
[Federal Register Volume 80, Number 20 (Friday, January 30, 2015)]
[Notices]
[Pages 5153-5161]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01749]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31427; 812-14362]


Goldman Sachs ETF Trust, et al.; Notice of Application

January 26, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (``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 (a)(2) of the Act, and under section 12(d)(1)(J) 
of the Act for an exemption from sections 12(d)(1)(A) and (B) of the 
Act.

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APPLICANTS: Goldman Sachs ETF Trust (the ``Trust''), Goldman Sachs 
Asset Management, L.P., GS Investment Strategies, LLC, and Goldman 
Sachs Asset Management International (each, an ``Initial Adviser''), 
and ALPS Distributors, Inc. (the ``Initial Distributor'').

SUMMARY OF APPLICATION: Applicants request an order that permits: (a) 
Actively-managed series of certain open-end management investment 
companies to issue shares (``Shares'') redeemable in large aggregations 
only (``Creation Units''); (b) secondary market transactions in Shares 
to occur at negotiated market prices; (c) certain series to pay 
redemption proceeds, under certain circumstances, more than seven days 
from the tender of Shares for redemption; (d) certain affiliated 
persons of the series to deposit securities into, and receive 
securities from, the series 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 series to acquire Shares; and 
certain series to perform creations and redemptions of Creation Units 
in-kind in a master-feeder structure.

DATES: Filing Dates: The application was filed on September 19, 2014 
and amended on December 23, 2014 and January 20, 2015.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on February 20, 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 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: The Trust, Goldman 
Sachs Asset Management, L.P., and GS Investment Strategies, LLC, 200 
West Street, New York, New York 10282; Goldman Sachs Asset Management 
International, River Court, 120 Fleet Street, London, EC4A 2BE, United 
Kingdom; and the Initial Distributor, 1290 Broadway, Suite 1100, 
Denver, Colorado 80203.

FOR FURTHER INFORMATION CONTACT: Mark Zaruba, Senior Counsel, at (202) 
551-6878 or Dalia Blass, 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 number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

[[Page 5154]]

Applicants' Representations

    1. The Trust has registered as an open-end management investment 
company under the Act and is a statutory trust organized under the laws 
of Delaware. The Trust will offer a number of Funds (as defined below), 
each of which will utilize active management investment strategies. 
Applicants expect the initial series of the Trust (the ``Initial 
Fund'') to be the Goldman Sachs Equity Dividend Fund, which will seek 
total return with an emphasis on dividends. The Initial Fund will seek 
to achieve its investment objective by investing in dividend-paying 
equity investments in U.S. issuers (including foreign issuers that are 
traded in the United States) with large public stock market 
capitalizations.
    2. An Initial Adviser will be the investment adviser to the Initial 
Fund and an Adviser (as defined below) will be the investment adviser 
to the Funds. The Initial Advisers are, and any other Adviser will be, 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (``Advisers Act''). The Adviser (as defined below) may in the 
future retain one or more sub-advisers (each a ``Sub-Adviser'') to 
manage the portfolios of the Funds (as defined below). Any Sub-Adviser 
will be registered, or not subject to registration, under the Advisers 
Act. The Initial Distributor is a registered broker-dealer (``Broker'') 
under the Securities Exchange Act of 1934 (``Exchange Act'') and will 
act as the distributor and principal underwriter of the Funds. 
Applicants request that the order also apply to any future distributor 
of Shares (``Future Distributor'' and, together with the Initial 
Distributor, the ``Distributor''), provided that any such Future 
Distributor complies with the terms and conditions of the application.
    3. Applicants request that the order apply to the Initial Fund and 
any future series of the Trust as well as other open-end management 
companies that may utilize active management investment strategies 
(``Future Funds''). Any Future Fund will (a) be advised by an Initial 
Adviser or an entity controlling, controlled by, or under common 
control with an Initial Adviser (any Initial Adviser and each such 
other entity included in the term ``Adviser''), and (b) comply with the 
terms and conditions of the application.\1\ The Initial Fund and Future 
Funds together are the ``Funds.'' Each Fund, or its respective Master 
Fund (as defined below), will consist of a portfolio of securities 
(including fixed income securities and/or equity securities) and/or 
currencies traded in the U.S. and/or non-U.S. markets, and derivatives, 
other assets, and other investment positions (``Portfolio 
Instruments'').\2\ Funds, or their respective Master Funds, may invest 
in ``Depositary Receipts.'' \3\ Each Fund will operate as an actively 
managed exchange-traded fund (``ETF''), and a Fund may operate as a 
feeder fund in a master-feeder structure (``Feeder Fund'').
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    \1\ Any Adviser to a Future Fund will be registered as an 
