[Federal Register Volume 83, Number 21 (Wednesday, January 31, 2018)]
[Notices]
[Pages 4534-4535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01834]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32992; 812-14762]


FS Series Trust and FS Fund Advisor, LLC; Release No. 32992/
January 25, 2018

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, as well as from certain 
disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of 
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 
Schedule 14A under the Securities Exchange Act of 1934, and sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). 
The requested exemption would permit an investment adviser to hire and 
replace certain sub-advisers without shareholder approval and grant 
relief from the Disclosure Requirements as they relate to fees paid to 
the sub-advisers.

Applicants:  FS Series Trust (the ``Trust''), a Delaware statutory 
trust registered under the Act as an open-end management investment 
company, and FS Fund Advisor, LLC (the ``Advisor''), a Delaware limited 
liability company registered as an investment adviser under the 
Investment Advisers Act of 1940 (together with the Trust, the 
``Applicants'').

Filing Dates:  The application was filed on April 12, 2017 and amended 
on September 22, 2017.

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 February 19, 2018, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit or, for lawyers, 
a certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

[[Page 4535]]


ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090. Applicants: 201 Rouse Boulevard, 
Philadelphia, PA 19112.

FOR FURTHER INFORMATION CONTACT: James Maclean, Senior Counsel, at 
(202) 551-7794, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 
551-6768 (Division of Investment Management, Chief Counsel's Office).

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

Summary of the Application

    1. The Advisor will serve as the investment adviser to the 
Subadvised Series pursuant to an investment advisory agreement with the 
Trust (each, an ``Investment Management Agreement'' and, collectively, 
the ``Investment Management Agreements'').\1\ The Advisor will provide 
the Subadvised Series with continuous and comprehensive investment 
management services, subject to the supervision of, and policies 
established by, the Trust's board of trustees (the ``Board''). The 
Investment Management Agreement permits the Advisor, subject to the 
approval of the Board, to delegate to one or more Sub-Advisors the 
responsibility to provide the day-to-day portfolio investment 
management of each Subadvised Series, subject to the supervision and 
direction of the Advisor.\2\ The primary responsibility for managing 
the Subadvised Series will remain vested in the Advisor. The Advisor 
will hire, evaluate, allocate assets to and oversee the Sub-Advisors, 
including determining whether a Sub-Advisor should be terminated, at 
all times subject to the authority of the Board.
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    \1\ Applicants request relief with respect to any future series 
and any other existing or future registered open-end management 
company or series thereof that intends to rely on the requested 
order and that: (a) Is advised by the Advisor, or any person 
controlling, controlled by or under common control with the Advisor 
or its successors; (b) uses the multi-manager structure described in 
the application; and (c) complies with the terms and conditions of 
the application (each, a ``Subadvised Series''). 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.
    \2\ A ``Sub-Advisor'' for a Series is (1) an indirect or direct 
``wholly-owned subsidiary'' (as such term is defined in the Act) of 
the Advisor for that Series, or (2) a sister company of the Advisor 
for that Series that is an indirect or direct ``wholly-owned 
subsidiary'' (as such term is defined in the Act) of the same 
company that, indirectly or directly, wholly owns the Advisor (each 
of (1) and (2) a ``Wholly-Owned Sub-Advisor''), or (3) an investment 
sub-adviser for that Series that is not an ``affiliated person'' (as 
such term is defined in Section 2(a)(3) of the Act) of the Series or 
the Advisor, except to the extent that an affiliation arises solely 
because the Sub-Advisor serves as a sub-adviser to one or more 
Series (each a ``Non-Affiliated Sub-Advisor'') .
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    2. Applicants request an exemption to permit the Advisor, subject 
to Board approval, to hire a Non-Affiliated Sub-Advisor or a Wholly-
Owned Sub-Advisor, pursuant to Sub-Advisory Agreements and materially 
amend Sub-Advisory Agreements with Non-Affiliated Sub-Advisors and 
Wholly-Owned Sub-Advisors without obtaining the shareholder approval 
required under section 15(a) of the Act and rule 18f-2 under the 
Act.\3\ Applicants also seek an exemption from the Disclosure 
Requirements to permit a Subadvised Series to disclose (as both a 
dollar amount and a percentage of the Subadvised Series' net assets): 
(a) The aggregate fees paid to the Advisor and any Wholly-Owned Sub-
Advisors; (b) the aggregate fees paid to Non-Affiliated Sub-Advisors; 
and (c) the fee paid to each Affiliated Sub-Advisor.
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    \3\ The requested relief will not extend to any sub-adviser, 
other than a Wholly-Owned Sub-Advisor, who is an affiliated person, 
as defined in section 2(a)(3) of the Act, of the Subadvised Series 
or of its Advisor, other than by reason of serving as a sub-adviser 
to one or more of the Subadvised Series or to any existing or future 
registered open-end management company or series thereof advised by 
an Advisor (``Affiliated Sub-Advisor'').
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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 Subadvised Series' shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Series' 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-Advisors is substantially equivalent to that of 
individual portfolio managers, so that requiring shareholder approval 
of Sub-advisory Agreements would impose unnecessary delays and expenses 
on the Subadvised Series. Applicants believe that the requested relief 
from the Disclosure Requirements meets this standard because it will 
improve the Advisor's ability to negotiate fees paid to the Sub-
Advisors that are more advantageous for the Subadvised Series.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01834 Filed 1-30-18; 8:45 am]
BILLING CODE 8011-01-P


