1522 Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 

1The Applicants request that the order apply not 

only to the series of the Trust advised by the Initial 

Adviser, The BDC Income Fund, but also to any 

future series of the Trust and any other existing or 

future registered open-end management investment 

companies and any series thereof that are part of the 

same ‘‘group of investment companies’’, as defined 

in the applicable Board minutes, that 

such change is in the best interests of 

the Fund and its shareholders, and does 

not involve a conflict of interest from 

which the Adviser or the Affiliated 

Subadviser derives an inappropriate 

advantage. 

7. Independent legal counsel, as 

defined in rule 0–1(a)(6) under the Act, 

will be engaged to represent the 

Independent Trustees. The selection of 

such counsel will be within the 

discretion of the then-existing 

Independent Trustees. 

8. The Adviser will provide the 

Board, no less frequently than quarterly, 

with information about the profitability 

of the Adviser on a per Fund basis. The 

information will reflect the impact on 

profitability of the hiring or termination 

of any Subadviser during the applicable 

quarter. 

9. Whenever a Subadviser is hired or 

terminated, the Adviser will provide the 

Board with information showing the 

expected impact on the profitability of 

the Adviser. 

10. The Adviser will provide general 

management services to each Fund, 

including overall supervisory 

responsibility for the general 

management and investment of each 

Fund’s assets, and, subject to review 

and approval of the Board, will: (a) Set 

each Fund’s overall investment 

strategies; (b) evaluate, select, and 

recommend Subadvisers to manage all 

or a portion of the each Fund’s assets; 

(c) allocate and, when appropriate, 

reallocate each Fund’s assets among one 

or more Subadvisers; (d) monitor and 

evaluate the performance of 

Subadvisers; and (e) implement 

procedures reasonably designed to 

ensure that Subadvisers comply with 

each Fund’s investment objective, 

policies and restrictions. 

11. No trustee or officer of the Trust 

or a Fund, or director, manager or 

officer of the Adviser, will own, directly 

or indirectly (other than through a 

pooled investment vehicle that is not 

controlled by such person), any interest 

in a Subadviser, except for (a) 

ownership of interests in the Adviser or 

any entity that controls, is controlled by, 

or is under common control with the 

Adviser; or (b) ownership of less than 

1% of the outstanding securities of any 

class of equity or debt of any publicly 

traded company that is either a 

Subadviser or an entity that controls, is 

controlled by or is under common 

control with a Subadviser. 

12. In the event the Commission 

adopts a rule under the Act providing 

substantially similar relief to that in the 

order requested in the Application, the 

requested order will expire on the 

effective date of that rule. 

13. Each Fund will disclose the 

Aggregate Fee Disclosure in its 

registration statement. 

14. Any new Subadvisory Agreement 

or any amendment to a Fund’s existing 

Advisory Agreement or Subadvisory 

Agreement that directly or indirectly 

results in an increase in the aggregate 

advisory rate payable by the Fund will 

be submitted to the Fund’s shareholders 

for approval. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2015–00227 Filed 1–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31407; 812–14355] 

Forum Funds II, et al.; Notice of 

Application 

January 6, 2015. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 12(d)(1)(J) of the 

Investment Company Act of 1940 (the 

‘‘1940 Act’’) for exemptions from 

sections 12(d)(1)(A), (B), and (C) of the 

1940 Act, under sections 6(c) and 17(b) 

of the 1940 Act for an exemption from 

section 17(a) of the 1940 Act, and under 

section 6(c) of the 1940 Act for an 

exemption from rule 12d1–2(a) under 

the 1940 Act. 

SUMMARY OF THE APPLICATION: 

Applicants request an order that would 

(a) permit certain registered open-end 

management investment companies that 

operate as ‘‘funds of funds’’ to acquire 

shares of certain registered open-end 

management investment companies, 

registered closed-end management 

investment companies, business 

development companies as defined by 

section 2(a)(48) of the 1940 Act 

(‘‘business development companies’’), 

and registered unit investment trusts 

that are within or outside the same 

group of investment companies as the 

acquiring investment companies and (b) 

permit certain registered open-end 

management investment companies 

relying on rule 12d1–2 under the 1940 

Act to invest in certain financial 

instruments. 

APPLICANTS: Forum Funds II (‘‘Trust’’), 

Full Circle Advisors, LLC (‘‘Initial 

Advisor’’) and Foreside Fund Services, 

LLC (the ‘‘Distributor’’). 

FILING DATES: The application was filed 

August 29, 2014, and amended on 

November 4, 2014, November 12, 2014, 

December 17, 2014, and December 24, 

2014. 