investment adviser under the Advisers Act. All entities that 
currently intend to rely on the 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.
    \2\ If a Fund (or its respective Master Fund) invests in 
derivatives, then (a) the board of trustees (``Board'') of the Fund 
will periodically review and approve the Fund's use of derivatives 
and how the Fund's (or, in the case of a Feeder Fund, its Master 
Fund's) investment adviser assesses and manages risk with respect to 
the Fund's (or, in the case of a Feeder Fund, its Master Fund's) use 
of derivatives and (b) the Fund's (or, in the case of a Feeder Fund, 
its Master Fund's) disclosure of its use of derivatives in its 
offering documents and periodic reports will be consistent with 
relevant Commission and staff guidance.
    \3\ Depositary Receipts are typically issued by a financial 
institution, a ``depositary'', and evidence ownership in a security 
or pool of securities that have been deposited with the depositary. 
A Fund (or its respective Master Fund) will not invest in any 
Depositary Receipts that the Adviser or any Sub-Adviser deems to be 
illiquid or for which pricing information is not readily available. 
No affiliated persons of applicants, any Future Fund, any Adviser, 
or any Sub-Adviser will serve as the depositary bank for any 
Depositary Receipts held by a Fund, or its respective Master Fund, 
except a depositary bank that is deemed to be affiliated solely 
because a Fund owns greater than 5% of the outstanding voting 
securities of such depositary bank.
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    4. Applicants also request that any exemption under section 
12(d)(1)(J) of the Act from sections 12(d)(1)(A) and (B) apply to: (i) 
Any Fund that is currently or subsequently part of the same ``group of 
investment companies'' as the Initial Fund within the meaning of 
section 12(d)(1)(G)(ii) of the Act; (ii) any principal underwriter for 
the Fund; (iii) any Brokers selling Shares of a Fund to an Investing 
Fund (as defined below); and (iv) each management investment company or 
unit investment trust registered under the Act that is not part of the 
same ``group of investment companies'' as the Funds within the meaning 
of section 12(d)(1)(G)(ii) of the Act and that enters into a FOF 
Participation Agreement (as defined below) with a Fund (such management 
investment companies, ``Investing Management Companies,'' such unit 
investment trusts, ``Investing Trusts,'' and Investing Management 
Companies and Investing Trusts together, ``Investing Funds''). 
Investing Funds do not include the Funds.\4\
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    \4\ An Investing Fund may rely on the order only to invest in 
Funds and not in any other registered investment company.
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    5. Applicants further request that the order permit a Fund to 
operate as a Feeder Fund (``Master-Feeder Relief''). Under the order, a 
Feeder Fund would be permitted to acquire shares of another registered 
investment company in the same group of investment companies having 
substantially the same investment objectives as the Feeder Fund 
(``Master Fund'') beyond the limitations in section 12(d)(1)(A) of the 
Act,\5\ and the Master Fund, and any principal underwriter for the 
Master Fund, would be permitted to sell shares of the Master Fund to 
the Feeder Fund beyond the limitations in section 12(d)(1)(B) of the 
Act. Applicants request that the Master-Feeder Relief apply to any 
Feeder Fund, any Master Fund and any principal underwriter for the 
Master Funds selling shares of a Master Fund to a Feeder Fund. 
Applicants state that creating an exchange-traded feeder fund may be 
preferable to creating entirely new series for several reasons, 
including avoiding additional overhead costs and economies of scale for 
the Feeder Funds.\6\ Applicants assert that, while certain costs may be 
higher in a master-feeder structure and there may possibly be lower tax 
efficiencies for the Feeder Funds, the Feeder Funds' Board will 
consider any such potential disadvantages against the benefits of 
economies of scale and other benefits of operating within a master-
feeder structure.
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    \5\ A Feeder Fund managed in a master-feeder structure will not 
make direct investments in any security or other instrument other 
than the securities issued by its respective Master Fund.
    \6\ In a master-feeder structure, the Master Fund, rather than 
the Feeder Fund, would invest its portfolio in compliance with the 
order. There would be no ability by Fund shareholders to exchange 
shares of Feeder Funds for shares of another feeder series of the 
Master Fund.
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    6. Applicants anticipate that a Creation Unit will consist of at 
least 10,000 Shares. Applicants anticipate that the trading price of a 
Share will range from $10 to $100. All orders to purchase Creation 
Units must be placed with the Distributor by or through a party that 
has entered into a participant agreement with the Distributor and the 
transfer agent of the Fund (``Authorized Participant'') with respect to 
the creation and redemption of Creation Units. An Authorized 
Participant is either: (a) A Broker or other participant in the 
Continuous Net Settlement System of the National Securities Clearing 
Corporation (``NSCC''), a

