80_FR_46521 80 FR 46372 - Little Harbor MultiStrategy Composite Fund and Little Harbor Advisors, LLC; Notice of Application

80 FR 46372 - Little Harbor MultiStrategy Composite Fund and Little Harbor Advisors, LLC; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 149 (August 4, 2015)

Page Range46372-46375
FR Document2015-19014

Federal Register, Volume 80 Issue 149 (Tuesday, August 4, 2015) 
[Federal Register Volume 80, Number 149 (Tuesday, August 4, 2015)]
[Notices]
[Pages 46372-46375]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-19014]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31726; File No. 812-14395]


Little Harbor MultiStrategy Composite Fund and Little Harbor 
Advisors, LLC; Notice of Application

July 28, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c) 
and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act for 
an exemption from rule 23c-3 under the Act, and for an order pursuant 
to section 17(d) of the Act and rule 17d-1 under the Act.

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Summary of Application:  Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares (``Shares'') and to impose asset-based distribution 
and service fees and deferred sales charges (``Deferred Sales 
Charges'').

Applicants:  Little Harbor MultiStrategy Composite Fund (``MSC Fund'') 
and Little Harbor Advisors, LLC (``Investment Manager'').

Filing Dates:  The application was filed on December 2, 2014, and 
amended on April 10, 2015 and June 17, 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

[[Page 46373]]

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 August 
24, 2015 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. 
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, 30 Doaks Lane, 
Marblehead, MA 01945.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 551-6876 or Mary Kay Frech, 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 MSC Fund is a Delaware statutory trust registered under the 
Act as a non-diversified, closed-end management investment company. The 
MSC Fund's investment objective is to realize long-term, risk-adjusted 
returns that are attractive as compared to those returns of traditional 
public equity and fixed-income markets. The MSC Fund may invest in U.S. 
and non-U.S. equities of companies with any market capitalization, 
fixed income securities of any quality, currencies, derivative 
instruments, futures contracts, options on futures contracts, and 
commodities.
    2. The Investment Manager is a Delaware limited liability company 
and is registered as an investment adviser under the Investment 
Advisers Act of 1940. The Investment Manager serves as the investment 
manager to the MSC Fund. Foreside Financial Services, LLC, a broker 
registered under the Securities Exchange Act of 1934 (``Exchange Act'') 
currently serves as the principal underwriter of the MSC Fund 
(``Distributor''). In the future, the Distributor may be an affiliated 
person, as defined in section 2(a)(3) of the Act, of the Investment 
Manager.
    3. Applicants seek an order to permit the MSC Fund to issue 
multiple classes of Shares, with varying sales charges, and/or asset-
based distribution and/or service fees, and Deferred Sales Charges.
    4. Applicants request that the order also apply to any continuously 
offered registered closed-end management investment company existing 
now or in the future for which the Investment Manager or any entity 
controlling, controlled by, or under common control with the Investment 
Manager, or any successor in interest to such entity,\1\ serves as 
investment adviser and which either operates as an ``interval fund'' 
pursuant to rule 23c-3 under the Act (each, an ``Interval Fund'') or 
provides periodic liquidity with respect to its Shares pursuant to rule 
13e-4 under the Exchange Act (each, a ``New Fund,'' and together with 
the MSC Fund, the ``Funds'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization of the entity under the laws of another 
jurisdiction or in a change in the form of business organization.
    \2\ Any Fund relying on the requested relief will do so in a 
manner consistent with the terms and conditions of the application. 
Applicants represent that any person presently intending to rely on 
the order requested is listed as an applicant.
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    5. Since February 1, 2015, the MSC Fund has made a continuous 
public offering of its single, undesignated class of Shares (the 
``Initial Class'').\3\ Shares of the MSC Fund currently are not offered 
or traded in a secondary market and are not listed on any securities 
exchange or quoted on any quotation medium. Applicants do not expect 
there to be a secondary trading market for any Fund Shares.
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    \3\ Shares of the MSC Fund are currently, and in the future will 
be, sold only to investors who meet the definition of ``accredited 
investor'' in Regulator D under the Securities Act of 1933.
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    6. The MSC Fund anticipates that Initial Class Shares will continue 
to be offered at net asset value, subject to a front-end sales load in 
addition to the current service fee. The MSC Fund and each New Fund 
propose to offer at least two, and perhaps more than two, classes of 
Shares. Shares of each new class will be offered at net asset value, 
and may be subject to a front-end sales load or a Deferred Sales 
Charge, and/or an asset-based distribution and/or service fee, and/or 
any early repurchase fee (``Early Repurchase Fee'').\4\ Because of the 
different distribution fees, shareholder service fees, and any other 
class expenses that may be attributable to the different classes, the 
net income attributable to, and any dividends payable on, each class of 
Shares may differ from each other from time to time. As a result, the 
net asset value per Share of the classes may differ over time.
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    \4\ Shares may be subject to an Early Repurchase Fee at a rate 
of 2% of the aggregate net asset value of a shareholder's Shares 
repurchased by the Fund if the interval between the date of purchase 
of the Shares and the valuation date with respect to the repurchase 
of those Shares is less than one year. Any Early Repurchase Fee 
imposed by a Fund will apply to all classes of Shares of the Fund, 
consistent with section 18 of the Act and rule 18f-3 thereunder. To 
the extent the Fund determines to waive, impose scheduled variations 
of, or eliminate any Early Repurchase Fee, it will do so 
consistently with the requirements of rule 22d-1 under the Act and 
the Fund's waiver of, scheduled variation in, or elimination of, any 
such Early Repurchase Fee will apply uniformly to all shareholders 
of the Fund.
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    7. Applicants state that, from time to time, a Fund may create and 
offer additional classes of Shares of the Fund, or may vary the 
characteristics of its Shares in the following respects: (i) The amount 
of fees permitted by a Distribution Plan \5\ and/or service plan as to 
such class; (ii) voting rights with respect to a Distribution Plan and/
or service plan as to such class; (iii) different class designations; 
(iv) the impact of any class expenses directly attributable to a 
particular class of Shares allocated on a class basis as described in 
the application; (v) differences in any dividends and net asset values 
per Share resulting from differences in fees under a Distribution Plan 
and/or service plan or in class expenses; (vi) any sales load 
structure; and (vii) any conversion features, as permitted under the 
Act.
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    \5\ Distribution fees with respect to any class of Shares of a 
Fund would be paid pursuant to a plan of distribution adopted by the 
Fund with respect to the applicable class in compliance with rules 
12b-1 and 17d-3 under the Act, as if those rules applied to closed-
end management investment companies (a ``Distribution Plan'').
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    10. Each Fund and its Distributor will comply with any requirements 
that the Commission or FINRA may adopt regarding disclosure at the 
point of sale and in transaction confirmations about the costs and 
conflicts of interest arising out of the distribution of open-end 
investment company shares, and regarding prospectus disclosure of sales 
charges and revenue sharing arrangements, as if those requirements 
applied to the Fund and the Distributor. In addition, each Fund or its 
Distributor will contractually require that any other distributor of 
the Fund's Shares comply with such requirements in connection with the 
distribution of Shares of the New Fund.
    11. Each Fund will allocate all expenses incurred by it among its 
various classes of Shares based on the respective net assets of the 
Fund attributable to each such class, except

