Form 40-APP Venerable Variable Insur

 

EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)

 

File No. 812-[__]

 

As filed with the Securities and Exchange Commission on January 27, 2025

 

U.S. Securities and Exchange Commission
Washington, D.C. 20549

 

 

APPLICATION FOR
AN ORDER OF EXEMPTION PURSUANT TO SECTION 6(c)
OF THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE “1940 ACT”),
FROM (1) CERTAIN PROVISIONS OF SECTION 15(a) OF THE 1940 ACT AND
(2) CERTAIN DISCLOSURE REQUIREMENTS UNDER
VARIOUS RULES AND FORMS

 

In the Matter of

 

Venerable Variable Insurance Trust
1475 Dunwoody Drive, Suite 200
West Chester, PA 19380

 

and

 

Venerable Investment Advisers, LLC
1475 Dunwoody Drive, Suite 200
West Chester, PA 19380

 

Please direct all communications regarding this Application to:

 

Beau Yanoshik

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue NW

Washington, DC 20004

Telephone: (202) 373-6133 

 

with a copy to:

 

Kristina Magolis

Venerable Investment Advisers, LLC

1475 Dunwoody Drive, Suite 200

West Chester, PA 19380

Telephone: (800) 366-0066 

 

 

This Application (including exhibits) contains 80 pages.

 

 

I. Introduction

 

Venerable Variable Insurance Trust (the “Trust”), a registered open-end management investment company that offers multiple series of shares (each, a “Fund” and collectively, the “Funds”), on its own behalf and on behalf of each Fund, and Venerable Investment Advisers, LLC (the “Adviser” and together with the Trust, the “Applicants”),¹ hereby submit this application (the “Application”) to the Securities and Exchange Commission (the “Commission”) for an order of exemption pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”).

 

Applicants request an order exempting them from Section 15(a) of the 1940 Act to permit the Adviser, subject to the approval of the board of trustees of the Trust (the “Board” or “Trustees”)², including a majority of those who are not “interested persons” of the Trust or the Adviser, as defined in Section 2(a)(19) of the 1940 Act (the “Independent Trustees”), to take certain actions without obtaining shareholder approval as follows: (i) select investment subadvisers (each a “Subadviser” and collectively, the “Subadvisers”) for all or a portion of the assets of a Fund pursuant to an investment subadvisory agreement with each Subadviser (each a “Subadvisory Agreement” and collectively, the “Subadvisory Agreements”); and (ii) materially amend Subadvisory Agreements with the Subadvisers. As used herein, a “Subadviser” for a Fund is any investment adviser that enters into a Subadvisory Agreement with respect to a Fund.

 

Applicants also apply for an order of the Commission under Section 6(c) of the 1940 Act exempting a Fund from certain disclosure obligations under the following rules and forms: (i) Item 19(a)(3) of Form N-1A; (ii) 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, as amended (the “Exchange Act”); and (iii) Sections 6-07(2)(a), (b), and (c) of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). Similar to the order the Commission granted to Carillon Series Trust, et al.,³ in addition to Wholly-Owned and Non-Affiliated Subadvisers (both as defined below), the relief described in this Application would extend to any Subadviser that is an “affiliated person” (as such term is defined in Section 2(a)(3) of the 1940 Act) of a Fund or the Adviser for reasons other than serving as investment subadviser to one or more Funds (an “Affiliated Subadviser”).⁴

 

¹ The term “Adviser” means (i) Venerable Investment Advisers, LLC, (ii) its successors, and (iii) any entity controlling, controlled by, or under common control with, Venerable Investment Advisers, LLC or its successors that serves as the primary adviser to a Subadvised Fund (as defined below). For the 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 The term “Board” also includes the board of trustees or directors of a future Subadvised Fund (as defined below), if different from the board of trustees of the Trust.

 

³ The Commission issued an order granting the expanded relief requested by the Application. Carillon Series Trust, et al., Investment Company Act Release Nos. 33464 (May 2, 2019) (Notice) and 33494 (May 29, 2019) (Order) (the “Carillon Order”). See also Roundhill ETF Trust and Roundhill Financial, Inc., Investment Company Act Release Nos. 35120 (January 30, 2024) (Notice) and 35147 (February 27, 2024) (Order) (the “Roundhill Order”); BondBloxx ETF Trust and BondBloxx Investment Management Corporation, Investment Company Act Release Nos. 35119 (Notice) (January 30, 2024) and 35146 (Order) (February 27, 2024) (the “BondBloxx Order”); RM Opportunity Trust and Rocky Mountain Private Wealth Management L.L.C., Investment Company Act Release Nos. 34964 (July 24, 2023) (Notice) and 34986 (August 21, 2023 ) (Order) (the “RM Opportunity Order”); Advisors Series Trust and Semper Capital Management, L.P., Investment Company Act Release Nos. 34500 (February 9, 2022) (Notice) and 34528 (March 8, 2022) (Order) (the “Advisors Trust Order”); New Age Alpha Trust and New Age Alpha Advisors, LLC, Investment Company Act Rel. Nos. 34322 (July 6, 2021) (Notice) and 34348 (August 3, 2021) (Order) (the “New Age Alpha Trust Order”); and Listed Funds Trust, et al., Investment Company Act Rel. Nos. 34293 (June 2, 2021) (Notice) and 34321 (June 29, 2021) (Order) (“LFT Order”).

 

⁴ Section 2(a)(3) of the 1940 Act defines “affiliated person” as follows: “Affiliated person” of another person means (A) any person directly or indirectly owning, controlling, or holding with power to vote, 5 per centum or more of the

 

 

Applicants request that the relief sought herein apply to Applicants, as well as to any existing or future registered open-end management investment company or series thereof that intends to rely on the requested order in the future and (i) is advised by the Adviser; (ii) uses the multi-manager structure described in this Application; and (iii) complies with the terms and conditions set forth herein (each, together with any Fund that currently uses or will use the multi-manager structure described in this Application, a “Subadvised Fund” and collectively, the “Subadvised Funds”).⁵

 

Applicants are seeking this exemption primarily to enhance the ability of the Adviser and the Board to obtain for a Subadvised Fund the services of one or more Subadvisers believed by the Adviser and the Board to be particularly well suited for all or a portion of the assets of the Subadvised Fund, and to make material amendments to Subadvisory Agreements believed by the Adviser and the Board to be appropriate, without the delay and expense of convening special meetings of shareholders to approve the Subadvisory Agreements. Under this structure, the Adviser, in its capacity as investment adviser, would evaluate, allocate assets to, and oversee the Subadvisers, and make recommendations about their hiring, termination and replacement to the Board, at all times subject to the authority of the Board. This structure is commonly referred to as a “multi-manager” structure. In addition, Applicants are seeking relief from certain disclosure requirements concerning fees paid to Subadvisers.

 

For the reasons discussed below, Applicants believe that the requested relief is appropriate, in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. Applicants believe that the Subadvised Funds would be negatively impacted without the requested relief because of delays in hiring or replacing Subadvisers and costs associated with the proxy solicitation to approve new or amended Subadvisory Agreements.

 

II. Background

A.

The Trust

 

The Trust is registered under the 1940 Act as an open-end management investment company organized as a Delaware statutory trust. The Adviser serves or will serve as “investment adviser,” as defined in Section 2(a)(20) of the 1940 Act, to each Fund. The Trust intends to operate one or more Funds under a multi-manager structure and shares of the Funds are or will be offered and sold pursuant to a registration statement on Form N-1A. The Board consists of five (5) trustees, the majority of whom are Independent Trustees.

 

outstanding voting securities of such other person; (B) any person 5 per centum or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other person; (C) any person directly or indirectly controlling, controlled by, or under common control with, such other person; (D) any officer, director, partner, copartner, or employee of such other person; (E) if such other person is an investment company, any investment adviser thereof or any member of an advisory board thereof; and (F) if such other person is an unincorporated investment company not having a board of directors, the depositor thereof.

 

⁵ All registered open-end investment companies that currently intend to rely on the requested order are named as Applicants. All Funds that currently are, or that currently intend to be, Subadvised Funds are identified in this Application. Any entity that relies on the requested order will do so only in accordance with the terms and conditions contained in this Application.

 

For purposes of this Application, the term “Subadviser” will also apply to any Subadviser to any wholly-owned subsidiary of a Subadvised Fund (each, a “Subsidiary” and collectively, the “Subsidiaries”). The Adviser will serve as investment adviser to each Subsidiary and may retain one or more Subadvisers to manage the assets of a Subsidiary. Applicants also request relief with respect to any Subadvisers who serve as Subadvisers to a Subsidiary. Where appropriate, Subsidiaries are also included in the term “Subadvised Funds.”

 

 

The Trust currently consists of the following Funds and may introduce new Funds in the future: Venerable High Yield Fund, Venerable Large Cap Index Fund, Venerable Moderate Allocation Fund, Venerable Strategic Bond Fund, and Venerable US Large Cap Strategic Equity Fund.⁶ Sub-Advisers have been engaged to provide services to the Funds. Each Fund intends to operate under a multi-manager structure.⁷

 

B.

The Adviser

 

Venerable Investment Advisers, LLC, with its business address at 1475 Dunwoody Drive, Suite 200, West Chester, PA, 19380, is a Delaware limited liability company registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and serves or will serve as investment adviser to each Fund pursuant to an investment advisory agreement with the Fund (each, an “Investment Advisory Agreement” and, together, the “Investment Advisory Agreements”). Any future Adviser also will be registered with the Commission as an investment adviser under the Advisers Act.

 

Consistent with the terms of a Subadvised Fund’s Investment Advisory Agreement, the Adviser may, subject to the approval of the Board, including a majority of the Independent Trustees, and the shareholders of the applicable Subadvised Fund (if required by applicable law), delegate portfolio management responsibilities of all or a portion of the assets of a Subadvised Fund to a Subadviser. The Adviser retains overall responsibility for the management and investment of the assets of the Subadvised Fund. With respect to each Subadvised Fund, the Adviser’s responsibilities include, for example, recommending the removal or replacement of Subadvisers, and allocating the portion of that Subadvised Fund’s assets to any given Subadviser and reallocating those assets as necessary from time to time. The Adviser evaluates, selects and recommends Subadvisers for the Subadvised Fund, and monitors and reviews each Subadviser and its performance and its compliance with the applicable Subadvised Fund’s investment policies and restrictions.

 

Each Investment Advisory Agreement has been or will be approved by the Board, including a majority of the Independent Trustees, and by the shareholders of the relevant Fund in the manner required by Sections 15(a) and 15(c) of the 1940 Act. The terms of the Investment Advisory Agreements comply or will comply with Section 15(a) of the 1940 Act. Applicants are not seeking an exemption from the provisions of the 1940 Act with respect to the Investment Advisory Agreements. Pursuant to the terms of each Investment Advisory Agreement, the Adviser, subject to the oversight of the Board, has agreed or will agree to (i) provide continuous investment management for each Fund; (ii) determine the securities and other investments to be purchased, retained, sold or loaned by each Fund and the portion of such assets to be invested or held uninvested as cash; and (iii) exercise full discretion and act for each Fund in the same manner and with the same force and effect as such Fund itself might or could do with respect to purchases, sales, or other transactions and with respect to all other things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. The Adviser also is or will be responsible for

 

⁶ The Trust has filed an amendment to its registration statement on Form N-1A that is not yet effective with respect to thirteen new Funds. Each Fund intends to operate under a multi-manager structure.

 

⁷ Each Subadvised Fund discloses or will disclose in its registration statement that it intends to operate pursuant to the order requested in this Application, if granted. The prospectus for a Subadvised Fund will continue to include the disclosure required by Condition 2 below at all times subsequent to the approval required by Condition 1 below. If a Subadvised Fund has obtained shareholder approval to operate under the multi-manager structure described herein prior to the issuance of an order as requested in this Application, the prospectus for the Subadvised Fund will at all times following such shareholder approval contain appropriate disclosure that the Subadvised Fund has applied for exemptive relief to operate under the multi-manager structure described herein, including the ability to hire new Subadvisers and materially amend an existing Subadvisory Agreement without soliciting further shareholder vote.

 

 

effecting transactions for each Fund and selecting brokers or dealers to execute such transactions for each Fund. The Adviser will periodically review each Fund’s investment policies and strategies and, based on the need of a particular Fund, may recommend changes to the investment policies and strategies of the Fund for consideration by the Board.

 

Each Investment Advisory Agreement permits or will permit the Adviser to enter into Subadvisory Agreements with one or more Subadvisers. Pursuant to its authority under the Investment Advisory Agreements, the Adviser has entered or will enter into Subadvisory Agreements as described below under “The Subadvisers and the Subadvised Funds.” 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 the 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.

 

For its services to a Fund, the Adviser receives or will receive an investment advisory fee from that Fund as specified in the applicable Investment Advisory Agreement. The investment advisory fees are calculated based on the average daily net assets of the Fund.

 

C.

The Subadvisers and the Subadvised Funds

 

Pursuant to the authority under the Investment Advisory Agreements, the Adviser has entered into Subadvisory Agreements with various Subadvisers on behalf of the Funds, each of which is considered a Non-Affiliated Subadviser (as defined below). The Adviser also may, in the future, enter into Subadvisory Agreements with other Subadvisers on behalf of the Subadvised Funds.

 

With respect to any future Subadviser that is wholly owned by the Adviser or the Adviser’s parent company, the Adviser will have overall responsibility for the affairs of such Subadviser, and generally will approve certain actions by that Subadviser that could materially affect the operations of the Adviser and its subsidiaries as a group.

 

Each Subadviser is, and any future Subadvisers will be, “investment advisers” to the Subadvised Funds within the meaning of Section 2(a)(20) of the 1940 Act and provide, or will provide, investment management services to the Subadvised Funds subject to, without limitation, the requirements of Sections 15(c) and 36(b) of the 1940 Act. In addition, each Subadviser is, and any future Subadvisers will be, registered with the Commission as an investment adviser under the Advisers Act or not subject to such registration. The Adviser selects Subadvisers based on the Adviser’s evaluation of the Subadvisers’ skills in managing assets pursuant to particular investment styles, and recommends their hiring to the Board. The Adviser does, and in the future may, employ multiple Subadvisers for one or more of any Subadvised Funds. In those instances, the Adviser would allocate and, as appropriate, reallocate a Subadvised Fund’s assets among the Subadvisers.

 

The Adviser engages or will engage in an ongoing analysis of the continued advisability of retaining a Subadviser and makes or will make recommendations to the Board as needed. The Adviser also negotiates and renegotiates, or will negotiate and renegotiate, the terms of the Subadvisory Agreements with a Subadviser, including the fees paid to the Subadviser, and makes or will make recommendations to the Board as needed.

 

The Subadvisers, subject to the oversight of the Adviser and the Board, determine or will determine the securities and other instruments to be purchased, sold or entered into by a Subadvised Fund’s portfolio or

 

 

a portion thereof, and place or will place orders with brokers or dealers that they select.⁸ The Subadvisers keep or will keep certain records required by the 1940 Act and the Advisers Act to be maintained on behalf of the relevant Subadvised Fund, and assist or will assist the Adviser to maintain the Subadvised Fund’s compliance with the relevant requirements of the 1940 Act. The Subadvisers monitor or will monitor the respective Subadvised Fund’s investments and provide or will provide periodic reports to the Board and the Adviser. The Subadvisers also make or will make their officers and employees available to the Adviser and the Board to review the investment performance and investment policies of the Subadvised Fund.

 

The Subadvisory Agreements were or will be approved by the Board, including a majority of the Independent Trustees, in accordance with Sections 15(a) and 15(c) of the 1940 Act.

 

The terms of each Subadvisory Agreement comply or will comply fully with the requirements of Section 15(a) of the 1940 Act. Each Subadvisory Agreement will set forth the duties of the Subadviser and precisely describe the compensation paid to the Subadviser.

 

After an initial two-year period, the terms of the Subadvisory Agreements will be reviewed and renewed on an annual basis by the Board, including a majority of the Independent Trustees in accordance with Section 15(c) of the 1940 Act. The Board dedicates or will dedicate substantial time to review contract matters, including matters relating to Investment Advisory Agreements and Subadvisory Agreements. With respect to each Subadvised Fund, the Board reviews or will review comprehensive materials received from the Adviser, the Subadviser, independent third parties and independent counsel. Applicants will continue this annual review and renewal process for Subadvisory Agreements in accordance with the 1940 Act if the relief requested herein is granted by the Commission.

 

The Board reviews or will review information provided by the Adviser and Subadvisers when it is asked to approve or renew Subadvisory Agreements. Each Subadvised Fund discloses or will disclose in its statutory prospectus that a discussion regarding the basis for the Board’s approval and renewal of the Investment Advisory Agreements and any applicable Subadvisory Agreements is available in the Subadvised Fund’s reports filed on Form N-CSR for the relevant period in accordance with Item 10(a)(1)(iii) of Form N-1A. The information provided to the Board is or will be maintained as part of the records of the respective Subadvised Fund pursuant to Rule 31a-1(b)(4) and Rule 31a-2 under the 1940 Act.

 

Pursuant to each Subadvisory Agreement, the Adviser has agreed or will agree to pay each Subadviser a fee, based on a percentage of the applicable assets of a Subadvised Fund, from the fee received by the Adviser from the Subadvised Fund under the Investment Advisory Agreement.⁹ Each Subadviser will bear its own expenses of providing investment management services to a Subadvised Fund.

