[Federal Register Volume 78, Number 87 (Monday, May 6, 2013)]
[Notices]
[Pages 26407-26410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10606]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30496; 812-14078]
Goldman Sachs Trust II, et al.; Notice of Application
April 29, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: 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.
-----------------------------------------------------------------------
SUMMARY: Summary of Application: Applicants request an order that
would permit them to enter into and materially amend subadvisory
agreements without shareholder approval and would grant relief from
certain disclosure requirements.
APPLICANTS: Goldman Sachs Trust II (the ``Trust''), Goldman Sachs
Asset Management L.P. (``GSAM'') and Goldman Sachs Asset Management
International (``GSAMI'', each of GSAM and GSAMI an ``Adviser'' and
collectively, ``Advisers,'' and together with the Trust,
``Applicants'').
DATES: Filing Dates: The application was filed September 21, 2012, and
amended on March 8, 2013.
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 May 28, 2013 and should be accompanied by proof of service on
the applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, 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: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
[[Page 26408]]
Washington, DC 20549-1090. Applicants: Caroline Kraus, Goldman Sachs &
Co., 200 West Street, 15th Floor, New York, NY 10282.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel,
at (202) 551-6990, or Jennifer L. Sawin, Branch Chief, at (202) 551-
6821 (Division of Investment Management, Office of Investment Company
Regulation).
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.
Applicants' Representations
1. The Trust is organized as a Delaware statutory trust and has
registered as an open-end management investment company under the Act
that will offer one or more series of shares (each a ``Series''). The
Trust has filed a registration statement on Form N-1A to register the
offering of shares of Goldman Sachs Multi-Manager Alternatives Fund, a
series of the Trust.\1\ Each Subadvised Fund may offer shares with its
own distinct investment objectives, policies and restrictions.
---------------------------------------------------------------------------
\1\ Applicants request that the relief sought herein apply to
the Applicants, as well as to any future Series of the Trust and to
any other existing or future registered open-end investment company
or series thereof that: (a) is advised by either GSAM, GSAMI or
their successors (the foregoing advisers being included in the term
``Adviser,'' and any such series or investment company, including
the Trust and its Series, a ``Fund''); (b) uses the manager of
managers structure described in this Application (``Manager of
Managers Structure''); and (c) complies with the terms and
conditions of this Application (the ``Subadvised Funds,'' and each a
``Subadvised Fund''). The only Trust that currently intends to rely
on the requested order is named as an Applicant. 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. If the name of any Subadvised Fund
contains the name of a Subadviser, the name of the Adviser that
serves as the primary adviser to that Subadvised Fund or a trademark
or trade name that is owned by or publicly used to identify that
Adviser will precede the name of the Subadviser.
---------------------------------------------------------------------------
2. GSAM, a Delaware limited partnership registered with the
Commission as an investment adviser under the Investment Advisers Act
of 1940 (``Advisers Act''), is expected to serve as investment adviser
to certain Series, in each case pursuant to an investment advisory
agreement with the Trust on behalf of the Series (each a ``GSAM
Investment Advisory Agreement''). GSAMI, a limited partnership
organized under the laws of the United Kingdom and registered with the
Commission as an investment adviser under the Advisers Act, may also
serve as investment adviser to certain Series, in each case pursuant to
an investment advisory agreement with the Trust on behalf of the Series
(each a ``GSAMI Investment Advisory Agreement'').\2\ The GSAM
Investment Advisory Agreements and the GSAMI Investment Advisory
Agreements are together referred to as the ``Investment Advisory
Agreements''. Each Investment Advisory Agreement will be approved by
the board of trustees of the Trust (the ``Board''), including a
majority of the trustees who are not ``interested persons,'' as defined
in section 2(a)(19) of the Act, of the Trust or the Adviser
(``Independent Trustees'') and by the shareholders of the relevant
Subadvised Fund in the manner required by sections 15(a) and 15(c) of
the Act and rule 18f-2 under the Act.\3\ Any future Adviser also will
be registered with the Commission as an investment adviser under the
Advisers Act and will enter into investment advisory agreements with or
on behalf of future Subadvised Funds, and such future agreements shall
be included in the term ``Investment Advisory Agreements.''
