
[Federal Register Volume 82, Number 78 (Tuesday, April 25, 2017)]
[Notices]
[Pages 19114-19115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08288]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32602; 812-14664]


Homestead Funds, Inc. and RE Advisers Corporation

April 19, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act. The requested exemption would 
permit an investment adviser to hire and replace certain sub-advisers 
without shareholder approval.

Applicants: Homestead Funds, Inc. (the ``Corporation''), a Maryland 
corporation registered under the Act as an open-end management 
investment company with multiple series, and RE Advisers Corporation, a 
Virginia corporation registered as an investment adviser under the 
Investment Advisers Act of 1940 (the ``Initial Manager,'' and, 
collectively with the Corporation, the ``Applicants'').

Filing Dates: The application was filed on June 21, 2016, and amended 
on November 1, 2016.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving Applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on May 15, 2017, and should be accompanied by proof of service on 
the Applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants, 4301 Wilson 
Boulevard, Arlington, VA 22203.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, or Robert Shapiro, Branch Chief, at (202) 
551-6821 (Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Summary of the Application

    1. The Manager (as defined below) will serve as the investment 
adviser to the Funds \1\ pursuant to an investment advisory agreement 
with the Corporation (the ``Investment Management Agreement'').\2\ The

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Manager is responsible for the overall management of the Funds' 
business affairs and selecting investments according to each Fund's 
respective investment objective, policies, and restrictions, subject to 
the oversight and authority of each Fund's board of directors 
(``Board''). The Investment Management Agreement permits the Manager, 
subject to the approval of the Board, to delegate to one or more sub-
advisers (each, a ``Sub-Adviser'' and collectively, the ``Sub-
Advisers'') the responsibility to provide the day-to-day portfolio 
investment management of each Fund, subject to the supervision and 
direction of the Manager. The primary responsibility for managing the 
Funds will remain vested in the Manager. The Manager will hire, 
evaluate, allocate assets to and oversee the Sub-Advisers, including 
determining whether a Sub-Adviser should be terminated, at all times 
subject to the authority of the Board.
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    \1\ One of the Funds, the Stock Index Fund, currently operates 
as a feeder fund managed by a third-party manager and invests 
substantially all of its assets in a separate series of an 
unaffiliated investment company (the ``Master Fund''). The Stock 
Index Fund will not engage any sub-advisers other than through 
approving the engagement of one or more of the Master Fund's sub-
advisers in the Stock Index Fund's capacity as a shareholder of the 
Master Fund. The Master Fund is not an Applicant and the Stock Index 
Fund will not rely on the requested order unless it is managed by 
the Manager and complies with all of the conditions in the 
application.
    \2\ Applicants request relief with respect to any existing or 
future series of the Corporation and any other existing or future 
registered open-end management investment company or series thereof 
that: (a) is advised by the Initial Manager, or any entity 
controlling, controlled by, or under common control with the Initial 
Manager or its successors (each, a ``Manager''); (b) uses the 
manager of managers structure described in the application; and (c) 
complies with the terms and conditions of the application (any such 
series, a ``Fund'' and collectively, the ``Funds''). For purposes of 
the requested order, ``successor'' is limited to an entity that 
results from a reorganization into another jurisdiction or a change 
in the type of business organization.
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    2. Applicants request an exemption to permit the Manager, subject 
to Board approval, to hire certain Sub-Advisers pursuant to Sub-
Advisory Agreements and materially amend existing Sub-Advisory 
Agreements without obtaining the shareholder approval required under 
section 15(a) of the Act and rule 18f-2 under the Act.\3\
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    \3\ The requested relief will not extend to any sub-adviser that 
is an affiliated person, as defined in section 2(a)(3) of the Act, 
of the Corporation, a Fund, or the Manager, other than by reason of 
serving as a sub-adviser to one or more of the Funds.
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    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Fund shareholders and notification about sub-
advisory changes and enhanced Board oversight to protect the interests 
of the Funds' shareholders.
    4. Section 6(c) 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 provisions of the Act, or 
any rule thereunder, if such relief is necessary or appropriate in the 
public interest and consistent with the protection of investors and 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the application, the Investment 
Management Agreements will remain subject to shareholder approval, 
while the role of the Sub-Advisers is substantially similar to that of 
individual portfolio managers, so that requiring shareholder approval 
of Sub-Advisory Agreements would impose unnecessary delays and expenses 
on the Funds.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08288 Filed 4-24-17; 8:45 am]
 BILLING CODE 8011-01-P