 

III. Request For Exemptive Relief

 

Section 6(c) of the 1940 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 1940 Act, or any rule thereunder, if such relief is necessary or appropriate in the public interest and consistent with the

 

⁸ For the purposes of this Application, a “Subadviser” also includes an investment subadviser that provides or will provide a model portfolio reflecting a specific strategy, style or focus with respect to the investment of all or a portion of a Subadvised Fund’s assets. The Adviser or another Subadviser may use the model portfolio to determine the securities and other instruments to be purchased, sold, or entered into by a Subadvised Fund’s portfolio or a portion thereof, and place orders with brokers or dealers that it selects.

 

⁹ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

 

protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. Applicants believe that the requested relief described in this Application meets this standard.

 

IV. Applicable Law And Discussion

 

A.

Shareholder Vote

 

1.

Regulatory Background

 

Section 15(a) of the 1940 Act states, in 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, which contract, whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company.”

 

Section 2(a)(20) of the 1940 Act defines an “investment adviser” as any person who, pursuant to an agreement with such registered investment company or with an investment adviser of such registered investment company, is empowered to determine what securities or other property shall be purchased or sold by such registered investment company. Consequently, the Subadvisers are deemed to be within the definition of an “investment adviser” and, therefore, the Subadvisory Agreements are each subject to Section 15(a) of the 1940 Act to the same extent as the Investment Advisory Agreements.

 

Therefore, Section 15(a) of the 1940 Act requires a majority of the outstanding voting securities of a Subadvised Fund to approve Subadvisory Agreements whenever the Adviser proposes to the Board to hire new Subadvisers for a Subadvised Fund. This provision would also require shareholder approval by a majority vote for any material amendment to Subadvisory Agreements.

 

Each Subadvisory Agreement is required to terminate automatically and immediately upon its “assignment,” which could occur upon a change in control of the applicable Subadviser.¹⁰

 

Rule 2a-6 under the 1940 Act provides that certain transactions that do not result in a “change in actual control or management of the investment adviser” to a registered investment company are not assignments for purposes of Section 15(a)(4) of the 1940 Act, thereby effectively providing an exemption from the shareholder voting requirements in Section 15(a) of the 1940 Act. Applicants do not believe that Rule 2a-6 under the 1940 Act provides a safe harbor to recommend, hire and terminate Subadvisers. Each Subadviser is expected to run its own day-to-day operations and each will have its own investment personnel. Therefore, in certain instances appointing certain Subadvisers could be viewed as a change in management and, as a result, an “assignment” within the meaning of the 1940 Act.

 

2.

Requested Relief

 

Applicants seek relief to (i) select Subadvisers, including Affiliated Subadvisers, for all or a portion of the assets of a Subadvised Fund and enter into Subadvisory Agreements and (ii) materially amend Subadvisory Agreements with such Subadvisers, each subject to the approval of the Board, including a majority of the Independent Trustees, without obtaining shareholder approval required under Section 15(a) of the 1940 Act. Such relief would include, without limitation, the replacement or reinstatement of any Subadviser with respect to which a Subadvisory Agreement has automatically terminated as a result of an “assignment,” within the meaning of Section 2(a)(4) of the 1940 Act. Applicants believe that the relief sought should be

 

¹⁰ See Section 15(a)(4) of the 1940 Act. Section 2(a)(4) of the 1940 Act defines “assignment” as any direct or indirect transfer or hypothecation of a contract.

 

 

granted by the Commission because (1) the Adviser either will operate a Subadvised Fund, or may operate a Subadvised Fund, in a manner that is different from conventional investment companies; (2) the relief will benefit shareholders by enabling a Subadvised Fund to operate in a less costly and more efficient manner; and (3) Applicants will consent to a number of conditions that adequately address the policy concerns of Section 15(a) of the 1940 Act, including conditions designed to ensure that shareholder interests are adequately protected through Board oversight.

 

a.

Operations of the Trust

 

Section 15(a) was designed to protect the interests and expectations of a registered investment company’s shareholders by requiring they approve investment advisory contracts, including subadvisory contracts.¹¹ Section 15(a) is predicated on the belief that if a registered investment company is to be managed by an investment adviser different from the investment adviser selected by shareholders at the time of the investment, the new investment adviser should be approved by shareholders.¹² The relief sought in this Application is consistent with this public policy.

 

In the case of a traditional investment company, the investment adviser is a single entity that employs one or more individuals as portfolio managers to make the day-to-day investment decisions. The investment adviser may terminate or hire portfolio managers without board or shareholder approval and has sole discretion to set the compensation it pays to the portfolio managers. Alternatively, for subadvised funds, the investment adviser is not normally responsible for the day-to-day investment decisions and instead, the investment adviser selects, oversees, and evaluates subadvisers who ultimately are responsible for the day-to-day investment decisions.

 

Primary responsibility for management of a Subadvised Fund’s assets, including the selection and oversight of the Subadvisers, is vested in the Adviser, subject to the oversight of the Board.

 

Applicants believe that it is consistent with the protection of investors to vest the selection and oversight of the Subadvisers in the Adviser in light of Applicants’ multi-manager structure, as well as the shareholders’ expectation that the Adviser is in possession of information necessary to select the most capable Subadvisers. The Adviser has the requisite expertise to evaluate, select and oversee the Subadvisers. The Adviser will not normally make day-to-day investment decisions for a Subadvised Fund.¹³

 

From the perspective of the shareholder, the role of the Subadvisers is substantially equivalent to the role of the individual portfolio managers employed by an investment adviser to a traditional investment company. The individual portfolio managers and the Subadvisers are each charged with the selection of portfolio investments in accordance with a Subadvised Fund’s investment objectives and policies and have no broad supervisory or management responsibilities with respect to a Subadvised Fund. Shareholders expect the Adviser, subject to review and approval of the Board, to select a Subadviser who is in the best position to achieve a Subadvised Fund’s investment objective. Shareholders also rely on the Adviser for the overall management of a Subadvised Fund and a Subadvised Fund’s total investment performance.

 

¹¹ See Section 1(b)(6) of the 1940 Act.

 

¹² Hearings on S. 3580 before a Subcomm. of the Senate Comm. on Banking and Currency, 76th Cong., 3d Sess. 253 (1940) (statement of David Schenker).

 

¹³ Although the Adviser will not normally make such day-to-day investment decisions, it may manage all or a portion of a Subadvised Fund.

 

 

Whenever required by Section 15(c) of the 1940 Act, the Board will request and the Adviser and each Subadviser will furnish such information as may be reasonably necessary for the Board to evaluate the terms of the Investment Advisory Agreements and the Subadvisory Agreements. The information that is provided to the Board will be maintained as part of the records of the Subadvised Funds in accordance with the applicable recordkeeping requirements under the 1940 Act and made available to the Commission in the manner prescribed by the 1940 Act.

 

In addition, the Adviser and the Board will consider the reasonableness of the Subadviser’s compensation with respect to each Subadvised Fund for which the Subadviser will provide portfolio management services. Although only the Adviser’s fee is payable directly by a Subadvised Fund, and the Subadviser’s fee is payable by the Adviser,¹⁴ the Subadviser’s fee directly bears on the amount and reasonableness of the Adviser’s fee payable by a Subadvised Fund. Accordingly, the Adviser and the Board will analyze the fees paid to Subadvisers in evaluating the reasonableness of the overall arrangements.

 

With respect to oversight, Applicants note that the Adviser performs and will perform substantially identical oversight of all Subadvisers, regardless of whether they are affiliated with the Adviser. Such oversight is similar in many respects to how the Adviser would oversee its own internal portfolio management teams.

 

b.

Lack of Economic Incentives

 

In allocating the management of Subadvised Fund assets between itself and one or more Subadvisers, Applicants acknowledge that the Adviser has an incentive to consider the benefit it will receive, directly or indirectly, from the fee paid for the management of those assets. However, Applicants believe that the protections afforded by the conditions set forth in this Application would prevent the Adviser from acting to the detriment of a Subadvised Fund and its shareholders. Applicants assert that the proposed conditions are designed to provide the Board with sufficient independence and the resources and information it needs to monitor and address conflicts of interest. In particular, the Adviser will provide the Board with any information that may be relevant to the Board’s evaluation of material conflicts of interest present in any subadvisory arrangement when the Board is considering, with respect to a Subadvised Fund, a change in Subadviser or an existing Subadvisory Agreement as part of its annual review process. The Board will also have to make a separate finding, reflected in the Board minutes, that any change in Subadviser or any renewal of an existing Subadvisory Agreement is in the best interests of the Subadvised Fund and its shareholders and, based on the information provided to it, does not involve a conflict of interest from which the Adviser, a Subadviser, or any officer or Trustee of the Subadvised Fund or any officer or board member of the Adviser derives an inappropriate advantage.

 

Applicants note that the relief they are requesting would not be subject to two conditions that have been customary in previous exemptive orders for similar relief, including (i) restrictions on the ownership of interest in Subadvisers by trustees and officers of the Subadvised Funds and the Adviser, and (ii) a requirement that the Adviser provide the Board with profitability reports each quarter. Applicants believe eliminating these conditions is appropriate with respect to the requested relief. As to the condition on ownership, Applicants assert that restricting ownership of interests in a Subadviser by trustees and officers would not be meaningful where the Adviser may itself own an interest in the Subadviser and the Subadviser may be selected for a Subadvised Fund under the requested relief.¹⁵ As to the condition requiring quarterly profitability reports, Applicants note that the Board reviews and will continue to review profitability

 

¹⁴ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

¹⁵ Any Trustee of the Board that has an ownership interest in a Subadviser would not be deemed an Independent Trustee under Section 2(a)(19) of the 1940 Act.

 

 

information at the time of any proposed Subadviser change (see condition 7) and as part of its annual review of each Subadvisory Agreement pursuant to Section 15(c) of the 1940 Act.

 

Until the Carillon Order, the Commission has granted the requested relief solely with respect to Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive orders. That relief has been premised on the fact that such a Subadviser serves in the same limited capacity as an individual portfolio manager. Applicants believe this same rationale supports extending the requested relief to Affiliated Subadvisers. Moreover, Applicants note that, while the Adviser’s judgment in recommending a Subadviser can be affected by certain conflicts of interest or economic incentives, they do not warrant denying the extension of the requested relief to Affiliated Subadvisers. For one, the Adviser faces those conflicts and incentives in allocating fund assets between itself and a Subadviser, and across Subadvisers, as it has an interest in considering the benefit it will receive, directly or indirectly, from the fee the fund pays for the management of those assets. Moreover, the Adviser has employed and will continue to employ the same methodology to evaluate potential conflicts of interest, regardless of the affiliation between the Adviser and Subadviser. While the selection and retention of Affiliated Subadvisers by the Adviser potentially presents different or additional conflicts of interest than may be the case with Non-Affiliated or Wholly-Owned Subadvisers, the proposed terms and conditions of the requested relief are designed to address the potential conflicts of interest with respect to both those common to all types of Subadvisers and specific to Affiliated Subadvisers. In particular, Applicants believe that the proposed conditions are protective of shareholder interests by ensuring the Board’s independence and providing the Board with the appropriate resources and information to monitor and address conflicts.

 

c.

Benefits to Shareholders

 

Without the requested relief, when a new Subadviser is retained by the Adviser on behalf of a Subadvised Fund, the shareholders of the Subadvised Fund are required to approve the Subadvisory Agreement. Similarly, if an existing Subadvisory Agreement with a Subadviser is amended in any material respect, approval by the shareholders of the affected Subadvised Fund is required. Moreover, if a Subadvisory Agreement with a Subadviser is “assigned” as a result of a change in control of the Subadviser, the shareholders of the affected Subadvised Fund will be required to approve retaining the existing Subadviser. In all these instances the need for shareholder approval requires a Subadvised Fund to call and hold a shareholder meeting, create and distribute proxy materials, and solicit votes from shareholders on behalf of the Subadvised Fund, and generally necessitates the retention of a proxy solicitor. This process is time-intensive, expensive and slow, and, in the case of a poorly performing Subadviser or one whose management team has parted ways with the Subadviser, potentially harmful to a Subadvised Fund and its shareholders.

 

As noted above, shareholders investing in a Fund that has a Subadviser are effectively hiring the Adviser to manage a Subadvised Fund’s assets by overseeing, monitoring and evaluating the Subadviser rather than by the Adviser hiring its own employees to oversee the Subadvised Fund. Applicants believe that permitting the Adviser to perform the duties for which the shareholders of a Subadvised Fund are paying the Adviser — the selection, oversight and evaluation of Subadvisers, including Affiliated Subadvisers — without incurring unnecessary delays or expenses is appropriate and in the interest of a Subadvised Fund’s shareholders and will allow such Subadvised Fund to operate more efficiently. Within this structure, the Adviser is in the better position to make an informed selection and evaluation of a Subadviser than are individual shareholders. Without the delay inherent in holding shareholder meetings (and the attendant difficulty in obtaining the necessary quorums), a Subadvised Fund will be able to hire or replace Subadvisers more quickly and at less cost, when the Board, including a majority of the Independent Trustees, and the Adviser believe that a change would benefit a Subadvised Fund and its shareholders.

 

 

Until the Carillon Order, the Commission has previously granted the requested relief solely with respect to certain Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive orders. That relief would permit Subadvised Funds to avoid the time-intensive and expensive shareholder solicitation process with respect to hiring or making a material amendment to a Subadvisory Agreement with respect to such subadvisers. As discussed above, Applicants believe the same rationale supports extending the requested relief to Affiliated Subadvisers as well, and while Affiliated Subadvisers may give rise to different or additional conflicts of interests, the proposed terms and conditions, including the enhanced oversight by the Board, address such potential conflicts. Moreover, treating all Subadvisers equally under the requested relief might help avoid the selection of Subadvisers potentially being influenced by considerations regarding the applicable regulatory requirements (i.e., whether a shareholder vote is required) and the associated costs and delays.¹⁶

 

If the relief requested is granted, each Investment Advisory Agreement will continue to be fully subject to Section 15(a) of the 1940 Act. Moreover, the relevant Board will consider the Investment Advisory Agreements and Subadvisory Agreements in connection with its annual contract renewal process under Section 15(c) of the 1940 Act, and the standards of Section 36(b) of the 1940 Act will be applied to the fees paid to each Subadviser.

 

3.

Shareholder Notification

 

With the exception of the relief requested in connection with Aggregate Fee Disclosure (as defined below), the prospectus and statement of additional information for each Subadvised Fund will include all information required by Form N-1A concerning the Subadvisers, including Affiliated Subadvisers, if the requested relief is granted. If a new Subadviser is retained, an existing Subadviser is terminated, or a Subadvisory Agreement is materially amended, a Subadvised Fund’s prospectus and statement of additional information will be supplemented promptly pursuant to Rule 497(e) under the Securities Act.

 

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;¹⁷ and (b) a Subadvised Fund will make the Multi-manager Information Statement available on the website 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

 

¹⁶ The Adviser is responsible for selecting Subadvisers in the best interests of a Subadvised Fund, regardless of the costs or timing constraints that may be associated with the process of seeking shareholder approval of Subadvisory Agreements and material amendments thereto.

 

¹⁷ 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 (except as modified to permit Aggregate Fee Disclosure as defined in this Application); (b) inform shareholders that the Multi-manager Information Statement is available on a website; (c) provide the website address; (d) state the time period during which the Multi-manager Information Statement will remain available on that website; (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 applicable Subadvised Fund.

 

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 with the Commission via the EDGAR system.

 

 

it on that website for at least 90 days. Under the requested relief, a Subadvised Fund would not furnish a Multi-manager Information Statement to shareholders when an existing Subadvisory Agreement is materially modified. 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 Board would comply with the requirements of Sections 15(a) and 15(c) of the 1940 Act before entering into or amending Subadvisory Agreements.

 

Prior to any Subadvised Fund relying on the requested relief in this Application, the Board, including its Independent Trustees, will have approved its operations as described herein. Additionally, the shareholders of the applicable Subadvised Fund have approved, or will approve, its operation as described herein by a vote of a majority of the outstanding voting securities, within the meaning of the 1940 Act, or by the sole shareholder prior to a Subadvised Fund offering its shares.¹⁸

 

B.

Fee Disclosure

 

1.

Regulatory Background

 

Form N-lA is the registration statement used by open-end investment companies. Item 19(a)(3) of Form N-1A requires a registered investment company to disclose in its statement of additional information the method of computing the “advisory fee payable” by the investment company with respect to each investment adviser, including the total dollar amounts that the investment company “paid to the adviser (aggregated with amounts paid to affiliated advisers, if any), and any advisers who are not affiliated persons of the adviser, under the investment advisory contract for the last three fiscal years.”

 

Rule 20a-1 under the 1940 Act requires proxies solicited with respect to a registered investment company to comply with Schedule 14A under the Exchange Act. Item 22 of Schedule 14A sets forth the information that must be included in a registered investment company’s proxy statement. Item 22(c)(1)(ii) requires a proxy statement for a shareholder meeting at which action will be taken on an investment advisory agreement to describe the terms of the advisory contract, “including the rate of compensation of the investment adviser.” Item 22(c)(1)(iii) requires a description of the “aggregate amount of the investment adviser’s fees and the amount and purpose of any other material payments” by the investment company to the investment adviser, or any affiliated person of the investment adviser during the fiscal year. Item 22(c)(8) requires a description of “the terms of the contract to be acted upon, and, if the action is an amendment to, or a replacement of, an investment advisory contract, the material differences between the current and proposed contract.” Finally, Item 22(c)(9) requires a proxy statement for a shareholder meeting at which a change in the advisory fee will be sought to state (i) the aggregate amount of the investment adviser’s fee during the last year; (ii) the amount that the adviser would have received had the proposed fee been in effect; and (iii) the difference between (i) and (ii) stated as a percentage of the amount in (i). Together, these provisions may require a Subadvised Fund to disclose the fees paid to a Subadviser in connection with shareholder action with respect to entering into, or materially amending, an advisory agreement or establishing, or increasing, advisory fees.