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 2, 2015, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to rule 0–5 under the 

1940 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: Forum Funds II, Three 

Canal Plaza, Suite 600, Portland, Maine 

04101; Full Circle Advisors, LLC, 102 

Greenwich Avenue, 2nd Floor, 

Greenwich, CT 06830; Foreside Fund 

Services LLC, Three Canal Plaza, Suite 

300, Portland, ME 04101. 

FOR FURTHER INFORMATION CONTACT: Jill 

Ehrlich, Senior Counsel, at (202) 551– 

6819, or David P. Bartels, Branch Chief, 

at (202) 551–6821 (Division of 

Investment Management, Chief 

Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

‘‘Company’’ name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. The Trust is an open-end 

management company registered under 

the 1940 Act and organized as a 

Delaware statutory trust. The Trust may 

offer multiple series.1


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in section 12(d)(1)(G)(ii) of the 1940 Act, as The 

BDC Income Fund and are, or may in the future be, 

advised by the Initial Advisor or any other 

investment adviser controlling, controlled by, or 

under common control with the Initial Advisor 

(together with The BDC Income Fund, each series 

a ‘‘Fund,’’ and collectively, ‘‘Funds’’). All entities 

that currently intend to rely on the requested order 

are named as applicants. Any other entity that relies 

on the order in the future will comply with the 

terms and conditions of the application. 

2All references to the term ‘‘Full Circle Advisors, 

LLC’’ include any successors in interest to Full 

Circle Advisors, LLC. A successor is limited to an 

entity that results from a reorganization into 

another jurisdiction or a change in the type of 

business organization. The term ‘‘Advisor’’ includes 

(i) the Initial Advisor and (ii) any entity controlling, 

controlled by, or under common control with the 

Initial Advisor that serves as investment adviser to 

the Funds. 

3For purposes of the request for relief, the term 

‘‘group of investment companies’’ means any two 

or more registered investment companies, including 

closed-end investment companies and BDCs, that 

hold themselves out to investors as related 

companies for purposes of investment and investor 

services. 

4Certain of the Underlying Funds may be 

registered under the 1940 Act as either UITs or 

open-end management investment companies and 

have obtained exemptions from the Commission 

necessary to permit their shares to be listed and 

traded on a national securities exchange at 

negotiated prices and, accordingly, to operate as 

exchange-traded funds (collectively, ‘‘ETFs’’ and 

each, an ‘‘ETF’’). In addition, certain of the 

Underlying Funds may in the future pursue their 

investment objectives through a master-feeder 

arrangement in reliance on section 12(d)(1)(E) of the 

1940 Act. In accordance with condition 12, a Fund 

of Funds may not invest in an Underlying Fund that 

operates as a feeder fund unless the feeder fund is 

part of the same ‘‘group of investment companies’’ 

as its corresponding master fund or the Fund of 

Funds. If a Fund of Funds invests in an Affiliated 

Fund that operates as a feeder fund and the 

corresponding master fund is not within the same 

‘‘group of investment companies’’ as the Fund of 

Funds and Affiliated Fund, the master fund would 

be an Unaffiliated Fund for purposes of the 

application and its conditions. 

5Applicants state that they do not believe that 

investments in business development companies 

present any particular considerations or concerns 

that may be different from those presented by 

investments in registered closed-end investment 

companies. In addition, Applicants represent that 

the Funds of Funds will not invest in reliance on 

the order in BDCs or closed-end investment 

companies that are not listed and traded on a 

national securities exchange. 

2. The Initial Advisor, a Delaware 

limited liability company, is a registered 

investment adviser under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’). The Initial Advisor, or 

an entity controlling, controlled by, or 

under common control with the Initial 

Advisor, serves, or will serve, as the 

investment adviser to each of the 

Funds.2 The Advisor may enter into 

sub-advisory agreements with one or 

more additional investment advisers to 

act as ‘‘Sub-Advisers’’ with respect to 

particular Funds (each, a ‘‘SubAdviser’’). The Distributor is a Broker 

(as defined below) and serves as the 

existing Fund’s principal underwriter 

and distributor. 

3. Applicants request relief to the 

extent necessary to permit: (a) Each 

Fund (each, a ‘‘Fund of Funds,’’ and 

collectively, the ‘‘Funds of Funds’’) to 

acquire shares of registered open-end 

management investment companies 

(each an ‘‘Unaffiliated Open-End 

Investment Company’’), registered 

closed-end management investment 

companies, business development 

companies (each registered closed-end 

management investment company and 

each business development company, 

an ‘‘Unaffiliated Closed-End Investment 

Company’’ and, together with the 

Unaffiliated Open-End Investment 

Companies, the ‘‘Unaffiliated 

Investment Companies’’), and registered 

unit investment trusts (‘‘UITs’’) (the 

‘‘Unaffiliated Trusts,’’ collectively with 

the Unaffiliated Investment Companies, 

the ‘‘Unaffiliated Funds’’), in each case, 

that are not part of the same ‘‘group of 

investment companies’’ as the Funds of 

Funds; 3 (b) the Unaffiliated Funds, their 

principal underwriters and any broker 

or dealer registered under the Securities 

Exchange Act of 1934 (the ‘‘1934 Act’’) 

