83_FR_4555 83 FR 4534 - FS Series Trust and FS Fund Advisor, LLC; Release No. 32992/January 25, 2018

83 FR 4534 - FS Series Trust and FS Fund Advisor, LLC; Release No. 32992/January 25, 2018

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 21 (January 31, 2018)

Page Range4534-4535
FR Document2018-01834

Federal Register, Volume 83 Issue 21 (Wednesday, January 31, 2018) 
[Federal Register Volume 83, Number 21 (Wednesday, January 31, 2018)]
[Notices]
[Pages 4534-4535]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-01834]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32992; 812-14762]


FS Series Trust and FS Fund Advisor, LLC; Release No. 32992/
January 25, 2018

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:  FS Series Trust (the ``Trust''), a Delaware statutory 
trust registered under the Act as an open-end management investment 
company, and FS Fund Advisor, LLC (the ``Advisor''), a Delaware limited 
liability company registered as an investment adviser under the 
Investment Advisers Act of 1940 (together with the Trust, the 
``Applicants'').

Filing Dates:  The application was filed on April 12, 2017 and amended 
on September 22, 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 February 19, 2018, 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.

[[Page 4535]]


ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090. Applicants: 201 Rouse Boulevard, 
Philadelphia, PA 19112.

FOR FURTHER INFORMATION CONTACT: James Maclean, Senior Counsel, at 
(202) 551-7794, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 
551-6768 (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 website 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 Advisor will serve as the investment adviser to the 
Subadvised Series pursuant to an investment advisory agreement with the 
Trust (each, an ``Investment Management Agreement'' and, collectively, 
the ``Investment Management Agreements'').\1\ The Advisor will provide 
the Subadvised Series with continuous and comprehensive investment 
management services, subject to the supervision of, and policies 
established by, the Trust's board of trustees (the ``Board''). The 
Investment Management Agreement permits the Advisor, subject to the 
approval of the Board, to delegate to one or more Sub-Advisors the 
responsibility to provide the day-to-day portfolio investment 
management of each Subadvised Series, subject to the supervision and 
direction of the Advisor.\2\ The primary responsibility for managing 
the Subadvised Series will remain vested in the Advisor. The Advisor 
will hire, evaluate, allocate assets to and oversee the Sub-Advisors, 
including determining whether a Sub-Advisor should be terminated, at 
all times subject to the authority of the Board.
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    \1\ Applicants request relief with respect to any future series 
and any other existing or future registered open-end management 
company or series thereof that intends to rely on the requested 
order and that: (a) Is advised by the Advisor, or any person 
controlling, controlled by or under common control with the Advisor 
or its successors; (b) uses the multi-manager structure described in 
the application; and (c) complies with the terms and conditions of 
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-Advisor'' for a Series is (1) an indirect or direct 
``wholly-owned subsidiary'' (as such term is defined in the Act) of 
the Advisor for that Series, or (2) a sister company of the Advisor 
for that Series that is an indirect or direct ``wholly-owned 
subsidiary'' (as such term is defined in the Act) of the same 
company that, indirectly or directly, wholly owns the Advisor (each 
of (1) and (2) a ``Wholly-Owned Sub-Advisor''), or (3) an investment 
sub-adviser for that Series that is not an ``affiliated person'' (as 
such term is defined in Section 2(a)(3) of the Act) of the Series or 
the Advisor, except to the extent that an affiliation arises solely 
because the Sub-Advisor serves as a sub-adviser to one or more 
Series (each a ``Non-Affiliated Sub-Advisor'') .
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    2. Applicants request an exemption to permit the Advisor, subject 
to Board approval, to hire a Non-Affiliated Sub-Advisor or a Wholly-
Owned Sub-Advisor, pursuant to Sub-Advisory Agreements and materially 
amend Sub-Advisory Agreements with Non-Affiliated Sub-Advisors and 
Wholly-Owned Sub-Advisors 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 Advisor and any Wholly-Owned Sub-
Advisors; (b) the aggregate fees paid to Non-Affiliated Sub-Advisors; 
and (c) the fee paid to each Affiliated Sub-Advisor.
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    \3\ The requested relief will not extend to any sub-adviser, 
other than a Wholly-Owned Sub-Advisor, who is an affiliated person, 
as defined in section 2(a)(3) of the Act, of the Subadvised Series 
or of its Advisor, other than by reason of serving as a sub-adviser 
to one or more of the Subadvised Series or to any existing or future 
registered open-end management company or series thereof advised by 
an Advisor (``Affiliated Sub-Advisor'').
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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 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-Advisors is substantially equivalent 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 Advisor's ability to negotiate fees paid to the Sub-
Advisors 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. 2018-01834 Filed 1-30-18; 8:45 am]
BILLING CODE 8011-01-P