[[Page 46374]]

that the net asset value and expenses of each class will reflect the 
fees associated with the Distribution Plan of that class (if any), 
shareholder service fees attributable to a particular class (including 
transfer agency fees, if any), and any other incremental expenses of 
that class. Expenses of a Fund, respectively allocated to a particular 
class of the Fund's Shares, will be borne on a pro rata basis by each 
outstanding Share of that class. Applicants state that the Fund will 
comply with the provisions of rule 18f-3 under the Act as if it were an 
open-end investment company.
    12. Applicants state that the Interval Funds may impose Deferred 
Sales Charges on Shares submitted for repurchase that have been held 
less than a specified period and may waive the Deferred Sales Charge 
for certain categories of shareholders or transactions to be 
established from time to time. Applicants represent that each Interval 
Fund would apply the Deferred Sales Charge (and any waivers or 
scheduled variations of the Deferred Sales Charge) uniformly to all 
shareholders in a given class and consistently with the requirements of 
rule 22d-1 under the Act as if the Interval Fund were an open-end 
investment company.
    13. Each Interval Fund may offer its shareholders an exchange 
feature under which the shareholders of the Interval Fund may, in 
connection with such Interval Fund's repurchase offers, exchange their 
Shares of the Interval Fund for Shares of the same class of (i) 
registered open-end investment companies or (ii) other Funds that 
continuously offer their Shares at net asset value, and that in either 
case are in the Interval Fund's group of investment companies 
(collectively, ``Other Funds''). Shares of an Interval Fund that are 
exchanged for Shares of Other Funds will be included as part of the 
amount of the repurchase offer amount for such Interval Fund as 
specified in rule 23c-3 under the Act. Any exchange option will comply 
with rule 11a-1, 11a-3 and rule 18f-3 under the Act, as if the Interval 
Fund were an open-end investment company. In complying with rule 11a-3, 
each Interval Fund will treat any Deferred Sales Charge as if it were a 
contingent deferred sales charge (``CDSC'').

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of Shares of the Funds may be prohibited by section 
18(c), as a class may have priority over another class as to payment of 
dividends because shareholders of different classes would pay different 
fees and expenses.
    2. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that multiple classes of Shares of the Funds 
may violate section 18(i) of the Act because each class would be 
entitled to exclusive voting rights with respect to matters solely 
related to that class.
    3. 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 provision of the Act, or from any 
rule thereunder, if and to the extent 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. Applicants request an exemption under section 
6(c) from sections 18(c) and 18(i) to permit the Funds to issue 
multiple classes of Shares.
    4. Applicants submit that the proposed allocation of expenses and 
voting rights among multiple classes is equitable and will not 
discriminate against any group or class of shareholders. Applicants 
submit that the proposed arrangements would permit a Fund to facilitate 
the distribution of its Shares and provide investors with a broader 
choice of shareholder services. Applicants assert that the proposed 
closed-end investment company multiple class structure does not raise 
the concerns underlying section 18 of the Act to any greater degree 
than open-end investment companies' multiple class structures that are 
permitted by rule 18f-3 under the Act. Applicants state that each Fund 
will comply with the provisions of rule 18f-3 as if it were an open-end 
investment company.

