81 FR 72629 - First Investors Equity Funds, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 203 (October 20, 2016)

Page Range		72629-72630
FR Document		2016-25346

Federal Register, Volume 81 Issue 203 (Thursday, October 20, 2016)

[Federal Register Volume 81, Number 203 (Thursday, October 20, 2016)]
[Notices]
[Pages 72629-72630]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-25346]


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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32318; File No. 812-14594]


First Investors Equity Funds, et al.; Notice of Application

October 14, 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.

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

Applicants: First Investors Equity Funds, First Investors Income Funds, 
First Investors Life Series Funds and First Investors Tax Exempt Funds 
(each a ``Trust''), each a Delaware statutory trust registered under 
the Act as an open-end management investment company with multiple 
series and Foresters Investment Management Company, Inc. (the 
``Adviser''), a New York corporation registered as an investment 
adviser under the Investment Advisers Act of 1940.

DATES:  Filing Dates: The application was filed on December 23, 2015 
and amended on May 20, 2016 and September 16, 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 November 8, 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: Mary Carty, Esq., 
Foresters Investment Management Company, Inc., 40 Wall Street, New 
York, NY 10005.

FOR FURTHER INFORMATION CONTACT: Kay-Mario Vobis, Senior Counsel, at 
(202) 551-6728 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 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\
---------------------------------------------------------------------------

    \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.
    \2\ Any Fund, however, will be able to call a loan on one 
business day's notice.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \3\ Under certain circumstances, a borrowing Fund will be 
required to pledge collateral to secure the loan.
---------------------------------------------------------------------------

    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 72630]]

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
Brent J. Fields,
Secretary.
[FR Doc. 2016-25346 Filed 10-19-16; 8:45 am]
 BILLING CODE 8011-01-P

72630 Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices

that imposes conditions on the quality For the Commission, by the Division of of those statements may be examined at
of or access to collateral for a borrowing Investment Management, under delegated the places specified in Item IV below.
(if the lender is another Fund) or the authority. The Exchange has prepared summaries,
same or better conditions (in any other Brent J. Fields, set forth in sections A, B, and C below,
circumstance).5 Secretary. of the most significant parts of such
[FR Doc. 2016–25346 Filed 10–19–16; 8:45 am] statements.
5. Applicants also believe that the
BILLING CODE 8011–01–P
limited relief from section 18(f)(1) of the A. Self-Regulatory Organization’s
Act that is necessary to implement the Statement of the Purpose of, and the
facility (because the lending Funds are Statutory Basis for, the Proposed Rule
SECURITIES AND EXCHANGE
not banks) is appropriate in light of the Change
COMMISSION
conditions and safeguards described in 1. Purpose
the application and because the Funds [Release No. 34–79101; File No. SR–
NYSEArca–2016–131] The Exchange proposes to list and
would remain subject to the trade shares (‘‘Shares’’) of the Virtus
requirement of section 18(f)(1) that all Self-Regulatory Organizations; NYSE Enhanced U.S. Equity ETF (‘‘Fund’’)
borrowings of a Fund, including Arca, Inc.; Notice of Filing of Proposed under Commentary .01 to NYSE Arca
combined interfund loans and bank Rule Change Relating to Listing and Equities Rule 5.2(j)(3), which governs
borrowings, have at least 300% asset Trading of Shares of the Virtus the listing and trading of Investment
coverage. Enhanced U.S. Equity ETF Under Company Units on the Exchange.4 The
6. Section 6(c) of the Act permits the Commentary .01 to NYSE Arca Equities Fund will be an index-based exchange
Commission to exempt any persons or Rule 5.2(j)(3) traded fund (‘‘ETF’’). The Shares will be
transactions from any provision of the offered by the Virtus ETF Trust II (the
October 14, 2016.
Act if such exemption is necessary or ‘‘Trust’’), which is registered with the
Pursuant to Section 19(b)(1) 1 of the Commission as an investment company
appropriate in the public interest and Securities Exchange Act of 1934
consistent with the protection of and has filed a registration statement on
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Form N–1A (the ‘‘Registration
investors and the purposes fairly notice is hereby given that, on October Statement’’) with the Commission on
intended by the policy and provisions of 3, 2016, NYSE Arca, Inc. (the behalf of the Fund.5
the Act. Section 12(d)(1)(J) of the Act ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with The investment adviser to the Fund
provides that the Commission may the Securities and Exchange will be Virtus ETF Advisers LLC (the
exempt any person, security, or Commission (‘‘Commission’’) the ‘‘Adviser’’). ETF Distributors LLC will
transaction, or any class or classes of proposed rule change as described in serve as the distributor (the
persons, securities, or transactions, from Items I, II, and III below, which Items ‘‘Distributor’’) of Fund shares on an
any provision of section 12(d)(1) if the have been prepared by the self- agency basis. The Bank of New York
exemption is consistent with the public regulatory organization. The Mellon (the ‘‘Administrator’’) will be
interest and the protection of investors. Commission is publishing this notice to the administrator, custodian and
Section 17(b) of the Act authorizes the solicit comments on the proposed rule transfer agent for the Fund.6
Commission to grant an order change from interested persons.
Description of the Shares and the Fund
permitting a transaction otherwise I. Self-Regulatory Organization’s
prohibited by section 17(a) if it finds As discussed in more detail below,
Statement of the Terms of Substance of
that (a) the terms of the proposed the Fund’s investment objective is to
the Proposed Rule Change seek investment results that, before fees
transaction are fair and reasonable and
The Exchange proposes to list and and expenses, closely correspond to the
do not involve overreaching on the part trade the shares of the Virtus Enhanced price and yield performance of the
of any person concerned; (b) the U.S. Equity ETF (the ‘‘Fund’’), a series Rampart Enhanced U.S. Equity Index
proposed transaction is consistent with of Virtus ETF Trust II (the ‘‘Trust’’), (the ‘‘Index’’). The Index was developed
the policies of each registered under Commentary .01 to NYSE Arca by Rampart Investment Management
investment company involved; and (c) Equities Rule 5.2(j)(3) (‘‘Investment Company, LLC (the ‘‘Index Provider’’),
the proposed transaction is consistent Company Units’’). The proposed rule and the Index is calculated and
with the general purposes of the Act. change is available on the Exchange’s
Rule 17d–1(b) under the Act provides Web site at www.nyse.com, at the 4 NYSE Arca Equities Rule 5.2(j)(3)(A) provides