4534 Federal Register / Vol. 83, No. 21 / Wednesday, January 31, 2018 / Notices opportunities, which should prevent The purchase of Creation Units by a SECURITIES AND EXCHANGE shares from trading at a material Fund of Funds directly from a Fund will COMMISSION discount or premium from NAV. be accomplished in accordance with the 6. With respect to Funds that hold policies of the Fund of Funds and will [Investment Company Act Release No. non-U.S. Portfolio Instruments and that be based on the NAVs of the Funds. 32992; 812–14762] effect creations and redemptions of Creation Units in kind, applicants 9. Applicants also request relief to FS Series Trust and FS Fund Advisor, request relief from the requirement permit a Feeder Fund to acquire shares LLC; Release No. 32992/January 25, imposed by section 22(e) in order to of another registered investment 2018 allow such Funds to pay redemption company managed by the Adviser proceeds within fifteen calendar days having substantially the same AGENCY: Securities and Exchange following the tender of Creation Units investment objectives as the Feeder Commission (‘‘Commission’’). for redemption. Applicants assert that Fund (‘‘Master Fund’’) beyond the ACTION: Notice. the requested relief would not be limitations in section 12(d)(1)(A) and inconsistent with the spirit and intent of permit the Master Fund, and any Notice of an application under section section 22(e) to prevent unreasonable, principal underwriter for the Master 6(c) of the Investment Company Act of undisclosed or unforeseen delays in the Fund, to sell shares of the Master Fund 1940 (‘‘Act’’) for an exemption from actual payment of redemption proceeds. to the Feeder Fund beyond the section 15(a) of the Act and rule 18f–2 7. Applicants request an exemption to limitations in section 12(d)(1)(B). under the Act, as well as from certain permit Funds of Funds to acquire Fund disclosure requirements in rule 20a–1 shares beyond the limits of section 10. Section 6(c) of the Act permits the under the Act, Item 19(a)(3) of Form N– 12(d)(1)(A) of the Act; and the Funds, Commission to exempt any persons or 1A, Items 22(c)(1)(ii), 22(c)(1)(iii), and any principal underwriter for the transactions from any provision of the 22(c)(8) and 22(c)(9) of Schedule 14A Funds, and/or any broker or dealer Act if such exemption is necessary or under the Securities Exchange Act of registered under the Exchange Act, to appropriate in the public interest and 1934, and sections 6–07(2)(a), (b), and sell shares to Funds of Funds beyond consistent with the protection of (c) of Regulation S–X (‘‘Disclosure the limits of section 12(d)(1)(B) of the investors and the purposes fairly Requirements’’). The requested Act. The application’s terms and intended by the policy and provisions of exemption would permit an investment conditions are designed to, among other the Act. Section 12(d)(1)(J) of the Act adviser to hire and replace certain sub- things, help prevent any potential (i) provides that the Commission may advisers without shareholder approval undue influence over a Fund through exempt any person, security, or and grant relief from the Disclosure control or voting power, or in transaction, or any class or classes of Requirements as they relate to fees paid connection with certain services, persons, securities, or transactions, from to the sub-advisers. transactions, and underwritings, (ii) any provision of section 12(d)(1) if the APPLICANTS: FS Series Trust (the excessive layering of fees, and (iii) exemption is consistent with the public ‘‘Trust’’), a Delaware statutory trust overly complex fund structures, which interest and the protection of investors. registered under the Act as an open-end are the concerns underlying the limits Section 17(b) of the Act authorizes the management investment company, and in sections 12(d)(1)(A) and (B) of the Commission to grant an order FS Fund Advisor, LLC (the ‘‘Advisor’’), Act. permitting a transaction otherwise a Delaware limited liability company 8. Applicants request an exemption registered as an investment adviser from sections 17(a)(1) and 17(a)(2) of the prohibited by section 17(a) if it finds that (a) the terms of the proposed under the Investment Advisers Act of Act to permit persons that are affiliated 1940 (together with the Trust, the persons, or second-tier affiliates, of the transaction are fair and reasonable and do not involve overreaching on the part ‘‘Applicants’’). Funds, solely by virtue of certain of any person concerned; (b) the FILING DATES: The application was filed ownership interests, to effectuate proposed transaction is consistent with on April 12, 2017 and amended on purchases and redemptions in-kind. The the policies of each registered September 22, 2017. deposit procedures for in-kind purchases of Creation Units and the investment company involved; and (c) HEARING OR NOTIFICATION OF HEARING: redemption procedures for in-kind the proposed transaction is consistent An order granting the application will redemptions of Creation Units will be with the general purposes of the Act. be issued unless the Commission orders the same for all purchases and a hearing. Interested persons may For the Commission, by the Division of redemptions and Deposit Instruments request a hearing by writing to the Investment Management, under delegated and Redemption Instruments will be Commission’s Secretary and serving authority. valued in the same manner as those applicants with a copy of the request, Robert W. Errett, personally or by mail. Hearing requests Portfolio Instruments currently held by the Funds. Applicants also seek relief Deputy Secretary. should be received by the Commission from the prohibitions on affiliated [FR Doc. 2018–01903 Filed 1–30–18; 8:45 am] by 5:30 p.m. on February 19, 2018, and transactions in section 17(a) to permit a BILLING CODE 8011–01–P should be accompanied by proof of Fund to sell its shares to and redeem its service on the applicants, in the form of shares from a Fund of Funds, and to an affidavit or, for lawyers, a certificate engage in the accompanying in-kind of service. Pursuant to rule 0–5 under the Act, hearing requests should state sradovich on DSK3GMQ082PROD with NOTICES transactions with the Fund of Funds.2 the nature of the writer’s interest, any 2 The requested relief would apply to direct sales facts bearing upon the desirability of a of shares in Creation Units by a Fund to a Fund of hearing on the matter, the reason for the Funds and redemptions of those shares. Applicants, request, and the issues contested. moreover, are not seeking relief from section 17(a) Fund of Funds because an Adviser or an entity for, and the requested relief will not apply to, controlling, controlled by or under common control Persons who wish to be notified of a transactions where a Fund could be deemed an with an Adviser provides investment advisory hearing may request notification by Affiliated Person, or a Second-Tier Affiliate, of a services to that Fund of Funds. writing to the Commission’s Secretary. VerDate Sep<11>2014 17:36 Jan 30, 2018 Jkt 244001 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 E:\FR\FM\31JAN1.SGM 31JAN1