 

¹⁸ If a Subadvised Fund has obtained shareholder approval to operate pursuant to an exemptive order that would permit it to operate in a multi-manager structure where the Adviser would enter into or amend Subadvisory Agreements only with respect to Wholly-Owned and Non-Affiliated Subadvisers subject to Board approval but without obtaining shareholder approval and has met all other terms and conditions of the requested order, the Subadvised Fund may rely on the applicable part of the order requested in this Application (i.e., hiring, amending Subadvisory Agreements with, and including Aggregate Fee Disclosure (as defined below) in response to the disclosure requirements discussed herein with respect to Wholly-Owned and Non-Affiliated Subadvisers).

 

 

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. These provisions could require a Subadvised Fund’s financial statements to disclose information concerning fees paid to a Subadviser. The exemption from Regulation S-X requested below would permit a Subadvised Fund to include only the Aggregate Fee Disclosure (as defined below); all other items required by Sections 6-07(2)(a), (b) and (c) of Regulation S-X will be disclosed.

 

2.

Requested Relief

 

Applicants seek relief to permit each Subadvised Fund to disclose (as a dollar amount and a percentage of the Subadvised Fund’s net assets) (a) the aggregate fees paid to the Adviser and any Wholly-Owned Subadvisers; and (b) the aggregate fees paid to Affiliated and Non-Affiliated Subadvisers (collectively, the “Aggregate Fee Disclosure”) in lieu of disclosing the fees that may be required by Item 19(a)(3) of Form N-lA, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, and Section 6-07(2)(a), (b) and (c) of Regulation S-X.¹⁹ The Aggregate Fee Disclosure would be presented as both a dollar amount and as a percentage of the Subadvised Fund’s net assets. Applicants believe that the relief sought in this Application should be granted because the Adviser intends to operate the Subadvised Funds under a multi-manager structure. As a result, disclosure of the individual fees that the Adviser pays to the Subadvisers would not serve any meaningful purpose.

 

As noted above, the Adviser may operate a Subadvised Fund in a manner different from a traditional investment company. By investing in a Subadvised Fund, shareholders are hiring the Adviser to manage the Subadvised Fund’s assets by overseeing, evaluating, monitoring, and recommending Subadvisers rather than by hiring its own employees to manage the assets directly. The Adviser, under the oversight of the Board, is responsible for overseeing the Subadvisers and recommending their hiring and replacement. In return, the Adviser receives an advisory fee from each Subadvised Fund. Pursuant to each Subadvisory Agreement, the Adviser has agreed or will agree to pay each Subadviser a fee, based on a percentage of assets of a Subadvised Fund, from the fee received by the Adviser from a Subadvised Fund under the Investment Advisory Agreement.²⁰ Each Subadviser will bear its own expenses of providing investment management services to a Subadvised Fund. Disclosure of the individual fees that the Adviser would pay to the Subadvisers does not serve any meaningful purpose since investors pay the Adviser to oversee, monitor, evaluate and compensate the Subadvisers. Applicants contend that the primary reasons for requiring disclosure of individual fees paid to Subadvisers are to inform shareholders of expenses to be charged by a particular Subadvised Fund and to enable shareholders to compare the fees to those of other comparable investment companies. Applicants believe that the requested relief satisfies these objectives because each Subadvised Fund’s overall advisory fee will be fully disclosed and, therefore, shareholders

 

¹⁹ As used herein, a “Wholly-Owned Subadviser” is any investment adviser that is (1) an indirect or direct “wholly-owned subsidiary” (as such term is defined in Section 2(a)(43) of the 1940 Act) of the Adviser, (2) a “sister company” of the Adviser that is an indirect or direct “wholly-owned subsidiary” of the same company that indirectly or directly wholly owns the Adviser (the Adviser’s “parent company”), or (3) a parent company of the Adviser. A “Non-Affiliated Subadviser” is any investment adviser that is not an “affiliated person” (as defined in the 1940 Act) of a Fund or the Adviser, except to the extent that an affiliation arises solely because the Subadviser serves as a subadviser to one or more Funds. Section 2(a)(43) of the 1940 Act defines “wholly-owned subsidiary” of a person as a company 95 per centum or more of the outstanding voting securities of which are, directly or indirectly, owned by such a person.

 

²⁰ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

 

will know what a Subadvised Fund’s fees and expenses are and will be able to compare the advisory fees a Subadvised Fund is charged to those of other investment companies.

 

Indeed, in a more conventional arrangement, requiring the Subadvised Funds to disclose the fees negotiated between the Adviser and the Subadvisers would be the functional equivalent of requiring single adviser investment companies to disclose the salaries of individual portfolio managers employed by that investment adviser. In the case of a traditional investment company, disclosure is made of the compensation paid to the investment adviser, but shareholders are not told or asked to vote on the salary paid by the investment adviser to individual portfolio managers. Similarly, in the case of the Subadvised Funds, the shareholders will have chosen to employ the Adviser and to rely upon the Adviser’s expertise in monitoring the Subadvisers, recommending the Subadvisers’ selection and termination (if necessary), and negotiating the compensation of the Subadvisers. There are no policy reasons that require shareholders of the Subadvised Funds to be informed of the individual Subadviser’s fees any more than shareholders of a traditional investment company (single investment adviser) would be informed of the particular investment adviser’s portfolio managers’ salaries.²¹

 

The requested relief would benefit shareholders of the Subadvised Funds because it would improve the Adviser’s ability to negotiate the fees paid to Subadvisers, including Affiliated Subadvisers. The Adviser’s ability to negotiate with the various Subadvisers would be adversely affected by public disclosure of fees paid to each Subadviser. If the Trust is not required to disclose the Subadvisers’ fees to the public, it may be possible to negotiate rates that are below a Subadviser’s “posted” amounts as the rate would not be disclosed to the Subadviser’s other clients. Moreover, if one Subadviser is aware of the advisory fee paid to another Subadviser, the Subadviser would likely take it into account in negotiating its own fee.

 

Until the Carillon Order, the Commission has previously granted the requested relief solely with respect to Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive orders. That relief only permitted the disclosure of aggregate fees paid to Wholly-Owned and Non-Affiliated Subadvisers and required disclosure of individual fees paid to Affiliated Subadvisers. If the requested relief under Section 15(a) of the 1940 Act is granted to extend to Affiliated Subadvisers, Applicants believe it is appropriate to permit each Subadvised Fund to disclose only aggregate fees paid to Affiliated Subadvisers for the same reasons that similar relief has been granted to Wholly-Owned and Non-Affiliated Subadvisers, as discussed above.

 

C.

Precedent

 

Applicants note that substantially identical relief was granted by the Commission in the Carillon Order and more recently in the Roundhill Order, the BondBloxx Order, the RM Opportunity Order, the Advisors Trust Order, the New Age Alpha Trust Order, and the LFT Order. Applicants note that substantially the same exemptions requested herein with respect to relief from Section 15(a) and relief from the disclosure requirements of the rules and forms discussed herein for Subadvisers, including Affiliated Subadvisers, have been granted previously by the Commission with respect to Wholly-Owned and Non-Affiliated

 

²¹ The relief would be consistent with the Commission’s disclosure requirements applicable to fund portfolio managers that were previously adopted. See Investment Company Act Release No. 26533 (Aug. 23, 2004). Under these disclosure requirements, a fund is required to include in its statement of additional information, among other matters, a description of the structure of and the method used to determine the compensation structure of its “portfolio managers.” Applicants state that with respect to each Subadvised Fund, the statement of additional information will describe the structure of, and method used to determine, the compensation received by each portfolio manager employed by any Subadviser. In addition to this disclosure with respect to portfolio managers, Applicants state that with respect to each Subadvised Fund, the statement of additional information will describe the structure of, and method used to determine, the compensation received by each Subadviser.

 

 

Subadvisers. See, e.g., Natixis Funds Trust I, et al., Investment Company Act Release Nos. 33265 (October 5, 2018) (notice) and 33287 (October 31, 2018) (order); Advisors Asset Management, Inc. and ETF Series Solutions, Investment Company Act Release Nos. 33169 (July 24, 2018) (notice) and 33207 (August 21, 2018) (order); TriLine Index Solutions, LLC and ETF Series Solutions, Investment Company Act Release Nos. 33159 (July 11, 2018) (notice) and 33192 (August 6, 2018) (order); SL Advisors, LLC and ETF Series Solutions, Investment Company Act Release Nos. 33158 (July 11, 2018) (notice) and 33193 (August 6, 2018) (order); DMS ETF Trust I, et al., Investment Company Act Release Nos. 33156 (July 10, 2018) (notice) and 33196 (August 7, 2018) (order).

 

For the reasons set forth above, Applicants believe that the relief sought would be appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

 

V. Conditions

 

Applicants agree that any order of the Commission 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 this Application will be, or has been, approved by a majority of the Subadvised Fund’s outstanding voting securities as defined in the 1940 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 multi-manager structure described in this Application. 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) The 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 oversight of the Board, will (i) set the Subadvised Fund’s overall investment strategies, (ii) evaluate, select, and recommend Subadvisers for 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.

 

(4) 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.

 

(5) At all times, at least a majority of the Board will be Independent Trustees, and the selection and 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 1940 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 is hired or terminated, the Adviser will provide the Board with information showing the expected impact on the profitability of the Adviser.

 

(8) The Board must evaluate any material conflicts that may be present in a subadvisory arrangement. Specifically, whenever a subadviser change is proposed for a Subadvised Fund (“Subadviser Change”) or the Board considers an existing Subadvisory Agreement as part of its annual review process (“Subadviser Review”):

 

(a) the Adviser will provide the Board, to the extent not already being provided pursuant to Section 15(c) of the 1940 Act, with all relevant information concerning:

 

(i) any material interest in the proposed new Subadviser, in the case of a Subadviser Change, or the Subadviser in the case of a Subadviser Review, held directly or indirectly by the Adviser or a parent or sister company of the Adviser, and any material impact the proposed Subadvisory Agreement may have on that interest;

 

(ii) any arrangement or understanding in which the Adviser or any parent or sister company of the Adviser is a participant that (A) may have had a material effect on the proposed Subadviser Change or Subadviser Review, or (B) may be materially affected by the proposed Subadviser Change or Subadviser Review;

 

(iii) any material interest in a Subadviser held directly or indirectly by an officer or Trustee of the Subadvised Fund, or an officer or board member of the Adviser (other than through a pooled investment vehicle not controlled by such person); and

 

(iv) any other information that may be relevant to the Board in evaluating any potential material conflicts of interest in the proposed Subadviser Change or Subadviser Review.

 

(b) the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the Board minutes, that the Subadviser Change or continuation after Subadviser Review is in the best interests of the Subadvised Fund and its shareholders and, based on the information provided to the Board, does not involve a conflict of interest from which the Adviser, a Subadviser, any officer or Trustee of the Subadvised Fund, or any officer or board member of the Adviser derives an inappropriate advantage.

 

(9) Each Subadvised Fund will disclose in its registration statement the Aggregate Fee Disclosure.

 

(10) In the event that the Commission adopts a rule under the 1940 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.

 

(11) Any new Subadvisory Agreement or any amendment to an existing Investment Advisory Agreement or Subadvisory Agreement that directly or indirectly results in an increase in the aggregate advisory fee rate payable by a Subadvised Fund will be submitted to the Subadvised Fund’s shareholders for approval.

 

 

VI. Procedural Matters

 

All of the requirements for execution and filing of this Application on behalf of Applicants have been complied with in accordance with the applicable organizational documents of Applicants, and the undersigned officers of Applicants are fully authorized to execute this Application and any amendments hereto. The authorizations to file are attached as Exhibits A-1 and A-2 to this Application in accordance with the requirements of Rule 0-2(c)(1) under the 1940 Act and the verifications required by Rule 0-2(d) under the 1940 Act are attached as Exhibits B-1 and B-2 to this Application. Marked copies of the Application are included as Exhibits C-1 and C-2 to this Application in accordance with the requirements of Rule 0-5(e) under the 1940 Act.

 

Pursuant to Rule 0-2(f) under the 1940 Act, the Trust states that its address is 1475 Dunwoody Drive, Suite 200, West Chester, PA, 19380 and the Adviser states that its address is 1475 Dunwoody Drive, Suite 200, West Chester, PA, 19380, and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.

 

Applicants desire that the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.

 

VII. Conclusion

 

For the foregoing reasons, Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act granting the relief requested in the Application.

 

Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with the protection of investors and consistent with the purpose fairly intended by the policy and provisions of the 1940 Act.

 

Respectfully submitted,
Venerable Variable Insurance Trust
By:	/s/ Michal Levy
	Name: Michal Levy
	Title: President
Venerable Investment Advisers, LLC
By:	/s/ Timothy Brown
	Name: Timothy Brown
	Title: President

 

January 27, 2025

 

 

Exhibit Index

 

Authorization of Venerable Variable Insurance Trust	Exhibit A-1
Authorization of Venerable Investment Advisers, LLC	Exhibit A-2
Verification of Venerable Variable Insurance Trust	Exhibit B-1
Verification of Venerable Investment Advisers, LLC	Exhibit B-2
Marked Copies of the Application Pursuant to Rule 0-5(e)	Exhibits C-1 and C-2

 

 

Exhibit A-1

 

Venerable Variable Insurance Trust

Authorization to File Exemptive Application

 

The undersigned, Kristina Magolis, hereby certifies that she is the duly appointed Secretary of Venerable Variable Insurance Trust (the “Trust”); that, with respect to the attached application for exemption from the provisions of the Investment Company Act of 1940 (the “1940 Act”), the rules and forms thereunder and any amendments thereto (such application along with any amendments, the “Application”), all actions necessary to authorize the execution and filing of the Application under the Amended and Restated Declaration of Trust and Bylaws of the Trust have been taken and the person signing and filing the Application on behalf of the Trust is fully authorized to do so; and that the following is a complete, true and correct copy of the resolutions duly adopted by the Initial Trustee of the Trust on October 23, 2023, in accordance with the Bylaws of the Trust, and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

 

VOTED:

That the appropriate officers of the Trust be, and hereby are, authorized to file on behalf of the Trust an application with the SEC for an order pursuant to Section 6(c) of the 1940 Act, exempting the Trust and Venerable Investment Advisers, LLC (the “Adviser”) from: (i) the provisions of Section 15(a) of the 1940 Act to permit the Adviser (or a sub-adviser with respect to money managers), subject to the supervision of the Board, to appoint new sub-advisers and money managers to a fund for which the Adviser serves as investment adviser and to make material changes to the sub-advisory agreements and money manager agreements with sub-advisers and money managers to a fund without obtaining shareholder approval of the applicable fund; and (ii) the disclosures required pursuant to 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, and Sections 6-07(2)(a)-(c) of Regulation S-X relating to sub-adviser and money manager compensation.

 

VOTED:

That the appropriate officers of the Trust be, and hereby are, authorized to file on behalf of the Trust with the SEC any amendments to the exemptive application in such form as the officers or any one of the officers deem necessary and appropriate to do any and all things necessary or proper under the 1940 Act, the Investment Advisers Act of 1940, as amended (the “Advisers Act”), the 1933 Act, and the Securities Exchange Act of 1934, as amended (the “1934 Act”), including the submission and filing of any and all amendments, reports and other documents deemed by such officer to be necessary or proper to accomplish the objectives of these resolutions.

 

VOTED:

That the appropriate officers of the Trust be, and each of them hereby is, authorized, empowered and directed to take all actions and to execute all documents necessary to give full effect to the foregoing resolutions in such manner or such forms as the officer or officers shall approve in his, her, or their discretion, in each case as conclusively evidenced by his, her, or their actions thereby or signatures thereon.

 

By:	/s/ Kristina Magolis
Name:	Kristina Magolis
Title:	Secretary
Dated:	January 27, 2025

 

 

Exhibit A-2

 

Venerable Investment Advisers, LLC

Authorization to File Exemptive Application

 

The undersigned, Timothy Brown, hereby certifies that he is the duly elected President of Venerable Investment Advisers, LLC (“VIA”); that, with respect to the attached application for exemption from the provisions of the Investment Company Act of 1940, rules and forms thereunder and any amendments thereto (such application along with any amendments, the “Application”), all actions necessary to authorize the execution and filing of the Application under the charter documents of VIA have been taken; and that the person signing and filing the Application by VIA is fully authorized to do so.