that in passing upon an application filed principal office of the Exchange, and at that an Investment Company Unit is a security that
represents an interest in a registered investment
under the rule, the Commission will the Commission’s Public Reference company that holds securities comprising, or
consider whether the participation of Room. otherwise based on or representing an interest in,
the registered investment company in a an index or portfolio of securities (or holds
II. Self-Regulatory Organization’s securities in another registered investment
joint enterprise, joint arrangement or Statement of the Purpose of, and company that holds securities comprising, or
profit sharing plan on the basis Statutory Basis for, the Proposed Rule otherwise based on or representing an interest in,
proposed is consistent with the Change an index or portfolio of securities).
5 See the Trust’s registration statement on Form
provisions, policies and purposes of the
Act and the extent to which such In its filing with the Commission, the N–1A, dated September 1, 2016 (File Nos. 333–
self-regulatory organization included 206600 and 811–23078). The descriptions of the
participation is on a basis different from Fund and the Shares contained herein are based, in
mstockstill on DSK3G9T082PROD with NOTICES

or less advantageous than that of the statements concerning the purpose of, part, on information in the Registration Statement.
and basis for, the proposed rule change 6 The Commission has issued an order granting
other participants.
and discussed any comments it received certain exemptive relief to the Trust under the
on the proposed rule change. The text Investment Company Act of 1940 (15 U.S.C. 80a–
1) (‘‘1940 Act’’). See Investment Company Act
5 Applicants state that any pledge of securities to
Release No. 30825 (December 11, 2013) (File No.
secure an interfund loan could constitute a 1 15 U.S.C.78s(b)(1). 812–14212) (‘‘Exemptive Order’’). Investments
purchase of securities for purposes of section 2 15 U.S.C. 78a. made by the Fund will comply with the conditions
17(a)(2) of the Act. 3 17 CFR 240.19b–4. in the Exemptive Order.

VerDate Sep<11>2014 16:40 Oct 19, 2016 Jkt 241001 PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 E:\FR\FM\20OCN1.SGM 20OCN1

Document Created: 2016-10-21 09:59:00
Document Modified: 2016-10-21 09:59:00

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.
Contact		Kay-Mario Vobis, Senior Counsel, at (202) 551-6728 or Mary Kay Frech, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		81 FR 72629