[[Page 5155]]

clearing agency registered with the Commission and affiliated with the 
Depository Trust Company (``DTC''), or (b) a participant in the DTC 
(such participant, ``DTC Participant'').
    7. In order to keep costs low and permit each Fund to be as fully 
invested as possible, 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 
below, purchasers will be required to purchase Creation Units by making 
an in-kind deposit of specified instruments (``Deposit Instruments''), 
and shareholders redeeming their Shares will receive an in-kind 
transfer of specified instruments (``Redemption Instruments'').\7\ On 
any given Business Day \8\ the names and quantities of the instruments 
that constitute the Deposit Instruments and the names and quantities of 
the instruments that constitute the Redemption Instruments will be 
identical, and these instruments may be referred to, in the case of 
either a purchase or redemption, as the ``Creation Basket.'' In 
addition, the Creation Basket will correspond pro rata to the positions 
in a Fund's portfolio (including cash positions),\9\ except: (a) In the 
case of bonds, for minor differences when it is impossible to break up 
bonds beyond certain minimum sizes needed for transfer and settlement; 
(b) for minor differences when rounding is necessary to eliminate 
fractional shares or lots that are not tradeable round lots; \10\ or 
(c) TBA Transactions,\11\ short positions and other positions that 
cannot be transferred in kind \12\ will be excluded from the Creation 
Basket.\13\ If there is a difference between NAV attributable to a 
Creation Unit and the aggregate market value of the Creation Basket 
exchanged for the Creation Unit, the party conveying instruments with 
the lower value will also pay to the other an amount in cash equal to 
that difference (the ``Cash Amount'').
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    \7\ The Funds must comply with the federal securities laws in 
accepting Deposit Instruments and satisfying redemptions with 
Redemption Instruments, including that the Deposit Instruments and 
Redemption Instruments are sold in transactions that would be exempt 
from registration under the Securities Act of 1933 (``Securities 
Act''). In accepting Deposit Instruments and satisfying redemptions 
with Redemption Instruments that are restricted securities eligible 
for resale pursuant to Rule 144A under the Securities Act, the Funds 
will comply with the conditions of Rule 144A.
    \8\ Each Fund will sell and redeem Creation Units on any day the 
Fund is open, including as required by section 22(e) of the Act 
(each, a ``Business Day'').
    \9\ The portfolio used for this purpose will be the same 
portfolio used to calculate the Fund's net asset value (``NAV'') for 
that Business Day.
    \10\ A tradeable round lot for a security will be the standard 
unit of trading in that particular type of security in its primary 
market.
    \11\ A TBA Transaction is a method of trading mortgage-backed 
securities. In a TBA Transaction, the buyer and seller agree on 
general trade parameters such as agency, settlement date, par amount 
and price.
    \12\ This includes instruments that can be transferred in kind 
only with the consent of the original counterparty to the extent the 
Fund does not intend to seek such consents.
    \13\ Because these instruments will be excluded from the 
Creation Basket, their value will be reflected in the determination 
of the Cash Amount (defined below).
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    8. Purchases and redemptions of Creation Units may be made in whole 
or in part on a cash basis, rather than in kind, solely under the 
following circumstances: (a) To the extent there is a Cash Amount, as 
described above; (b) if, on a given Business Day, a Fund announces 
before the open of trading that all purchases, all redemptions or all 
purchases and redemptions on that day will be made entirely in cash; 
(c) if, upon receiving a purchase or redemption order from an 
Authorized Participant, a Fund determines to require the purchase or 
redemption, as applicable, to be made entirely in cash; (d) if, on a 
given Business Day, a Fund requires all Authorized Participants 
purchasing or redeeming Shares on that day to deposit or receive (as 
applicable) cash in lieu of some or all of the Deposit Instruments or 
Redemption Instruments, respectively, solely because: (i) Such 
instruments are not eligible for transfer through either the NSCC or 
DTC; or (ii) in the case of Funds holding non-U.S. investment (``Global 
Funds''), such instruments are not eligible for trading due to local 
trading restrictions, local restrictions on securities transfers or 
other similar circumstances; or (e) if a Fund permits an Authorized 
Participant to deposit or receive (as applicable) cash in lieu of some 
or all of the Deposit Instruments or Redemption Instruments, 
respectively, solely because: (i) Such instruments are, in the case of 
the purchase of a Creation Unit, not available in sufficient quantity; 
(ii) such instruments are not eligible for trading by an Authorized 
Participant or the investor on whose behalf the Authorized Participant 
is acting; or (iii) a holder of Shares of a Global Fund would be 
subject to unfavorable income tax treatment if the holder receives 
redemption proceeds in kind.\14\
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    \14\ A ``custom order'' is any purchase or redemption of Shares 
made in whole or in part on a cash basis in reliance on clause 
(e)(i) or (e)(ii).
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    9. Each Business Day, before the open of trading on a national 
securities exchange, as defined in section 2(a)(26) of the Act (``Stock 
Exchange''), on which Shares are listed, each Fund will cause to be 
published through the NSCC the names and quantities of the instruments 
comprising the Creation Basket, as well as the estimated Cash Amount 
(if any), for that day. The published Creation Basket will apply until 
a new Creation Basket is announced on the following Business Day, and 
there will be no intra-day changes to the Creation Basket except to 
correct errors in the published Creation Basket. The Stock Exchange 
will disseminate every 15 seconds throughout the trading day an amount 
representing, on a per Share basis, the sum of the current value of the 
Portfolio Instruments that were publicly disclosed prior to the 
commencement of trading in Shares on the Stock Exchange.
    10. A Fund may recoup the settlement costs charged by NSCC and DTC 
by imposing a transaction fee on investors purchasing or redeeming 
Creation Units (the ``Transaction Fee'').\15\ The Transaction Fee will 
be borne only by purchasers and redeemers of Creation Units and will be 
limited to amounts that have been determined appropriate by the Adviser 
to defray the transaction expenses that will be incurred by a Fund when 
an investor purchases or redeems Creation Units.\16\ All orders to 
purchase Creation Units will be placed with the Distributor by or 
through an Authorized Participant and the Distributor will transmit all 
purchase orders to the relevant Fund. The Distributor will be 
responsible for delivering a prospectus (``Prospectus'') to those 
Authorized Participants purchasing Creation Units and for maintaining 
records of both the orders placed with it and the confirmations of 
acceptance furnished by it.
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    \15\ Applicants are not requesting relief from section 18 of the 
Act. Accordingly, a Master Fund may require a Transaction Fee 
payment to cover expenses related to purchases or redemptions of the 
Master Fund's shares by a Feeder Fund only if it requires the same 
payment for equivalent purchases or redemptions by any other feeder 
fund. Thus, for example, a Master Fund may require payment of a 
Transaction Fee by a Feeder Fund for transactions for 20,000 or more 
shares so long as it requires payment of the same Transaction Fee by 
all feeder funds for transactions involving 20,000 or more shares.
    \16\ Where a Fund permits an in-kind purchaser to deposit cash 
in lieu of depositing one or more Deposit Instruments, the purchaser 
may be assessed a higher Transaction Fee to offset the cost to the 
Fund of buying those particular Deposit Instruments. In all cases, 
the Transaction Fee will be limited in accordance with the 
requirements of the Commission applicable to open-end management 
investment companies offering redeemable securities.
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    11. Shares will be listed and traded at negotiated prices on a 
Stock Exchange and traded in the secondary market. Applicants expect 
that Stock Exchange

[[Page 5156]]