 

 

By:	/s/ Timothy Brown
Name:	Timothy Brown
Title:	President

 

 

Exhibit B-1

 

Venerable Variable Insurance Trust

 

Verification Pursuant to Rule 0-2(d)

 

The undersigned states she has duly executed the attached Application dated January 27, 2025, for and on behalf of Venerable Variable Insurance Trust; that she is the President of such trust; and that all action by shareholders, trustees and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further says that she is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

 

Venerable Variable Insurance Trust

 

By:	/s/ Michal Levy
Name:	Michal Levy
Title:	President

 

 

Exhibit B-2

 

Venerable Investment Advisers, LLC

 

Verification Pursuant to Rule 0-2(d)

 

The undersigned states he has duly executed the attached Application dated January 27, 2025, for and on behalf of Venerable Investment Advisers, LLC; that he is the President of such company; and that all action by officers, directors and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further says that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

 

Venerable Investment Advisers, LLC
By:	/s/ Timothy Brown
Name:	Timothy Brown
Title:	President

 

 

Exhibit C-1

 

 

EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)

 

File No. 812-15516812-[__]

 

As filed with the Securities and Exchange Commission on January 2527, 20242025

 

U.S. Securities and Exchange Commission
Washington, D.C. 20549

 

 

 

SECOND AMENDED AND RESTATED APPLICATION FOR
AN ORDER OF EXEMPTION PURSUANT TO SECTION 6(c)
OF THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE “1940 ACT”),
FROM: (1) CERTAIN PROVISIONS OF SECTION 15(a) OF THE 1940 ACT AND
(2) CERTAIN DISCLOSURE REQUIREMENTS UNDER
VARIOUS RULES AND FORMS

 

In the Matter of

 

Roundhill ETF Trust
154 West 14^th Street, 2^nd Floor
New York, New York 10011

Venerable Variable Insurance Trust
1475 Dunwoody Drive, Suite 200
West Chester, PA 19380

 

and

 

Roundhill Financial Inc.
154 West 14^th Street, 2^nd Floor
New York, New York 10011

Venerable Investment Advisers, LLC
1475 Dunwoody Drive, Suite 200
West Chester, PA 19380

 

Please direct all communications regarding this Application to:

 

Morrison Warren, Esq. ([email protected])
Richard Coyle, Esq. ([email protected])
Suzanne Russell, Esq. ([email protected])
Chapman and Cutler LLP
320 South Canal Street
Chicago, Illinois 60606

Beau Yanoshik

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue NW

Washington, DC 20004

Telephone: (202) 373-6133 

 

 

with a copy to:

 

Timothy Maloney ([email protected])
Roundhill Financial Inc.
154 West 14^th Street, 2^nd Floor
New York, New York 10011

Kristina Magolis

Venerable Investment Advisers, LLC

1475 Dunwoody Drive, Suite 200

West Chester, PA 19380

Telephone: (800) 366-0066 

 

 

This Application (including Exhibitsexhibits) contains 8480 pages.

 

 

United States of America

BEFORE THE

Securities and Exchange Commission
Washington, D.C. 20549

In the Matter of   Roundhill ETF Trust 154 West 14th Street, 2nd Floor New York, New York 10011   and   Roundhill Financial Inc. 154 West 14th Street, 2nd Floor New York, New York 10011   Investment Company Act of 1940 File No. 812-15516

 

SECOND AMENDED AND RESTATED APPLICATION FOR AN ORDER OF EXEMPTION PURSUANT TO SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE“1940 ACT”), FROM CERTAIN PROVISIONS OF SECTION 15(a) OF THE 1940 ACT AND FROM CERTAIN DISCLOSURE REQUIREMENTS UNDER VARIOUS RULES AND FORMS 

 

 

I. Introduction

 

Roundhill ETFVenerable Variable Insurance Trust (the “Trust”), a registered open-end management investment company that offers one or moremultiple series of shares (each, a “Fund” and collectively, the “Funds”), on its own behalf, and on behalf of each Fund, and Roundhill Financial Inc. (the “Initial Adviser” or Venerable Investment Advisers, LLC (the “Adviser” and together with the Trust, the “Applicants”),¹, hereby submit this second amended and restated application (the “Application”) to the Securities and Exchange Commission (the “Commission”) for an order of exemption pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”).

 

Applicants request an order exempting them from Section 15(a) of the 1940 Act to permit the Adviser, subject to the approval of the board of trustees of the Trust (the “Board” or “Trustees”)², including a majority of those who are not “interested persons” of the Trust or the Adviser, as defined in Section 2(a)(19) of the 1940 Act (the “Independent Trustees”), to take certain actions without obtaining shareholder approval as follows: (i) select investment subadvisers (each a “Subadviser” and collectively, the “Subadvisers”) for all or a portion of the assets of a Fund pursuant to an investment subadvisory agreement with each Subadviser (each a “Subadvisory Agreement” and collectively, the “Subadvisory Agreements”); and (ii) materially amend Subadvisory Agreements with the Subadvisers.

As used herein, a “Subadviser” for a Fund is any investment adviser that enters into a Subadvisory Agreement with respect to a Fund.

 

Applicants also apply for an order of the Commission under Section 6(c) of the 1940 Act exempting a Fund from certain disclosure obligations under the following rules and forms: (i) Item 19(a)(3) of Form N-1A; (ii) 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, as amended (the “Exchange Act”); and (iii) Sections 6-07(2)(a), (b), and (c) of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). Similar to the order the Commission recently granted to Carillon Series Trust, et al.,³, in addition to Wholly-Owned and Non-Affiliated

 

¹ The term “Adviser” means (i) the Initial AdviserVenerable Investment Advisers, LLC, (ii) its successors, and (iii) any entity controlling, controlled by, or under common control with, the Initial AdviserVenerable Investment Advisers, LLC or its successors that serves as the primary adviser to a Subadvised Fund (as defined below). For the 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 The term “Board” also includes the board of trustees or directors of a future Subadvised Fund (as defined below), if different from the board of trustees of the Trust.

 

³ The Commission issued an order granting the expanded relief requested by the Application. Carillon Series Trust, et al., Investment Company Act Release NoNos. 33464 (May 2, 2019) (Notice) and No. 33494 (May 29, 2019) (Order) (the “Carillon Order”). See also Roundhill ETF Trust and Roundhill Financial, Inc., Investment Company Act Release Nos. 35120 (January 30, 2024) (Notice) and 35147 (February 27, 2024) (Order) (the “Roundhill Order”); BondBloxx ETF Trust and BondBloxx Investment Management Corporation, Investment Company Act Release Nos. 35119 (Notice) (January 30, 2024) and 35146 (Order) (February 27, 2024) (the “BondBloxx Order”); RM Opportunity Trust and Rocky Mountain Private Wealth Management L.L.C., Investment Company Act Release NoNos. 34964 (July 24, 2023) (Notice) and No. 34986 (August 21, 2023 ) (Order) (the “RM Opportunity Order”). See also; Advisors Series Trust and Semper Capital Management, L.P., Investment Company Act Release NoNos. 34500 (February 9, 2022) (Notice) and No. 34528 (March 8, 2022) (Order) (the “Advisors Trust Order”). See also; New Age Alpha Trust and New Age Alpha Advisors, LLC, Investment Company Act Rel. NoNos. 34322 (July 6, 2021) (Notice) and No. 34348 (August 3, 2021) (Order) (the “New Age Alpha Trust Order”). See also; and Listed Funds Trust, et al., Investment Company Act Rel. NoNos. 34293 (June 2, 2021) (Notice) and No. 34321 (June 29, 2021) (Order) (“LFT Order”). See also Azzad Funds, et al., Investment Company Act Rel. No. 34241 (April 5, 2021) and No. 34261 (April 30, 2021) (“Azzad Order”). See also ETF Series Solutions and Distillate Capital Partners LLC, Investment Company Act Release No. 34169 (January 11, 2021) (Notice) and No. 34190 (February 8, 2021) (Order)

 

 

Subadvisers (both as defined below), the relief described in this Application would extend to any Subadviser that is an “affiliated person” (as such term is defined in Section 2(a)(3) of the 1940 Act) of a Fund or the Adviser for reasons other than serving as investment subadviser to one or more Funds (an “Affiliated Subadviser”).⁴

 

Applicants request that the relief sought herein apply to Applicants, as well as to any existing or future registered open-end management investment company or series thereof that intends to rely on the requested order in the future and (i) is advised by the Adviser; (ii) uses the multi-manager structure described in this Application; and (iii) complies with the terms and conditions set forth herein (each, together with any Fund that currently uses or will use the multi-manager structure described in this Application, a “Subadvised Fund” and collectively, the “Subadvised Funds”).⁵

 

Applicants are seeking this exemption primarily to enhance the ability of the Adviser and the Board to obtain for a Subadvised Fund the services of one or more Subadvisers believed by the Adviser and the Board to be particularly well suited for all or a portion of the assets of the Subadvised Fund, and to make material amendments to Subadvisory Agreements believed by the Adviser and the Board to be appropriate, without the delay and expense of convening special meetings of shareholders to approve the Subadvisory Agreements. Under this structure, the Adviser, in its capacity as investment adviser, would evaluate, allocate assets to, and oversee the Subadvisers, and make recommendations about their hiring, termination and replacement to the Board, at all times subject to the authority of the Board. This structure is commonly referred to as a “multi-manager” structure. In addition, Applicants are seeking relief from certain disclosure requirements concerning fees paid to Subadvisers.

 

(the “Distillate Capital Order”); Esoterica Thematic Trust and Esoterica Capital LLC, Investment Company Act Release No. 34161 (January 4, 2021) (Notice) and No. 34185 (February 1, 2021) (Order) (the “Esoterica Order”); ETF Series Solutions and Clearshares LLC, Investment Company Act Release No. 34144 (December 21, 2020) (Notice) and No. 34174 (January 19, 2021) (Order) (the “Clearshares Order”); OSI ETF Trust, et al., Investment Company Act Release No. 33678 (October 29, 2019) (Notice) and No. 33705 (November 26, 2019) (Order) (the “OSI ETF Order”); and Investment Managers Series Trust II, et al., Investment Company Act Release No. 34075 (October 27, 2020) (Notice) and No. 34104 (November 23, 2020) (Order) (the “Investment Managers Order”).

 

 

⁴ Section 2(a)(3) of the 1940 Act defines “affiliated person” as follows: “Affiliated person” of another person means (A) any person directly or indirectly owning, controlling, or holding with power to vote, 5 per centum or more of the outstanding voting securities of such other person; (B) any person 5 per centum or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other person; (C) any person directly or indirectly controlling, controlled by, or under common control with, such other person; (D) any officer, director, partner, copartner, or employee of such other person; (E) if such other person is an investment company, any investment adviser thereof or any member of an advisory board thereof; and (F) if such other person is an unincorporated investment company not having a board of directors, the depositor thereof

.

 

⁵ All registered open-end investment companies that currently intend to rely on the requested order are named as Applicants. All Funds that currently are, or that currently intend to be, Subadvised Funds are identified in this Application. Any entity that relies on the requested order will do so only in accordance with the terms and conditions contained in this Application.

 

For purposes of this Application, the term “Subadviser” will also apply to any Subadviser to any wholly-owned subsidiary of a Subadvised Fund (each, a “Subsidiary” and collectively, the “Subsidiaries”). The Adviser will serve as investment adviser to each Subsidiary and may retain one or more Subadvisers to manage the assets of a Subsidiary. Applicants also request relief with respect to any Subadvisers who serve as Subadvisers to a Subsidiary. Where appropriate, Subsidiaries are also included in the term “Subadvised Funds.”

 

 

For the reasons discussed below, Applicants believe that the requested relief is appropriate, in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. Applicants believe that the Subadvised Funds would be negatively impacted without the requested relief because of delays in hiring or replacing Subadvisers and costs associated with the proxy solicitation to approve new or amended Subadvisory Agreements.

 

II. Background

A.                A.       The Trust

 

The Trust is registered under the 1940 Act as an open-end management investment company organized as a Delaware statutory trust. The Adviser serves or will serve as “investment adviser,” as defined in Section 2(a)(20) of the 1940 Act, to each Fund. The Trust intends to operate one or more Funds under a multi-manager structure, and whichshares of the Funds are or will be offered and sold pursuant to a registration statement on Form N-1A. The Board consists of fourfive (45) trustees, three (3)the majority of whom serve as anare Independent TrusteeTrustees.

 

The Trust intends to offer shares of multiple series, each with its own distinct investment objectives, policies, and restrictions. The Adviser has retained a Subadviser to provide investment advisory services to one or more Funds.⁶

The Trust currently consists of the following Funds and may introduce new Funds in the future: Venerable High Yield Fund, Venerable Large Cap Index Fund, Venerable Moderate Allocation Fund, Venerable Strategic Bond Fund, and Venerable US Large Cap Strategic Equity Fund.⁶ Sub-Advisers have been engaged to provide services to the Funds. Each Fund intends to operate under a multi-manager structure.⁷

 

B.                 B.       The Adviser

 

Roundhill Financial Inc.Venerable Investment Advisers, LLC, with its business address at 154 West 14^th Street, 2^nd Floor, New York, New York 100111475 Dunwoody Drive, Suite 200, West Chester, PA, 19380, is a Delaware corporationlimited liability company registered with the Commission as an

 

⁶ Each Subadvised Fund discloses or will disclose in its registration statement that it intends to operate pursuant to the order as requested in this Application, if granted. The prospectus for a Subadvised Fund will continue to include the disclosure required by Condition 2 below at all times subsequent to the approval required by Condition 1 below. If a Subadvised Fund has obtained shareholder approval to operate under the multi-manager structure described herein prior to the issuance of an order as requested in this Application, the prospectus for the Subadvised Fund will at all times following such shareholder approval contain appropriate disclosure that the Subadvised Fund has applied for exemptive relief to operate under the multi-manager structure described herein, including the ability to hire new Subadvisers and materially amend an existing Subadvisory Agreement without soliciting further shareholder vote.

⁶The Trust has filed an amendment to its registration statement on Form N-1A that is not yet effective with respect to thirteen new Funds. Each Fund intends to operate under a multi-manager structure.

 

⁷ Each Subadvised Fund discloses or will disclose in its registration statement that it intends to operate pursuant to the order requested in this Application, if granted. The prospectus for a Subadvised Fund will continue to include the disclosure required by Condition 2 below at all times subsequent to the approval required by Condition 1 below. If a Subadvised Fund has obtained shareholder approval to operate under the multi-manager structure described herein prior to the issuance of an order as requested in this Application, the prospectus for the Subadvised Fund will at all times following such shareholder approval contain appropriate disclosure that the Subadvised Fund has applied for exemptive relief to operate under the multi-manager structure described herein, including the ability to hire new Subadvisers and materially amend an existing Subadvisory Agreement without soliciting further shareholder vote.

 

 

investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and serves or will serve as investment adviser to the Funds. The Adviser serves or will serve as investment adviser to each Fund pursuant to an investment advisory agreement with thatthe Fund (each, an “Investment Advisory Agreement” and, together, the “Investment Advisory Agreements”). Any future Adviser also will be registered with the Commission as an investment adviser under the Advisers Act.

 

Consistent with the terms of a Subadvised Fund’s Investment Advisory Agreement, the Adviser may, subject to the approval of the Board, including a majority of the Independent Trustees, and the shareholders of the applicable Subadvised Fund (if required by applicable law), delegate portfolio management responsibilities of all or a portion of the assets of a Subadvised Fund to a Subadviser. The Adviser retains overall responsibility for the management and investment of the assets of the Subadvised Fund. With respect to each Subadvised Fund, the Adviser’s responsibilities include, for example, recommending the removal or replacement of Subadvisers, and allocating the portion of that Subadvised Fund’s assets to any given Subadviser and reallocating those assets as necessary from time to time. The Adviser evaluates, selects and recommends Subadvisers for the Subadvised Fund, and monitors and reviews each Subadviser and its performance and its compliance with the applicable Subadvised Fund’s investment policies and restrictions.

 

Each Investment Advisory Agreement has been or will be approved by the Board, including a majority of the Independent Trustees, and by the shareholders of the relevant Fund in the manner required by Sections 15(a) and 15(c) of the 1940 Act. The terms of the Investment Advisory Agreements comply or will comply with Section 15(a) of the 1940 Act. Applicants are not seeking an exemption from the provisions of the 1940 Act with respect to the Investment Advisory Agreements. Pursuant to the terms of each Investment Advisory Agreement, the Adviser, subject to the oversight of the Board, has agreed or will agree to (i) provide continuous investment management for each Fund; (ii) determine the securities and other investments to be purchased, retained, sold or loaned by each Fund and the portion of such assets to be invested or held uninvested as cash; and (iii) exercise full discretion and act for each Fund in the same manner and with the same force and effect as such Fund itself might or could do with respect to purchases, sales, or other transactions and with respect to all other things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. The Adviser also is or will be responsible for effecting transactions for each Fund and selecting brokers or dealers to execute such transactions for each Fund. The Adviser will periodically review each Fund’s investment policies and strategies and, based on the need of a particular Fund, may recommend changes to the investment policies and strategies of the Fund for consideration by the Board.

 

Each Investment Advisory Agreement permits or will permit the Adviser to enter into Subadvisory Agreements with one or more Subadvisers. Pursuant to its authority under the Investment Advisory Agreements, the Adviser has entered or will enter into Subadvisory Agreements as described below under “The Subadvisers and the Subadvised Funds.” If the name of any Subadvised Fund contains the name of a subadviserSubadviser, the name of the Adviser that serves as the primary adviser to the 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 subadviserSubadviser.

 

For its services to eacha Fund, the Adviser receives or will receive an investment advisory fee from that Fund as specified in the applicable Investment Advisory Agreement. The investment advisory fees are calculated based on the average daily net assets of the particular Fund, calculated daily as of the close of business on each business day during the month.

