81 FR 38257 - Guggenheim Funds Trust, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 113 (June 13, 2016)

[Federal Register Volume 81, Number 113 (Monday, June 13, 2016)]
[Notices]
[Pages 38257-38258]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13826]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32140; File No. 812-14525]


Guggenheim Funds Trust, et al.; Notice of Application

June 6, 2016.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 12(d)(1)(J) 
of the Investment Company Act of 1940 (the ``Act'') for an exemption 
from sections 12(d)(1)(A), (B), and (C) of the Act and under sections 
6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 
(2) of the Act. The requested order would permit certain registered 
open-end investment companies to acquire shares of certain registered 
open-end investment companies, registered closed-end investment 
companies, business development companies, as defined in section 
2(a)(48) of the Act (``BDCs''), and registered unit investment trusts 
(collectively, ``Underlying Funds'') that are within and outside the 
same group of investment companies as the acquiring investment 
companies, in excess of the limits in section 12(d)(1) of the Act.

-----------------------------------------------------------------------

Applicants:  Guggenheim Funds Trust and Guggenheim Variable Funds 
Trust, each a Delaware statutory trust and registered under the Act as 
an open-end management investment company with multiple series (each, a 
``Trust''); Guggenheim Partners Investment Management, LLC, a Delaware 
limited liability company (``GPIM''), and Security Investors, LLC, a 
Kansas limited liability company (``Security Investors''), each 
registered as an investment adviser under the Investment Advisers Act 
of 1940; and Guggenheim Funds Distributors, LLC, a Delaware limited 
liability company, registered as a broker-dealer under the Securities 
Exchange Act of 1934 (``Exchange Act'').

Filing Dates: The application was filed on July 31, 2015, and amended 
on December 16, 2015 and April 13, 2016.

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 July 1, 2016 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: Guggenheim Funds 
Trust, Guggenheim Variable Funds Trust, and Guggenheim Funds 
Distributors, LLC, 805 King Farm Boulevard, Suite 600, Rockville, MD 
20850; Security Investors, LLC, 330 Madison Avenue, 10th Floor, New 
York, NY 10022; and Guggenheim Partners Investment Management, LLC, 100 
Wilshire Boulevard, 5th Floor, Santa Monica, CA 90401.

FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at

[[Page 38258]]

(202) 551-6826, or David J. Marcinkus, 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.

Summary of the Application

    1. Applicants request an order to permit (a) a Fund \1\ (each a 
``Fund of Funds'') to acquire shares of Underlying Funds \2\ in excess 
of the limits in sections 12(d)(1)(A) and (C) of the Act and (b) the 
Underlying Funds that are registered open-end investment companies or 
series thereof, their principal underwriters and any broker or dealer 
registered under the Exchange Act to sell shares of the Underlying Fund 
to the Fund of Funds in excess of the limits in section 12(d)(1)(B) of 
the Act.\3\ Applicants also request an order of exemption under 
sections 6(c) and 17(b) of the Act from the prohibition on certain 
affiliated transactions in section 17(a) of the Act to the extent 
necessary to permit the Underlying Funds to sell their shares to, and 
redeem their shares from, the Funds of Funds.\4\ Applicants state that 
such transactions will be consistent with the policies of each Fund of 
Funds and each Underlying Fund and with the general purposes of the Act 
and will be based on the net asset values of the Underlying Funds.
---------------------------------------------------------------------------

    \1\ Applicants request that the order apply to each existing and 
future series of the Trusts and to each existing and future 
registered open-end investment company or series thereof that is 
advised by GPIM or Security Investors or their successors or by any 
other investment adviser controlling, controlled by, or under common 
control with GPIM or Security Investors or their successors and is 
part of the same ``group of investment companies'' as the Trusts 
(each, a ``Fund''). 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. For purposes of the request for relief, the 
term ``group of investment companies'' means any two or more 
registered investment companies, including closed-end investment 
companies or BDCs, that hold themselves out to investors as related 
companies for purposes of investment and investor services.
    \2\ Certain of the Underlying Funds have obtained exemptions 
from the Commission necessary to permit their shares to be listed 
and traded on a national securities exchange at negotiated prices 
and, accordingly, to operate as an exchange-traded fund (``ETF'').
    \3\ Applicants do not request relief for the Funds of Funds to 
invest in reliance on the order in BDCs and registered closed-end 
investment companies that are not listed and traded on a national 
securities exchange.
    \4\ A Fund of Funds generally would purchase and sell shares of 
an Underlying Fund that operates as an ETF through secondary market 
transactions rather than through principal transactions with the 
Underlying Fund. Applicants nevertheless request relief from section 
17(a) to permit a Fund of Funds to purchase or redeem shares from 
the ETF. A Fund of Funds will purchase and sell shares of an 
Underlying Fund that is a closed-end fund or BDC through secondary 
market transactions at market prices rather than through principal 
transactions with the closed-end fund or BDC. Accordingly, 
applicants are not requesting section 17(a) relief with respect to 
transactions in shares of closed-end funds (including BDCs).
---------------------------------------------------------------------------

    2. Certain Underlying Funds may invest up to 25% of their assets in 
a wholly-owned and controlled subsidiary of the Underlying Fund 
organized under the laws of the Cayman Islands as an exempted company 
or under the laws of another non-U.S. jurisdiction (each, a ``Cayman 
Sub''), in order to invest in commodity-related instruments and certain 
other instruments. Applicants state that these Cayman Subs are created 
for tax purposes in order to ensure that the Underlying Fund would 
remain qualified as a regulated investment company for U.S. federal 
income tax purposes.
    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 are designed to, among other things, help 
prevent any potential (i) undue influence over an Underlying Fund that 
is not in the same ``group of investment companies'' as the Fund of 
Funds through control or voting power, or in connection with certain 
services, transactions, and underwritings, (ii) excessive layering of 
fees, and (iii) overly complex fund structures, which are the concerns 
underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act.
    4. 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. Section 17(b) of the Act authorizes the 
Commission to grant an order permitting a transaction otherwise 
prohibited by section 17(a) if it finds that (a) the terms of the 
proposed transaction are fair and reasonable and do not involve 
overreaching on the part of any person concerned; (b) the proposed 
transaction is consistent with the policies of each registered 
investment company involved; and (c) the proposed transaction is 
consistent with the general purposes of the Act. Section 6(c) of the 
Act permits the Commission to exempt any persons or transactions from 
any provision of the Act if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-13826 Filed 6-10-16; 8:45 am]
 BILLING CODE 8011-01-P