Federal Register / Vol. 83, No. 21 / Wednesday, January 31, 2018 / Notices 4535 ADDRESSES: Secretary, U.S. Securities managing the Subadvised Series will Advisors is substantially equivalent to and Exchange Commission, 100 F Street remain vested in the Advisor. The that of individual portfolio managers, so NE, Washington, DC 20549–1090. Advisor will hire, evaluate, allocate that requiring shareholder approval of Applicants: 201 Rouse Boulevard, assets to and oversee the Sub-Advisors, Sub-advisory Agreements would impose Philadelphia, PA 19112. including determining whether a Sub- unnecessary delays and expenses on the FOR FURTHER INFORMATION CONTACT: Advisor should be terminated, at all Subadvised Series. Applicants believe James Maclean, Senior Counsel, at (202) times subject to the authority of the that the requested relief from the 551–7794, or Andrea Ottomanelli Board. Disclosure Requirements meets this 2. Applicants request an exemption to standard because it will improve the Magovern, Branch Chief, at (202) 551– permit the Advisor, subject to Board Advisor’s ability to negotiate fees paid 6768 (Division of Investment approval, to hire a Non-Affiliated Sub- to the Sub-Advisors that are more Management, Chief Counsel’s Office). Advisor or a Wholly-Owned Sub- advantageous for the Subadvised Series. SUPPLEMENTARY INFORMATION: The Advisor, pursuant to Sub-Advisory following is a summary of the For the Commission, by the Division of Agreements and materially amend Sub- Investment Management, under delegated application. The complete application Advisory Agreements with Non- authority. may be obtained via the Commission’s Affiliated Sub-Advisors and Wholly- Eduardo A. Aleman, website by searching for the file Owned Sub-Advisors without obtaining Assistant Secretary. number, or an applicant using the the shareholder approval required under Company name box, at http:// [FR Doc. 2018–01834 Filed 1–30–18; 8:45 am] section 15(a) of the Act and rule 18f–2 www.sec.gov/search/search.htm or by BILLING CODE 8011–01–P under the Act.3 Applicants also seek an calling (202) 551–8090. exemption from the Disclosure Summary of the Application Requirements to permit a Subadvised Series to disclose (as both a dollar DEPARTMENT OF STATE 1. The Advisor will serve as the amount and a percentage of the [Public Notice: 10291] investment adviser to the Subadvised Subadvised Series’ net assets): (a) The Series pursuant to an investment aggregate fees paid to the Advisor and Notice of Determinations: Culturally advisory agreement with the Trust any Wholly-Owned Sub-Advisors; (b) Significant Objects Imported for (each, an ‘‘Investment Management the aggregate fees paid to Non-Affiliated Exhibition Determinations: ‘‘Danh Vo: Agreement’’ and, collectively, the Sub-Advisors; and (c) the fee paid to Take My Breath Away’’ Exhibition ‘‘Investment Management each Affiliated Sub-Advisor. Agreements’’).1 The Advisor will SUMMARY: Notice is hereby given of the 3. Applicants agree that any order provide the Subadvised Series with following determinations: I hereby granting the requested relief will be continuous and comprehensive determine that certain objects to be subject to the terms and conditions investment management services, included in the exhibition ‘‘Danh Vo: stated in the application. Such terms subject to the supervision of, and Take My Breath Away,’’ imported from and conditions provide for, among other policies established by, the Trust’s abroad for temporary exhibition within safeguards, appropriate disclosure to board of trustees (the ‘‘Board’’). The the United States, are of cultural Subadvised Series’ shareholders and Investment Management Agreement significance. The objects are imported notification about sub-advisory changes permits the Advisor, subject to the pursuant to loan agreements with the and enhanced Board oversight to protect approval of the Board, to delegate to one foreign owners or custodians. I also the interests of the Subadvised Series’ or more Sub-Advisors the responsibility determine that the exhibition or display shareholders. to provide the day-to-day portfolio 4. Section 6(c) of the Act provides that of the exhibit objects at the Solomon