(‘‘Broker’’) to sell shares of such 

Unaffiliated Funds to the Funds of 

Funds; (c) the Funds of Funds to acquire 

shares of other registered investment 

companies, including open-end 

management investment companies and 

series thereof, closed-end management 

investment companies and UITs, as well 

as business development companies (if 

any), in the same group of investment 

companies as the Funds of Funds 

(collectively, the ‘‘Affiliated Funds,’’ 

and, together with the Unaffiliated 

Funds, the ‘‘Underlying Funds’’); 4 and 

(d) the Affiliated Funds, their principal 

underwriters and any Broker to sell 

shares of the Affiliated Funds to the 

Funds of Funds.5 Applicants also 

request an order under sections 6(c) and 

17(b) of the 1940 Act to exempt 

applicants from section 17(a) to the 

extent necessary to permit Underlying 

Funds organized as open-end 

investment companies (‘‘Underlying 

Open-End Investment Companies’’) and 

UITs (‘‘Underlying UITs’’) to sell their 

shares to Funds of Funds and redeem 

their shares from Funds of Funds. 

4. Applicants also request an 

exemption under section 6(c) from rule 

12d1–2 under the 1940 Act to permit 

any existing or future Fund of Funds 

that relies on section 12(d)(1)(G) of the 

1940 Act (‘‘Section 12(d)(1)(G) Fund of 

Funds’’) and that otherwise complies 

with rule 12d1–2 under the 1940 Act, to 

also invest, to the extent consistent with 

its investment objective(s), policies, 

strategies and limitations, in other 

financial instruments that may not be 

securities within the meaning of section 

2(a)(36) of the 1940 Act (‘‘Other 

Investments’’). 

Applicants’ Legal Analysis 

A. Section 12(d)(1) 

1. Section 12(d)(1)(A) of the 1940 Act, 

in relevant part, prohibits a registered 

investment company from acquiring 

shares of an investment company if the 

securities represent more than 3% of the 

total outstanding voting stock of the 

acquired company, more than 5% of the 

total assets of the acquiring company, 

or, together with the securities of any 

other investment companies, more than 

10% of the total assets of the acquiring 

company. Section 12(d)(1)(B) of the 

1940 Act prohibits a registered openend investment company, its principal 

underwriter, and any Broker from 

selling the investment company’s shares 

to another investment company if the 

sale will cause the acquiring company 

to own more than 3% of the acquired 

company’s voting stock, or if the sale 

will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. Section 12(d)(1)(C) prohibits 

an investment company from acquiring 

any security issued by a registered 

closed-end investment company if such 

acquisition would result in the 

acquiring company, any other 

investment companies having the same 

investment adviser, and companies 

controlled by such investment 

companies, collectively, owning more 

than 10% of the outstanding voting 

stock of the registered closed-end 

investment company. 

2. Section 12(d)(1)(J) of the 1940 Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Applicants request an exemption under 

section 12(d)(1)(J) of the 1940 Act from 

the limitations of sections 12(d)(1)(A), 

(B) and (C) to the extent necessary to 

permit: (i) The Funds of Funds to 

acquire shares of Underlying Funds in 

excess of the limits set forth in section 

12(d)(1)(A) and (C) of the 1940 Act; and 

(ii) the Underlying Funds, their 

principal underwriters and any Broker 

to sell shares of the Underlying Funds 

to the Funds of Funds in excess of the 

limits set forth in section 12(d)(1)(B) of 

the 1940 Act. 

3. Applicants state that the proposed 

arrangement will not give rise to the 

policy concerns underlying sections 


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1524 Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 

6A ‘‘Fund of Funds Affiliate’’ is the Advisor, any 

Sub-Adviser, promoter or principal underwriter of 

a Fund of Funds, as well as any person controlling, 

controlled by or under common control with any 

of those entities. An ‘‘Unaffiliated Fund Affiliate’’ 

is an investment adviser(s), sponsor, promoter or 

principal underwriter of any Unaffiliated Fund or 

any person controlling, controlled by or under 

common control with any of those entities. 

7An ‘‘Underwriting Affiliate’’ is a principal 

underwriter in any underwriting or selling 

syndicate that is an officer, director, trustee, 

advisory board member, investment adviser, subadviser or employee of the Fund of Funds, or a 

person of which any such officer, director, trustee, 

investment adviser, sub-adviser, member of an 

advisory board or employee is an affiliated person. 

An Underwriting Affiliate does not include any 

person whose relationship to an Unaffiliated Fund 

is covered by section 10(f) of the 1940 Act. 