specialists or market makers (``Market Makers'') will be assigned to 
Shares. The price of Shares trading on the Stock Exchange will be based 
on a current bid/offer in the secondary market. Transactions involving 
the purchases and sales of Shares on the Stock Exchange will be subject 
to customary brokerage fees and charges.
    12. Applicants expect that purchasers of Creation Units will 
include institutional investors and arbitrageurs. Market Makers, acting 
in their unique role to provide a fair and orderly secondary market for 
Shares, also may purchase Creation Units for use in their own market 
making activities.\17\ Applicants expect that secondary market 
purchasers of Shares will include both institutional and retail 
investors.\18\ Applicants expect that arbitrage opportunities created 
by the ability to continually purchase or redeem Creation Units at 
their NAV per Share should ensure that the Shares will not trade at a 
material discount or premium in relation to their NAV.
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    \17\ If Shares are listed on The NASDAQ Stock Market LLC 
(``Nasdaq'') or a similar electronic Stock Exchange (including NYSE 
Arca), one or more member firms of that Stock Exchange will act as 
Market Maker and maintain a market for Shares trading on that Stock 
Exchange. On Nasdaq, no particular Market Maker would be 
contractually obligated to make a market in Shares. However, the 
listing requirements on Nasdaq, for example, stipulate that at least 
two Market Makers must be registered in Shares to maintain a 
listing. In addition, on Nasdaq and NYSE Arca, registered Market 
Makers are required to make a continuous two-sided market or subject 
themselves to regulatory sanctions. No Market Maker will be an 
affiliated person or an affiliated person of an affiliated person, 
of the Funds, except within the meaning of section 2(a)(3)(A) or (C) 
of the Act due solely to ownership of Shares as discussed below.
    \18\ Shares will be registered in book-entry form only. DTC or 
its nominee will be the record or registered owner of all 
outstanding Shares. Beneficial ownership of Shares will be shown on 
the records of DTC or DTC Participants.
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    13. Shares will not be individually redeemable and owners of Shares 
may acquire those Shares from a Fund, or tender such shares for 
redemption to the Fund, in Creation Units only. To redeem, an investor 
must accumulate enough Shares to constitute a Creation Unit. Redemption 
requests must be placed by or through an Authorized Participant.
    14. Neither the Trust nor any Fund will be marketed or otherwise 
held out as a ``mutual fund.'' Instead, each Fund will be marketed as 
an ``actively-managed exchange-traded fund.'' In any advertising 
material where features of obtaining, buying or selling Shares traded 
on the Stock Exchange are described there will be an appropriate 
statement to the effect that Shares are not individually redeemable.
    15. The Funds' Web site, which will be publicly available prior to 
the public offering of Shares, will include a Prospectus and additional 
quantitative information updated on a daily basis, including, on a per 
Share basis for each Fund, the prior Business Day's NAV and the market 
closing price or mid-point of the bid/ask spread at the time of the 
calculation of such NAV (``Bid/Ask Price''), and a calculation of the 
premium or discount of the market closing price or Bid/Ask Price 
against such NAV. On each Business Day, before commencement of trading 
in Shares on the Stock Exchange, the Fund will disclose on its Web site 
the identities and quantities of the Portfolio Instruments held by the 
Fund (or its respective Master Fund) \19\ that will form the basis for 
the Fund's calculation of NAV at the end of the Business Day.\20\ This 
disclosure will look through any Wholly-Owned Subsidiary (defined 
below) and identify the specific Portfolio Instruments held by that 
entity.
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    \19\ Feeder Funds will disclose information about the securities 
and other assets held by the Master Fund.
    \20\ Applicants note that under accounting procedures followed 
by the Funds, trades made on the prior Business Day will be booked 
and reflected in NAV on the current Business Day. Accordingly, each 
Fund will be able to disclose at the beginning of the Business Day 
the portfolio that will form the basis for its NAV calculation at 
the end of such Business Day.
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Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of 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) of the Act for an exemption from sections 
12(d)(1)(A) and (B) of the Act.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction, or any class of persons, 
securities or transactions, from any provisions of the Act, if and to 
the extent that 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 17(b) of the Act authorizes the Commission to exempt a proposed 
transaction from section 17(a) of the Act if evidence establishes that 
the terms of the transaction, including the consideration to be paid or 
received, are reasonable and fair and do not involve overreaching on 
the part of any person concerned, and the proposed transaction is 
consistent with the policies of the registered investment company and 
the general 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.

Sections 5(a)(1) and 2(a)(32) of the Act

    3. Section 5(a)(1) of the Act defines an ``open-end company'' as a 
management investment company that is offering for sale or has 
outstanding any redeemable security of which it is the issuer. Section 
2(a)(32) of the Act defines a redeemable security as any security, 
other than short-term paper, under the terms of which the holder, upon 
its presentation to the issuer, is entitled to receive approximately a 
proportionate share of the issuer's current net assets, or the cash 
equivalent. Because Shares will not be individually redeemable, 
applicants request an order that would permit each Fund to redeem 
Shares in Creation Units only.\21\ Applicants state that investors may 
purchase Shares in Creation Units from each Fund and redeem Creation 
Units from each Fund. Applicants further state that because the market 
price of Creation Units will be disciplined by arbitrage opportunities, 
investors should be able to sell Shares in the secondary market at 
prices that do not vary materially from their NAV.
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    \21\ The Master Funds will not require relief from sections 
2(a)(32) and 5(a)(1) because the Master Funds will issue 
individually redeemable securities.
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Section 22(d) of the Act and Rule 22c-1 Under the Act

    4. Section 22(d) of the Act, among other things, prohibits a dealer 
from selling a redeemable security that is currently being offered to 
the public by or through a principal underwriter, except at a current 
public offering price described in the prospectus. Rule 22c-1 under the 
Act generally requires that a dealer selling, redeeming, or 
repurchasing a redeemable security do so only at a price based on its 
NAV. Applicants state that secondary market trading in Shares will take 
place at negotiated prices, not at a current offering price described 
in the Prospectus, and not at a price based on NAV. Thus, purchases and 
sales of Shares in the secondary market will not comply with section 
22(d) of the Act and rule 22c-1 under the Act.

[[Page 5157]]

Applicants request an exemption under section 6(c) from these 
provisions.\22\
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    \22\ The Master Funds will not require relief from section 22(d) 
or rule 22c-1 because shares of the Master Funds will not trade at 
negotiated prices in the secondary market.
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    5. Applicants assert that the concerns sought to be addressed by 
section 22(d) of the Act and rule 22c-1 under the Act with respect to 
pricing are equally satisfied by the proposed method of pricing Shares. 
Applicants maintain that while there is little legislative history 
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by 
certain riskless-trading schemes by principal underwriters and contract 
dealers, (b) prevent unjust discrimination or preferential treatment 
among buyers resulting from sales at different prices, and (c) assure 
an orderly distribution system of investment company shares by 
eliminating price competition from brokers offering shares at less than 
the published sales price and repurchasing shares at more than the 
published redemption price.
    6. Applicants believe that none of these purposes will be thwarted 
by permitting Shares to trade in the secondary market at negotiated 
prices. Applicants state that (a) secondary market trading in Shares 
does not involve the Funds as parties and cannot 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 contend that the proposed distribution 
system will be orderly because arbitrage activity should ensure that 
the difference between the market price of Shares and their NAV remains 
narrow.

