83 FR 7827 - Investment Company Act Release No. 33005A; File No. 812-14808 Morningstar Funds Trust, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 36 (February 22, 2018)

Page Range		7827-7828
FR Document		2018-03570
Federal Register, Volume 83 Issue 36 (Thursday, February 22, 2018)
[Federal Register Volume 83, Number 36 (Thursday, February 22, 2018)]
[Notices]
[Pages 7827-7828]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-03570]


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SECURITIES AND EXCHANGE COMMISSION


Investment Company Act Release No. 33005A; File No. 812-14808 
Morningstar Funds Trust, et al.; Notice of Application

February 15, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    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 (each an ``Unaffiliated Open-End Investment 
Company''), registered closed-end investment companies and ``business 
development companies,'' as defined in section 2(a)(48) of the Act 
(each registered closed-end management and each business development 
company, an ``Unaffiliated Closed-End Investment Company'' and, 
together with the Unaffiliated Open-End Investment Companies, the 
``Unaffiliated Investment Companies''), and registered unit investment 
trusts (the ``Unaffiliated Trusts,'' and together with the Unaffiliated 
Investment Companies, the ``Unaffiliated Funds'') that are within the 
same group of investment companies (collectively, the ``Affiliated 
Funds'') and outside the same group of investment companies as the 
acquiring investment companies (collectively, the Affiliated Funds and, 
together with the Unaffiliated Funds, the ``Underlying Funds''), in 
excess of the limits in section 12(d)(1) of the Act.
    Applicants: Morningstar Funds Trust, a Delaware statutory trust 
that is registered under the Act as an open-end management investment 
company and intends to introduce multiple series, and Morningstar 
Investment Management LLC, a Delaware limited liability company 
registered as an investment adviser under the Investment Advisers Act 
of 1940.
    Filing Dates: The application was filed on August 10, 2017 and 
amended on January 19, 2018.
    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 March 12, 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.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090. Applicants: Daniel Needham, 
Morningstar Investment Management LLC, 22 West Washington Street, 
Chicago, IL 60602; and Michael W. Mundt, Esq., Stradley Ronon Stevens & 
Young, LLP, 1250 Connecticut Avenue NW, Suite 500, Washington, DC 
20036.

FOR FURTHER INFORMATION CONTACT: Judy Lee, Senior Special Counsel, at 
(202) 551-6259, or Holly Hunter-Ceci, Assistant Chief Counsel, at (202) 
551-

[[Page 7828]]

6825 (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 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 Securities Exchange Act of 1934 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.
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    \1\ Applicants request that the order apply to each existing and 
future series of Morningstar Funds Trust and to each existing and 
future registered open-end investment company or series thereof that 
is advised by Morningstar Investment Management LLC or its successor 
or by any other investment adviser controlling, controlled by or 
under common control with Morningstar Investment Management LLC or 
its successor and is part of the same ``group of investment 
companies'' as Morningstar Funds Trust (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 and business development companies, 
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 Funds of Funds to 
invest in reliance on the order in business development companies 
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 or closed-end fund 
through secondary market transactions rather than through principal 
transactions with the Underlying Fund. Applicants nevertheless 
request relief from sections 17(a)(1) and (2) to permit each ETF or 
Unaffiliated Closed-End Investment Company that is an affiliated 
person, or an affiliated person of an affiliated person, as defined 
in section 2(a)(3) of the 1940 Act, of a Fund of Funds to sell 
shares to or redeem shares from the Fund of Funds. This includes, in 
the case of sales and redemptions of shares of ETFs, the in-kind 
transactions that accompany such sales and redemptions. The 
Applicants are not seeking relief from section 17(a) for, and the 
requested relief will not apply to, transactions where an ETF, 
business development company, or closed-end fund could be deemed an 
affiliated person, or an affiliated person of an affiliated person, 
of a Fund of Funds because an investment adviser to the ETF, 
business development company, or closed-end fund or an entity 
controlling, controlled by or under common control with the 
investment adviser to the ETF, business development company, or 
closed-end fund, is also an investment adviser to the Fund of Funds.
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    2. 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.
    3. 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03570 Filed 2-21-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 36 / Thursday, February 22, 2018 / Notices 7827

