81 FR 70467 - Harris Associates Investment Trust, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 197 (October 12, 2016)

Page Range		70467-70468
FR Document		2016-24568

Federal Register, Volume 81 Issue 197 (Wednesday, October 12, 2016)

[Federal Register Volume 81, Number 197 (Wednesday, October 12, 2016)]
[Notices]
[Pages 70467-70468]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-24568]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32306; File No. 812-14609]


Harris Associates Investment Trust, et al.; Notice of Application

October 5, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

Action:  Notice of an application for an order pursuant to: (a) Section 
6(c) of the Investment Company Act of 1940 (``Act'') granting an 
exemption from sections 18(f) and 21(b) of the Act; (b) section 
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of 
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption 
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) 
section 17(d) of the Act and rule 17d-1 under the Act to permit certain 
joint arrangements and transactions. Applicants request an order that 
would permit certain registered open-end management investment 
companies to participate in a joint lending and borrowing facility.

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Applicants:  Harris Associates Investment Trust (the ``Trust''), a 
Massachusetts business trust registered under the Act as an open-end 
management investment company with multiple series and Harris 
Associates L.P. (the ``Adviser''), a Delaware limited partnership 
registered as an investment adviser under the Investment Advisers Act 
of 1940.

Filing Dates:  The application was filed on February 8, 2016 and 
amended on June 21, 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 October 31, 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: 111 S. Wacker Drive, 
Suite 4600, Chicago, Illinois 60606-4319.

For Further Information Contact:  Emerson S. Davis, Senior Counsel, at 
(202) 551-6868 or Daniele Marchesani, 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. Applicants request an order that would permit the applicants to 
participate in an interfund lending facility where each Fund could lend 
money directly to and borrow money directly from other Funds to cover 
unanticipated cash shortfalls, such as unanticipated redemptions or 
trade fails.\1\ The Funds will not borrow under the facility for 
leverage purposes and the loans' duration will be no more than 7 
days.\2\
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    \1\ Applicants request that the order apply to the applicants 
and to any existing or future registered open-end management 
investment company or series thereof for which the Adviser or any 
successor thereto or an investment adviser controlling, controlled 
by, or under common control with the Adviser or any successor 
thereto serves as investment adviser (each a ``Fund'' and 
collectively the ``Funds'' and each such investment adviser an 
``Adviser''). For purposes of the requested order, ``successor'' is 
limited to any entity that results from a reorganization into 
another jurisdiction or a change in the type of a business 
organization. Applicants are not requesting that the order also 
apply, and the order will not apply, to any fund or series that is a 
money market fund that complies with Rule 2a-7 under the Act.
    \2\ Any Fund, however, will be able to call a loan on one 
business day's notice.
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    2. Applicants anticipate that the proposed facility would provide a 
borrowing Fund with a source of liquidity at a rate lower than the bank 
borrowing rate at times when the cash position of the Fund is 
insufficient to meet temporary cash requirements. In addition, Funds 
making short-term cash loans directly to other Funds would earn 
interest at a rate higher than they otherwise could obtain from 
investing their cash in repurchase agreements or certain other short 
term money market instruments. Thus, applicants assert that the 
facility would benefit both borrowing and lending Funds.
    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the Application. 
Among others, the Adviser, through a designated committee, would 
administer the facility as a disinterested fiduciary as part of its 
duties under the investment management agreements with the Funds and 
would receive no additional fee as compensation for its services in 
connection with the administration of the facility. The facility would 
be subject to oversight and certain approvals by the Funds' Board, 
including, among others, approval of the interest rate formula and of 
the method for allocating loans across Funds, as well as review of the 
process in place to evaluate the liquidity implications for the Funds. 
A Fund's aggregate outstanding interfund loans will not exceed 15% of 
its net assets, and the Fund's loans to any one Fund will not exceed 5% 
of the lending Fund's net assets.\3\
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    \3\ Under certain circumstances, a borrowing Fund will be 
required to pledge collateral to secure the loan.
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    4. Applicants assert that the facility does not raise the concerns 
underlying section 12(d)(1) of the Act given that the Funds are part of 
the same group of investment companies and there will be no duplicative 
costs or fees to the Funds.\4\ Applicants also assert that the proposed 
transactions do not raise the concerns underlying sections 17(a)(1), 
17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in 
lending transactions that unfairly benefit insiders or are detrimental 
to the Funds. Applicants state that the facility will offer both 
reduced borrowing costs and enhanced returns on loaned funds to all 
participating Funds and each Fund would have an equal opportunity to 
borrow and lend on equal terms based on an interest rate formula that 
is objective and verifiable. With respect to the relief from section 
17(a)(2) of the Act, applicants note that any collateral pledged to 
secure an interfund loan would be subject to the same conditions 
imposed by any other lender to a Fund