8Any references to NASD Conduct Rule 2830 

include any successor or replacement FINRA rule 

to NASD Conduct Rule 2830. 

12(d)(1)(A), (B), and (C), which include 

concerns about undue influence by a 

fund of funds over underlying funds, 

excessive layering of fees, and overly 

complex fund structures. Accordingly, 

applicants believe that the requested 

exemption is consistent with the public 

interest and the protection of investors. 

4. Applicants submit that the 

proposed structure will not result in the 

exercise of undue influence by a Fund 

of Funds or its affiliated persons over 

the Underlying Funds. Applicants assert 

that the concern about undue influence 

does not arise in connection with a 

Fund of Funds’ investment in the 

Affiliated Funds because they are part of 

the same group of investment 

companies. To limit the control a Fund 

of Funds or Fund of Funds Affiliate 6

may have over an Unaffiliated Fund, 

applicants propose a condition 

prohibiting the Advisor and any person 

controlling, controlled by or under 

common control with the Advisor, and 

any investment company and any issuer 

that would be an investment company 

but for section 3(c)(1) or section 3(c)(7) 

of the 1940 Act advised or sponsored by 

the Advisor or any person controlling, 

controlled by or under common control 

with the Advisor (collectively, the 

‘‘Group’’) from controlling (individually 

or in the aggregate) an Unaffiliated Fund 

within the meaning of section 2(a)(9) of 

the 1940 Act. The same prohibition 

would apply to any Sub-Adviser and 

any person controlling, controlled by or 

under common control with the SubAdviser, and any investment company 

or issuer that would be an investment 

company but for section 3(c)(1) or 

3(c)(7) of the 1940 Act (or portion of 

such investment company or issuer) 

advised or sponsored by the SubAdviser or any person controlling, 

controlled by or under common control 

with the Sub-Adviser (collectively, the 

‘‘Sub-Adviser Group’’). 

5. With respect to closed-end 

Underlying Funds, applicants note that 

although closed-end funds may not be 

unduly influenced by a holder’s right of 

redemption, closed-end Underlying 

Funds may be unduly influenced by a 

holder’s ability to vote a large block of 

stock. To address this concern, 

applicants submit that, with respect to 

a Fund’s investment in an Unaffiliated 

Closed-End Investment Company, (i) 

each member of the Group or SubAdviser Group that is an investment 

company or an issuer that would be an 

investment company but for section 

3(c)(1) or 3(c)(7) of the 1940 Act will 

vote its shares of the Unaffiliated 

Closed-End Investment Company in the 

manner prescribed by section 

12(d)(1)(E) of the 1940 Act and (ii) each 

other member of the Group or SubAdviser Group will vote its shares of the 

Unaffiliated Closed-End Investment 

Company in the same proportion as the 

vote of all other holders of the same 

type of such Unaffiliated Closed-End 

Investment Company’s shares. 

Applicants state that, in this way, an 

Unaffiliated Closed-End Investment 

Company will be protected from undue 

influence by a Fund of Funds through 

the voting of the Unaffiliated ClosedEnd Investment Company’s shares. 

6. Applicants propose other 

conditions to limit the potential for 

undue influence over the Unaffiliated 

Funds, including that no Fund of Funds 

or Fund of Funds Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to an Unaffiliated 

Investment Company or sponsor to an 

Unaffiliated Trust) will cause an 

Unaffiliated Fund to purchase a security 

in an offering of securities during the 

existence of any underwriting or selling 

syndicate of which a principal 

underwriter is an Underwriting Affiliate 

(‘‘Affiliated Underwriting’’).7

7. To further ensure that an 

Unaffiliated Investment Company 

understands the implications of a Fund 

of Funds’ investment under the 

requested exemptive relief, prior to its 

investment in the shares of an 

Unaffiliated Investment Company in 

excess of the limit of section 

12(d)(1)(A)(i) of the 1940 Act, a Fund of 

Funds and the Unaffiliated Investment 

Company will execute an agreement 

stating, without limitation, that each of 

their boards of directors or trustees (for 

any entity, the ‘‘Board’’) and their 

investment advisers understand the 

terms and conditions of the order and 

agree to fulfill their responsibilities 

under the order (the ‘‘Participation 

Agreement’’). Applicants note that an 

Unaffiliated Investment Company 

(including an ETF or an Unaffiliated 

Closed-End Investment Company) 

would also retain its right to reject any 

initial investment by a Fund of Funds 

in excess of the limits in section 

12(d)(1)(A)(i) of the 1940 Act by 

declining to execute the Participation 

Agreement with the Fund of Funds. In 

addition, an Unaffiliated Investment 

Company (other than an ETF or closedend fund whose shares are purchased by 

a Fund of Funds in the secondary 

market) will retain its right at all times 

to reject any investment by a Fund of 

Funds. Finally, subject solely to the 

giving of notice to a Fund of Funds and 

the passage of a reasonable notice 

period, an Unaffiliated Fund (including 

an ETF or an Unaffiliated Closed-End 

Investment Company) could terminate a 

Participation Agreement with the Fund 

of Funds. 