Deferred Sales Charge

    1. Section 23(c) of the Act provides, in relevant part, that no 
registered closed-end investment company will purchase securities of 
which it is the issuer, except: (a) On a securities exchange or other 
open market; (b) pursuant to tenders, after reasonable opportunity to 
submit tenders given to all holders of securities of the class to be 
purchased; or (c) under such other circumstances as the Commission may 
permit by rules and regulations or orders for the protection of 
investors.
    2. Rule 23c-3 under the Act permits a registered closed-end 
investment company (an ``interval fund'') to make repurchase offers of 
between five and twenty-five percent of its outstanding shares at net 
asset value at periodic intervals pursuant to a fundamental policy of 
the interval fund. Rule 23c-3(b)(1) under the Act provides that an 
interval fund may deduct from repurchase proceeds only a repurchase 
fee, not to exceed two percent of the proceeds, that is paid to the 
interval fund and is reasonably intended to compensate the fund for 
expenses directly related to the repurchase.
    3. Section 23(c)(3) provides that the Commission may issue an order 
that would permit a closed-end investment company to repurchase its 
shares in circumstances in which the repurchase is made in a manner or 
on a basis that does not unfairly discriminate against any holders of 
the class or classes of securities to be purchased.
    4. Applicants request relief under sections 6(c), discussed above, 
and 23(c)(3) from rule 23c-3 to the extent necessary for the Interval 
Funds to impose a Deferred Sales Charge on Shares submitted for 
repurchase that have been held for less than a specified period.
    5. Applicants state that the Deferred Sales Charge they intend to 
impose is functionally similar to a CDSC imposed by an open-end 
investment company under rule 6c-10 under the Act. Rule 6c-10 permits 
open-end investment companies to impose CDSCs, subject to certain 
conditions. Applicants note that rule 6c-10 is grounded in policy 
considerations supporting the employment of CDSCs where there are 
adequate safeguards for the investor and state that the same policy 
considerations support imposition of Deferred Sales Charges in the 
interval fund context. In addition, applicants state that Deferred 
Sales Charges may be necessary for the distributor to recover 
distribution costs. Applicants represent that any Deferred Sales Charge 
imposed by the Interval Funds will comply with rule 6c-10 under the Act 
as if that rule were applicable to closed-end investment companies. 
Each Interval Fund will disclose Deferred Sales Charges in accordance 
with the requirements of Form N-1A concerning CDSCs. Applicants further 
state that each Interval Fund will apply the Deferred Sales Charge (and 
any waivers or scheduled variations of the Deferred

[[Page 46375]]

Sales Charge) uniformly to all shareholders in a given class and 
consistently with the requirements of rule 22d-1 under the Act.

Asset-Based Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to the extent necessary to permit the Fund to impose asset-
based service and/or distribution fees. Applicants have agreed to 
comply with rules 12b-1 and 17d-3 as if those rules applied to closed-
end investment companies, which they believe will resolve any concerns 
that might arise in connection with a Fund financing the distribution 
of its Shares through asset-based distribution fees.
    3. For the reasons stated above, applicants submit that the 
exemptions requested under section 6(c) are necessary and appropriate 
in the public interest and are consistent with the protection of 
investors and the purposes fairly intended by the policy and provisions 
of the Act. Applicants further submit that the relief requested 
pursuant to section 23(c)(3) is consistent with the protection of 
investors and insures that applicants do not unfairly discriminate 
against any holders of the class or classes of securities to be 
purchased. Finally, applicants submit that the requested relief meets 
the standards for relief in section 17(d) of the Act and rule 17d-1 
thereunder. Applicants state that the Funds' imposition of asset-based 
distribution fees is consistent with the provisions, policies and 
purposes of the Act and does not involve participation on a basis 
different from or less advantageous than that of other participants.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with the provisions of rules 6c-10, 12b-1, 
17d-3, 18f-3, and 22d-1 under the Act, as amended from time to time or 
replaced, as if those rules applied to closed-end management investment 
companies, and will comply with the NASD Conduct Rule 2830, as amended 
from time to time, as if that rule applied to all closed-end management 
investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19014 Filed 8-3-15; 8:45 am]
BILLING CODE 8011-01-P