Section 22(e) of the Act

    7. Section 22(e) of the Act generally prohibits a registered 
investment company from suspending the right of redemption or 
postponing the date of payment of redemption proceeds for more than 
seven days after the tender of a security for redemption. Applicants 
observe that settlement of redemptions of Creation Units of Global 
Funds is contingent not only on the settlement cycle of the U.S. 
securities markets but also on the delivery cycles present in foreign 
markets in which those Funds invest. Applicants have been advised that, 
under certain circumstances, the delivery cycles for transferring 
Portfolio Instruments to redeeming investors, coupled with local market 
holiday schedules, will require a delivery process of up to 15 calendar 
days. Applicants therefore request relief from section 22(e) in order 
to provide payment or satisfaction of redemptions within the maximum 
number of calendar days required for such payment or satisfaction in 
the principal local markets where transactions in the Portfolio 
Instruments of each Global Fund customarily clear and settle, but in 
all cases no later than 15 calendar days following the tender of a 
Creation Unit.\23\
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    \23\ Applicants acknowledge that no relief obtained from the 
requirements of section 22(e) will affect any obligations that it 
may otherwise have under rule 15c6-1 under the Exchange Act. Rule 
15c6-1 requires that most securities transactions be settled within 
three business days of the trade date.
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    8. Applicants state that section 22(e) was designed to prevent 
unreasonable, undisclosed and unforeseen delays in the actual payment 
of redemption proceeds. Applicants assert that the requested relief 
will not lead to the problems that section 22(e) was designed to 
prevent. Applicants state that allowing redemption payments for 
Creation Units of a Fund to be made within a maximum of 15 calendar 
days would not be inconsistent with the spirit and intent of section 
22(e).\24\ Applicants state each Global Fund's statement of additional 
information (``SAI'') will disclose those local holidays (over the 
period of at least one year following the date of the SAI), if any, 
that are expected to prevent the delivery of redemption proceeds in 
seven calendar days and the maximum number of days needed to deliver 
the proceeds for each affected Global Fund. Applicants are not seeking 
relief from section 22(e) with respect to Global Funds that do not 
effect redemptions in-kind.\25\
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    \24\ Other feeder funds invested in any Master Fund are not 
seeking, and will not rely on, the section 22(e) relief requested 
herein.
    \25\ In addition, the requested exemption from section 22(e) 
would only apply to in-kind redemptions by the Feeder Funds and 
would not apply to in-kind redemptions by other feeder funds.
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Section 12(d)(1) of the Act

    9. Section 12(d)(1)(A) of the Act prohibits a registered investment 
company from acquiring shares of an investment company if the 
securities represent more than 3% of the total outstanding voting stock 
of the acquired company, more than 5% of the total assets of the 
acquiring company, or, together with the securities of any other 
investment companies, more than 10% of the total assets of the 
acquiring company. Section 12(d)(1)(B) of the Act prohibits a 
registered open-end investment company, its principal underwriter, or 
any other broker or dealer from selling its 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.
    10. Applicants request relief to permit Investing Funds to acquire 
Shares in excess of the limits in section 12(d)(1)(A) of the Act and to 
permit the Funds, their principal underwriters and any Broker to sell 
Shares to Investing Funds in excess of the limits in section 
12(d)(1)(B) of the Act. Applicants submit that the proposed conditions 
to the requested relief address the concerns underlying the limits in 
section 12(d)(1), which include concerns about undue influence, 
excessive layering of fees and overly complex structures.
    11. Applicants submit that their proposed conditions address any 
concerns regarding the potential for undue influence. To limit the 
control that an Investing Fund may have over a Fund, applicants propose 
a condition prohibiting the adviser of an Investing Management Company 
(``Investing Fund Adviser''), sponsor of an Investing Trust 
(``Sponsor''), any person controlling, controlled by, or under common 
control with the Investing Fund Adviser or Sponsor, and any investment 
company or issuer that would be an investment company but for sections 
3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by the 
Investing Fund Adviser, the Sponsor, or any person controlling, 
controlled by, or under common control with the Investing Fund Adviser 
or Sponsor (``Investing Fund's Advisory Group'') from controlling 
(individually or in the aggregate) a Fund within the meaning of section 
2(a)(9) of the Act. The same prohibition would apply to any sub-adviser 
to an Investing Management Company (``Investing Fund Sub-Adviser''), 
any person controlling, controlled by or under common control with the 
Investing Fund Sub-Adviser, and any investment company or issuer that 
would be an investment company but for sections 3(c)(1) or 3(c)(7) of 
the Act (or portion of such investment company or issuer) advised or 
sponsored by the Investing Fund Sub-Adviser or any person controlling, 
controlled by or under common control with the Investing Fund Sub-
Adviser

[[Page 5158]]