8. Applicants state that they do not 

believe that the proposed arrangement 

will result in excessive layering of fees. 

The Board of each Fund of Funds, 

including a majority of the trustees who 

are not ‘‘interested persons’’ within the 

meaning of section 2(a)(19) of the 1940 

Act (the ‘‘Independent Trustees’’), will 

find that the management or advisory 

fees charged under a Fund of Funds’ 

advisory contract are based on services 

provided that are in addition to, rather 

than duplicative of, services provided 

under the advisory contract(s) of any 

Underlying Fund in which the Fund of 

Funds may invest. In addition, the 

Advisor will waive fees otherwise 

payable to it by a Fund of Funds in an 

amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company under 

rule 12b–1 under the 1940 Act) received 

from an Unaffiliated Fund by the 

Advisor, or an affiliated person of the 

Advisor, other than any advisory fees 

paid to the Advisor or an affiliated 

person of the Advisor by the 

Unaffiliated Investment Company, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

9. Applicants further state that any 

sales charges and/or service fees 

charged with respect to shares of a Fund 

of Funds will not exceed the limits 

applicable to funds of funds set forth in 

in rule 2830 of the Conduct Rules of the 

NASD (‘‘NASD Conduct Rule 2830’’).8

10. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Underlying 

Fund will acquire securities of any other 

investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 


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Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 1525 

9Applicants acknowledge that receipt of any 

compensation by (a) an affiliated person of a Fund 

of Funds, or an affiliated person of such person, for 

the purchase by the Fund of Funds of shares of an 

Underlying Fund or (b) an affiliated person of an 

Underlying Fund, or an affiliated person of such 

person, for the sale by the Underlying Fund of its 

shares to a Fund of Funds may be prohibited by 

section 17(e) (1) of the 1940 Act. The Participation 

Agreement also will include this acknowledgement. 

10Applicants note that a Fund of Funds generally 

would purchase and sell shares of an Underlying 

Fund that operates as an ETF or a closed-end fund 

through secondary market transactions rather than 

through principal transactions with the Underlying 

Fund. Applicants nevertheless request relief from 

sections 17(a)(1) and (2) to permit each Fund of 

Funds that is an affiliated person, or an affiliated 

person of an affiliated person, as defined in section 

2(a)(3) of the 1940 Act, of an ETF or a closed-end 

fund to purchase or redeem shares from the ETF or 

closed-end fund. Applicants are not seeking relief 

from section 17(a) for, and the requested relief will 

not apply to, transactions where an ETF or a closedend fund could be deemed an affiliated person, or 

an affiliated person of an affiliated person, of a 

Fund of Funds because an investment adviser to the 

ETF or an entity controlling, controlled by or under 

common control with the investment adviser to the 

ETF or closed-end fund is also an investment 

adviser to the Fund of Funds. 

the 1940 Act in excess of the limits 

contained in section 12(d)(1)(A) of the 

1940 Act, except in certain 

circumstances identified in condition 12 

below. 

B. Section 17(a) 

1. Section 17(a) of the 1940 Act 

generally prohibits sales or purchases of 

securities between a registered 

investment company and any affiliated 

person of the company. Section 2(a)(3) 

of the 1940 Act defines an ‘‘affiliated 

person’’ of another person to include (a) 

any person directly or indirectly 

owning, controlling, or holding with 

power to vote, 5% or more of the 

outstanding voting securities of the 

other person; (b) any person 5% or more 

of whose outstanding voting securities 

are directly or indirectly owned, 

controlled, or held with power to vote 

by the other person; and (c) any person 

directly or indirectly controlling, 

controlled by, or under common control 

with the other person. 

2. Applicants state that the Funds of 

Funds and the Affiliated Funds may be 

deemed to be under the common control 

of the Advisor and, therefore, affiliated 

persons of one another. Applicants also 

state that the Funds of Funds and the 

Underlying Funds may also be deemed 

to be affiliated persons of one another if 

a Fund of Funds owns 5% or more of 

the outstanding voting securities of one 

or more of such Underlying Funds. 

Applicants state that the sale of shares 

by the Underlying Open-End Investment 

Companies or Underlying UITs to the 

Funds of Funds and the purchase of 

those shares from the Funds of Funds by 

the Underlying Open-End Investment 

Companies or Underlying UITs (through 

redemptions) could be deemed to 

violate section 17(a).9

3. Section 17(b) of the 1940 Act 

authorizes the Commission to grant an 

order permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (i) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (ii) the 

proposed transaction is consistent with 

the policies of each registered 

investment company concerned; and 

(iii) the proposed transaction is 

consistent with the general purposes of 

the 1940 Act. Section 6(c) of the 1940 

Act permits the Commission to exempt 

any person or transactions from any 

provision of the 1940 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 1940 Act. 