R. investment management of each the Commission may exempt any Guggenheim Museum, New York, New Subadvised Series, subject to the person, security, or transaction or any York, from on or about February 9, supervision and direction of the class or classes of persons, securities, or 2018, until on or about May 9, 2018, and Advisor.2 The primary responsibility for transactions from any provisions of the at possible additional exhibitions or Act, or any rule thereunder, if such venues yet to be determined, is in the 1 Applicants request relief with respect to any relief is necessary or appropriate in the national interest. future series and any other existing or future public interest and consistent with the FOR FURTHER INFORMATION CONTACT: registered open-end management company or series Elliot Chiu in the Office of the Legal thereof that intends to rely on the requested order protection of investors and purposes and that: (a) Is advised by the Advisor, or any fairly intended by the policy and Adviser, U.S. Department of State person controlling, controlled by or under common provisions of the Act. Applicants (telephone: 202–632–6471; email: control with the Advisor or its successors; (b) uses believe that the requested relief meets section2459@state.gov). The mailing the multi-manager structure described in the address is U.S. Department of State, L/ application; and (c) complies with the terms and this standard because, as further conditions of the application (each, a ‘‘Subadvised explained in the application, the PD, SA–5, Suite 5H03, Washington, DC Series’’). For purposes of the requested order, Investment Management Agreements 20522–0505. ‘‘successor’’ is limited to an entity that results from will remain subject to shareholder SUPPLEMENTARY INFORMATION: The a reorganization into another jurisdiction or a foregoing determinations were made change in the type of business organization. approval while the role of the Sub- 2 A ‘‘Sub-Advisor’’ for a Series is (1) an indirect pursuant to the authority vested in me or direct ‘‘wholly-owned subsidiary’’ (as such term arises solely because the Sub-Advisor serves as a by the Act of October 19, 1965 (79 Stat. is defined in the Act) of the Advisor for that Series, sub-adviser to one or more Series (each a ‘‘Non- 985; 22 U.S.C. 2459), E.O. 12047 of or (2) a sister company of the Advisor for that Series Affiliated Sub-Advisor’’) . March 27, 1978, the Foreign Affairs sradovich on DSK3GMQ082PROD with NOTICES that is an indirect or direct ‘‘wholly-owned 3 The requested relief will not extend to any sub- subsidiary’’ (as such term is defined in the Act) of adviser, other than a Wholly-Owned Sub-Advisor, Reform and Restructuring Act of 1998 the same company that, indirectly or directly, who is an affiliated person, as defined in section (112 Stat. 2681, et seq.; 22 U.S.C. 6501 wholly owns the Advisor (each of (1) and (2) a 2(a)(3) of the Act, of the Subadvised Series or of its note, et seq.), Delegation of Authority ‘‘Wholly-Owned Sub-Advisor’’), or (3) an Advisor, other than by reason of serving as a sub- No. 234 of October 1, 1999, Delegation investment sub-adviser for that Series that is not an adviser to one or more of the Subadvised Series or ‘‘affiliated person’’ (as such term is defined in to any existing or future registered open-end of Authority No. 236–3 of August 28, Section 2(a)(3) of the Act) of the Series or the management company or series thereof advised by 2000 (and, as appropriate, Delegation of Advisor, except to the extent that an affiliation an Advisor (‘‘Affiliated Sub-Advisor’’). Authority No. 257–1 of December 11, VerDate Sep<11>2014 17:36 Jan 30, 2018 Jkt 244001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\31JAN1.SGM 31JAN1


Document Created: 2018-01-31 00:59:12
Document Modified: 2018-01-31 00:59:12
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.
DatesThe application was filed on April 12, 2017 and amended on September 22, 2017.
ContactJames Maclean, Senior Counsel, at (202) 551-7794, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6768 (Division of Investment Management, Chief Counsel's Office).
FR Citation83 FR 4534 
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