82 FR 34344 - Morningstar Funds Trust and Morningstar Investment Management LLC

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 140 (July 24, 2017)

Page Range		34344-34345
FR Document		2017-15405
Federal Register, Volume 82 Issue 140 (Monday, July 24, 2017)
[Federal Register Volume 82, Number 140 (Monday, July 24, 2017)]
[Notices]
[Pages 34344-34345]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-15405]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32736; 812-14753]


Morningstar Funds Trust and Morningstar Investment Management LLC

July 18, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of 
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 
Schedule 14A under the Securities Exchange Act of 1934, and sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). 
The requested exemption would permit an investment adviser to hire and 
replace certain sub-advisers without shareholder approval and grant 
relief from the Disclosure Requirements as they relate to fees paid to 
the sub-advisers.

Applicants: Morningstar Funds Trust (the ``Trust''), a Delaware 
statutory trust registered under the Act as an open-end management 
investment company, and Morningstar Investment Management LLC (the 
``Initial Adviser''), a Delaware limited liability company registered 
as an investment adviser under the Investment Advisers Act of 1940 
(collectively with the Trust, the ``Applicants'').

Filing Dates: The application was filed on March 6, 2017 and amended on 
June 12, 2017.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on August 14, 2017, 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: 22 West Washington 
Street, Chicago, IL 60602.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at 
(202) 551-6817, or Katlin C. Bottock, 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. The Adviser will serve as the investment adviser to the 
Subadvised Series pursuant to an investment advisory agreement with the 
Trust (the ``Investment Management Agreement'').\1\ The Adviser will 
provide the Subadvised Series with continuous and comprehensive 
investment management services, subject to the supervision of, and 
policies established by, the board of trustees of the Trust 
(``Board''). The Investment Management Agreement permits the Adviser, 
subject to the approval of the Board, to delegate to one or more sub-
advisers (each, a ``Sub-Adviser'' and collectively, the ``Sub-
Advisers'') the responsibility to provide the day-to-day portfolio 
investment management of each Subadvised Series, subject to the 
supervision and direction of the Adviser.\2\ The primary responsibility 
for managing each Subadvised Series will remain vested in the Adviser. 
The Adviser will hire, evaluate, allocate assets to and oversee the 
Sub-Advisers, including determining whether a Sub-Adviser should be 
terminated, at all times subject to the authority of the Board.
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    \1\ Applicants request relief with respect to the named 
Applicants, as well as to any future series of the Trust and any 
other registered open-end management investment company or series 
thereof that: (a) Is advised by the Initial Adviser, its successors, 
or any entity controlling, controlled by or under common control 
with the Initial Adviser or its successors (each, also an 
``Adviser''); (b) uses the multi-manager structure described in the 
application; and (c) complies with the terms and conditions set 
forth in the application (each, a ``Subadvised Series''). For 
purposes of the requested order, ``successor'' is limited to an 
entity that results from a reorganization into another jurisdiction 
or a change in the type of business organization.
    \2\ A ``Sub-Adviser'' for a Subadvised Series is (1) an indirect 
or direct ``wholly-owned subsidiary'' (as such term is defined in 
the Act) of the Adviser for that Subadvised Series, or (2) a sister 
company of the Adviser for that Subadvised Series that is an 
indirect or direct ``wholly-owned subsidiary'' of the same company 
that, indirectly or directly, wholly owns the Adviser (each of (1) 
and (2) a ``Wholly-Owned Sub-Adviser'' and collectively, the 
``Wholly-Owned Sub-Advisers''), or (3) not an ``affiliated person'' 
(as such term is defined in section 2(a)(3) of the Act) of the 
Subadvised Series, except to the extent that an affiliation arises 
solely because the Sub-Adviser serves as a sub-adviser to a 
Subadvised Series (``Non-Affiliated Sub-Advisers'').
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    2. Applicants request an exemption to permit the Adviser, subject 
to Board approval, to hire certain Sub-Advisers pursuant to Sub-
Advisory Agreements and materially amend existing Sub-Advisory 
Agreements without obtaining the shareholder approval required under 
section 15(a) of the Act and rule 18f-2 under the Act.\3\ Applicants 
also seek an exemption from the Disclosure Requirements to permit a 
Subadvised Series to disclose (as both a dollar amount and a percentage 
of the Subadvised Series' net assets): (a) The aggregate fees paid to 
the Adviser and any Wholly-Owned Sub-Adviser; (b) the aggregate fees 
paid to Non-Affiliated Sub-Advisers; and (c) the fee paid to each 
Affiliated Sub-Adviser (collectively, ``Aggregate Fee Disclosure'').
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    \3\ The requested relief will not extend to any sub-adviser, 
other than a Wholly-Owned Sub-Adviser, who is an affiliated person, 
as defined in Section 2(a)(3) of the Act, of the Subadvised Series, 
the Trust or of the Adviser, other than by reason of serving as a 
sub-adviser to one or more of the Subadvised Series (``Affiliated 
Sub-Adviser'').
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    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Subadvised Series shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Series' shareholders.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the