46372 Federal Register / Vol. 80, No. 149 / Tuesday, August 4, 2015 / Notices redemption rights of shareholders for years.2 In addition, Commission staff of the information collected; and (d) improper purposes, such as the estimates that there are an average of ways to minimize the burden of the preservation of management fees. two conduit funds that may be invested collection of information on Although section 22(e) permits funds to in a money market fund that breaks the respondents, including through the use postpone the date of payment or buck.3 Commission staff further of automated collection techniques or satisfaction upon redemption for up to estimates that a money market fund or other forms of information technology. seven days, it does not permit funds to conduit fund would spend Consideration will be given to suspend the right of redemption for any approximately one hour of an in-house comments and suggestions submitted in amount of time, absent certain specified attorney’s time to prepare and submit writing within 60 days after this circumstances or a Commission order. the notice required by the rule. Given publication. Rule 22e–3 under the Act [17 CFR these estimates, the total annual burden Please direct your written comments 270.22e–3] exempts money market of the notification requirement of rule to Pamela Dyson, Director/Chief funds from section 22(e) to permit them 22e–3 for all money market funds and Information Officer, Securities and to suspend redemptions in order to conduit funds would be approximately Exchange Commission, C/O Remi facilitate an orderly liquidation of the 30 minutes, 4 at a cost of $190.5 Pavlik-Simon, 100 F Street NE., fund. Specifically, rule 22e–3 permits a The estimate of average burden hours Washington, DC 20549; or send an email money market fund to suspend is made solely for the purposes of the to: PRA_Mailbox@sec.gov. redemptions and postpone the payment Paperwork Reduction Act, and is not Dated: July 28, 2015. of proceeds pending board-approved derived from a comprehensive or even Robert W. Errett, liquidation proceedings if: (i) The fund’s a representative survey or study of the Deputy Secretary. board of directors, including a majority costs of Commission rules and forms. [FR Doc. 2015–18884 Filed 8–3–15; 8:45 am] of disinterested directors, determines Compliance with the collection of information requirements of the rule is BILLING CODE 8011–01–P pursuant to § 270.2a–7(c)(8)(ii)(C) that the extent of the deviation between the necessary to obtain the benefit of relying fund’s amortized cost price per share on the rule. An agency may not conduct SECURITIES AND EXCHANGE and its current net asset value per share or sponsor, and a person is not required COMMISSION calculated using available market to respond to, a collection of quotations (or an appropriate substitute information unless it displays a [Investment Company Act Release No. that reflects current market conditions) currently valid control number. 31726; File No. 812–14395] may result in material dilution or other Written comments are invited on: (a) unfair results to investors or existing Whether the collection of information is Little Harbor MultiStrategy Composite shareholders; (ii) the fund’s board of necessary for the proper performance of Fund and Little Harbor Advisors, LLC; directors, including a majority of the functions of the Commission, Notice of Application disinterested directors, irrevocably including whether the information has July 28, 2015. approves the liquidation of the fund; practical utility; (b) the accuracy of the AGENCY: Securities and Exchange and (iii) the fund, prior to suspending Commission’s estimate of the burden of Commission (‘‘Commission’’). redemptions, notifies the Commission of the collection of information; (c) ways to enhance the quality, utility, and clarity ACTION: Notice of an application under its decision to liquidate and suspend redemptions. Rule 22e–3 also provides section 6(c) of the Investment Company an exemption from section 22(e) for 2 This estimate is based upon the Commission’s Act of 1940 (the ‘‘Act’’) for an registered investment companies that experience with the frequency with which money exemption from sections 18(c) and 18(i) market funds have historically required sponsor of the Act, under sections 6(c) and own shares of a money market fund support. Although the vast majority of money pursuant to section 12(d)(1)(E) of the market fund sponsors have supported their money 23(c)(3) of the Act for an exemption Act (‘‘conduit funds’’), if the underlying market funds in times of market distress, for from rule 23c–3 under the Act, and for money market fund has suspended purposes of this estimate Commission staff an order pursuant to section 17(d) of the conservatively estimates that one or more sponsors Act and rule 17d–1 under the Act. redemptions pursuant to the rule. A may not provide support. conduit fund that suspends redemptions 3 Based on a review of filings with the in reliance on the exemption provided Commission, Commission staff estimates that 2.3 SUMMARY OF APPLICATION: Applicants by rule 22e–3 is required to provide conduit funds are invested in each master fund. request an order to permit certain prompt notice of the suspension of However, master funds account for only 11.3% of registered closed-end management all money market funds. Solely for the purposes of investment companies to issue multiple redemptions to the Commission. Notices this information collection, and to avoid required by the rule must be provided underestimating possible burdens, the Commission classes of shares (‘‘Shares’’) and to by electronic mail, directed to the conservatively assumes that any money market that impose asset-based distribution and attention of the Director of the Division breaks the buck and liquidates would be a master service fees and deferred sales charges fund. (‘‘Deferred Sales Charges’’). of Investment Management or the 4 This estimate is based on the following Director’s designee.1 Compliance with calculations: (1 hour ÷ 6 years) = 10 minutes per APPLICANTS: Little Harbor MultiStrategy the notification requirement is year for each fund and conduit fund that is required Composite Fund (‘‘MSC Fund’’) and mandatory for money market funds and to provide notice under the rule. 10 minutes per Little Harbor Advisors, LLC year × 3 (combined number of affected funds and (‘‘Investment Manager’’). conduit funds that rely on rule 22e–3 to conduit funds) = 30 minutes. suspend redemptions and postpone 5 This estimate is based on the following FILING DATES: The application was filed payment of proceeds pending a calculation: $380/hour × 30 minutes = $190. The on December 2, 2014, and amended on estimated hourly wages used in this PRA analysis April 10, 2015 and June 17, 2015. tkelley on DSK3SPTVN1PROD with NOTICES liquidation, and are not kept were derived from reports prepared by the confidential. Securities Industry and Financial Markets HEARING OR NOTIFICATION OF HEARING: Commission staff estimates that, on Association, modified to account for an 1800-hour An order granting the requested relief average, one money market fund would work year and multiplied by 5.35 to account for will be issued unless the Commission break the buck and liquidate every six bonuses, firm size, employee benefits and overhead. See Securities Industry and Financial Markets orders a hearing. Interested persons may Association, Management & Professional Earnings request a hearing by writing to the 1 See rule 22e–3(a)(3). in the Securities Industry 2013. Commission’s Secretary and serving VerDate Sep<11>2014 18:45 Aug 03, 2015 Jkt 235001 PO 00000 Frm 00139 Fmt 4703 Sfmt 4703 E:\FR\FM\04AUN1.SGM 04AUN1

