PRA_Mailbox@sec.gov.
Dated: September 11, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–19510 Filed 9–13–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32809; File No. 812–14778]
Medley Capital Corporation, et al.
September 8, 2017.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of application for an order
under sections 17(d) and 57(i) of the
Investment Company Act of 1940 (the
‘‘Act’’) and rule 17d–1 under the Act to
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43269
permit certain joint transactions
otherwise prohibited by sections 17(d)
and 57(a)(4) of the Act and rule 17d–1
under the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
business development companies (each,
a ‘‘BDC’’) and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with certain affiliated investment funds
and accounts.
APPLICANTS: Medley Capital Corporation
(‘‘MCC’’); Medley SBIC, LP (‘‘Medley
SBIC’’); Medley SBIC GP, LLC (the
‘‘SBIC General Partner’’); Medley LLC;
MCC Advisors LLC (‘‘MCC Advisors’’);
Medley Capital LLC, MOF II
Management LLC, and MOF III
Management LLC (collectively, the
‘‘Existing Affiliated Investment
Advisers’’); MOF II GP LLC, MOF III GP
LLC, and Medley Credit Strategies GP,
LLC (collectively, the ‘‘Existing General
Partners’’); Medley Opportunity Fund III
LP, Medley Opportunity Fund II LP, and
Medley Credit Strategies (KOC) LLC
(collectively, the ‘‘Existing Affiliated
Funds’’); Sierra Income Corporation
(‘‘Sierra’’); SIC Advisors LLC (‘‘SIC
Advisors’’); Sierra Total Return Fund
(‘‘STRF’’); STRF Advisors LLC (‘‘STRF
Advisors’’); Sierra Opportunity Fund
(‘‘SOF’’); and SOF Advisor LLC (‘‘SOF
Advisors’’).
FILING DATE: The application was filed
on May 24, 2017.
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 October 3, 2017 and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F St.
NE., Washington, DC 20549–1090.
Applicants: c/o Brooke Taube, Medley
Capital Corporation, Seth Taube, Sierra
Income Corporation, Sierra Total Return
Fund, and Sierra Opportunity Fund, 280
Park Avenue, 6th Floor East, New York,
NY 10017.
FOR FURTHER INFORMATION CONTACT: HaeSung Lee, Attorney-Adviser, at (202)
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]]>Agencies
[Federal Register Volume 82, Number 177 (Thursday, September 14, 2017)]
[Notices]
[Pages 43267-43269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19474]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32810; File No. 812-14691]
The Vanguard Group, Inc., et al.
September 8, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
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) actively-
managed 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 Creation Units
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; and (e) certain
registered management investment companies and unit investment trusts
outside of the same group of investment companies as the Funds
(``Acquiring Funds'') to acquire shares of the Funds.
Applicants: The Vanguard Group, Inc. (``Initial Adviser''), a
Pennsylvania corporation registered as an investment adviser under the
Investment Advisers Act of 1940, Vanguard Marketing Corporation
(``Distributor''), a wholly-owned subsidiary of the Initial Adviser and
a broker-dealer registered under the Securities Exchange Act of 1934
(``Exchange Act''), and Vanguard Admiral Funds, Vanguard Bond Index
Funds, Vanguard California Tax-Free Funds, Vanguard Charlotte Funds,
Vanguard Chester Funds, Vanguard Convertible Securities Fund, Vanguard
Explorer Fund, Vanguard Fenway Funds, Vanguard Fixed Income Securities
Funds, Vanguard Horizon Funds, Vanguard Index Funds, Vanguard
International Equity Index Funds, Vanguard Malvern Funds, Vanguard
Massachusetts Tax-Exempt Funds, Vanguard Money Market Reserves,
Vanguard Montgomery Funds, Vanguard Morgan Growth Fund, Vanguard
Municipal Bond Funds, Vanguard New Jersey Tax-Free Funds, Vanguard New
York Tax-Free Funds, Vanguard Ohio Tax-Free Funds, Vanguard
Pennsylvania Tax-Free Funds, Vanguard Quantitative Funds, Vanguard
Scottsdale Funds, Vanguard Specialized Funds, Vanguard STAR Funds,
Vanguard Tax-Managed Funds, Vanguard Trustees' Equity Fund, Vanguard
Valley Forge Funds, Vanguard Variable Insurance Funds, Vanguard
Wellesley Income Fund, Vanguard Wellington Fund, Vanguard Whitehall
Funds, Vanguard Windsor Funds, and Vanguard World Fund, each a Delaware
statutory trust registered under the Act as an open-end management
investment company with multiple series (each a ``Trust,'' and
together, the ``Trusts'').
Filing Date: The application was filed on August 17, 2016, and amended
on May 19, 2017, August 22, 2017, and September 7, 2017.
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 October 3, 2017, 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: Brian P. Murphy, Esq., The
Vanguard Group, Inc., Mail Stop V26, P.O. Box 2600, Valley Forge, PA
19482-2600.
FOR FURTHER INFORMATION CONTACT: Asen Parachkevov, Senior Counsel, or
Daniele Marchesani, Assistant Chief Counsel, 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
[[Page 43268]]
number, or for an applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Summary of the Application
1. Applicants request an order that would allow Funds to operate as
actively-managed 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. 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 future series of
the Trusts and other open-end management investment companies or
series thereof that currently exist or that may be created in the
future (each, included in the term ``Fund''), each of which will
operate as an actively-managed ETF. Any series of the Trusts, or of
other open-end management investment companies, that have multiple
share classes will not be able to rely on the order. 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 such entity or any successor thereto is included in the term
``Adviser'') and (b) comply with the terms and conditions of the
application. For purposes of the requested order, the term
``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization.
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2. Each Fund will consist of a portfolio of securities,
instruments, other assets or positions (``Portfolio Positions''). Each
Fund will disclose on its Web site the identities and quantities of the
Portfolio Positions that will form the basis for the Fund's calculation
of NAV at the end of the day.
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 hold non-U.S. Portfolio Positions and
that effect creations and redemptions of Creation Units in kind,
applicants request relief from the requirement imposed by section 22(e)
in order to allow such Funds to pay redemption proceeds within fifteen
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 Acquiring 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 Acquiring 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 Instruments and
Redemption Instruments will be valued in the same manner as those
Portfolio 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
an Acquiring Fund, and to engage in the accompanying in-kind
transactions with the Acquiring Fund.\2\ The purchase of Creation Units
by an Acquiring Fund directly from a Fund will be accomplished in
accordance with the policies of the Acquiring Fund and will be based on
the NAVs of the Funds.
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\2\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to an Acquiring Fund 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 an Acquiring Fund because an investment
adviser to the Funds is also an investment adviser to the Acquiring
Fund.
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9. 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
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.
[[Page 43269]]
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19474 Filed 9-13-17; 8:45 am]
BILLING CODE 8011-01-P