[[Page 34345]]

Act, or any rule thereunder, if such relief is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the application, the Investment 
Management Agreements will remain subject to shareholder approval while 
the role of the Sub-Advisers is substantially similar to that of 
individual portfolio managers, so that requiring shareholder approval 
of Sub-Advisory Agreements would impose unnecessary delays and expenses 
on the Subadvised Series. Applicants believe that the requested relief 
from the Disclosure Requirements meets this standard because it will 
improve the Adviser's ability to negotiate fees paid to the Sub-
Advisers that are more advantageous for the Subadvised Series.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-15405 Filed 7-21-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 140 / Monday, July 24, 2017 / Notices 34345

Act, or any rule thereunder, if such Section 19(b)(2) of the Act4 provides thereunder,2 a proposed rule change to
relief is necessary or appropriate in the that, within 45 days of the publication adopt Exchange Rule 1713
public interest and consistent with the of notice of the filing of a proposed rule (Consolidated Audit Trail—Fee Dispute
protection of investors and purposes change, or within such longer period up Resolution). The proposed rule change
fairly intended by the policy and to 90 days as the Commission may was published for comment in the
provisions of the Act. Applicants designate if it finds such longer period Federal Register on June 7, 2017.3 The
believe that the requested relief meets to be appropriate and publishes its Commission received no comment
this standard because, as further reasons for so finding or as to which the letters on the proposed rule change.
explained in the application, the self-regulatory organization consents,
Investment Management Agreements the Commission shall either approve the Section 19(b)(2) of the Act 4 provides
will remain subject to shareholder proposed rule change, disapprove the that, within 45 days of the publication
approval while the role of the Sub- proposed rule change, or institute of notice of the filing of a proposed rule
Advisers is substantially similar to that proceedings to determine whether the change, or within such longer period up
of individual portfolio managers, so that proposed rule change should be to 90 days as the Commission may
requiring shareholder approval of Sub- disapproved. The Commission is designate if it finds such longer period
Advisory Agreements would impose extending this 45-day time period. to be appropriate and publishes its
unnecessary delays and expenses on the The Commission finds that it is reasons for so finding or as to which the
Subadvised Series. Applicants believe appropriate to designate a longer period self-regulatory organization consents,
that the requested relief from the within which to take action on the the Commission shall either approve the
Disclosure Requirements meets this proposed rule change so that it has proposed rule change, disapprove the
standard because it will improve the sufficient time to consider the proposed proposed rule change, or institute
Adviser’s ability to negotiate fees paid rule change. The proposed rule change proceedings to determine whether the
to the Sub-Advisers that are more would establish the procedures for proposed rule change should be
advantageous for the Subadvised Series. resolving potential disputes related to disapproved. The Commission is
CAT Fees charged to Industry Members.
For the Commission, by the Division of extending this 45-day time period.
Accordingly, the Commission,
Investment Management, under delegated The Commission finds that it is
authority.
pursuant to Section 19(b)(2) of the Act,5
designates September 18, 2017, as the appropriate to designate a longer period
Eduardo A. Aleman,
date by which the Commission should within which to take action on the
Assistant Secretary. either approve or disapprove or institute proposed rule change so that it has
[FR Doc. 2017–15405 Filed 7–21–17; 8:45 am] proceedings to determine whether to sufficient time to consider the proposed
BILLING CODE 8011–01–P disapprove the proposed rule change rule change. The proposed rule change
(File Number SR–IEX–2017–21). would establish the procedures for
For the Commission, by the Division of resolving potential disputes related to
SECURITIES AND EXCHANGE
Trading and Markets, pursuant to delegated CAT Fees charged to Industry Members.
COMMISSION authority.6
Accordingly, the Commission,
[Release No. 34–81166; File No. SR–IEX– Eduardo A. Aleman,
pursuant to Section 19(b)(2) of the Act,5
2017–21] Assistant Secretary. designates September 5, 2017, as the
[FR Doc. 2017–15415 Filed 7–21–17; 8:45 am] date by which the Commission should
Self-Regulatory Organizations; BILLING CODE 8011–01–P either approve or disapprove or institute
Investors Exchange LLC; Notice of
Designation of a Longer Period for proceedings to determine whether to
Commission Action on a Proposed SECURITIES AND EXCHANGE disapprove the proposed rule change
Rule Change To Adopt Rule 15.130 To COMMISSION (File Number SR–MIAX–2017–24).
Establish the Procedures for Resolving For the Commission, by the Division of
[Release No. 34–81165; File No. SR–MIAX–
Potential Disputes Related to CAT 2017–24] Trading and Markets, pursuant to delegated
Fees Charged to Industry Members authority.6