Federal Register / Vol. 80, No. 149 / Tuesday, August 4, 2015 / Notices 46373 applicants with a copy of the request, Distributor may be an affiliated person, different distribution fees, shareholder personally or by mail. Hearing requests as defined in section 2(a)(3) of the Act, service fees, and any other class should be received by the Commission of the Investment Manager. expenses that may be attributable to the by 5:30 p.m. on August 24, 2015 and 3. Applicants seek an order to permit different classes, the net income should be accompanied by proof of the MSC Fund to issue multiple classes attributable to, and any dividends service on the applicants, in the form of of Shares, with varying sales charges, payable on, each class of Shares may an affidavit, or, for lawyers, a certificate and/or asset-based distribution and/or differ from each other from time to time. of service. Pursuant to rule 0–5 under service fees, and Deferred Sales Charges. As a result, the net asset value per Share the Act, hearing requests should state 4. Applicants request that the order of the classes may differ over time. the nature of the writer’s interest, any also apply to any continuously offered 7. Applicants state that, from time to facts bearing upon the desirability of a registered closed-end management time, a Fund may create and offer hearing on the matter, the reason for the investment company existing now or in additional classes of Shares of the Fund, request, and the issues contested. the future for which the Investment or may vary the characteristics of its Persons who wish to be notified of a Manager or any entity controlling, Shares in the following respects: (i) The hearing may request notification by controlled by, or under common control amount of fees permitted by a writing to the Commission’s Secretary. with the Investment Manager, or any Distribution Plan 5 and/or service plan Persons who wish to be notified of a successor in interest to such entity,1 as to such class; (ii) voting rights with hearing may request notification by serves as investment adviser and which respect to a Distribution Plan and/or writing to the Commission’s Secretary. either operates as an ‘‘interval fund’’ service plan as to such class; (iii) ADDRESSES: Secretary, U.S. Securities pursuant to rule 23c–3 under the Act different class designations; (iv) the and Exchange Commission, 100 F Street (each, an ‘‘Interval Fund’’) or provides impact of any class expenses directly NE., Washington, DC 20549–1090; periodic liquidity with respect to its attributable to a particular class of Applicants, 30 Doaks Lane, Marblehead, Shares pursuant to rule 13e–4 under the Shares allocated on a class basis as MA 01945. Exchange Act (each, a ‘‘New Fund,’’ and described in the application; (v) together with the MSC Fund, the differences in any dividends and net FOR FURTHER INFORMATION CONTACT: ‘‘Funds’’).2 asset values per Share resulting from Deepak T. Pai, Senior Counsel, at (202) differences in fees under a Distribution 551–6876 or Mary Kay Frech, Branch 5. Since February 1, 2015, the MSC Fund has made a continuous public Plan and/or service plan or in class Chief, at (202) 551–6821 (Division of expenses; (vi) any sales load structure; Investment Management, Chief offering of its single, undesignated class of Shares (the ‘‘Initial Class’’).3 Shares of and (vii) any conversion features, as Counsel’s Office). permitted under the Act. the MSC Fund currently are not offered SUPPLEMENTARY INFORMATION: The 10. Each Fund and its Distributor will or traded in a secondary market and are following is a summary of the not listed on any securities exchange or comply with any requirements that the application. The complete application quoted on any quotation medium. Commission or FINRA may adopt may be obtained via the Commission’s Applicants do not expect there to be a regarding disclosure at the point of sale Web site by searching for the file secondary trading market for any Fund and in transaction confirmations about number, or for an applicant using the Shares. the costs and conflicts of interest arising Company name box, at http:// 6. The MSC Fund anticipates that out of the distribution of open-end www.sec.gov/search/search.htm or by Initial Class Shares will continue to be investment company shares, and calling (202) 551–8090. offered at net asset value, subject to a regarding prospectus disclosure of sales front-end sales load in addition to the charges and revenue sharing Applicants’ Representations current service fee. The MSC Fund and arrangements, as if those requirements 1. The MSC Fund is a Delaware applied to the Fund and the Distributor. each New Fund propose to offer at least statutory trust registered under the Act In addition, each Fund or its Distributor two, and perhaps more than two, classes as a non-diversified, closed-end will contractually require that any other of Shares. Shares of each new class will management investment company. The distributor of the Fund’s Shares comply be offered at net asset value, and may be MSC Fund’s investment objective is to with such requirements in connection subject to a front-end sales load or a realize long-term, risk-adjusted returns with the distribution of Shares of the Deferred Sales