4. Applicants submit that the 

proposed transactions satisfy the 

standards for relief under sections 17(b) 

and 6(c) of the 1940 Act. Applicants 

state that the terms of the transactions 

are reasonable and fair and do not 

involve overreaching. Applicants state 

that the terms upon which an 

Underlying Fund will sell its shares to 

or purchase its shares from a Fund of 

Funds will be in accordance with the 

rules and regulations under the 1940 

Act.10 Applicants also state that the 

proposed transactions will be consistent 

with the policies of each Fund of Funds 

and any Underlying Fund, and with the 

general purposes of the 1940 Act. 

C. Other Investments by Section 

12(d)(1)(G) Funds of Funds 

1. Section 12(d)(1)(G) of the 1940 Act 

provides that section 12(d)(1) will not 

apply to securities of an acquired 

company purchased by an acquiring 

company if: (i) The acquiring company 

and acquired company are part of the 

same ‘‘group of investment companies,’’ 

as defined in section 12(d)(1)(G)(ii) of 

the 1940 Act; (ii) the acquiring company 

holds only securities of acquired 

companies that are part of the same 

‘‘group of investment companies,’’ as 

defined in section 12(d)(1)(G)(ii) of the 

1940 Act, government securities, and 

short-term paper; (iii) the aggregate sales 

loads and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the 1940 Act by a 

securities association registered under 

section 15A of the 1934 Act or by the 

Commission; and (iv) the acquired 

company has a policy that prohibits it 

from acquiring securities of registered 

open-end management investment 

companies or registered UITs in reliance 

on section 12(d)(1)(F) or (G) of the 1940 

Act. 

2. Rule 12d1–2 under the 1940 Act 

permits a registered open-end 

investment company or a registered UIT 

that relies on section 12(d)(1)(G) of the 

1940 Act to acquire, in addition to 

securities issued by another registered 

investment company in the same group 

of investment companies, government 

securities, and short-term paper: (1) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

12(d)(1)(A) or 12(d)(1)(F) of the 1940 

Act; (2) securities (other than securities 

issued by an investment company); and 

(3) securities issued by a money market 

fund, when the investment is in reliance 

on rule 12d1–1 under the 1940 Act. For 

the purposes of rule 12d1–2, 

‘‘securities’’ means any security as 

defined in section 2(a)(36) of the 1940 

Act. 

3. Applicants state that the proposed 

arrangement would comply with rule 

12d1–2 under the 1940 Act, but for the 

fact that the Section 12(d)(1)(G) Funds 

of Funds may invest a portion of their 

assets in Other Investments. Applicants 

request an order under section 6(c) of 

the 1940 Act for an exemption from rule 

12d1–2(a) to allow the Section 

12(d)(1)(G) Funds of Funds to invest in 

Other Investments. Applicants assert 

that permitting a Section 12(d)(1)(G) 

Fund of Funds to invest in Other 

Investments as described in the 

application would not raise any of the 

concerns that section 12(d)(1) of the 

1940 Act was intended to address. 

4. Consistent with its fiduciary 

obligations under the 1940 Act, a 

Section 12(d)(1)(G) Fund of Funds’ 

Board will review the advisory fees 

charged by the Section 12(d)(1)(G) Fund 

of Funds’ investment adviser(s) to 

ensure that the fees are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided pursuant to the advisory 

agreement of any investment company 

in which the Section 12(d)(1)(G) Fund 

of Funds may invest. 

Applicants’ Conditions 

Investments by Funds of Funds in 

Underlying Funds 

Applicants agree that the order 

granting the requested relief to permit 

Funds of Funds to invest in Underlying 

Funds shall be subject to the following 

conditions: 


tkelley on DSK3SPTVN1PROD with NOTICES
1526 Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 

1. The members of the Group will not 

control (individually or in the aggregate) 