 

C.                C.       The Subadvisers and the Subadvised Funds

 

Pursuant to the authority under the Investment Advisory Agreements, the Adviser may enterhas entered into Subadvisory Agreements with various Subadvisers on behalf of a Fund. The Initial Adviser has entered into a Subadvisory Agreement with Exchange Traded Concepts, LLC (“Exchange Traded Concepts”), which serves as the Subadviser to the Roundhill S&P Dividend Monarchs ETF and the Roundhill Bitcoin Covered Call Strategy ETF. Exchange Traded Conceptsthe Funds, each of which is considered a Non-Affiliated Subadviser (as defined below). The Adviser also may, in the future, enter into Subadvisory Agreements with other Subadvisers on behalf of the Roundhill S&P Dividend Monarchs ETF, the Roundhill Bitcoin Covered Call Strategy ETF and other Subadvised Funds.⁷

 

With respect to any future Subadviser that is wholly owned by the Adviser or the Adviser’s parent company, the Adviser will have overall responsibility for the affairs of such Subadviser, and generally will approve certain actions by that Subadviser that could materially affect the operations of the Adviser and its subsidiaries as a group. Exchange Traded Concepts has, and any future Subadviser will have, their own employees who would provide investment services to a Subadvised Fund.

 

TheEach Subadviser is, and any future Subadvisers will be, “investment advisers” to the Subadvised Funds within the meaning of Section 2(a)(20) of the 1940 Act and provide, or will provide, investment management services to the Subadvised Funds subject to, without limitation, the requirements of Sections 15(c) and 36(b) of the 1940 Act. In addition, theeach Subadviser is, and any future Subadvisers will be, registered with the Commission as an investment adviser under the Advisers Act or not subject to such registration. The Adviser selects Subadvisers based on the Adviser’s evaluation of the Subadvisers’ skills in managing assets pursuant to particular investment styles, and recommends their hiring to the Board. InThe Adviser does, and in the future, the Adviser may, employ multiple Subadvisers for one or more of any Subadvised Funds. In those instances, the Adviser would allocate and, as appropriate, reallocate a Subadvised Fund’s assets among the Subadvisers.

 

The Adviser engages or will engage in an ongoing analysis of the continued advisability of retaining a Subadviser and makes or will make recommendations to the Board as needed. The Adviser also negotiates and renegotiates, or will negotiate and renegotiate, the terms of the Subadvisory Agreements with a Subadviser, including the fees paid to the SubadvisersSubadviser, and makes or will make recommendations to the Board as needed.

 

The Subadvisers, subject to the oversight of the Adviser and the Board, determine or will determine the securities and other instruments to be purchased, sold or entered into by a Subadvised Fund’s portfolio or a portion thereof, and place or will place orders with brokers or dealers that they select.⁸ The Subadvisers

 

⁷ The Trust has filed Amendments to Form N-1A with respect to 12 Funds that have not yet commenced operations, each of which currently intends to be a Subadvised Fund. Such Funds include: (i) the Roundhill S&P 500 0DTE Covered Call Strategy ETF; (ii) the Roundhill N-100 0DTE Covered Call Strategy ETF; (iii) the Roundhill Lithium Futures ETF; (iv) the Roundhill SPX 0DTE Income ETF; (v) the Roundhill Tech 100 0DTE Income ETF; (vi) the Roundhill SPX 0DTE Enhanced Income ETF; (vii) the Roundhill Tech 100 0DTE Enhanced Income ETF; (viii) the Roundhill S500 Managed Distribution ETF; (ix) the Roundhill Tech 100 Managed Distribution ETF; (x) the Roundhill Daily 2X Long Magnificent Seven ETF; (xi) the Roundhill Daily Inverse Magnificent Seven ETF; and (xii) the Roundhill Daily 2X Inverse Magnificent Seven ETF. The Adviser has entered or currently intends to enter into Subadvisory Agreements with Exchange Traded Concepts on behalf of the foregoing Funds. The Adviser also may, in the future, enter into Subadvisory Agreements with other Subadvisers on behalf of the foregoing Funds.

⁸ For the purposes of this Application, a “Subadviser” also includes an investment subadviser that provides or will provide the Adviser with a model portfolio reflecting a specific strategy, style or focus with respect to the investment of all or a portion of a Subadvised Fund’s assets. The Adviser or another Subadviser may use the model portfolio to determine the securities and other instruments to be purchased, sold, or entered into by a Subadvised Fund’s portfolio or a portion thereof, and place orders with brokers or dealers that it selects.

 

 

keep or will keep certain records required by the 1940 Act and the Advisers Act to be maintained on behalf of the relevant Subadvised Fund, and assist or will assist the Adviser to maintain the Subadvised Fund’s compliance with the relevant requirements of the 1940 Act. The Subadvisers monitor or will monitor the respective Subadvised Fund’s investments and provide or will provide periodic reports to the Board and the Adviser. The Subadvisers also make or will make their officers and employees available to the Adviser and the Board to review the investment performance and investment policies of the Subadvised Fund.

 

The Subadvisory Agreements were or will be approved by the Board, including a majority of the Independent Trustees, in accordance with Sections 15(a) and 15(c) of the 1940 Act.

 

The terms of each Subadvisory Agreement comply or will comply fully with the requirements of Section 15(a) of the 1940 Act. Each Subadvisory Agreement will set forth the duties of the Subadviser and precisely describe the compensation paid to the Subadviser.

 

After an initial two-year period, the terms of the Subadvisory Agreements will be reviewed and renewed on an annual basis by the Board, including a majority of the Independent Trustees in accordance with Section 15(c) of the 1940 Act. The Board dedicates or will dedicate substantial time to review contract matters, including matters relating to Investment Advisory Agreements and Subadvisory Agreements. With respect to each Subadvised Fund, the Board reviews or will review comprehensive materials received from the Adviser, the Subadviser, independent third parties and independent counsel. Applicants will continue this annual review and renewal process for Subadvisory Agreements in accordance with the 1940 Act if the relief requested herein is granted by the Commission.

 

The Board reviews or will review information provided by the Adviser and Subadvisers when it is asked to approve or renew Subadvisory Agreements. Each Subadvised Fund discloses or will disclose in its statutory prospectus that a discussion regarding the basis for the Board’s approval and renewal of the Investment Advisory Agreements and any applicable Subadvisory Agreements is available in the Subadvised Fund’s annual or semi-annual report to shareholdersreports filed on Form N-CSR for the relevant period in accordance with Item 10(a)(1)(iii) of Form N-1A. The information provided to the Board is or will be maintained as part of the records of the respective Subadvised Fund pursuant to Rule 31a-1(b)(4) and Rule 31a-2 under the 1940 Act.

 

Pursuant to each Subadvisory Agreement, the Adviser has agreed or will agree to pay each Subadviser a fee, based on thea percentage of the applicable assets of a Subadvised Fund, from the fee received by the Adviser from athe Subadvised Fund under the Investment Advisory Agreement.⁹ Each Subadviser will bear its own expenses of providing investment management services to a Subadvised Fund.

 

III. Request For Exemptive Relief

 

Section 6(c) of the 1940 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 1940 Act, or any rule thereunder, if such relief 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 1940 Act. Applicants believe that the requested relief described in this Application meets this standard.

 

 

⁹ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

 

IV. Applicable Law And Discussion

 

A.

A.       Shareholder Vote

 

1.                   1.       Regulatory Background

 

Section 15(a) of the 1940 Act states, in 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, which contract, whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company.”

 

Section 2(a)(20) of the 1940 Act defines an “investment adviser” as any person who, pursuant to an agreement with such registered investment company or with an investment adviser of such registered investment company, is empowered to determine what securities or other property shall be purchased or sold by such registered investment company. Consequently, the Subadvisers are deemed to be within the definition of an “investment adviser” and, therefore, the Subadvisory Agreements are each subject to Section 15(a) of the 1940 Act to the same extent as the Investment Advisory Agreements.

 

Therefore, Section 15(a) of the 1940 Act requires a majority of the outstanding voting securities of a Subadvised Fund to approve Subadvisory Agreements whenever the Adviser proposes to the Board to hire new Subadvisers for a Subadvised Fund. This provision would also require shareholder approval by a majority vote for any material amendment to Subadvisory Agreements.

 

TheEach Subadvisory Agreements areAgreement is required to terminate automatically and immediately upon theirits “assignment,” which could occur upon a change in control of the Subadvisersapplicable Subadviser.¹⁰

 

Rule 2a-6 under the 1940 Act provides that certain transactions that do not result in a “change in actual control or management of the investment adviser” to a registered investment company are not assignments for purposes of Section 15(a)(4) of the 1940 Act, thereby effectively providing an exemption from the shareholder voting requirements in Section 15(a) of the 1940 Act. Applicants do not believe that Rule 2a-6 under the 1940 Act provides a safe harbor to recommend, hire and terminate Subadvisers. Each Subadviser is expected to run its own day-to-day operations and each will have its own investment personnel. Therefore, in certain instances appointing certain Subadvisers could be viewed as a change in management and, as a result, an “assignment” within the meaning of the 1940 Act.

 

2.                   2.       Requested Relief

 

Applicants seek relief to (i) select Subadvisers, including Affiliated Subadvisers, for all or a portion of the assets of a Subadvised Fund and enter into Subadvisory Agreements and (ii) materially amend Subadvisory Agreements with such Subadvisers, each subject to the approval of the Board, including a majority of the Independent Trustees, without obtaining shareholder approval required under Section 15(a) of the 1940 Act. Such relief would include, without limitation, the replacement or reinstatement of any Subadviser with respect to which a Subadvisory Agreement has automatically terminated as a result of an “assignment,” within the meaning of Section 2(a)(4) of the 1940 Act. Applicants believe that the relief sought should be granted by the Commission because (1) the Adviser either will operate a Subadvised Fund, or may operate thea Subadvised Fund, in a manner that is different from conventional investment companies; (2) the relief

 

¹⁰ See Section 15(a)(4) of the 1940 Act. Section 2(a)(4) of the 1940 Act defines “assignment” as any direct or indirect transfer or hypothecation of a contract.

 

 

will benefit shareholders by enabling thea Subadvised Fund to operate in a less costly and more efficient manner; and (3) Applicants will consent to a number of conditions that adequately address the policy concerns of Section 15(a) of the 1940 Act, including conditions designed to ensure that shareholder interests are adequately protected through Board oversight.

 

a.                   (a)       Operations of the Trust

 

Section 15(a) was designed to protect the interests and expectations of a registered investment company’s shareholders by requiring they approve investment advisory contracts, including subadvisory contracts.¹¹ Section 15(a) is predicated on the belief that if a registered investment company is to be managed by an investment adviser different from the investment adviser selected by shareholders at the time of the investment, the new investment adviser should be approved by shareholders.¹² The relief sought in this Application is consistent with this public policy.

 

In the case of a traditional investment company, the investment adviser is a single entity that employs one or more individuals as portfolio managers to make the day-to-day investment decisions. The investment adviser may terminate or hire portfolio managers without board or shareholder approval and has sole discretion to set the compensation it pays to the portfolio managers. Alternatively, for subadvised funds, the investment adviser is not normally responsible for the day-to-day investment decisions and instead, the investment adviser selects, oversees, and evaluates subadvisers who ultimately are responsible for the day-to-day investment decisions.

 

Primary responsibility for management of a Subadvised Fund’s assets, including the selection and oversight of the Subadvisers, is vested in the Adviser, subject to the oversight of the Board.

 

Applicants believe that it is consistent with the protection of investors to vest the selection and oversight of the Subadvisers in the Adviser in light of Applicants’ multi-manager structure, as well as the shareholders’ expectation that the Adviser is in possession of information necessary to select the most capable Subadvisers. The Adviser has the requisite expertise to evaluate, select and oversee the Subadvisers. The Adviser will not normally make day-to-day investment decisions for a Subadvised Fund.¹³

 

From the perspective of the shareholder, the role of the Subadvisers is substantially equivalent to the role of the individual portfolio managers employed by an investment adviser to a traditional investment company. The individual portfolio managers and the Subadvisers are each charged with the selection of portfolio investments in accordance with a Subadvised Fund’s investment objectives and policies and have no broad supervisory, or management or administrative responsibilities with respect to a Subadvised Fund. Shareholders expect the Adviser, subject to review and approval of the Board, to select a Subadviser who is in the best position to achieve a Subadvised Fund’s investment objective. Shareholders also rely on the Adviser for the overall management of a Subadvised Fund and a Subadvised Fund’s total investment performance.

 

¹¹See Section 1(b)(6) of the 1940 Act.

 

¹² Hearings on S. 3580 before a Subcomm. of the Senate Comm. on Banking and Currency, 76th Cong., 3d Sess. 253 (1940) (statement of David Schenker).

 

¹³Although the Adviser will not normally make such day-to-day investment decisions, it may manage all or a portion of a Subadvised Fund.

 

 

Whenever required by Section 15(c) of the 1940 Act, the Board will request and the Adviser and each Subadviser will furnish such information as may be reasonably necessary for the Board to evaluate the terms of the Investment Advisory Agreements and the Subadvisory Agreements. The information that is provided to the Board will be maintained as part of the records of the Subadvised Funds in accordance with the applicable recordkeeping requirements under the 1940 Act and made available to the Commission in the manner prescribed by the 1940 Act.

 

In addition, the Adviser and the Board will consider the reasonableness of the Subadviser’s compensation with respect to each Subadvised Fund for which the Subadviser will provide portfolio management services. Although only the Adviser’s fee is payable directly by a Subadvised Fund, and the Subadviser’s fee is payable by the Adviser,¹⁴ the Subadviser’s fee directly bears on the amount and reasonableness of the Adviser’s fee payable by a Subadvised Fund. Accordingly, the Adviser and the Board will analyze the fees paid to Subadvisers in evaluating the reasonableness of the overall arrangements.

 

With respect to oversight, Applicants note that the Adviser performs and will perform substantially identical oversight of all Subadvisers, regardless of whether they are affiliated with the Adviser. Such oversight is similar in many respects to how the Adviser would oversee its own internal portfolio management teams.

 

b.                   (b)       Lack of Economic Incentives

 

In allocating the management of Subadvised Fund assets between itself and one or more Subadvisers, Applicants acknowledge that the Adviser has an incentive to consider the benefit it will receive, directly or indirectly, from the fee paid for the management of those assets. However, Applicants believe that the protections afforded by the conditions set forth in this Application would prevent the Adviser from acting to the detriment of a Subadvised Fund and its shareholders. Applicants assert that the proposed conditions are designed to provide the Board with sufficient independence and the resources and information it needs to monitor and address conflicts of interest. In particular, the Adviser will provide the Board with any information that may be relevant to the Board’s evaluation of material conflicts of interest present in any subadvisory arrangement when the Board is considering, with respect to a Subadvised Fund, a change in Subadviser or an existing Subadvisory Agreement as part of its annual review process. The Board will also have to make a separate finding, reflected in the Board minutes, that any change in SubadvisersSubadviser or any renewal of an existing Subadvisory Agreement is in the best interests of the Subadvised Fund and its shareholders and, based on the information provided to it, does not involve a conflict of interest from which the Adviser, a Subadviser, or any officer or Trustee of the Subadvised Fund or any officer or board member of the Adviser derives an inappropriate advantage.

 

Applicants note that the relief they are requesting would not be subject to two conditions that have been customary in previous exemptive orders for similar relief, including (i) restrictions on the ownership of interest in Subadvisers by trustees and officers of the Subadvised Funds and the Adviser, and (ii) a requirement that the Adviser provide the Board with profitability reports each quarter. Applicants believe eliminating these conditions is appropriate with respect to the requested relief. As to the condition on ownership, Applicants assert that restricting ownership of interests in a Subadviser by trustees and officers would not be meaningful where the Adviser may itself own an interest in the Subadviser and the Subadviser may be selected for a Subadvised Fund under the requested relief.¹⁵ As to the condition requiring quarterly profitability reports, Applicants note that the Board reviews and will continue to review profitability

 

¹⁴A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

¹⁵ Any Trustee of the Board that has an ownership interest in a Subadviser would not be deemed an Independent Trustee under Section 2(a)(19) of the 1940 Act.

 

 

information at the time of any proposed Subadviser change (see condition 7) and as part of its annual review of each Subadvisory Agreement pursuant to Section 15(c) of the 1940 Act.

 

Until the Carillon Order, the Commission has granted the requested relief solely with respect to Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive orders. That relief has been premised on the fact that such a Subadviser serves in the same limited capacity as an individual portfolio manager. Applicants believe this same rationale supports extending the requested relief to Affiliated Subadvisers. Moreover, Applicants note that, while the Adviser’s judgment in recommending a Subadviser can be affected by certain conflicts of interest or economic incentives, they do not warrant denying the extension of the requested relief to Affiliated Subadvisers. For one, the Adviser faces those conflicts and incentives in allocating fund assets between itself and a Subadviser, and across Subadvisers, as it has an interest in considering the benefit it will receive, directly or indirectly, from the fee the fund pays for the management of those assets. Moreover, the Adviser has employed and will continue to employ the same methodology to evaluate potential conflicts of interest, regardless of the affiliation between the Adviser and Subadviser. While the selection and retention of Affiliated Subadvisers by the Adviser potentially presents different or additional conflicts of interest than may be the case with Non-Affiliated or Wholly-Owned Subadvisers, the proposed terms and conditions of the requested relief are designed to address the potential conflicts of interest with respect to both those common to all types of Subadvisers and specific to Affiliated Subadvisers. In particular, Applicants believe that the proposed conditions are protective of shareholder interests by ensuring the Board’s independence and providing the Board with the appropriate resources and information to monitor and address conflicts.