Charge, and/or an asset- that are attractive as compared to those New Fund. based distribution and/or service fee, returns of traditional public equity and 11. Each Fund will allocate all and/or any early repurchase fee (‘‘Early fixed-income markets. The MSC Fund expenses incurred by it among its Repurchase Fee’’).4 Because of the may invest in U.S. and non-U.S. equities various classes of Shares based on the of companies with any market 1 A successor in interest is limited to an entity respective net assets of the Fund capitalization, fixed income securities of that results from a reorganization of the entity attributable to each such class, except any quality, currencies, derivative under the laws of another jurisdiction or in a instruments, futures contracts, options change in the form of business organization. apply to all classes of Shares of the Fund, consistent 2 Any Fund relying on the requested relief will do on futures contracts, and commodities. with section 18 of the Act and rule 18f–3 so in a manner consistent with the terms and thereunder. To the extent the Fund determines to 2. The Investment Manager is a conditions of the application. Applicants represent waive, impose scheduled variations of, or eliminate Delaware limited liability company and that any person presently intending to rely on the any Early Repurchase Fee, it will do so consistently is registered as an investment adviser order requested is listed as an applicant. with the requirements of rule 22d–1 under the Act under the Investment Advisers Act of 3 Shares of the MSC Fund are currently, and in and the Fund’s waiver of, scheduled variation in, 1940. The Investment Manager serves as the future will be, sold only to investors who meet or elimination of, any such Early Repurchase Fee the definition of ‘‘accredited investor’’ in Regulator will apply uniformly to all shareholders of the tkelley on DSK3SPTVN1PROD with NOTICES the investment manager to the MSC D under the Securities Act of 1933. Fund. Fund. Foreside Financial Services, LLC, 4 Shares may be subject to an Early Repurchase 5 Distribution fees with respect to any class of a broker registered under the Securities Fee at a rate of 2% of the aggregate net asset value Shares of a Fund would be paid pursuant to a plan Exchange Act of 1934 (‘‘Exchange Act’’) of a shareholder’s Shares repurchased by the Fund of distribution adopted by the Fund with respect to if the interval between the date of purchase of the the applicable class in compliance with rules 12b– currently serves as the principal Shares and the valuation date with respect to the 1 and 17d–3 under the Act, as if those rules applied underwriter of the MSC Fund repurchase of those Shares is less than one year. to closed-end management investment companies (a (‘‘Distributor’’). In the future, the Any Early Repurchase Fee imposed by a Fund will ‘‘Distribution Plan’’). 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46374 Federal Register / Vol. 80, No. 149 / Tuesday, August 4, 2015 / Notices that the net asset value and expenses of thereafter, the company has outstanding all holders of securities of the class to each class will reflect the fees associated more than one class of senior security. be purchased; or (c) under such other with the Distribution Plan of that class Applicants state that the creation of circumstances as the Commission may (if any), shareholder service fees multiple classes of Shares of the Funds permit by rules and regulations or attributable to a particular class may be prohibited by section 18(c), as orders for the protection of investors. (including transfer agency fees, if any), a class may have priority over another 2. Rule 23c–3 under the Act permits and any other incremental expenses of class as to payment of dividends a registered closed-end investment that class. Expenses of a Fund, because shareholders of different classes company (an ‘‘interval fund’’) to make respectively allocated to a particular would pay different fees and expenses. repurchase offers of between five and class of the Fund’s Shares, will be borne 2. Section 18(i) of the Act provides twenty-five percent of its outstanding on a pro rata basis by each outstanding that each share of stock issued by a shares at net asset value at periodic Share of that class. Applicants state that registered management investment intervals pursuant to a fundamental the Fund will comply with the company will be a voting stock and policy of the interval fund. Rule 23c– provisions of rule 18f–3 under the Act have equal voting rights with every 3(b)(1) under the Act provides that an as if it were an open-end investment other outstanding voting stock. interval fund may deduct from company. Applicants state that multiple classes of repurchase proceeds only a repurchase 12. Applicants state that the Interval Shares of the Funds may violate section fee, not to exceed two percent of the Funds may impose Deferred Sales 18(i) of the Act because each class proceeds, that is paid to the interval Charges on Shares submitted for would be entitled to exclusive voting fund and is reasonably intended to repurchase that have been held less than rights with respect to matters solely compensate the fund for expenses a specified period and