an Unaffiliated Fund within the 

meaning of section 2(a)(9) of the 1940 

Act. The members of a Sub-Adviser 

Group will not control (individually or 

in the aggregate) an Unaffiliated Fund 

within the meaning of section 2(a)(9) of 

the 1940 Act. With respect to a Fund’s 

investment in an Unaffiliated ClosedEnd Investment Company, (i) each 

member of the Group or Sub-Adviser 

Group that is an investment company or 

an issuer that would be an investment 

company but for section 3(c)(1) or 

3(c)(7) of the 1940 Act will vote its 

shares of the Unaffiliated Closed-End 

Investment Company in the manner 

prescribed by section 12(d)(1)(E) of the 

1940 Act and (ii) each other member of 

the Group or Sub-Adviser Group will 

vote its shares of the Unaffiliated 

Closed-End Investment Company in the 

same proportion as the vote of all other 

holders of the same type of such 

Unaffiliated Closed-End Investment 

Company’s shares. If, as a result of a 

decrease in the outstanding voting 

securities of any other Unaffiliated 

Fund, the Group or a Sub-Adviser 

Group, each in the aggregate, becomes a 

holder of more than 25 percent of the 

outstanding voting securities of such 

Unaffiliated Fund, then the Group or the 

Sub-Adviser Group will vote its shares 

of the Unaffiliated Fund in the same 

proportion as the vote of all other 

holders of the Unaffiliated Fund’s 

shares. This condition will not apply to 

a Sub-Adviser Group with respect to an 

Unaffiliated Fund for which the SubAdviser or a person controlling, 

controlled by, or under common control 

with the Sub-Adviser acts as the 

investment adviser within the meaning 

of section 2(a)(20)(A) of the 1940 Act (in 

the case of an Unaffiliated Investment 

Company) or as the sponsor (in the case 

of an Unaffiliated Trust). 

2. No Fund of Funds or Fund of 

Funds Affiliate will cause any existing 

or potential investment by the Fund of 

Funds in an Unaffiliated Fund to 

influence the terms of any services or 

transactions between the Fund of Funds 

or a Fund of Funds Affiliate and the 

Unaffiliated Fund or an Unaffiliated 

Fund Affiliate. 

3. The Board of each Fund of Funds, 

including a majority of the Independent 

Trustees, will adopt procedures 

reasonably designed to ensure that the 

Advisor and any Sub-Adviser to the 

Fund of Funds is conducting the 

investment program of the Fund of 

Funds without taking into account any 

consideration received by the Fund of 

Funds or Fund of Funds Affiliate from 

an Unaffiliated Fund or an Unaffiliated 

Fund Affiliate in connection with any 

services or transactions. 

4. Once an investment by a Fund of 

Funds in the securities of an 

Unaffiliated Investment Company 

exceeds the limit of section 

12(d)(1)(A)(i) of the 1940 Act, the Board 

of the Unaffiliated Investment 

Company, including a majority of the 

Independent Trustees, will determine 

that any consideration paid by the 

Unaffiliated Investment Company to a 

Fund of Funds or a Fund of Funds 

Affiliate in connection with any services 

or transactions: (a) Is fair and reasonable 

in relation to the nature and quality of 

the services and benefits received by the 

Unaffiliated Investment Company; (b) is 

within the range of consideration that 

the Unaffiliated Investment Company 

would be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition does not apply with respect to 

any services or transactions between an 

Unaffiliated Investment Company and 

its investment adviser(s), or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Fund of Funds or Fund of 

Funds Affiliate (except to the extent it 

is acting in its capacity as an investment 

adviser to an Unaffiliated Investment 

Company or sponsor to an Unaffiliated 

Trust) will cause an Unaffiliated Fund 

to purchase a security in any Affiliated 

Underwriting. 

6. The Board of an Unaffiliated 

Investment Company, including a 

majority of the Independent Trustees, 

will adopt procedures reasonably 

designed to monitor any purchases of 

securities by the Unaffiliated Investment 

Company in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of the Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the 1940 Act, 

including any purchases made directly 

from an Underwriting Affiliate. The 

Board of the Unaffiliated Investment 

Company will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Fund of Funds in the 

Unaffiliated Investment Company. The 

Board of the Unaffiliated Investment 

Company will consider, among other 

things: (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Investment Company; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated 

Investment Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Unaffiliated Investment 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to ensure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders. 

7. Each Unaffiliated Investment 

Company will maintain and preserve 

permanently, in an easily accessible 

place, a written copy of the procedures 

described in the preceding condition, 

and any modifications to such 

procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the 1940 Act, 

setting forth (1) the party from whom 

the securities were acquired, (2) the 

identity of the underwriting syndicate’s 

members, (3) the terms of the purchase, 

and (4) the information or materials 

upon which the determinations of the 

Board of the Unaffiliated Investment 

Company were made. 