(``Investing Fund's Sub-Advisory Group'').
    12. Applicants propose a condition to ensure that no Investing Fund 
or Investing Fund Affiliate \26\ (except to the extent it is acting in 
its capacity as an investment adviser to a Fund) will cause a Fund to 
purchase a security in an offering of securities during the existence 
of an underwriting or selling syndicate of which a principal 
underwriter is an Underwriting Affiliate (``Affiliated Underwriting''). 
An ``Underwriting Affiliate'' is a principal underwriter in any 
underwriting or selling syndicate that is an officer, director, member 
of an advisory board, Investing Fund Adviser, Investing Fund Sub-
Adviser, employee or Sponsor of the Investing Fund, or a person of 
which any such officer, director, member of an advisory board, 
Investing Fund Adviser, Investing Fund Sub-Adviser, employee or Sponsor 
is an affiliated person (except any person whose relationship to the 
Fund is covered by section 10(f) of the Act is not an Underwriting 
Affiliate).
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    \26\ An ``Investing Fund Affiliate'' is any Investing Fund 
Adviser, Investing Fund Sub-Adviser, Sponsor, promoter and principal 
underwriter of an Investing Fund, and any person controlling, 
controlled by or under common control with any of these entities. 
``Fund Affiliate'' is an investment adviser, promoter, or principal 
underwriter of a Fund or any person controlling, controlled by or 
under common control with any of these entities.
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    13. Applicants propose several conditions to address the potential 
for layering of fees. Applicants note that the board of directors or 
trustees of any Investing Management Company, including a majority of 
the directors or trustees who are not ``interested persons'' within the 
meaning of section 2(a)(19) of the Act (``disinterested directors or 
trustees''), will be required to find that the advisory fees charged 
under the contract are based on services provided that will be in 
addition to, rather than duplicative of, services provided under the 
advisory contract of any Fund in which the Investing Management Company 
may invest. Applicants also state that any sales charges and/or service 
fees charged with respect to shares of an Investing Fund will not 
exceed the limits applicable to a fund of funds as set forth in NASD 
Conduct Rule 2830.\27\
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    \27\ Any reference to NASD Conduct Rule 2830 includes any 
successor or replacement rule that may be adopted by the Financial 
Industry Regulatory Authority.
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    14. Applicants submit that the proposed arrangement will not create 
an overly complex fund structure. Applicants note that a Fund will be 
prohibited from acquiring securities of any investment company or 
company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of 
the limits contained in section 12(d)(1)(A) of the Act, other than a 
Wholly-Owned Subsidiary,\28\ except to the extent permitted by 
exemptive relief from the Commission permitting the Fund to purchase 
shares of other investment companies for short-term cash management 
purposes.
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    \28\ A Fund, or its respective Master Fund, may invest in a 
wholly-owned subsidiary, organized under the laws of the Cayman 
Islands as an exempted company or under the laws of another non-U.S. 
jurisdiction (each, a ``Wholly-Owned Subsidiary''), in order to 
pursue its investment objectives and/or ensure that the Fund remains 
qualified as a registered investment company for U.S. federal income 
tax purposes. Certain Wholly-Owned Subsidiaries may be investment 
companies or excluded from the definition of investment company by 
section 3(c)(1) or 3(c)(7) of the Act. For a Fund (or its respective 
Master Fund) that invests in a Wholly-Owned Subsidiary, the Adviser 
will serve as investment adviser to both the Fund (or its respective 
Master Fund) and the Wholly-Owned Subsidiary. A Feeder Fund will not 
invest in a Wholly-Owned Subsidiary.
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    15. To ensure that an Investing Fund is aware of the terms and 
conditions of the requested order, the Investing Funds must enter into 
an agreement with the respective Funds (``FOF Participation 
Agreement''). The FOF Participation Agreement will include an 
acknowledgement from the Investing Fund that it may rely on the order 
only to invest in a Fund and not in any other investment company.
    16. Applicants also are seeking relief from Sections 12(d)(1)(A) 
and 12(d)(1)(B) to the extent necessary to permit the Feeder Funds to 
perform creations and redemptions of Shares in-kind in a master-feeder 
structure. Applicants assert that this structure is substantially 
identical to traditional master-feeder structures permitted pursuant to 
the exception provided in section 12(d)(1)(E) of the Act. Section 
12(d)(1)(E) provides that the percentage limitations of sections 
12(d)(1)(A) and (B) will not apply to a security issued by an 
investment company (in this case, the shares of the applicable Master 
Fund) if, among other things, that security is the only investment 
security held in the investing fund's portfolio (in this case, the 
Feeder Fund's portfolio). Applicants believe the proposed master-feeder 
structure complies with section 12(d)(1)(E) because each Feeder Fund 
will hold only investment securities issued by its corresponding Master 
Fund; however, the Feeder Funds may receive securities other than 
securities of its corresponding Master Fund if a Feeder Fund accepts an 
in-kind creation. To the extent that a Feeder Fund may be deemed to be 
holding both shares of the Master Fund and other securities, applicants 
request relief from sections 12(d)(1)(A) and (B). The Feeder Funds 
would operate in compliance with all other provisions of section 
12(d)(1)(E).

Sections 17(a)(1) and (2) of the Act

    17. Section 17(a) of the Act generally prohibits an affiliated 
person of a registered investment company, or an affiliated person of 
such a person (``second tier affiliate''), from selling any security to 
or purchasing any security from the company. Section 2(a)(3) of the Act 
defines ``affiliated person'' to include 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 and any 
person directly or indirectly controlling, controlled by, or under 
common control with, the other person. Section 2(a)(9) of the Act 
defines ``control'' as the power to exercise a controlling influence 
over the management or policies of a company and provides that a 
control relationship will be presumed where one person owns more than 
25% of another person's voting securities. Each Fund may be deemed to 
be controlled by an Adviser and hence affiliated persons of each other. 
In addition, the Funds may be deemed to be under common control with 
any other registered investment company (or series thereof) advised by 
an Adviser (an ``Affiliated Fund'').
    18. Applicants request an exemption under sections 6(c) and 17(b) 
of the Act from sections 17(a)(1) and 17(a)(2) of the Act to permit in-
kind purchases and redemptions of Creation Units by persons that are 
affiliated persons or second tier affiliates of the Funds solely by 
virtue of one or more of the following: (a) Holding 5% or more, or in 
excess of 25% of the outstanding Shares of one or more Funds; (b) 
having an affiliation with a person with an ownership interest 
described in (a); or (c) holding 5% or more, or more than 25% of the 
Shares of one or more Affiliated Funds.\29\ Applicants also request an 
exemption in order to permit a Fund to sell its Shares to and redeem 
its Shares from, and engage in the in-kind transactions that would 
accompany such sales and redemptions with, certain Investing Funds of 
which the Funds are affiliated persons or second-tier affiliates.\30\
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    \29\ Applicants 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 an affiliated person 
of an affiliated person, of an Investing Fund because an investment 
adviser to the Funds is also an investment adviser to an Investing 
Fund.
    \30\ To the extent that purchases and sales of Shares occur in 
the secondary market and not through principal transactions directly 
between an Investing Fund and a Fund, relief from section 17(a) 
would not be necessary. However, the requested relief would apply to 
direct sales of Shares in Creation Units by a Fund to an Investing 
Fund and redemptions of those Shares. The requested relief is also 
intended to cover the in-kind transactions that may accompany such 
sales and redemptions. Applicants are not seeking relief from 
section 17(a) for, and the requested relief will not apply to, 
transactions where a Fund could be deemed an affiliated person, or 
an affiliated person of an affiliated person, of an Investing Fund 
because an investment adviser to the Funds is also an investment 
adviser to an Investing Fund.