may waive the related to that class. directly related to the repurchase. Deferred Sales Charge for certain 3. Section 6(c) of the Act provides that 3. Section 23(c)(3) provides that the categories of shareholders or the Commission may exempt any Commission may issue an order that transactions to be established from time person, security or transaction or any would permit a closed-end investment to time. Applicants represent that each class or classes of persons, securities or company to repurchase its shares in Interval Fund would apply the Deferred transactions from any provision of the circumstances in which the repurchase Sales Charge (and any waivers or Act, or from any rule thereunder, if and is made in a manner or on a basis that scheduled variations of the Deferred to the extent such exemption is does not unfairly discriminate against Sales Charge) uniformly to all necessary or appropriate in the public any holders of the class or classes of shareholders in a given class and interest and consistent with the securities to be purchased. consistently with the requirements of protection of investors and the purposes 4. Applicants request relief under fairly intended by the policy and sections 6(c), discussed above, and rule 22d–1 under the Act as if the provisions of the Act. Applicants 23(c)(3) from rule 23c–3 to the extent Interval Fund were an open-end request an exemption under section 6(c) necessary for the Interval Funds to investment company. 13. Each Interval Fund may offer its from sections 18(c) and 18(i) to permit impose a Deferred Sales Charge on shareholders an exchange feature under the Funds to issue multiple classes of Shares submitted for repurchase that which the shareholders of the Interval Shares. have been held for less than a specified Fund may, in connection with such 4. Applicants submit that the period. proposed allocation of expenses and 5. Applicants state that the Deferred Interval Fund’s repurchase offers, voting rights among multiple classes is Sales Charge they intend to impose is exchange their Shares of the Interval equitable and will not discriminate functionally similar to a CDSC imposed Fund for Shares of the same class of (i) by an open-end investment company against any group or class of registered open-end investment under rule 6c–10 under the Act. Rule shareholders. Applicants submit that companies or (ii) other Funds that 6c–10 permits open-end investment the proposed arrangements would continuously offer their Shares at net companies to impose CDSCs, subject to permit a Fund to facilitate the asset value, and that in either case are certain conditions. Applicants note that distribution of its Shares and provide in the Interval Fund’s group of rule 6c–10 is grounded in policy investors with a broader choice of investment companies (collectively, considerations supporting the shareholder services. Applicants assert ‘‘Other Funds’’). Shares of an Interval employment of CDSCs where there are that the proposed closed-end Fund that are exchanged for Shares of adequate safeguards for the investor and investment company multiple class Other Funds will be included as part of state that the same policy considerations structure does not raise the concerns the amount of the repurchase offer support imposition of Deferred Sales underlying section 18 of the Act to any amount for such Interval Fund as Charges in the interval fund context. In greater degree than open-end specified in rule 23c–3 under the Act. addition, applicants state that Deferred investment companies’ multiple class Any exchange option will comply with Sales Charges may be necessary for the structures that are permitted by rule rule 11a–1, 11a–3 and rule 18f–3 under distributor to recover distribution costs. 18f–3 under the Act. Applicants state the Act, as if the Interval Fund were an Applicants represent that any Deferred that each Fund will comply with the open-end investment company. In Sales Charge imposed by the Interval provisions of rule 18f–3 as if it were an complying with rule 11a–3, each Funds will comply with rule 6c–10 open-end investment company. Interval Fund will treat any Deferred under the Act as if that rule were Sales Charge as if it were a contingent Deferred Sales Charge applicable to closed-end investment deferred sales charge (‘‘CDSC’’). 1. Section 23(c) of the Act provides, companies. Each Interval Fund will tkelley on DSK3SPTVN1PROD with NOTICES Applicants’ Legal Analysis in relevant part, that no registered disclose Deferred Sales Charges in closed-end investment company will accordance with the requirements of Multiple Classes of Shares purchase securities of which it is the Form N–1A concerning CDSCs. 1. Section 18(c) of the Act provides, issuer, except: (a) On a securities Applicants further state that each in relevant part, that a closed-end exchange or other open market; (b) Interval Fund will apply the Deferred investment company may not issue or pursuant to tenders, after reasonable Sales Charge (and any waivers or sell any senior security if, immediately opportunity to submit tenders given to scheduled variations of the Deferred VerDate Sep<11>2014 18:45 Aug 03, 2015 Jkt 235001 PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 E:\FR\FM\04AUN1.SGM 04AUN1