8. Prior to its investment in shares of 

an Unaffiliated Investment Company in 

excess of the limit set forth in section 

12(d)(1)(A)(i) of the 1940 Act, the Fund 

of Funds and the Unaffiliated 

Investment Company will execute a 

Participation Agreement stating, 

without limitation, that their Boards and 

their investment advisers understand 

the terms and conditions of the order 

and agree to fulfill their responsibilities 

under the order. At the time of its 

investment in shares of an Unaffiliated 

Investment Company in excess of the 

limit set forth in section 12(d)(1)(A)(i), 

a Fund of Funds will notify the 

Unaffiliated Investment Company of the 

investment. At such time, the Fund of 

Funds will also transmit to the 

Unaffiliated Investment Company a list 

of the names of each Fund of Funds 

Affiliate and Underwriting Affiliate. The 

Fund of Funds will notify the 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 1527 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 ‘‘Redistributor’’ means a vendor or any other 

person that provides an NYSE Arca data product to 

a data recipient or to any system that a data 

Continued 

Unaffiliated Investment Company of any 

changes to the list as soon as reasonably 

practicable after a change occurs. The 

Unaffiliated Investment Company and 

the Fund of Funds will maintain and 

preserve a copy of the order, the 

Participation Agreement, and the list 

with any updated information for the 

duration of the investment and for a 

period of not less than six years 

thereafter, the first two years in an 

easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the 1940 

Act, the Board of each Fund of Funds, 

including a majority of the Independent 

Trustees, shall find that the advisory 

fees charged under the advisory contract 

are based on services provided that are 

in addition to, rather than duplicative 

of, services provided under the advisory 

contract(s) of any Underlying Fund in 

which the Fund of Funds may invest. 

Such finding, and the basis upon which 

the finding was made, will be recorded 

fully in the minute books of the 

appropriate Fund of Funds. 

10. The Advisor will waive fees 

otherwise payable to it by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b–1 under the 1940 

Act) received from an Unaffiliated Fund 

by the Advisor, or an affiliated person 

of the Advisor, other than any advisory 

fees paid to the Advisor or its affiliated 

person by the Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund. Any Sub-Adviser 

will waive fees otherwise payable to the 

Sub-Adviser, directly or indirectly, by 

the Fund of Funds in an amount at least 

equal to any compensation received by 

the Sub-Adviser, or an affiliated person 

of the Sub-Adviser, from an Unaffiliated 

Fund, other than any advisory fees paid 

to the Sub-Adviser or its affiliated 

person by the Unaffiliated Investment 

Company in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund made at the direction 

of the Sub-Adviser. In the event that the 

Sub-Adviser waives fees, the benefit of 

the waiver will be passed through to the 

Fund of Funds. 

11. Any sales charges and/or service 

fees charged with respect to shares of a 

Fund of Funds will not exceed the 

limits applicable to funds of funds set 

forth in NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the 1940 Act, in 

excess of the limits contained in section 

12(d)(1)(A) of the 1940 Act, except to 

the extent that such Underlying Fund: 

(a) Acquires such securities in 

compliance with section 12(d)(1)(E) of 

the 1940 Act and is either an Affiliated 

Fund or is in the same ‘‘group of 

investment companies’’ as its 

corresponding master fund; (b) receives 

securities of another investment 

company as a dividend or as a result of 

a plan of reorganization of a company 

(other than a plan devised for the 

purpose of evading section 12(d)(1) of 

the 1940 Act); or (c) acquires (or is 

deemed to have acquired) securities of 

another investment company pursuant 

to exemptive relief from the 

Commission permitting such 

Underlying Fund to: (i) Acquire 

securities of one or more investment 

companies for short-term cash 

management purposes or (ii) engage in 

inter-fund borrowing and lending 

transactions. 

Other Investments by Section 

12(d)(1)(G) Funds of Funds 

In addition, Applicants agree that the 

order granting the requested relief to 

permit Section 12(d)(1)(G) Funds of 

Funds to invest in Other Investments 

shall be subject to the following 

condition: 

13. Applicants will comply with all 

provisions of rule 12d1–2 under the 

1940 Act, except for paragraph (a)(2) to 

the extent that it restricts any Section 

12(d)(1)(G) Fund of Funds from 

investing in Other Investments as 

described in the application. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2015–00226 Filed 1–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73993; File No. SR– 

NYSEArca–2014–147] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Fees for 

NYSE Arca Integrated Feed To 

Establish Eligibility Requirements for 

Redistribution 

January 6, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

24, 2014, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

fees for NYSE Arca Integrated Feed to 

establish eligibility requirements for 

redistribution on a managed nondisplay basis and to establish an access 

fee for managed non-display data 

recipients, operative on January 1, 2015. 

The text of the proposed rule change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

fees for NYSE Arca Integrated Feed, as 

set forth on the NYSE Arca Equities 

Proprietary Market Data Fees Schedule 

(‘‘Fee Schedule’’), to establish eligibility 

requirements for redistribution of 

market data on a Managed Non-Display 

basis and establish an access fee for 

Managed Non-Display data recipients, 

operative on January 1, 2015. 

Non-Display Use of NYSE Arca 

market data means accessing, 

processing, or consuming NYSE Arca 

market data delivered via direct and/or 

Redistributor 3 data feeds for a purpose 


tkelley on DSK3SPTVN1PROD with NOTICES