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[[Page 5159]]

    19. Applicants assert that no useful purpose would be served by 
prohibiting such affiliated persons from making in-kind purchases or 
in-kind redemptions of Shares of a Fund in Creation Units. Absent the 
unusual circumstances discussed in the application, the Deposit 
Instruments and Redemption Instruments available for a Fund will be the 
same for all purchasers and redeemers, respectively, and will 
correspond pro rata to the Fund's Portfolio Instruments. The deposit 
procedures for in-kind purchases of Creation Units and the redemption 
procedures for in-kind redemptions will be the same for all purchases 
and redemptions. Deposit Instruments and Redemption Instruments will be 
valued in the same manner as those Portfolio Instruments currently held 
by the relevant Funds, and the valuation of the Deposit Instruments and 
Redemption Instruments will be made in the same manner and on the same 
terms for all, regardless of the identity of the purchaser or redeemer. 
Applicants do not believe that in-kind purchases and redemptions will 
result in abusive self-dealing or overreaching of the Fund.
    20. Applicants also submit that the sale of Shares to and 
redemption of Shares from an Investing Fund meets the standards for 
relief under sections 17(b) and 6(c) of the Act. Applicants note that 
any consideration paid for the purchase or redemption of Shares 
directly from a Fund will be based on the NAV of the Fund in accordance 
with policies and procedures set forth in the Fund's registration 
statement.\31\ The FOF Participation Agreement will require any 
Investing Fund that purchases Creation Units directly from a Fund to 
represent that the purchase of Creation Units from a Fund by an 
Investing Fund will be accomplished in compliance with the investment 
restrictions of the Investing Fund and will be consistent with the 
investment policies set forth in the Investing Fund's registration 
statement. Applicants also state that the proposed transactions are 
consistent with the general purposes of the Act and appropriate in the 
public interest.
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    \31\ Applicants acknowledge that the receipt of compensation by 
(a) an affiliated person of an Investing Fund, or an affiliated 
person of such person, for the purchase by the Investing Fund of 
Shares of the Fund or (b) an affiliated person of a Fund, or an 
affiliated person of such person, for the sale by the Fund of its 
Shares to an Investing Fund, may be prohibited by section 17(e)(1) 
of the Act. The FOF Participation Agreement also will include this 
acknowledgment.
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    21. In addition, to the extent that a Fund operates in a master-
feeder structure, applicants also request relief permitting the Feeder 
Funds to engage in in-kind creations and redemptions with the 
applicable Master Fund. Applicants state that the request for relief 
described above would not be sufficient to permit such transactions 
because the Feeder Funds and the applicable Master Fund could also be 
affiliated by virtue of having the same investment adviser. However, 
applicants believe that in-kind creations and redemptions between a 
Feeder Fund and a Master Fund advised by the same investment adviser do 
not involve ``overreaching'' by an affiliated person. Applicants 
represent that such transactions will occur only at the Feeder Fund's 
proportionate share of the Master Fund's net assets, and the 
distributed securities will be valued in the same manner as they are 
valued for the purposes of calculating the applicable Master Fund's 
NAV. Further, all such transactions will be effected with respect to 
predetermined securities and on the same terms with respect to all 
investors. Finally, such transaction would only occur as a result of, 
and to effectuate, a creation or redemption transaction between the 
Feeder Fund and a third-party investor. Applicants state that, in 
effect, the Feeder Fund will serve as a conduit through which creation 
and redemption orders by Authorized Participants will be effected.

Applicants' Conditions

    Applicants agree that any order of the Commission granting the 
requested relief will be subject to the following conditions:

A. ETF Relief

    1. As long as a Fund operates in reliance on the requested order, 
the Shares of the Fund will be listed on a Stock Exchange.
    2. Neither the Trust nor any Fund will be advertised or marketed as 
an open-end investment company or a mutual fund. Any advertising 
material that describes the purchase or sale of Creation Units or 
refers to redeemability will prominently disclose that the Shares are 
not individually redeemable and that owners of the Shares may acquire 
those Shares from the Fund and tender those Shares for redemption to 
the Fund in Creation Units only.
    3. The Web site for the Funds, which is and will be publicly 
accessible at no charge, will contain, on a per Share basis, for each 
Fund the prior Business Day's NAV and the market closing price or Bid/
Ask Price, and a calculation of the premium or discount of the market 
closing price or Bid/Ask Price against such NAV.
    4. On each Business Day, before commencement of trading in Shares 
on the Stock Exchange, the Fund will disclose on its Web site the 
identities and quantities of the Portfolio Instruments held by the Fund 
(or its respective Master Fund) that will form the basis for the Fund's 
calculation of NAV at the end of the Business Day.
    5. The Adviser or any Sub-Adviser, directly or indirectly, will not 
cause any Authorized Participant (or any investor on whose behalf an 
Authorized Participant may transact with the Fund) to acquire any 
Deposit Instrument for the Fund, or its respective Master Fund, through 
a transaction in which the Fund, or its respective Master Fund, could 
not engage directly.
    6. The requested relief to permit ETF operations will expire on the 
effective date of any Commission rule under the Act that provides 
relief permitting the operation of actively-managed ETFs, other than 
the Master-Feeder Relief.

B. Section 12(d)(1) Relief

    1. The members of the Investing Fund's Advisory Group will not 
control (individually or in the aggregate) a Fund (or its respective 
Master Fund) within the meaning of section 2(a)(9) of the Act. The 
members of the Investing Fund's Sub-Advisory Group will not control 
(individually or in the aggregate) a Fund (or its respective Master 
Fund) within the meaning of section 2(a)(9) of the Act. If, as a result 
of a decrease in the outstanding voting securities of a Fund, the 
Investing Fund's Advisory Group or the Investing Fund's Sub-Advisory 
Group, each in the aggregate, becomes a holder of more than 25 percent 
of the outstanding voting securities of a Fund, it will vote its Shares 
of the Fund in the same proportion as the vote of all other holders of 
the Fund's Shares. This condition does not apply to the Investing 
Fund's Sub-Advisory Group with respect to a Fund (or its respective 
Master Fund) for which the Investing Fund Sub-Adviser or a person 
controlling, controlled by or under common control with the Investing 
Fund Sub-Adviser acts as the investment adviser within the meaning of 
section 2(a)(20)(A) of the Act.