July 18, 2017.
Self-Regulatory Organizations; Miami Eduardo A. Aleman,
International Securities Exchange, Assistant Secretary.
On June 6, 2017, the Investors LLC; Notice of Designation of a Longer
Exchange LLC (‘‘IEX’’ or the [FR Doc. 2017–15416 Filed 7–21–17; 8:45 am]
Period for Commission Action on a
‘‘Exchange’’) filed with the Securities Proposed Rule Change To Adopt
BILLING CODE 8011–01–P
and Exchange Commission Exchange Rule 1713 Consolidated
(‘‘Commission’’), pursuant to Section Audit Trail—Fee Dispute Resolution
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’)1 and July 18, 2017.
Rule 19b–4 thereunder,2 a proposed rule On May 23, 2017, Miami International
change to adopt Rule 15.130 Securities Exchange, LLC (‘‘MIAX
(Consolidated Audit Trail—Fee Dispute Options’’ or the ‘‘Exchange’’) filed with
Resolution). The proposed rule change the Securities and Exchange
was published for comment in the Commission (‘‘Commission’’), pursuant
mstockstill on DSK30JT082PROD with NOTICES

Federal Register on June 20, 2017.3 The to Section 19(b)(1) of the Securities
Commission received no comment Exchange Act of 1934 (‘‘Act’’ or
letters on the proposed rule change. ‘‘Exchange Act’’) 1 and Rule 19b–4 2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 80837
1 15 U.S.C. 78s(b)(1). 4 15 U.S.C. 78s(b)(2). (June 1, 2017), 82 FR 26526 (‘‘Notice’’).
5 15 4 15 U.S.C. 78s(b)(2).
2 17 CFR 240.19b–4. U.S.C. 78s(b)(2).
3 Securities Exchange Act Release No. 80936 6 17 CFR 200.30–3(a)(31). 5 15 U.S.C. 78s(b)(2).

(June 15, 2017), 82 FR 28153 (‘‘Notice’’). 1 15 U.S.C. 78s(b)(1). 6 17 CFR 200.30–3(a)(31).

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Document Created: 2017-07-22 01:20:11
Document Modified: 2017-07-22 01:20:11
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.
Dates		The application was filed on March 6, 2017 and amended on June 12, 2017.
Contact		Bruce R. MacNeil, Senior Counsel, at (202) 551-6817, or Katlin C. Bottock, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		82 FR 34344