---------------------------------------------------------------------------
\2\ GSAM and GSAMI are wholly-owned subsidiaries of the Goldman
Sachs Group, Inc.
\3\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Fund.
---------------------------------------------------------------------------
3. Under the terms of each Investment Advisory Agreement, the
Adviser to a Subadvised Fund, subject to the oversight of the
applicable Board, shall furnish a continuous investment program for the
Subadvised Fund. The Adviser shall periodically review each Subadvised
Fund's investment policies and strategies and based on the need of a
particular Subadvised Fund may recommend changes to the investment
policies and strategies of the Subadvised Fund for consideration by its
Board. For its services to each Subadvised Fund, the Adviser shall
receive an investment advisory fee from that Subadvised Fund as
specified in the applicable Investment Advisory Agreement based on each
Subadvised Fund's average daily total or net assets. The terms of the
Investment Advisory Agreements also permit the applicable Adviser,
subject to the approval of the relevant Board, including a majority of
the Independent Trustees, and the shareholders of the applicable
Subadvised Fund (if required by applicable law), to delegate portfolio
management responsibilities of all or a portion of the assets of the
Subadvised Fund to one or more subadvisers (``Subadvisers''). Each
Subadviser will be an investment adviser as defined in section 2(a)(20)
of the Act, and either registered with the Commission as an investment
adviser under the Advisers Act or not subject to such registration. The
Adviser shall have overall responsibility for the management and
investment of the assets of each Subadvised Fund and, with respect to
each Subadvised Fund, the Adviser's responsibilities shall include, for
example, recommending the removal or replacement of Subadvisers, and
determining the portion of that Subadvised Fund's assets to be managed
by any given Subadviser and reallocating those assets as necessary from
time to time. The Adviser shall evaluate, select and recommend
Subadvisers to manage the assets of Subadvised Fund, and shall monitor
and review the Subadviser and its performance and its compliance with
that Subadvised Fund's investment policies and restrictions. For
services provided under each Subadvisory Agreement, it is currently
intended that the applicable Subadviser will receive from the
applicable Adviser a fee based on a percentage of the Subadvised Fund's
average daily total or net assets (``Subadvisory fees''). All
Subadvisers are expected to be compensated by the applicable Adviser
out of the advisory fees the Adviser receives pursuant to the relevant
Investment Advisory Agreement. As a matter of convenience, the
applicable Adviser may request that (a) amounts payable to a Subadviser
by the Adviser be transmitted directly to the Subadviser by the
Subadvised Fund and (b) that such amount be deducted from the amounts
payable by the Subadvised Fund to the Adviser. Subadvised Funds may
directly pay advisory fees to Subadvisers in the future, although any
amendment to a Subadvisory Agreement that would increase the total
management and advisory fees payable by a Subadvised Fund would require
shareholder approval.
4. Applicants request an order to permit the Adviser, subject to
Board approval, to select certain Subadvisers to manage all or a
portion of the assets of a Subadvised Fund pursuant to a Sub-Advisory
Agreement and materially amend Sub-Advisory Agreements without
obtaining shareholder approval. The requested relief will not extend to
any Subadviser that is an affiliated person, as defined in section
2(a)(3) of the Act, of the Trust, a Subadvised Fund or the Adviser,
other than by reason of serving as a Subadviser to a Subadvised Fund
(``Affiliated Subadviser'').
5. Applicants also request an order exempting the Subadvised Funds
from certain disclosure provisions described
[[Page 26409]]
below that may require the Applicants to disclose fees paid to each
Subadviser by the Adviser or a Subadvised Fund. Applicants seek an
order to permit each Subadvised Fund to disclose (as a dollar amount
and a percentage of a Subadvised Fund's total or net assets) only: (a)
The aggregate fees paid to the Subadvised Fund's Adviser and any
Affiliated Subadvisers; and (b) the aggregate fees paid to Subadvisers
other than Affiliated Subadvisers (collectively, the ``Aggregate Fee
Disclosure''). A Subadvised Fund that employs an Affiliated Subadviser
will provide separate disclosure of any fees paid to the Affiliated
Subadviser.
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except pursuant to a written contract that has been
approved by the vote of a majority of the company's outstanding voting
securities. Rule 18f-2 under the Act provides that each series or class
of stock in a series investment company affected by a matter must
approve that matter if the Act requires shareholder approval.