Federal Register / Vol. 80, No. 149 / Tuesday, August 4, 2015 / Notices 46375 Sales Charge) uniformly to all different from or less advantageous than contact the Office of the Secretary at shareholders in a given class and that of other participants. (202) 551–5400. consistently with the requirements of Dated: July 30, 2015. Applicants’ Condition rule 22d–1 under the Act. Brent J. Fields, Applicants agree that any order Asset-Based Distribution Fees granting the requested relief will be Secretary. 1. Section 17(d) of the Act and rule subject to the following condition: [FR Doc. 2015–19188 Filed 7–31–15; 4:15 pm] 17d–1 under the Act prohibit an Applicants will comply with the BILLING CODE 8011–01–P affiliated person of a registered provisions of rules 6c–10, 12b–1, 17d– investment company or an affiliated 3, 18f–3, and 22d–1 under the Act, as person of such person, acting as amended from time to time or replaced, SECURITIES AND EXCHANGE principal, from participating in or as if those rules applied to closed-end COMMISSION effecting any transaction in connection management investment companies, Submission for OMB Review; with any joint enterprise or joint and will comply with the NASD Comment Request arrangement in which the investment Conduct Rule 2830, as amended from company participates unless the time to time, as if that rule applied to Upon Written Request, Copies Available Commission issues an order permitting all closed-end management investment From: Securities and Exchange the transaction. In reviewing companies. Commission, Office of FOIA Services, applications submitted under section For the Commission, by the Division of 100 F Street NE., Washington, DC 17(d) and rule 17d–1, the Commission Investment Management, under delegated 20549–2736. considers whether the participation of authority. Extension: the investment company in a joint Robert W. Errett, Rule 23c–3 and Form N–23c–3, SEC File enterprise or joint arrangement is No. 270–373, OMB Control No. 3235– Deputy Secretary. consistent with the provisions, policies 0422. [FR Doc. 2015–19014 Filed 8–3–15; 8:45 am] and purposes of the Act, and the extent Notice is hereby given that, pursuant to which the participation is on a basis BILLING CODE 8011–01–P to the Paperwork Reduction Act of 1995 different from or less advantageous than (44 U.S.C. 3501 et. seq.), the Securities that of other participants. and Exchange Commission (the 2. Rule 17d–3 under the Act provides SECURITIES AND EXCHANGE COMMISSION ‘‘Commission’’) has submitted to the an exemption from section 17(d) and Office of Management and Budget rule 17d–1 to permit open-end (‘‘OMB’’) a request for extension of the Sunshine Act Meeting investment companies to enter into previously approved collection of distribution arrangements pursuant to Notice is hereby given, pursuant to information discussed below. rule 12b–1 under the Act. Applicants the provisions of the Government in the Rule 23c–3 (17 CFR 270.23c–3) under request an order under section 17(d) and Sunshine Act, Public Law 94–409, that the Investment Company Act of 1940 rule 17d–1 under the Act to the extent the Securities and Exchange (15 U.S.C. 80a–1 et seq.) permits a necessary to permit the Fund to impose Commission will hold a Closed Meeting registered closed-end investment asset-based service and/or distribution on Thursday, August 6, 2015 at 2 p.m. company (‘‘closed-end fund’’ or ‘‘fund’’) fees. Applicants have agreed to comply Commissioners, Counsel to the that meets certain requirements to with rules 12b–1 and 17d–3 as if those Commissioners, the Secretary to the repurchase common stock of which it is rules applied to closed-end investment Commission, and recording secretaries the issuer from shareholders at periodic companies, which they believe will will attend the Closed Meeting. Certain intervals, pursuant to repurchase offers resolve any concerns that might arise in staff members who have an interest in made to all holders of the stock. The connection with a Fund financing the the matters also may be present. rule enables these funds to offer their distribution of its Shares through asset- The General Counsel of the shareholders a limited ability to resell based distribution fees. Commission, or her designee, has their shares in a manner that previously 3. For the reasons stated above, certified that, in her opinion, one or was available only to open-end applicants submit that the exemptions more of the exemptions set forth in 5 investment company shareholders. To requested under section 6(c) are U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) protect shareholders, a closed-end fund necessary and appropriate in the public and 17 CFR 200.402(a)(3), (5), (7), 9(ii) that relies on rule 23c–3 must send interest and are consistent with the and (10), permit consideration of the shareholders a notification that contains protection of investors and the purposes scheduled matter at the Closed Meeting. specified information each time the fairly intended by the policy and Commissioner Gallagher, as duty fund makes a repurchase offer (on a provisions of the Act. Applicants further officer, voted to consider the items quarterly, semi-annual, or annual basis, submit that the relief requested listed for the Closed Meeting in closed or, for certain funds, on a discretionary pursuant to section 23(c)(3) is consistent session. basis not more often than every two with the protection of investors and The subject matter of the Closed years). The fund also must file copies of insures that applicants do not unfairly Meeting will be: Settlement of the shareholder notification with the discriminate against any holders of the injunctive actions; Institution and Commission (electronically through the class or classes of securities to be settlement of administrative Commission’s Electronic Data purchased. Finally, applicants submit proceedings; Consideration of amicus Gathering, Analysis, and Retrieval that the requested relief meets the participation; and Other matters relating System (‘‘EDGAR’’)) on Form N–23c–3, tkelley on DSK3SPTVN1PROD with NOTICES standards for relief in section 17(d) of to enforcement proceedings. a filing that provides certain the Act and rule 17d–1 thereunder. At times, changes in Commission information about the fund and the type Applicants state that the Funds’ priorities require alterations in the of offer the fund is making.1 The fund imposition of asset-based distribution scheduling of meeting items. fees is consistent with the provisions, For further information and to 1 Form N–23c–3, entitled ‘‘Notification of policies and purposes of the Act and ascertain what, if any, matters have been Repurchase Offer Pursuant to Rule 23c–3,’’ requires does not involve participation on a basis added, deleted or postponed, please Continued VerDate Sep<11>2014 18:45 Aug 03, 2015 Jkt 235001 PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 E:\FR\FM\04AUN1.SGM 04AUN1


Document Created: 2015-12-18 14:51:39
Document Modified: 2015-12-18 14:51:39
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of an application under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 18(c) and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act for an exemption from rule 23c-3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d-1 under the Act.
DatesThe application was filed on December 2, 2014, and amended on April 10, 2015 and June 17, 2015.
ContactDeepak T. Pai, Senior Counsel, at (202) 551-6876 or Mary Kay Frech, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation80 FR 46372 
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