where feasible it intends to implement communications relating to the an ‘‘Unaffiliated Closed-End Investment
similar risk protections to provide proposed rule change between the Company’’ and, together with the
consistency between markets so as to Commission and any person, other than Unaffiliated Open-End Investment
avoid confusion among Members. For those that may be withheld from the Companies, the ‘‘Unaffiliated
this reason, the Commission believes public in accordance with the Investment Companies’’), and registered
that waiving the 30-day operative delay provisions of 5 U.S.C. 552, will be unit investment trusts (the ‘‘Unaffiliated
is consistent with the protection of available for website viewing and Trusts,’’ and together with the
investors and the public interest. printing in the Commission’s Public Unaffiliated Investment Companies, the
Therefore, the Commission hereby Reference Room, 100 F Street NE, ‘‘Unaffiliated Funds’’) that are within
waives the operative delay and Washington, DC 20549, on official the same group of investment
designates the proposed rule change business days between the hours of companies (collectively, the ‘‘Affiliated
operative upon filing.40 10:00 a.m. and 3:00 p.m. Copies of the Funds’’) and outside the same group of
At any time within 60 days of the filing also will be available for investment companies as the acquiring
filing of the proposed rule change, the inspection and copying at the principal investment companies (collectively, the
Commission summarily may office of the Exchange. All comments Affiliated Funds and, together with the
temporarily suspend such rule change if received will be posted without change. Unaffiliated Funds, the ‘‘Underlying
it appears to the Commission that such Persons submitting comments are Funds’’), in excess of the limits in
action is necessary or appropriate in the cautioned that we do not redact or edit section 12(d)(1) of the Act.
public interest, for the protection of personal identifying information from Applicants: Morningstar Funds Trust,
investors, or otherwise in furtherance of comment submissions. You should a Delaware statutory trust that is
the purposes of the Act. If the submit only information that you wish registered under the Act as an open-end
Commission takes such action, the to make available publicly. All management investment company and
Commission shall institute proceedings submissions should refer to File intends to introduce multiple series,
to determine whether the proposed rule Number SR–PEARL–2018–01 and and Morningstar Investment
change should be approved or should be submitted on or before March Management LLC, a Delaware limited
disapproved. 15, 2018. liability company registered as an
IV. Solicitation of Comments For the Commission, by the Division of investment adviser under the
Trading and Markets, pursuant to delegated Investment Advisers Act of 1940.
Interested persons are invited to authority.41 Filing Dates: The application was
submit written data, views, and Eduardo A. Aleman, filed on August 10, 2017 and amended
arguments concerning the foregoing, Assistant Secretary. on January 19, 2018.
including whether the proposed rule [FR Doc. 2018–03567 Filed 2–21–18; 8:45 am]
change is consistent with the Act. Hearing or Notification of Hearing: An
Comments may be submitted by any of
BILLING CODE 8011–01–P order granting the requested relief will
the following methods: be issued unless the Commission orders
a hearing. Interested persons may
Electronic Comments SECURITIES AND EXCHANGE request a hearing by writing to the
COMMISSION Commission’s Secretary and serving
• Use the Commission’s internet
comment form (http://www.sec.gov/ Investment Company Act Release No. applicants with a copy of the request,
rules/sro.shtml); or 33005A; File No. 812–14808 personally or by mail. Hearing requests
• Send an email to rule-comments@ Morningstar Funds Trust, et al.; Notice should be received by the Commission
sec.gov. Please include File Number SR– of Application by 5:30 p.m. on March 12, 2018 and
PEARL–2018–01 on the subject line. should be accompanied by proof of
February 15, 2018. service on the applicants, in the form of
Paper Comments AGENCY: Securities and Exchange an affidavit, or, for lawyers, a certificate
• Send paper comments in triplicate Commission (‘‘Commission’’). of service. Pursuant to Rule 0–5 under
to Brent J. Fields, Secretary, Securities ACTION: Notice. the Act, hearing requests should state
and Exchange Commission, 100 F Street the nature of the writer’s interest, any
NE, Washington, DC 20549–1090. Notice of an application for an order facts bearing upon the desirability of a
under section 12(d)(1)(J) of the hearing on the matter, the reason for the
All submissions should refer to File Investment Company Act of 1940 (the
Number SR–PEARL–2018–01. This file request, and the issues contested.
‘‘Act’’) for an exemption from sections Persons who wish to be notified of a
number should be included on the 12(d)(1)(A), (B), and (C) of the Act and
subject line if email is used. To help the hearing may request notification by
under sections 6(c) and 17(b) of the Act writing to the Commission’s Secretary.
Commission process and review your for an exemption from sections 17(a)(1)
comments more efficiently, please use and (2) of the Act. The requested order ADDRESSES: Secretary, U.S. Securities
only one method. The Commission will would permit certain registered open- and Exchange Commission, 100 F Street
post all comments on the Commission’s end investment companies to acquire NE, Washington, DC 20549–1090.
internet website (http://www.sec.gov/ shares of certain registered open-end Applicants: Daniel Needham,
rules/sro.shtml). Copies of the investment companies (each an Morningstar Investment Management
submission, all subsequent ‘‘Unaffiliated Open-End Investment LLC, 22 West Washington Street,
amendments, all written statements Company’’), registered closed-end Chicago, IL 60602; and Michael W.
daltland on DSKBBV9HB2PROD with NOTICES

with respect to the proposed rule investment companies and ‘‘business Mundt, Esq., Stradley Ronon Stevens &
change that are filed with the development companies,’’ as defined in Young, LLP, 1250 Connecticut Avenue
Commission, and all written section 2(a)(48) of the Act (each NW, Suite 500, Washington, DC 20036.
40 For purposes only of waiving the 30-day
registered closed-end management and FOR FURTHER INFORMATION CONTACT: Judy
operative delay, the Commission has considered the each business development company, Lee, Senior Special Counsel, at (202)
proposed rule’s impact on efficiency, competition, 551–6259, or Holly Hunter-Ceci,
and capital formation. See 15 U.S.C. 78c(f). 41 17 CFR 200.30–3(a)(12). Assistant Chief Counsel, at (202) 551–

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Document Created: 2018-02-22 02:51:19
Document Modified: 2018-02-22 02:51:19
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 August 10, 2017 and amended on January 19, 2018.
Contact		Judy Lee, Senior Special Counsel, at (202) 551-6259, or Holly Hunter-Ceci, Assistant Chief Counsel, at (202) 551- 6825 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 7827