[[Page 5160]]

    2. No Investing Fund or Investing Fund Affiliate will cause any 
existing or potential investment by the Investing Fund in a Fund to 
influence the terms of any services or transactions between the 
Investing Fund or an Investing Fund Affiliate and the Fund (or its 
respective Master Fund) or a Fund Affiliate.
    3. The board of directors or trustees of an Investing Management 
Company, including a majority of the independent directors or trustees, 
will adopt procedures reasonably designed to ensure that the Investing 
Fund Adviser and any Investing Fund Sub-Adviser are conducting the 
investment program of the Investing Management Company without taking 
into account any consideration received by the Investing Management 
Company or an Investing Fund Affiliate from a Fund (or its respective 
Master Fund) or a Fund Affiliate in connection with any services or 
transactions.
    4. Once an investment by an Investing Fund in the Shares of a Fund 
exceeds the limit in section 12(d)(1)(A)(i) of the Act, the Board of a 
Fund (or its respective Master Fund), including a majority of the 
independent directors or trustees, will determine that any 
consideration paid by the Fund (or its respective Master Fund) to the 
Investing Fund or an Investing Fund Affiliate in connection with any 
services or transactions: (i) Is fair and reasonable in relation to the 
nature and quality of the services and benefits received by the Fund 
(or its respective Master Fund); (ii) is within the range of 
consideration that the Fund (or its respective Master Fund) would be 
required to pay to another unaffiliated entity in connection with the 
same services or transactions; and (iii) does not involve overreaching 
on the part of any person concerned. This condition does not apply with 
respect to any services or transactions between a Fund (or its 
respective Master Fund) and its investment adviser(s), or any person 
controlling, controlled by or under common control with such investment 
adviser(s).
    5. The Investing Fund Adviser, or Trustee or Sponsor, as 
applicable, will waive fees otherwise payable to it by the Investing 
Fund in an amount at least equal to any compensation (including fees 
received pursuant to any plan adopted by a Fund (or its respective 
Master Fund) under rule 12b-1 under the Act) received from a Fund (or 
its respective Master Fund) by the Investing Fund Adviser, or Trustee 
or Sponsor, or an affiliated person of the Investing Fund Adviser, or 
Trustee or Sponsor, other than any advisory fees paid to the Investing 
Fund Adviser, or Trustee, or Sponsor, or its affiliated person by the 
Fund (or its respective Master Fund), in connection with the investment 
by the Investing Fund in the Fund. Any Investing Fund Sub-Adviser will 
waive fees otherwise payable to the Investing Fund Sub-Adviser, 
directly or indirectly, by the Investing Management Company in an 
amount at least equal to any compensation received from a Fund (or its 
respective Master Fund) by the Investing Fund Sub-Adviser, or an 
affiliated person of the Investing Fund Sub-Adviser, other than any 
advisory fees paid to the Investing Fund Sub-Adviser or its affiliated 
person by the Fund (or its respective Master Fund), in connection with 
the investment by the Investing Management Company in the Fund made at 
the direction of the Investing Fund Sub-Adviser. In the event that the 
Investing Fund Sub-Adviser waives fees, the benefit of the waiver will 
be passed through to the Investing Management Company.
    6. No Investing Fund or Investing Fund Affiliate (except to the 
extent it is acting in its capacity as an investment adviser to a Fund 
(or its respective Master Fund)) will cause a Fund (or its respective 
Master Fund) to purchase a security in an Affiliated Underwriting.
    7. The Board of a Fund (or its respective Master Fund), including a 
majority of the independent directors or trustees, will adopt 
procedures reasonably designed to monitor any purchases of securities 
by the Fund (or its respective Master Fund) in an Affiliated 
Underwriting, once an investment by an Investing Fund in the securities 
of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, 
including any purchases made directly from an Underwriting Affiliate. 
The Board will review these purchases periodically, but no less 
frequently than annually, to determine whether the purchases were 
influenced by the investment by the Investing Fund in the Fund. The 
Board will consider, among other things: (i) Whether the purchases were 
consistent with the investment objectives and policies of the Fund (or 
its respective Master Fund); (ii) 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 (iii) whether the amount of 
securities purchased by the Fund (or its respective Master Fund) in 
Affiliated Underwritings and the amount purchased directly from an 
Underwriting Affiliate have changed significantly from prior years. The 
Board will take any appropriate actions based on its review, including, 
if appropriate, the institution of procedures designed to assure that 
purchases of securities in Affiliated Underwritings are in the best 
interest of shareholders of the Fund.
    8. Each Fund (or its respective Master Fund) 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 Affiliated Underwritings once an investment 
by an Investing Fund in the securities of the Fund exceeds the limit of 
section 12(d)(1)(A)(i) of the Act, setting forth from whom the 
securities were acquired, the identity of the underwriting syndicate's 
members, the terms of the purchase, and the information or materials 
upon which the Board's determinations were made.
    9. Before investing in a Fund in excess of the limits in section 
12(d)(1)(A), an Investing Fund will execute a FOF Participation 
Agreement with the Fund stating that their respective boards of 
directors or trustees and their investment advisers, or Trustee and 
Sponsor, as applicable, 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 a Fund in excess of the limit 
in section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of 
the investment. At such time, the Investing Fund will also transmit to 
the Fund a list of the names of each Investing Fund Affiliate and 
Underwriting Affiliate. The Investing Fund will notify the Fund of any 
changes to the list as soon as reasonably practicable after a change 
occurs. The Fund and the Investing Fund will maintain and preserve a 
copy of the order, the FOF 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.
    10. Before approving any advisory contract under section 15 of the 
Act, the board of directors or trustees of each Investing Management 
Company, including a majority of the independent directors or trustees, 
will find that the advisory fees charged under such contract are based 
on services provided

[[Page 5161]]

that will be in addition to, rather than duplicative of, the services 
provided under the advisory contract(s) of any Fund (or its respective 
Master Fund) in which the Investing Management Company may invest. 
These findings and their basis will be recorded fully in the minute 
books of the appropriate Investing Management Company.
    11. Any sales charges and/or service fees charged with respect to 
shares of an Investing Fund will not exceed the limits applicable to a 
fund of funds as set forth in NASD Conduct Rule 2830.
    12. No Fund (or its respective Master Fund) relying on the section 
12(d)(1) relief will acquire securities of any investment company or 
company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of 
the limits contained in section 12(d)(1)(A) of the Act, other than any 
Wholly-Owned Subsidiary, and except to the extent (i) permitted by 
exemptive relief from the Commission permitting the Fund (or its 
respective Master Fund) to purchase shares of other investment 
companies for short-term cash management purposes or (ii) the Fund 
acquires securities of the Master Fund pursuant to the Master-Feeder 
Relief.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-01749 Filed 1-29-15; 8:45 am]
BILLING CODE 8011-01-P


