Gadsden ETF Trust and Gadsden, LLC, 5151-5153 [2018-02170]
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Federal Register / Vol. 83, No. 24 / Monday, February 5, 2018 / Notices
of each transaction in reliance on this
Order, the Applicant informed the
relevant advisory client of the capacity
in which the Applicant may act with
respect to the transaction and that it
received the advisory client’s consent (if
the Applicant informs the client orally
of the capacity in which it may act with
respect to such transaction or obtains
oral consent, such records may, for
example, include recordings of
telephone conversations or
contemporaneous written notations);
and (c) documentation sufficient to
enable assessment of compliance by the
Applicant with sections 206(1) and (2)
of the Advisers Act in connection with
its reliance on this Order.3 In each case,
such records will be maintained and
preserved in an easily accessible place
for a period of not less than five years,
the first two years in an appropriate
office of the Applicant, and be available
for inspection by the staff of the
Commission.
11. The Applicant will adopt written
compliance policies and procedures
reasonably designed to ensure, and the
Applicant’s chief compliance officer
will monitor, the Applicant’s
compliance with the conditions of this
Order. The Applicant’s chief
compliance officer will, on at least a
quarterly basis, conduct testing
reasonably sufficient to verify such
compliance. Such written policies and
procedures, monitoring and testing will
address, without limitation: (a)
Compliance by the Applicant with its
disclosure and consent requirements
under this Order; (b) the integrity and
operation of electronic systems
employed by the Applicant in
connection with its reliance on this
Order; (c) compliance by the Applicant
with its recordkeeping obligations under
this Order; and (d) whether there is any
evidence of the Applicant engaging in
‘‘dumping’’ in connection with its
reliance on this Order.4 The Applicant’s
chief compliance officer will document
the frequency and results of such
monitoring and testing, and the
Applicant will maintain and preserve
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3 For
example, under sections 206(1) and (2), an
investment adviser may not engage in any
transaction on a principal basis with a client that
is not consistent with the best interests of the client
or that subrogates the client’s interests to the
interests of the investment adviser. Cf. Investment
Advisers Act Release No. 2106 (Jan. 31, 2003)
(adopting Rule 206(4)–6).
4 See Report of the Securities and Exchange
Commission, Investment Trusts and Investment
Companies, H.R. Doc. No. 279, 76th Cong., 2d Sess.,
pt. 3, at 2581, 2589 (1939); Hearings on S. 3580
Before a Subcommittee of the Commission on
Banking and Currency, 76th Cong., 3d Sess. 209,
212–23 (1940); Hearings on S. 3580 Before the
Subcomm. of the Comm. on Banking and Currency,
76th Cong., 3d Sess. 322 (1940).
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such documentation in an easily
accessible place for a period of not less
than five years, the first two years in an
appropriate office of the Applicant, and
be available for inspection by the staff
of the Commission.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–02168 Filed 2–2–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32999; 812–14859]
Gadsden ETF Trust and Gadsden, LLC
January 30, 2018.
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 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: Gadsden ETF Trust
(‘‘Trust’’), a Delaware statutory trust that
will be registered under the Act as an
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5151
open-end management investment
company with multiple series, and
Gadsden, LLC (‘‘Initial Adviser’’), a
Delaware limited liability company that
will be registered as an investment
adviser under the Investment Advisers
Act of 1940.
FILING DATES: The application was filed
on December 26, 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 February 23, 2018, 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: Eight Tower Bridge, 161
Washington Street, Suite 580,
Conshohocken, PA 19428.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, 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
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of 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
1 Applicants request that the order apply to the
Initial Fund, as well as to future series of the Trust,
and any other open-end management investment
companies or series thereof (each, included in the
term ‘‘Fund’’), each of which will operate as an
actively-managed ETF. 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
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Continued
05FEN1
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5152
Federal Register / Vol. 83, No. 24 / Monday, February 5, 2018 / Notices
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 a broker-dealer
registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
(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 consist of a
portfolio of securities and other assets
and investment positions (‘‘Portfolio
Instruments’’). Each Fund will disclose
on its website the identities and
quantities of the Portfolio Instruments
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
‘‘Adviser’’) and (b) comply with the terms and
conditions of the application.
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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 Instruments 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 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 a person who is 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
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 Instruments currently held by
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Fmt 4703
Sfmt 4703
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.2
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
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 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 investment adviser to the
Funds is also an investment adviser to a Fund of
Funds.
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Federal Register / Vol. 83, No. 24 / Monday, February 5, 2018 / Notices
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
HEARING OR NOTIFICATION OF HEARING:
[FR Doc. 2018–02170 Filed 2–2–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32998; File No. 812–14842]
Columbia Funds Series Trust, et al.
January 30, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
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Notice of an application for an order
pursuant to: (a) Section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act; (b)
section 12(d)(1)(J) of the Act granting an
exemption from section 12(d)(1) of the
Act; (c) sections 6(c) and 17(b) of the
Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
and (d) section 17(d) of the Act and rule
17d–1 under the Act to permit certain
joint arrangements and transactions.
Applicants request an order that would
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.1
APPLICANTS: Columbia Funds Series
Trust, Columbia Funds Series Trust I,
Columbia Funds Series Trust II,
Columbia Funds Variable Insurance
Trust, Columbia Funds Variable Series
Trust II, Columbia ETF Trust I and
Columbia ETF Trust II (each a ‘‘Trust’’
and collectively, the ‘‘Trusts’’), each
registered under the Act as open-end
management investment companies
with one or more series, and Columbia
Management Investment Advisers, LLC
(‘‘Columbia Management’’), registered as
an investment adviser under the
Investment Advisers Act of 1940.