2. Form N-1A is the registration statement used by open-end
investment companies. Item 19(a)(3) of Form N-1A requires disclosure of
the method and amount of the investment adviser's compensation.
3. Rule 20a-1 under the Act requires proxies solicited with respect
to an investment company to comply with Schedule 14A under the
Securities Exchange Act of 1934 (``Exchange Act''). Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together,
require a proxy statement for a shareholder meeting at which the
advisory contract will be voted upon to include the ``rate of
compensation of the investment adviser,'' the ``aggregate amount of the
investment adviser's fees,'' a description of the ``terms of the
contract to be acted upon,'' and, if a change in the advisory fee is
proposed, the existing and proposed fees and the difference between the
two fees.
4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b) and (c) of Regulation S-X require
a registered investment company to include in its financial statement
information about the investment advisory fees.
5. 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
from any rule thereunder, 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. Applicants state that the requested relief meets this standard for
the reasons discussed below.
6. Applicants assert that the shareholders expect the Adviser,
subject to the review and approval of the Board, to select the
Subadvisers who are best suited to achieve the Subadvised Fund's
investment objective. Applicants assert that, from the perspective of
the shareholder, the role of the Subadviser is substantially equivalent
to the role of the individual portfolio managers employed by an
investment adviser to a traditional investment company. Applicants
state that requiring shareholder approval of each Subadvisory Agreement
would impose unnecessary delays and expenses on the Subadvised Funds
and may preclude the Subadvised Funds from acting promptly when the
Adviser and Board consider it appropriate to hire Subadvisers or amend
Subadvisory Agreements. Applicants note that the Investment Advisory
Agreement for each Subadvised Fund and Subadvisory Agreements with
Affiliated Subadvisers (if any) will continue to be subject to the
shareholder approval requirements of section 15(a) of the Act and rule
18f-2 under the Act.
7. If new Subadvisers are hired, the Subadvised Funds will inform
shareholders of the hiring of a new Subadviser pursuant to the
following procedures (``Modified Notice and Access Procedures''): (a)
Within 90 days after a new Subadviser is hired for any Subadvised Fund,
that Subadvised Fund will send its shareholders either a Multi-manager
Notice or a Multi-manager Notice and Multi-manager Information
Statement;\4\ and (b) the Subadvised Fund will make the Multi-manager
Information Statement available on the Web site identified in the
Multi-manager Notice no later than when the Multi-manager Notice (or
Multi-manager Notice and Multi-manager Information Statement) is first
sent to shareholders, and will maintain it on that Web site for at
least 90 days. In the circumstances described in this Application, a
proxy solicitation to approve the appointment of new Subadvisers
provides no more meaningful information to shareholders than the
proposed Multi-manager Information Statement. Moreover, as indicated
above, the applicable Board would comply with the requirements of
Sections 15(a) and 15(c) of the Act before entering into or amending
Sub-Advisory Agreements.
---------------------------------------------------------------------------
\4\ A ``Multi-manager Notice'' will be modeled on a Notice of
Internet Availability as defined in rule 14a-16 under the Exchange
Act, and specifically will, among other things: (a) Summarize the
relevant information regarding the new Subadviser; (b) inform
shareholders that the Multi-manager Information Statement is
available on a Web site; (c) provide the Web site address; (d) state
the time period during which the Multi-manager Information Statement
will remain available on that Web site; (e) provide instructions for
accessing and printing the Multi-manager Information Statement; and
(f) instruct the shareholder that a paper or email copy of the
Multi-manager Information Statement may be obtained, without charge,
by contacting the Subadvised Funds.
A ``Multi-manager Information Statement'' will meet the
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule
14A under the Exchange Act for an information statement, except as
modified by the requested order to permit Aggregate Fee Disclosure.
Multi-manager Information Statements will be filed electronically
with the Commission via the EDGAR system.
---------------------------------------------------------------------------
8. Applicants assert that the requested disclosure relief would
benefit shareholders of the Subadvised Funds because it would improve
each Adviser's ability to negotiate the fees paid to Subadvisers.