[[Page 70468]]

that imposes conditions on the quality of or access to collateral for a 
borrowing (if the lender is another Fund) or the same or better 
conditions (in any other circumstance).\5\
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    \4\ Applicants state that the obligation to repay an interfund 
loan could be deemed to constitute a security for the purposes of 
sections 17(a)(1) and 12(d)(1) of the Act.
    \5\ Applicants state that any pledge of securities to secure an 
interfund loan could constitute a purchase of securities for 
purposes of section 17(a)(2) of the Act.
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    5. Applicants also believe that the limited relief from section 
18(f)(1) of the Act that is necessary to implement the facility 
(because the lending Funds are not banks) is appropriate in light of 
the conditions and safeguards described in the application and because 
the Funds would remain subject to the requirement of section 18(f)(1) 
that all borrowings of a Fund, including combined interfund loans and 
bank borrowings, have at least 300% asset coverage.
    6. 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. 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. Rule 
17d-1(b) under the Act provides that in passing upon an application 
filed under the rule, the Commission will consider whether the 
participation of the registered investment company in a joint 
enterprise, joint arrangement or profit sharing plan on the basis 
proposed is consistent with the provisions, policies and purposes of 
the Act and the extent to which such participation is on a basis 
different from or less advantageous than that of the other 
participants.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24568 Filed 10-11-16; 8:45 am]
 BILLING CODE 8011-01-P

70468 Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices

that imposes conditions on the quality For the Commission, by the Division of October 4, 2016, the Exchange filed
of or access to collateral for a borrowing Investment Management, under delegated Amendment No. 3 to the proposed rule
authority. change.7 The Commission received no
(if the lender is another Fund) or the
same or better conditions (in any other Robert W. Errett, comments on the proposed rule change.
circumstance).5 Deputy Secretary. This order grants approval of the
[FR Doc. 2016–24568 Filed 10–11–16; 8:45 am] proposed rule change, as modified by
5. Applicants also believe that the
BILLING CODE 8011–01–P Amendment Nos. 1, 2, and 3.
limited relief from section 18(f)(1) of the
Act that is necessary to implement the II. Description of the Proposal
facility (because the lending Funds are SECURITIES AND EXCHANGE The Exchange proposes to list and
not banks) is appropriate in light of the COMMISSION trade the Shares under BZX Rule
conditions and safeguards described in 14.11(i), which governs the listing and
[Release No. 34–79053; File No. SR–
the application and because the Funds BatsBZX–2016–35] trading of Managed Fund Shares on the
would remain subject to the Exchange. The Shares will be offered by
requirement of section 18(f)(1) that all Self-Regulatory Organizations; Bats the Trust. According to the Exchange,
borrowings of a Fund, including BZX Exchange, Inc.; Order Granting the Trust is registered with the
combined interfund loans and bank Approval of a Proposed Rule Change, Commission as an open-end investment
borrowings, have at least 300% asset as Modified by Amendment Nos. 1, 2, company and has filed a registration
coverage. and 3, To List and Trade Shares of the statement with respect to the Fund on
6. Section 6(c) of the Act permits the JPMorgan Global Bond Opportunities Form N–1A (‘‘Registration Statement’’)
ETF of the J.P. Morgan Exchange- with the Commission.8
Commission to exempt any persons or
Traded Fund Trust Under BZX Rule J.P. Morgan Investment Management
transactions from any provision of the
14.11(i), Managed Fund Shares Inc. will be the investment adviser
Act if such exemption is necessary or
(‘‘Adviser’’) to the Fund. The Adviser
appropriate in the public interest and October 5, 2016.
will serve as the administrator for the
consistent with the protection of I. Introduction Fund. SEI Investments Distribution Co.
investors and the purposes fairly serves as the distributor for the Trust.
intended by the policy and provisions of On July 1, 2015, Bats BZX Exchange,
Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with JPMorgan Chase Bank, N.A. will act as
the Act. Section 12(d)(1)(J) of the Act the custodian and transfer agent for the
provides that the Commission may the Securities and Exchange
Commission (‘‘Commission’’), pursuant Trust. The Exchange states that the
exempt any person, security, or Adviser is not registered as a broker-
to Section 19(b)(1) 1 of the Securities
transaction, or any class or classes of dealer but that the Adviser is affiliated
Exchange Act of 1934 (‘‘Act’’) 2 and Rule
persons, securities, or transactions, from 19b–4 thereunder,3 a proposed rule with a broker-dealer and has
any provision of section 12(d)(1) if the change to list and trade shares implemented a ‘‘fire wall’’ with respect
exemption is consistent with the public (‘‘Shares’’) of the JPMorgan Global Bond to such broker-dealer regarding access to
interest and the protection of investors. Opportunities ETF (‘‘Fund’’) of the J.P.
Section 17(b) of the Act authorizes the Morgan Exchange-Traded Fund Trust securities; (5) provided additional clarity regarding
the definition of private placements, restricted
Commission to grant an order (‘‘Trust’’) under BZX Rule 14.11(i). The securities, and unregistered securities, as well as
permitting a transaction otherwise proposed rule change was published for restrictions on such holdings; (6) provided
prohibited by section 17(a) if it finds comment in the Federal Register on July additional description of restrictions on the Fund’s
that (a) the terms of the proposed structured investments; (7) provided additional
14, 2016.4 On August 18, 2016, the clarification regarding the types of derivatives and
transaction are fair and reasonable and Commission extended the time period foreign currency transactions in which the Fund
do not involve overreaching on the part within which to approve the proposed may invest; (8) provided additional detail regarding
of any person concerned; (b) the rule change, disapprove the proposed the Fund’s coverage of options; (9) provided
additional detail regarding the commodity-related
proposed transaction is consistent with rule change, or institute proceedings to pooled investment vehicles that the Fund may hold;
the policies of each registered determine whether to approve or and (10) provided additional clarification regarding
investment company involved; and (c) disapprove the proposed rule change to the Fund’s valuation of convertible securities,
October 12, 2016.5 On August 30, 2016, warrants and rights, and custodial receipts. Because
the proposed transaction is consistent the changes in Amendment No. 2 to the proposed
with the general purposes of the Act. the Exchange filed Amendment No. 1 to rule change clarify certain statements in the
Rule 17d–1(b) under the Act provides the proposed rule change. On October 3, proposal and do not materially alter the substance
that in passing upon an application filed 2016, the Exchange filed Amendment of the proposed rule change or raise any novel
No. 2 to the proposed rule change.6 On regulatory issues, it is not subject to notice and
under the rule, the Commission will comment.
consider whether the participation of 1 15
7 In Amendment No. 3, which partially amended
U.S.C. 78s(b)(1).
the registered investment company in a 2 15 U.S.C. 78a.
Amendment No. 2 to the proposed rule change, the
Exchange: (i) Added a citation to a Commission
joint enterprise, joint arrangement or 3 17 CFR 240.19b–4.
Order in support of proposed restrictions on the
profit sharing plan on the basis 4 See Securities Exchange Act Release No. 78264
Fund’s investments in municipal securities; and (ii)
proposed is consistent with the (July 8, 2016), 81 FR 45546 (‘‘Notice’’). consolidated footnotes into a single footnote.
5 See Securities Exchange Act Release No. 78613 Amendment No. 3 is not subject to notice and
provisions, policies and purposes of the
(August 18, 2016), 81 FR 57967 (August 24, 2016). comment because it is a technical amendment that
Act and the extent to which such 6 Amendment No. 2 replaced Amendment No. 1, does not materially alter the substance of the
participation is on a basis different from which amended and replaced the original filing in proposed rule change or raise any novel regulatory
mstockstill on DSK3G9T082PROD with NOTICES