 

c.                   (c)       Benefits to Shareholders

 

Without the requested relief, when a new Affiliated Subadviser is retained by the Adviser on behalf of a Subadvised Fund, the shareholders of the Subadvised Fund are required to approve the Subadvisory Agreement. Similarly, if an existing Subadvisory Agreement with an Affiliateda Subadviser is amended in any material respect, approval by the shareholders of the affected Subadvised Fund is required. Moreover, if a Subadvisory Agreement with an Affiliateda Subadviser is “assigned” as a result of a change in control of the Subadviser, the shareholders of the affected Subadvised Fund will be required to approve retaining the existing Subadviser. In all these instances the need for shareholder approval requires a Subadvised Fund to call and hold a shareholder meeting, create and distribute proxy materials, and solicit votes from shareholders on behalf of the Subadvised Fund, and generally necessitates the retention of a proxy solicitor. This process is time-intensive, expensive and slow, and, in the case of a poorly performing Subadviser or one whose management team has parted ways with the Subadviser, potentially harmful to a Subadvised Fund and its shareholders.

 

As noted above, shareholders investing in a Fund that has a Subadviser are effectively hiring the Adviser to manage a Subadvised Fund’s assets by overseeing, monitoring and evaluating the Subadviser rather than by the Adviser hiring its own employees to oversee the Subadvised Fund. Applicants believe that permitting the Adviser to perform the duties for which the shareholders of a Subadvised Fund are paying the Adviser — the selection, oversight and evaluation of Subadvisers, including Affiliated Subadvisers — without incurring unnecessary delays or expenses is appropriate and in the interest of a Subadvised Fund’s shareholders and will allow such Subadvised Fund to operate more efficiently. Within this structure, the Adviser is in the better position to make an informed selection and evaluation of a Subadviser than are individual shareholders. Without the delay inherent in holding shareholder meetings (and the attendant difficulty in obtaining the necessary quorums), a Subadvised Fund will be able to hire or replace Affiliated Subadvisers more quickly and at less cost, when the Board, including a majority of the Independent Trustees, and the Adviser believe that a change would benefit a Subadvised Fund and its shareholders.

 

 

 

 

Until the Carillon Order, the Commission has previously granted the requested relief solely with respect to certain Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive orders. That relief has permittedwould permit Subadvised Funds to avoid the time-intensive and expensive shareholder solicitation process with respect to hiring or making a material amendment to a Subadvisory Agreement with respect to such subadvisers. As discussed above, Applicants believe the same rationale supports extending the requested relief to Affiliated Subadvisers as well, and while Affiliated Subadvisers may give rise to different or additional conflicts of interests, the proposed terms and conditions, including the enhanced oversight by the Board, address such potential conflicts. Moreover, treating all Subadvisers equally under the requested relief might help avoid the selection of Subadvisers potentially being influenced by considerations regarding the applicable regulatory requirements (i.e., whether a shareholder vote is required) and the associated costs and delays.¹⁶

 

If the relief requested is granted, each Investment Advisory Agreement will continue to be fully subject to Section 15(a) of the 1940 Act. Moreover, the relevant Board will consider the Investment Advisory Agreements and Subadvisory Agreements in connection with its annual contract renewal process under Section 15(c) of the 1940 Act, and the standards of Section 36(b) of the 1940 Act will be applied to the fees paid to each Subadviser.

 

3.            3.        Shareholder Notification

 

With the exception of the relief requested in connection with Aggregate Fee Disclosure (as defined below), the prospectus and statement of additional information for each Subadvised Fund will include all information required by Form N-1A concerning the Subadvisers, including Affiliated Subadvisers, if the requested relief is granted. If a new Subadviser is retained, an existing Subadviser is terminated, or a Subadvisory Agreement is materially amended, a Subadvised Fund’s prospectus and statement of additional information will be supplemented promptly pursuant to Rule 497(e) under the Securities Act.

 

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;¹⁷ and (b) a Subadvised Fund will make the Multi-manager Information Statement available on

 

¹⁶ The Adviser is responsible for selecting Subadvisers in the best interests of a Subadvised Fund, regardless of the costs or timing constraints that may be associated with the process of seeking shareholder approval of Subadvisory Agreements and material amendments thereto.

 

 

¹⁷ 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 (except as modified to permit Aggregate Fee Disclosure as defined in this Application); (b) inform shareholders that the Multi-manager Information Statement is available on a website; (c) provide the website address; (d) state the time period during which the Multi-manager Information Statement will remain available on that website; (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 athe applicable Subadvised Fund.

 

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 with the Commission via the EDGAR system.

 

 

the website 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 website for at least 90 days. Under the requested relief, a Subadvised Fund would not furnish a Multi-manager Information Statement to shareholders when an existing Subadvisory Agreement is materially modified. 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 Board would comply with the requirements of Sections 15(a) and 15(c) of the 1940 Act before entering into or amending Subadvisory Agreements.

 

Prior to any Subadvised Fund relying on the requested relief in this Application, the Board, including its Independent Trustees, will have approved its operations as described herein. Additionally, the shareholders of the applicable Subadvised Fund have approved, or will approve, its operation as described herein by a vote of a majority of the outstanding voting securities, within the meaning of the 1940 Act, or by the sole shareholder prior to a Subadvised Fund offering its shares.¹⁸

 

B.

B.            Fee Disclosure

 

1.                                  1.             Regulatory Background

 

Form N-lA is the registration statement used by open-end investment companies. Item 19(a)(3) of Form N-1A requires a registered investment company to disclose in its statement of additional information the method of computing the “advisory fee payable” by the investment company with respect to each investment adviser, including the total dollar amounts that the investment company “paid to the adviser (aggregated with amounts paid to affiliated advisers, if any), and any advisers who are not affiliated persons of the adviser, under the investment advisory contract for the last three fiscal years.”

 

Rule 20a-1 under the 1940 Act requires proxies solicited with respect to a registered investment company to comply with Schedule 14A under the Exchange Act. Item 22 of Schedule 14A sets forth the information that must be included in a registered investment company’s proxy statement. Item 22(c)(1)(ii) requires a proxy statement for a shareholder meeting at which action will be taken on an investment advisory agreement to describe the terms of the advisory contract, “including the rate of compensation of the investment adviser.” Item 22(c)(1)(iii) requires a description of the “aggregate amount of the investment adviser’s fees and the amount and purpose of any other material payments” by the investment company to the investment adviser, or any affiliated person of the investment adviser during the fiscal year. Item 22(c)(8) requires a description of “the terms of the contract to be acted upon, and, if the action is an amendment to, or a replacement of, an investment advisory contract, the material differences between the current and proposed contract.” Finally, Item 22(c)(9) requires a proxy statement for a shareholder meeting at which a change in the advisory fee will be sought to state (i) the aggregate amount of the investment adviser’s fee during the last year; (ii) the amount that the adviser would have received had the proposed fee been in effect; and (iii) the difference between (i) and (ii) stated as a percentage of the amount in (i). Together, these provisions may require a Subadvised Fund to disclose the fees paid to a Subadviser in

 

¹⁸ If a Subadvised Fund has obtained shareholder approval to operate pursuant to an exemptive order that would permit it to operate in a multi-manager structure where the Adviser would enter into or amend Subadvisory Agreements only with respect to Wholly-Owned and Non-Affiliated Subadvisers subject to Board approval but without obtaining shareholder approval and has met all other terms and conditions of the requested order, the Subadvised Fund may rely on the applicable part of the order requested in this Application (i.e., hiring, amending Subadvisory Agreements with, and including Aggregate Fee Disclosure (as defined below) in response to the disclosure requirements discussed herein with respect to Wholly-Owned and Non-Affiliated Subadvisers).

 

 

connection with shareholder action with respect to entering into, or materially amending, an advisory agreement or establishing, or increasing, advisory fees.

 

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. These provisions could require a Subadvised Fund’s financial statements to disclose information concerning fees paid to a Subadviser. The exemption from Regulation S-X requested below would permit a Subadvised Fund to include only the Aggregate Fee Disclosure (as defined below); all other items required by Sections 6-07(2)(a), (b) and (c) of Regulation S-X will be disclosed.

 

2.                  2.       Requested Relief

 

Applicants seek relief to permit each Subadvised Fund to disclose (as a dollar amount and a percentage of the Subadvised Fund’s net assets) (a) the aggregate fees paid to the Adviser and any Wholly-Owned Subadvisers; and (b) the aggregate fees paid to Affiliated and Non-Affiliated Subadvisers (collectively, the “Aggregate Fee Disclosure”) in lieu of disclosing the fees that may be required by Item 19(a)(3) of Form N-lA, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, and Section 6-07(2)(a), (b) and (c) of Regulation S-X.¹⁹ The Aggregate Fee Disclosure would be presented as both a dollar amount and as a percentage of the Subadvised Fund’s net assets. Applicants believe that the relief sought in this Application should be granted because the Adviser intends to operate the Subadvised Funds under a multi-manager structure. As a result, disclosure of the individual fees that the Adviser pays to the Subadvisers would not serve any meaningful purpose.

 

As noted above, the Adviser may operate a Subadvised Fund in a manner different from a traditional investment company. By investing in a Subadvised Fund, shareholders are hiring the Adviser to manage the Subadvised Fund’s assets by overseeing, evaluating, monitoring, and recommending Subadvisers rather than by hiring its own employees to manage the assets directly. The Adviser, under the oversight of the Board, is responsible for overseeing the Subadvisers and recommending their hiring and replacement. In return, the Adviser receives an advisory fee from each Subadvised Fund. Pursuant to each Subadvisory Agreement, the Adviser has agreed or will agree to pay each Subadviser a fee, based on thea percentage of the assets of a Subadvised Fund, from the fee received by the Adviser from a Subadvised Fund under the Investment Advisory Agreement.²⁰ Each Subadviser will bear its own expenses of providing investment management services to a Subadvised Fund.²⁰ Disclosure of the individual fees that the Adviser would pay to the Subadvisers does not serve any meaningful purpose since investors pay the Adviser to oversee, monitor, evaluate and compensate the Subadvisers. Applicants contend that the primary reasons for requiring disclosure of individual fees paid to Subadvisers are to inform shareholders of expenses to be

 

¹⁹ As used herein, a “Wholly-Owned Subadviser” is any investment adviser that is (1) an indirect or direct “wholly-owned subsidiary” (as such term is defined in Section 2(a)(43) of the 1940 Act) of the Adviser, (2) a “sister company” of the Adviser that is an indirect or direct “wholly-owned subsidiary” of the same company that indirectly or directly wholly owns the Adviser (the Adviser’s “parent company”), or (3) a parent company of the Adviser. A “Non-Affiliated Subadviser” is any investment adviser that is not an “affiliated person” (as defined in the 1940 Act) of a Fund or the Adviser, except to the extent that an affiliation arises solely because the Subadviser serves as a subadviser to one or more Funds. Section 2(a)(43) of the 1940 Act defines “wholly-owned subsidiary” of a person as a company 95 per centum or more of the outstanding voting securities of which are, directly or indirectly, owned by such a person.

 

 

²⁰ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

²⁰ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

 

charged by a particular Subadvised Fund and to enable shareholders to compare the fees to those of other comparable investment companies. Applicants believe that the requested relief satisfies these objectives because theeach Subadvised Fund’s overall advisory fee will be fully disclosed and, therefore, shareholders will know what a Subadvised Fund’s fees and expenses are and will be able to compare the advisory fees a Subadvised Fund is charged to those of other investment companies.

 

Indeed, in a more conventional arrangement, requiring the Subadvised Funds to disclose the fees negotiated between the Adviser and the Subadvisers would be the functional equivalent of requiring single adviser investment companies to disclose the salaries of individual portfolio managers employed by that investment adviser. In the case of a traditional investment company, disclosure is made of the compensation paid to the investment adviser, but shareholders are not told or asked to vote on the salary paid by the investment adviser to individual portfolio managers. Similarly, in the case of the Subadvised Funds, the shareholders will have chosen to employ the Adviser and to rely upon the Adviser’s expertise in monitoring the Subadvisers, recommending the Subadvisers’ selection and termination (if necessary), and negotiating the compensation of the Subadvisers. There are no policy reasons that require shareholders of the Subadvised Funds to be informed of the individual Subadviser’s fees any more than shareholders of a traditional investment company (single investment adviser) would be informed of the particular investment adviser’s portfolio managers’ salaries.²¹

 

The requested relief would benefit shareholders of the Subadvised Funds because it would improve the Adviser’s ability to negotiate the fees paid to Subadvisers, including Affiliated Subadvisers. The Adviser’s ability to negotiate with the various Subadvisers would be adversely affected by public disclosure of fees paid to each Subadviser. If the AdviserTrust is not required to disclose the Subadvisers’ fees to the public, the Adviserit may be ablepossible to negotiate rates that are below a Subadviser’s “posted” amounts as the rate would not be disclosed to the Subadviser’s other clients. Moreover, if one Subadviser is aware of the advisory fee paid to another Subadviser, the Subadviser would likely take it into account in negotiating its own fee.

 

Until the Carillon Order, the Commission has previously granted the requested relief solely with respect to Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive orders. That relief only permitted the disclosure of aggregate fees paid to Wholly-Owned and Non-Affiliated Subadvisers and required disclosure of individual fees paid to Affiliated Subadvisers. If the requested relief under Section 15(a) of the 1940 Act is granted to extend to Affiliated Subadvisers, Applicants believe it is appropriate to permit each Subadvised Fund to disclose only aggregate fees paid to Affiliated Subadvisers for the same reasons that similar relief has been granted to Wholly-Owned and Non-Affiliated Subadvisers, as discussed above.

 

C.

C.           Precedent

 

Applicants note that substantially identical relief was granted by the Commission in the Carillon Order and more recently in the Roundhill Order, the BondBloxx Order, the RM Opportunity Order, the Advisors

 

²¹ The relief would be consistent with the Commission’s disclosure requirements applicable to fund portfolio managers that were previously adopted. See Investment Company Act Release No. 26533 (Aug. 23, 2004). Under these disclosure requirements, a fund is required to include in its statement of additional information, among other matters, a description of the structure of and the method used to determine the compensation structure of its “portfolio managers.” Applicants state that with respect to each Subadvised Fund, the statement of additional information will describe the structure of, and method used to determine, the compensation received by each portfolio manager employed by any Subadviser. In addition to this disclosure with respect to portfolio managers, Applicants state that with respect to each Subadvised Fund, the statement of additional information will describe the structure of, and method used to determine, the compensation received by each Subadviser.

 

 

Trust Order, the Carillon Order, the New Age Alpha Trust Order, and the LFT Order, the Azzad Order, the Distillate Capital Order, the Esoterica Order, the Clearshares Order, the OSI ETF Order, and the Investment Managers Order. Applicants note that substantially the same exemptions requested herein with respect to relief from Section 15(a) and relief from the disclosure requirements of the rules and forms discussed herein for Subadvisers, including Affiliated Subadvisers, have been granted previously by the Commission with respect to Wholly-Owned and Non-Affiliated Subadvisers. See, e.g., Natixis Funds Trust I, et al., Investment Company Act Release Nos. 33265 (October 5, 2018) (notice) and 33287 (October 31, 2018) (order); Advisors Asset Management, Inc. and ETF Series Solutions, Investment Company Act Release Nos. 33169 (July 24, 2018) (notice) and 33207 (August 21, 2018) (order); TriLine Index Solutions, LLC and ETF Series Solutions, Investment Company Act Release Nos. 33159 (July 11, 2018) (notice) and 33192 (August 6, 2018) (order); SL Advisors, LLC and ETF Series Solutions, Investment Company Act Release Nos. 33158 (July 11, 2018) (notice) and 33193 (August 6, 2018) (order); DMS ETF Trust I, et al., Investment Company Act Release Nos. 33156 (July 10, 2018) (notice) and 33196 (August 7, 2018) (order).

 

For the reasons set forth above, Applicants believe that the relief sought would be appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

 

V. Conditions

 

Applicants agree that any order of the Commission 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 this Application will be, or has been, approved by a majority of the Subadvised Fund’s outstanding voting securities as defined in the 1940 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 multi-manager structure described in this Application. 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) The 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 oversight of the Board, will (i) set the Subadvised Fund’s overall investment strategies, (ii) evaluate, select, and recommend Subadvisers for 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.

 

(4) 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.

 

 

(5) At all times, at least a majority of the Board will be Independent Trustees, and the selection and 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 1940 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 is hired or terminated, the Adviser will provide the Board with information showing the expected impact on the profitability of the Adviser.

 

(8) The Board must evaluate any material conflicts that may be present in a subadvisory arrangement. Specifically, whenever a subadviser change is proposed for a Subadvised Fund (“Subadviser Change”) or the Board considers an existing Subadvisory Agreement as part of its annual review process (“Subadviser Review”):

 

(a) the Adviser will provide the Board, to the extent not already being provided pursuant to Section 15(c) of the 1940 Act, with all relevant information concerning:

 

(i) any material interest in the proposed new Subadviser, in the case of a Subadviser Change, or the Subadviser in the case of a Subadviser Review, held directly or indirectly by the Adviser or a parent or sister company of the Adviser, and any material impact the proposed Subadvisory Agreement may have on that interest;

 

(ii) any arrangement or understanding in which the Adviser or any parent or sister company of the Adviser is a participant that (A) may have had a material effect on the proposed Subadviser Change or Subadviser Review, or (B) may be materially affected by the proposed Subadviser Change or Subadviser Review;

 

(iii) any material interest in a Subadviser held directly or indirectly by an officer or Trustee of the Subadvised Fund, or an officer or board member of the Adviser (other than through a pooled investment vehicle not controlled by such person); and

 

(iv) any other information that may be relevant to the Board in evaluating any potential material conflicts of interest in the proposed Subadviser Change or Subadviser Review.