Applicants state that if the Adviser is not required to disclose the
Subadvisers' fees to the public, the Adviser may be able to negotiate
rates that are below a Subadviser's ``posted'' amounts. Applicants
submit that the requested relief will also encourage Subadvisers to
negotiate lower subadvisory fees with the Adviser(s) if the lower fees
are not required to be made public.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Subadvised Fund may rely on the order requested herein,
the operation of the Subadvised Fund in the manner described in the
Application will be approved by a majority of the Subadvised Fund's
outstanding voting securities as defined in the Act or, in the case of
a Subadvised Fund whose public shareholders purchase shares on the
basis of a prospectus containing the disclosure contemplated by
condition 2 below, by the initial shareholder before such Subadvised
Fund's shares are offered to the public.
2. The prospectus for each Subadvised Fund will disclose the
existence, substance, and effect of any order granted pursuant to the
Application. In addition, each Subadvised Fund will hold itself out to
the public as employing the Manager of
[[Page 26410]]
Managers Structure. The prospectus will prominently disclose that the
Adviser has the ultimate responsibility, subject to oversight by the
Board, to oversee the Subadvisers and recommend their hiring,
termination, and replacement.
3. Subadvised Funds will inform shareholders of the hiring of a new
Subadviser within 90 days after the hiring of the new Subadviser
pursuant to the Modified Notice and Access Procedures.
4. An Adviser will not enter into a Subadvisory Agreement with any
Affiliated Subadviser unless such agreement, including the compensation
to be paid thereunder, has been approved by the shareholders of the
applicable Subadvised Fund.
5. At all times, at least a majority of the Board will be
Independent Trustees, and the nomination of new or additional
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
6. Independent legal counsel, as defined in rule 0-1(a)(6) under
the Act, will be engaged to represent the Independent Trustees. The
selection of such counsel will be within the discretion of the then-
existing Independent Trustees.
7. Whenever a Subadviser change is proposed for a Subadvised Fund
with an Affiliated Subadviser, the Board, including a majority of the
Independent Trustees, will make a separate finding, reflected in the
Board minutes, that the change is in the best interests of the
Subadvised Fund and its shareholders, and does not involve a conflict
of interest from which the applicable Adviser or the Affiliated
Subadviser derives an inappropriate advantage.
8. Whenever a Subadviser is hired or terminated, the applicable
Adviser will provide the Board with information showing the expected
impact on the profitability of the Adviser.
9. Each Adviser will provide the Board, no less frequently than
quarterly, with information about the profitability of the Adviser on a
per Subadvised Fund basis. The information will reflect the impact on
profitability of the hiring or termination of any Subadviser during the
applicable quarter.
10. Each applicable Adviser will provide general management
services to each Subadvised Fund, including overall supervisory
responsibility for the general management and investment of the
Subadvised Fund's assets and, subject to review and approval of the
Board, will: (i) Set the Subadvised Fund's overall investment
strategies; (ii) evaluate, select, and recommend Subadvisers to manage
all or a portion of the Subadvised Fund's assets; (iii) allocate and,
when appropriate, reallocate the Subadvised Fund's assets among
Subadvisers; (iv) monitor and evaluate the Subadvisers' performance;
and (v) implement procedures reasonably designed to ensure that
Subadvisers comply with the Subadvised Fund's investment objective,
policies and restrictions.
11. No Trustee or officer of a Trust or of a Fund or director or
officer of the applicable Adviser will own directly or indirectly
(other than through a pooled investment vehicle that is not controlled
by such person) any interest in a Subadviser except for (i) ownership
of interests in the Adviser or any entity that controls, is controlled
by or is under common control with the Adviser; or (ii) ownership of
less than 1% of the outstanding securities of any class of equity or
debt of any publicly traded company that is either a Subadviser or an
entity that controls, is controlled by or is under common control with
a Subadviser.
12. Each Subadvised Fund will disclose in its registration
statement the Aggregate Fee Disclosure.
13. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that in the order requested
in the Application, the requested order will expire on the effective
date of that rule.
14. For Subadvised Funds that pay fees to a Subadviser directly
from fund assets, any changes to a Subadvisory Agreement that would
result in an increase in the total management and advisory fees payable
by a Subadvised Fund will be required to be approved by the
shareholders of the Subadvised Fund.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10606 Filed 5-3-13; 8:45 am]
BILLING CODE 8011-01-P