or less advantageous than that of the its entirety. In Amendment No. 2, the Exchange: (1) issues.
clarified the Fund’s investments in instruments that 8 See Registration Statement on Form N–1A for
other participants. provide exposure to countries other than the U.S.; the Trust, dated May 26, 2016 (File Nos. 333–
(2) added the defined terms ‘‘Bonds’’ and ‘‘Non- 191837 and 811–22903). The Exchange states that
Bonds’’ to describe and clarify some of the Fund’s the Commission has issued an order granting
5 Applicants state that any pledge of securities to
investments; (3) provided additional detail certain exemptive relief to the Trust under the
secure an interfund loan could constitute a regarding restrictions on the Fund’s investments in Investment Company Act of 1940 (‘‘1940 Act’’). See
purchase of securities for purposes of section non-agency asset-backed securities; (4) clarified Investment Company Act Release No. 31990
17(a)(2) of the Act. restrictions on the Fund’s investments in municipal (February 9, 2016) (File No. 812–13761).

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Document Created: 2016-10-12 00:55:22
Document Modified: 2016-10-12 00:55:22

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice of an application for an order pursuant to: (a) Section 6(c) of the Investment Company Act of 1940 (``Act'') granting an exemption from sections 18(f) and 21(b) of the Act; (b) section 12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) section 17(d) of the Act and rule 17d-1 under the Act to permit certain joint arrangements and transactions. Applicants request an order that would permit certain registered open-end management investment companies to participate in a joint lending and borrowing facility.
Dates		The application was filed on February 8, 2016 and amended on June 21, 2016.
Contact		Emerson S. Davis, Senior Counsel, at (202) 551-6868 or Daniele Marchesani, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		81 FR 70467