 

(b) the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the Board minutes, that the Subadviser Change or continuation after Subadviser Review is in the best interests of the Subadvised Fund and its shareholders and, based on the information provided to the Board, does not involve a conflict of interest from which the Adviser, a Subadviser, any officer or Trustee of the Subadvised Fund, or any officer or board member of the Adviser derives an inappropriate advantage.

 

(9) Each Subadvised Fund will disclose in its registration statement the Aggregate Fee Disclosure.

 

(10) In the event that the Commission adopts a rule under the 1940 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.

 

 

(11) Any new Subadvisory Agreement or any amendment to an existing Investment Advisory Agreement or Subadvisory Agreement that directly or indirectly results in an increase in the aggregate advisory fee rate payable by thea Subadvised Fund will be submitted to the Subadvised Fund’s shareholders for approval.

 

VI. Procedural Matters

 

All of the requirements for execution and filing of this Application on behalf of Applicants have been complied with in accordance with the applicable organizational documents of Applicants, and the undersigned officers of Applicants are fully authorized to execute this Application and any amendments hereto. The resolutions of the Boardauthorizations to file are attached as ExhibitExhibits A-1 and A-2 to this Application in accordance with the requirements of Rule 0-2(c)(1) under the 1940 Act and the verifications required by Rule 0-2(d) under the 1940 Act are attached as Exhibits B-1 and B-2 to this Application. Marked copies of the Application are included as Exhibits C-1 and C-2 to this Application in accordance with the requirements of Rule 0-5(e) under the 1940 Act.

 

Pursuant to Rule 0-2(f) under the 1940 Act, the Trust states that its address is 154 West 14^th Street, 2^nd Floor, New York, New York 100111475 Dunwoody Drive, Suite 200, West Chester, PA, 19380 and the Adviser states that its address is 154 West 14^th Street, 2^nd Floor, New York, New York 100111475 Dunwoody Drive, Suite 200, West Chester, PA, 19380, and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.

 

Applicants desire that the Commission issue the requested order pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.

 

VII. Conclusion

 

For the foregoing reasons, Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act granting the relief requested in the Application.

 

Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with the protection of investors and consistent with the purpose fairly intended by the policy and provisions of the 1940 Act.

 

 

	Respectfully submitted,
	Roundhill ETFVenerable Variable Insurance Trust
	By:	/s/ Timothy MaloneyMichal Levy
		Name: Timothy MaloneyMichal Levy
		Title: Chief Financial Officer and TreasurerPresident
	Roundhill Financial Inc.Venerable Investment Advisers, LLC
	By:	/s/ Timothy MaloneyBrown
		Name: Timothy MaloneyBrown
		Title: Chief Investment OfficerPresident

January 2527, 20242025

 

 

Exhibit Index

 

Authorizing Resolutions of Roundhill ETFAuthorization of Venerable Variable Insurance Trust	Exhibit A-1
Authorization of Venerable Investment Advisers, LLC	Exhibit A-2
Verification of Roundhill ETFVenerable Variable Insurance Trust Pursuant to Rule 0-2(d)	Exhibit B-1
Verification of Roundhill Financial Inc. Pursuant to Rule 0-2(d)Venerable Investment Advisers, LLC	Exhibit B-2
Marked Copies of the Application Pursuant to Rule 0-5(e)	Exhibits C-1 and C-2

 

 

Exhibit A-1

 

Roundhill ETFVenerable Variable Insurance Trust

Authorization to File Exemptive Order
Application Relating to the Funds

 

The undersigned, Sean PoyntzKristina Magolis, hereby certifies that heshe is the duly appointed Secretary of Roundhill ETFVenerable Variable Insurance Trust (the “Trust”); that, with respect to the attached second amended and restated application for exemption from the provisions of the Investment Company Act of 1940 (the “1940 Act”), the rules and forms thereunder and any amendments thereto (such second amended and restated application along with any future amendments, the “Application”), all actions necessary to authorize the execution and filing of the Application under the Agreement and Amended and Restated Declaration of Trust and By-LawsBylaws of the Trust have been taken and the person signing and filing the Application on behalf of the Trust is fully authorized to do so; and that the following is a complete, true and correct copy of the resolutions duly adopted by the Board of TrusteesInitial Trustee of the Trust on September 26October 23, 2023, in accordance with the Bylaws of the Trust, and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

 

WHEREAS, Section 15(a) of the Investment Company Act of 1940, as amended (the “1940 Act”), generally makes it unlawful for any person to act as an investment adviser (including as a sub-adviser) to a registered investment company except pursuant to a written contract which has been approved by the vote of a majority of the outstanding voting securities of such registered investment company, and

VOTED:

That the appropriate officers of the Trust be, and hereby are, authorized to file on behalf of the Trust an application with the SEC for an order pursuant to Section 6(c) of the 1940 Act, exempting the Trust and Venerable Investment Advisers, LLC (the “Adviser”) from: (i) the provisions of Section 15(a) of the 1940 Act to permit the Adviser (or a sub-adviser with respect to money managers), subject to the supervision of the Board, to appoint new sub-advisers and money managers to a fund for which the Adviser serves as investment adviser and to make material changes to the sub-advisory agreements and money manager agreements with sub-advisers and money managers to a fund without obtaining shareholder approval of the applicable fund; and (ii) the disclosures required pursuant to 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, and Sections 6-07(2)(a)-(c) of Regulation S-X relating to sub-adviser and money manager compensation.

 

WHEREAS, registered investment companies are required to disclose information pertaining to fees paid to sub-advisers under the provisions of various forms prescribed by, and regulations promulgated by, the Securities and Exchange Commission (the “Commission”); and

VOTED:

That the appropriate officers of the Trust be, and hereby are, authorized to file on behalf of the Trust with the SEC any amendments to the exemptive application in such form as the officers or any one of the officers deem necessary and appropriate to do any and all things necessary or proper under the 1940 Act, the Investment Advisers Act of 1940, as amended (the “Advisers Act”), the 1933 Act, and the Securities Exchange Act of 1934, as amended (the “1934 Act”), including the submission and filing of any and all amendments, reports and other documents deemed by such officer to be necessary or proper to accomplish the objectives of these resolutions.

 

WHEREAS, Roundhill ETF Trust (the “Trust”) wishes to seek an order of exemption from the Commission that, in general terms, grants relief from the foregoing shareholder approval and disclosure requirements.

 

VOTED:

That the appropriate officers of the Trust be, and each of them hereby is, authorized, empowered and directed to take all actions and to execute all documents necessary to give full effect to the foregoing resolutions in such manner or such forms as the officer or officers shall approve in his, her, or their discretion, in each case as conclusively evidenced by his, her, or their actions thereby or signatures thereon.

 

NOW, THEREFORE, BE IT HEREBY RESOLVED, that any officer of the Trust that he may designate be, and each hereby is, authorized to prepare, execute and submit to the Commission, on behalf of the Trust and in its name, an application or applications in such form as they, or any one of them, deems necessary or appropriate seeking, pursuant to Section 6(c) of the 1940 Act, an order of exemption from Section 15(a) of the 1940 Act and from certain disclosure requirements under various rules and forms, to permit, among other things, as described in such application or applications, the hiring and retention of sub-advisers and amendments to sub-advisory contracts on behalf of the Trust and its series without shareholder approval (any such application, an “Exemptive Application” and such order of exemption, the “Order of Exemption”); and further

By:	/s/ Kristina Magolis
Name:	Kristina Magolis
Title:	Secretary
Dated:	January 27, 2025

 

RESOLVED, that any officer of the Trust that he may designate be, and each hereby is, authorized and directed to take such additional actions and to execute and deliver on behalf of the Trust such other documents or instruments as he or she deems necessary or appropriate in furtherance of the above resolution, including, without limitation, the preparation, execution and filing of any necessary or appropriate amendment(s) or supplement(s) to the above-described Exemptive Application(s), his or her authority therefor to be conclusively evidenced by the taking of any such actions or the execution or delivery of any such document or instrument; and further

Exhibit A-2

 

Venerable Investment Advisers, LLC

Authorization to File Exemptive Application

 

RESOLVED, that upon issuance of an Order of Exemption by the Commission in accordance with the terms and conditions of any Exemptive Application described above, the Trust is authorized to act in accordance with the provisions of such Exemptive Application and the related Order of Exemption.

The undersigned, Timothy Brown, hereby certifies that he is the duly elected President of Venerable Investment Advisers, LLC (“VIA”); that, with respect to the attached application for exemption from the provisions of the Investment Company Act of 1940, rules and forms thereunder and any amendments thereto (such application along with any amendments, the “Application”), all actions necessary to authorize the execution and filing of the Application under the charter documents of VIA have been taken; and that the person signing and filing the Application by VIA is fully authorized to do so.

 

 

	By:	/s/ Sean Poyntz	/s/ Timothy Brown
	Name:	Sean Poyntz	Timothy Brown
	Title:	Secretary	President
Dated:	January 25, 2024

 

 

Exhibit B-1

 

Roundhill ETFVenerable Variable Insurance Trust

 

Verification Pursuant to Rule 0-2(d)

 

The undersigned states heshe has duly executed the attached Second Amended and Restated Application dated January 2527, 20242025, for and on behalf of Roundhill ETFVenerable Variable Insurance Trust; that he is Chief Financial Officer and Treasurershe is the President of such trust; and that all action by shareholders, trustees and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further says that heshe is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

 

Venerable Variable Insurance Trust

 

	By:	/s/ Timothy MaloneyMichal Levy
	Name:	Timothy MaloneyMichal Levy
	Title:	Chief Financial Officer and TreasurerPresident

 

 

Exhibit B-2

 

Roundhill Financial Inc.

Venerable Investment Advisers, LLC

 

Verification Pursuant to Rule 0-2(d)

 

The undersigned states he has duly executed the attached Second Amended and Restated Application dated January 2527, 20242025, for and on behalf of Roundhill Financial Inc.Venerable Investment Advisers, LLC; that he is Chief Investment Officerthe President of such company; and that all action by stockholders, officers, directors and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further says that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

 

	Roundhill Financial Inc.Venerable Investment Advisers, LLC
	By:	/s/ Timothy MaloneyBrown
	Name:	Timothy MaloneyBrown
	Title:	Chief Investment OfficerPresident

 

 

EXHIBIT C-2

 

 

EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)

 

File No. 812-15526 812-[__]

 

UNITED STATES OF AMERICA

As filed with the Securities and Exchange Commission on January 27, 2025

BEFORE THE 

U.S. SECURITIES AND EXCHANGE COMMISSION

U.S. Securities and Exchange Commission
Washington, D.C. 20549

 

In the Matter of

 

BONDBLOXX ETF TRUST

AND

BONDBLOXX INVESTMENT MANAGEMENT CORPORATION

 

700 Larkspur Landing Circle, Suite 250

Larkspur, CA 94939

SECOND AMENDED APPLICATION FOR
AN ORDER OF EXEMPTION PURSUANT TO SECTION 6(c) OF
OF THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE “1940 ACT”),
FROM: (1) CERTAIN PROVISIONS OF SECTION 15(a) OF THE 1940 ACT AND
(2)
CERTAIN DISCLOSURE REQUIREMENTS UNDER
VARIOUS RULES AND FORMS

 

In the Matter of

 

Venerable Variable Insurance Trust
1475 Dunwoody Drive, Suite 200
West Chester, PA 19380

 

and

 

Venerable Investment Advisers, LLC
1475 Dunwoody Drive, Suite 200
West Chester, PA 19380

 

Please direct all communications regarding this Application to:

 

Edward BaerBeau Yanoshik

Ropes & GrayMorgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue NW

Washington, DC 20004

Telephone: (202) 373-6133 

Three Embarcadero Center

San Francisco, CA 94111

[email protected] 

 

 

Withwith a copy to:

 

Joanna GallegosKristina Magolis

BondBloxxVenerable Investment Management CorporationAdvisers, LLC

700 Larkspur Landing Circle1475 Dunwoody Drive, Suite 250200

West Chester, PA 19380

Telephone: (800) 366-0066 

Larkspur, CA 94939

[email protected] 

 

 

Page 1 of 82 sequentially numbered pagesThis Application (including exhibits) contains 80 pages.

 

 

As filed with the Securities and Exchange Commission on January 26, 2024 

UNITED STATES OF AMERICA

BEFORE THE

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of BONDBLOXX ETF TRUST AND BONDBLOXX INVESTMENT MANAGEMENT CORPORATION   File No. 812-15526

) ) ) ) ) ) ) ) ) ) ) ) )

SECOND AMENDED APPLICATION FOR AN ORDER OF EXEMPTION PURSUANT TO SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”), FROM: (1) CERTAIN PROVISIONS OF SECTION 15(a) OF THE 1940 ACT AND (2) CERTAIN DISCLOSURE REQUIREMENTS UNDER VARIOUS RULES AND FORMS

 

 

I.       INTRODUCTION Introduction

 

BondBloxx ETFVenerable Variable Insurance Trust (the “Trust”), a registered open-end management investment company that offers one or moremultiple series of shares (each, a “Fund” and collectively, the “Funds”), on its own behalf and on behalf of each series, and BondBloxxFund, and Venerable Investment Management CorporationAdvisers, LLC (the “Initial Adviser” or the “Adviser” and together with the Trust, the “Applicants”),¹ the investment adviser to BondBloxx IR+M Tax-Aware Short Duration ETF (the “Fund”),²hereby submit this second amended application (the “Application”) to the Securities and Exchange Commission (the “Commission”) for an order of exemption pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”).

 

Applicants request an order exempting them from Section 15(a) of the 1940 Act to permit the Adviser, subject to the approval of the board of trustees of the Trust (the “Board” or “Trustees”)²,³ including a majority of those who are not “interested persons” of the Trust or the Adviser, as defined in Section 2(a)(19) of the 1940 Act (the “Independent Trustees”), to take certain actions without obtaining shareholder approval as follows: (i) select investment sub-adviserssubadvisers (each a “Sub-AdviserSubadviser” and collectively, the “Sub-AdvisersSubadvisers”) for all or a portion of the assets of thea Fund pursuant to an investment sub-advisorysubadvisory agreement with each Sub-AdviserSubadviser (each a “Sub-AdvisorySubadvisory Agreement” and collectively, the “Sub-AdvisorySubadvisory Agreements”); and (ii) materially amend Sub-AdvisorySubadvisory Agreements with the Sub-AdvisersSubadvisers. As used herein, a “Sub-AdviserSubadviser” for a Fund is any investment adviser that enters into a Sub-AdvisorySubadvisory Agreement with respect to a Fund.

 

Applicants also apply for an order of the Commission under Section 6(c) of the 1940 Act exempting a Sub-Advised Fund from certain disclosure obligations under the following rules and forms: (i) Item 19(a)(3) of Form N-1A; (ii) 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, as amended (the “Exchange Act”); and (iii) Sections 6-07(2)(a), (b), and (c) of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). Similar to the order the Commission granted to Carillon Series Trust, et al.,⁴³ in addition to Wholly-Owned and Non-Affiliated

 

¹ The term “Adviser” means (i) the Initial AdviserVenerable Investment Advisers, LLC, (ii) its successors, and (iii) any entity controlling, controlled by, or under common control with, the Initial AdviserVenerable Investment Advisers, LLC or its successors that serves as the primary adviser to a Sub-AdvisedSubadvised Fund (as defined below). For the 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 registration statement relating to BondBloxx IR+M Tax-Aware Short Duration ETF was filed on November 16, 2023 and is not yet effective.

² The term “Board” also includes the board of trustees or directors of a future Subadvised Fund (as defined below), if different from the board of trustees of the Trust.

 

³ The term “Board” also includes the board of trustees or directors of a future Sub-Advised Fund (as defined below), if different from the board of trustees of the Trust. 