FILING DATE: The application was filed
on November 9, 2017.
1 The requested order would supersede an
exemptive order issued by the Commission on
October 24, 2006, with the result that no person
will continue to rely on the prior order if the order
is granted. RiverSource Diversified Income Series,
Inc., et al., Investment Company Act Release Nos.
27506 (September 28, 2006) (notice) and 27525
(October 24, 2016) (order). All existing entities that
currently intend to rely on the order have been
named as applicants. Any other existing or future
entity that relies on the order in the future will
comply with the terms and conditions of the
application.
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18:08 Feb 02, 2018
Jkt 244001
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 February 26, 2018 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: c/o Brian D. McCabe, Esq.
and Nathan D. Somogie, Esq., Rope &
Gray LLP, Prudential Tower, 800
Boylston Street, Boston, MA 02199.
FOR FURTHER INFORMATION CONTACT: HaeSung Lee, Attorney-Adviser, at (202)
551–7345 or Robert H. Shapiro, 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
website by searching for the file
number, or 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 permit the applicants to
participate in an interfund lending
facility where each Fund could lend
money directly to and borrow money
directly from other Funds to cover
unanticipated cash shortfalls, such as
unanticipated redemptions or trade
fails.2 The Funds will not borrow under
2 Applicants request that the order apply to the
applicants and to any existing or future series of the
Trusts and to any other registered open-end or
closed-end management investment company or its
series for which Columbia Management and each
successor thereto or a person controlling, controlled
by, or under common control with Columbia
Management serves as investment adviser (each
such investment adviser may be referred to as an
‘‘Adviser’’ and collectively, the ‘‘Advisers’’). For
purposes of the requested order, ‘‘successor’’ is
limited to any entity that results from a
reorganization into another jurisdiction or a change
in the type of a business organization. The Funds
that are closed-end management investment
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5153
the facility for leverage purposes and
the loans’ duration will be no more than
7 days.3
2. Applicants anticipate that the
proposed facility would provide a
borrowing Fund with a source of
liquidity at a rate lower than the bank
borrowing rate at times when the cash
position of the Fund is insufficient to
meet temporary cash requirements. In
addition, Funds making short-term cash
loans directly to other Funds would
earn interest at a rate higher than they
otherwise could obtain from investing
their cash in repurchase agreements or
certain other short term money market
instruments. Thus, applicants assert that
the facility would benefit both
borrowing and lending Funds.
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
stated in the Application. Among
others, the Adviser, through a
designated committee, would
administer the facility as a disinterested
fiduciary as part of its duties under the
investment management and
administrative agreements with the
Funds and would receive no additional
fee as compensation for its services in
connection with the administration of
the facility. The facility would be
subject to oversight and certain
approvals by the Funds’ Board,
including, among others, approval of the
interest rate formula and of the method
for allocating loans across Funds, as
well as review of the process in place to
evaluate the liquidity implications for
the Funds. A Fund’s aggregate
outstanding interfund loans will not
exceed 15% of its net assets, and the
Fund’s loans to any one Fund will not
exceed 5% of the lending Fund’s net
assets.4
4. Applicants assert that the facility
does not raise the concerns underlying
section 12(d)(1) of the Act given that the
Funds are part of the same group of
investment companies and there will be
no duplicative costs or fees to the
Funds.5 Applicants also assert that the
proposed transactions do not raise the
concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as
the Funds would not engage in lending
transactions that unfairly benefit
companies will not participate as borrowers in the
interfund lending facility.
3 Any Fund, however, will be able to call a loan
on one business day’s notice.
4 Under certain circumstances, a borrowing Fund
will be required to pledge collateral to secure the
loan.
5 Applicants state that the obligation to repay an
interfund loan could be deemed to constitute a
security for the purposes of sections 17(a)(1) and
12(d)(1) of the Act.
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]]>Agencies
[Federal Register Volume 83, Number 24 (Monday, February 5, 2018)]
[Notices]
[Pages 5151-5153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02170]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32999; 812-14859]
Gadsden ETF Trust and Gadsden, LLC
January 30, 2018.
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 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: Gadsden ETF Trust (``Trust''), a Delaware statutory trust
that will be registered under the Act as an open-end management
investment company with multiple series, and Gadsden, LLC (``Initial
Adviser''), a Delaware limited liability company that will be
registered as an investment adviser under the Investment Advisers Act
of 1940.
Filing Dates: The application was filed on December 26, 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 February 23, 2018, 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: Eight Tower Bridge, 161
Washington Street, Suite 580, Conshohocken, PA 19428.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, 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 website by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Summary of 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
[[Page 5152]]
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 a broker-dealer registered under the
Securities Exchange Act of 1934 (``Exchange Act'') (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 Fund,
as well as to future series of the Trust, and any other open-end
management investment companies or series thereof (each, included in
the term ``Fund''), each of which will operate as an actively-
managed ETF. 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 Fund will consist of a portfolio of securities and other
assets and investment positions (``Portfolio Instruments''). Each Fund
will disclose on its website the identities and quantities of the
Portfolio Instruments 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 Instruments
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 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 a person who is 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 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
Instruments 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.\2\ 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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\2\ 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 investment
adviser to the Funds is also an investment adviser to a 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
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 5153]]
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02170 Filed 2-2-18; 8:45 am]
BILLING CODE 8011-01-P