⁴³ The Commission issued an order granting the expanded relief requested by the Application. Carillon Series Trust, et al., Investment Company Act Release NoNos. 33464 (May 2, 2019) (Notice) and No. 33494 (May 29, 2019) (Order) (the “Carillon Order”). See also Total Fund Solution and Cromwell Investment Advisors, LLCRoundhill ETF Trust and Roundhill Financial, Inc., Investment Company Act Rel. No. 34901 (April 26Release Nos. 35120 (January 30, 2024) (Notice) and 35147 (February 27, 2024) (Order) (the “Roundhill Order”); BondBloxx ETF Trust and BondBloxx Investment Management Corporation, Investment Company Act Release Nos. 35119 (Notice) (January 30, 2024) and 35146 (Order) (February 27, 2024) (the “BondBloxx Order”); RM Opportunity Trust and Rocky Mountain Private Wealth Management L.L.C., Investment Company Act Release Nos. 34964 (July 24, 2023) (Notice) and No. 34921 (May 2334986 (August 21, 2023 ) (Order) (the “Total Fund Order”). See also Two Roads

 

 

Sub-AdvisersSubadvisers (both as defined below), the relief described in this Application would extend to any Sub-AdviserSubadviser that is an “affiliated person” (as such term is defined in Section 2(a)(3) of the 1940 Act) of thea Fund or the Adviser for reasons other than serving as investment sub-advisersubadviser to one or more Funds (an “Affiliated Sub-AdviserSubadviser”).⁵⁴

 

Applicants request that the relief sought herein apply to Applicants, as well as to any existing or future registered open-end management investment company or series thereof that intends to rely on the requested order in the future and (i) is advised by the Adviser; (ii) uses the multi-manager structure described in this Application; and (iii) complies with the terms and conditions set forth herein (each, together with any Fund that currently uses or will use the multi-manager structure described in this Application, a “Sub-AdvisedSubadvised Fund,” and collectively, the “Sub-AdvisedSubadvised Funds”).⁶⁵

 

Shared Trust and Hypatia Capital Management LLC, Investment Company Act Rel. No. 34892 (April 20, 2023) (Notice) and No. 34918 (May 16, 2023) (Order) (the “Two Roads Order”). See also Investment Managers Series Trust II and Embassy Asset Management, LP, Investment Company Act Rel. No. 34886 (April 14, 2023) (Notice) and No. 34913 (May 10, 2023) (Order) (the “Investment Managers Series Order”). See also Touchstone Strategic Trust, et al., Investment Company Act Rel. No. 34790 (December 22, 2022) (Notice) and No. 34809 (January 18, 2023) (Order) (the “Touchstone Order”). See alsoRM Opportunity Order”); Advisors Series Trust and Semper Capital Management, L.P., Investment Company Act Rel. NoRelease Nos. 34500 (February 9, 2022) (Notice) and No. 34528 (March 8, 2022) (Order) (the “Semper Capital Management Order”). See also Investment Managers Series Trust and Hamilton Lane Advisors, L.L.C., Investment Company Act Rel. No. 34370 (September 1, 2021) (Notice) and No. 34385 (September 27, 2021) (Order) (the “Hamilton Lane Order”). See also Uncommon Investment Funds Trust and Uncommon Investment Advisors LLC, Investment Company Act Rel. No. 34331 (July 15, 2021) (Notice) and No. 34354 (August 11, 2021) (Order) (the “Uncommon Investment Funds Order”). See alsoAdvisors Trust Order”); New Age Alpha Trust and New Age Alpha Advisors, LLC, Investment Company Act Rel. NoNos. 34322 (July 6, 2021) (Notice) and No. 34348 (August 3, 2021) (Order) (the "“New Age Alpha Trust Order"”). See also; and Listed Funds Trust, et al., Investment Company Act Rel. NoNos. 34293 (June 2, 2021) (Notice) and No. 34321 (June 29, 2021) (Order) (“LFT Order”). See also Azzad Funds, et al., Investment Company Act Rel. No. 34241 (April 5, 2021) and No. 34261 (April 30, 2021) ("Azzad Order"). See also ETF Series Solutions and Distillate Capital Partners LLC, Investment Company Act Release No. 34169 (January 11, 2021) (Notice) and No. 34190 (February 8, 2021) (Order) (the “Distillate Capital Order”); Esoterica Thematic Trust and Esoterica Capital LLC, Investment Company Act Release No. 34161 (January 4, 2021) (Notice) and No. 34185 (February 1, 2021) (Order) (the “Esoterica Order”); ETF Series Solutions and Clearshares LLC, Investment Company Act Release No. 34144 (December 21, 2020) (Notice) and No. 34174 (January 19, 2021) (Order) (the “Clearshares Order”); OSI ETF Trust, et. al., Investment Company Act Release No. 33678 (October 29, 2019) (Notice) and No. 33705 (November 26, 2019) (Order) (the “OSI ETF Order”); and Investment Managers Series Trust II, et. al., Investment Company Act Release No. 34075 (October 27, 2020) (Notice) and No. 34104 (November 23, 2020) (Order) (the “Investment Managers Order”). 

 

⁵⁴ Section 2(a)(3) of the 1940 Act defines “affiliated person” as follows: “Affiliated person” of another person means (A) any person directly or indirectly owning, controlling, or holding with power to vote, 5 per centum or more of the outstanding voting securities of such other person; (B) any person 5 per centum or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other person; (C) any person directly or indirectly controlling, controlled by, or under common control with, such other person; (D) any officer, director, partner, copartner, or employee of such other person; (E) if such other person is an investment company, any investment adviser thereof or any member of an advisory board thereof; and (F) if such other person is an unincorporated investment company not having a board of directors, the depositor thereof.

 

⁶⁵ All registered open-end investment companies that currently intend to rely on the requested order are named as Applicants. The FundAll Funds that currently intends to operate as a Sub-Advised Fund isare, or that currently intend to be, Subadvised Funds are identified in this Application. Any entity that relies on the requested order will do so only in accordance with the terms and conditions contained in this Application.

 

 

Applicants are seeking this exemption primarily to enhance the ability of the Adviser and the Board to obtain for a Sub-AdvisedSubadvised Fund the services of one or more Sub-AdvisersSubadvisers believed by the Adviser and the Board to be particularly well suited for all or a portion of the assets of the Sub-AdvisedSubadvised Fund, and to make material amendments to Sub-AdvisorySubadvisory Agreements believed by the Adviser and the Board to be appropriate, without the delay and expense of convening special meetings of shareholders to approve the Sub-AdvisorySubadvisory Agreements. Under this structure, the Adviser, in its capacity as investment adviser, would evaluate, allocate assets to, and oversee the Sub-AdvisersSubadvisers, and make recommendations about their hiring, termination and replacement to the Board, at all times subject to the authority of the Board. This structure is commonly referred to as a “multi-manager” structure. In addition, Applicants are seeking relief from certain disclosure requirements concerning fees paid to Sub-AdvisersSubadvisers.

 

For the reasons discussed below, Applicants believe that the requested relief is appropriate, in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. Applicants believe that a Sub-Advised Fundthe Subadvised Funds would be negatively impacted without the requested relief because of delays in hiring or replacing Sub-AdvisersSubadvisers and costs associated with the proxy solicitation to approve new or amended Sub-AdvisorySubadvisory Agreements.

 

II.       BACKGROUND Background

A.                A.              The Trust

 

The Trust is registered under the 1940 Act as an open-end management investment company organized as a Delaware statutory trust. The Adviser serves or will serve as “investment adviser,” as defined in Section 2(a)(20) of the 1940 Act, to theeach Fund. The Trust intends to operate the Fund one or more Funds under a multi-manager structure and whichshares of the Funds are or will be offered and sold pursuant to a registration statement on Form N-1A. The Board consists of five (5) trustees, fourthe majority of whom serve asare Independent Trustees.

 

The Trust offers shares of multiple series, each with its own distinct investment objectives, policies, and restrictions. The Adviser anticipates that the Fund will retain a Sub-Adviser to provide investment advisory services to the Fund.⁷The Fund will operate from its inception under a multi-manager structure. The Trust currently consists of the following Funds and may introduce new Funds in the future: Venerable High Yield Fund, Venerable Large Cap Index Fund, Venerable Moderate Allocation

 

For purposes of this Application, the term “Subadviser” will also apply to any Subadviser to any wholly-owned subsidiary of a Subadvised Fund (each, a “Subsidiary” and collectively, the “Subsidiaries”). The Adviser will serve as investment adviser to each Subsidiary and may retain one or more Subadvisers to manage the assets of a Subsidiary. Applicants also request relief with respect to any Subadvisers who serve as Subadvisers to a Subsidiary. Where appropriate, Subsidiaries are also included in the term “Subadvised Funds.”

⁷ Each Sub-Advised Fund will disclose in its registration statement that it intends to operate pursuant to the order, as applicable, as requested in this Application, if granted. The prospectus for a Sub-Advised Fund will include the disclosure required by Condition 2 below at all times subsequent to the approval required by Condition 1 below, as applicable. If a Sub-Advised Fund has obtained shareholder approval to operate under the multi-manager structure described herein prior to the issuance of an order as requested in this Application, the prospectus for the Sub-Advised Fund will at all times following such shareholder approval contain appropriate disclosure that the Sub-Advised Fund has applied for exemptive relief to operate under the multi-manager structure described herein, including the ability to hire new Sub-Advisers and materially amend an existing Sub-Advisory Agreement without soliciting further shareholder vote. 

 

 

Fund, Venerable Strategic Bond Fund, and Venerable US Large Cap Strategic Equity Fund.⁶ Sub-Advisers have been engaged to provide services to the Funds. Each Fund intends to operate under a multi-manager structure.⁷

 

B.                 B.                The Adviser

 

BondBloxxVenerable Investment Management CorporationAdvisers, LLC, with its business address at 700 Larkspur Landing Circle, Suite 250, Larkspur, CA 949391475 Dunwoody Drive, Suite 200, West Chester, PA, 19380, is a Delaware corporationlimited liability company registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and anticipates that itserves or will serve as investment adviser to theeach Fund pursuant to an investment advisory agreement with the Fund (each, an “Investment Advisory Agreement” and, together, the “Investment Advisory Agreements”). Any future Adviser also will be registered with the Commission as an investment adviser under the Advisers Act.

 

Consistent with the terms of a Sub-AdvisedSubadvised Fund’s Investment Advisory Agreement, the Adviser may, subject to the approval of the Board, including a majority of the Independent Trustees, and the shareholders of the applicable Sub-AdvisedSubadvised Fund (if required by applicable law), delegate portfolio management responsibilities of all or a portion of the assets of a Sub-AdvisedSubadvised Fund to a Sub-AdviserSubadviser. The Adviser retains overall responsibility for the management and investment of the assets of the Sub-AdvisedSubadvised Fund. With respect to each Sub-AdvisedSubadvised Fund, the Adviser’s responsibilities will include, for example, recommending the removal or replacement of Sub-AdvisersSubadvisers, and allocating the portion of that Sub-AdvisedSubadvised Fund’s assets to any given Sub-AdviserSubadviser and reallocating those assets as necessary from time to time. The Adviser evaluates, selects and recommends Sub-AdvisersSubadvisers for the Sub-Advised FundsSubadvised Fund, and monitors and reviews each Sub-AdviserSubadviser and its performance and its compliance with the applicable Sub-AdvisedSubadvised Fund’s investment policies and restrictions.

 

Each Investment Advisory Agreement has been or will be approved by the Board, including a majority of the Independent Trustees, and by the shareholders of the relevant Fund in the manner required by Sections 15(a) and 15(c) of the 1940 Act. The terms of the Investment Advisory Agreements comply or will comply with Section 15(a) of the 1940 Act. Applicants are not seeking an exemption from the provisions of the 1940 Act with respect to the Investment Advisory Agreements. Pursuant to the terms of each Investment Advisory Agreement, the Adviser, subject to the oversight of the Board, has agreed or will agree to (i) provide continuous investment management for each Fund; (ii) determine the securities and other investments to be purchased, retained, sold or loaned by each Fund and the portion of such assets to be invested or held uninvested as cash; and (iii) exercise full discretion and act for each Fund in the same manner and with the same force and effect as such Fund itself might or could do with respect to purchases, sales, or other transactions and with respect to all other things necessary or incidental to the furtherance or

 

⁶ The Trust has filed an amendment to its registration statement on Form N-1A that is not yet effective with respect to thirteen new Funds. Each Fund intends to operate under a multi-manager structure.

 

⁷ Each Subadvised Fund discloses or will disclose in its registration statement that it intends to operate pursuant to the order requested in this Application, if granted. The prospectus for a Subadvised Fund will continue to include the disclosure required by Condition 2 below at all times subsequent to the approval required by Condition 1 below. If a Subadvised Fund has obtained shareholder approval to operate under the multi-manager structure described herein prior to the issuance of an order as requested in this Application, the prospectus for the Subadvised Fund will at all times following such shareholder approval contain appropriate disclosure that the Subadvised Fund has applied for exemptive relief to operate under the multi-manager structure described herein, including the ability to hire new Subadvisers and materially amend an existing Subadvisory Agreement without soliciting further shareholder vote.

 

 

conduct of such purchases, sales or other transactions. The Adviser also is or will be responsible for effecting transactions for each Fund and selecting brokers or dealers to execute such transactions for each Fund. The Adviser will periodically review each Fund’s investment policies and strategies and, based on the need of a particular Fund, may recommend changes to the investment policies and strategies of the Fund for consideration by the Board.

 

Each Investment Advisory Agreement permits or will permit the Adviser to enter into Sub-AdvisorySubadvisory Agreements with one or more Sub-AdvisersSubadvisers. Pursuant to its authority under the Investment Advisory Agreements, the Adviser has entered or will enter into Sub-AdvisorySubadvisory Agreements as described below under “The Sub-AdvisersSubadvisers and the Sub-Advised Fund(s)Subadvised Funds.” If the name of any Sub-AdvisedSubadvised Fund contains the name of a sub-adviserSubadviser, the name of the Adviser that serves as the primary adviser to the Sub-AdvisedSubadvised Fund, or a trademark or trade name that is owned by or publicly used to identify that Adviser, will precede the name of the sub-adviserSubadviser.

 

For its services to each Sub-Adviseda Fund, the Adviser receives or will receive an investment advisory fee from that Sub-Advised Fund as specified in the applicable Investment Advisory Agreement. The investment advisory fees are calculated based on the average daily net assets of the particular Fund, calculated daily as of the close of business on each business day during the month.

 

C.                             The Sub-Advisers and the Sub-Advised Fund(s)

C.                The Subadvisers and the Subadvised Funds

 

Pursuant to the authority under the Investment Advisory Agreements, the Adviser may enter into Sub-Advisoryhas entered into Subadvisory Agreements with various Sub-AdvisersSubadvisers on behalf of a Sub-Advised Fund. The Initial Adviser intends to enter into a Sub-Advisory Agreement with Income Research + Management (“IR+M”). IR+M will bethe Funds, each of which is considered a Non-Affiliated Sub-AdviserSubadviser (as defined below). The Adviser also may, in the future, enter into Sub-AdvisorySubadvisory Agreements with other Sub-AdvisersSubadvisers on behalf of the Fund and other Sub-AdvisedSubadvised Funds.

 

With respect to any future Sub-AdviserSubadviser that is wholly owned by the Adviser or the Adviser’s parent company, the Adviser will have overall responsibility for the affairs of such Sub-AdviserSubadviser, and generally will approve certain actions by that Sub-AdviserSubadviser that could materially affect the operations of the Adviser and its subsidiaries as a group. IR+M has, and any future Sub-Adviser will have, their own employees who would provide investment services to a Sub-Advised Fund.

 

The Sub-AdviserEach Subadviser is, and any future Sub-AdvisersSubadvisers will be, “investment advisers” to the Sub-Advised FundSubadvised Funds within the meaning of Section 2(a)(20) of the 1940 Act and provide, or will provide, investment management services to the Sub-Advised FundSubadvised Funds subject to, without limitation, the requirements of Sections 15(c) and 36(b) of the 1940 Act. In addition, the Sub-Advisereach Subadviser is, and any future Sub-AdvisersSubadvisers will be, registered with the Commission as an investment adviser under the Advisers Act or not subject to such registration. The Adviser selects Sub-AdvisersSubadvisers based on the Adviser’s evaluation of the Sub-AdvisersSubadvisers’ skills in managing assets pursuant to particular investment styles, and recommends their hiring to the Board. InThe Adviser does, and in the future, the Adviser may, employ multiple Sub-AdvisersSubadvisers for one or more of any Sub-Advised FundSubadvised Funds. In those instances, the Adviser would allocate and, as appropriate, reallocate a Sub-AdvisedSubadvised Fund’s assets among the Sub-AdvisersSubadvisers.

 

 

The Adviser engages or will engage in an ongoing analysis of the continued advisability of retaining a Sub-AdviserSubadviser and makes or will make recommendations to the Board as needed. The Adviser also negotiates and renegotiates, or will negotiate and renegotiate, the terms of the Sub-AdvisorySubadvisory Agreements with a Sub-AdviserSubadviser, including the fees paid to the Sub-AdvisersSubadviser, and makes or will make recommendations to the Board as needed.

 

The Sub-AdvisersSubadvisers, subject to the oversight of the Adviser and the Board, determine or will determine the securities and other instruments to be purchased, sold or entered into by a Sub-AdvisedSubadvised Fund’s portfolio or a portion thereof, and place or will place orders with brokers or dealers that they or the Adviser selectsselect.⁸ The Sub-AdvisersSubadvisers keep or will keep certain records required by the 1940 Act and the Advisers Act to be maintained on behalf of the relevant Sub-AdvisedSubadvised Fund, and assist or will assist the Adviser to maintain the Sub-AdvisedSubadvised Fund’s compliance with the relevant requirements of the 1940 Act. The Sub-AdvisersSubadvisers monitor or will monitor the respective Sub-AdvisedSubadvised Fund’s investments and provide or will provide periodic reports to the Board and the Adviser. The Sub-AdvisersSubadvisers also make or will make their officers and employees available to the Adviser and the Board to review the investment performance and investment policies of the Sub-AdvisedSubadvised Fund.

 

The Sub-AdvisorySubadvisory Agreements were or will be approved by the Board, including a majority of the Independent Trustees, in accordance with Sections 15(a) and 15(c) of the 1940 Act.

 

The terms of each Sub-AdvisorySubadvisory Agreement comply or will comply fully with the requirements of Section 15(a) of the 1940 Act. Each Sub-AdvisorySubadvisory Agreement will set forth the duties of the Sub-AdviserSubadviser and precisely describe the compensation paid to the Sub-AdviserSubadviser.

 

After an initial two-year period, the terms of the Sub-AdvisorySubadvisory Agreements will be reviewed and renewed on an annual basis by the Board, including a majority of the Independent Trustees, in accordance with Section 15(c) of the 1940 Act. The Board dedicates or will dedicate substantial time to review contract matters, including matters relating to Investment Advisory Agreements and Sub-AdvisorySubadvisory Agreements. With respect to a Sub-Advisedeach Subadvised Fund, the Board reviews or will review comprehensive materials received from the Adviser, the Sub-AdviserSubadviser, independent third parties and independent legal counsel. Applicants will continue this annual review and renewal process for Sub-AdvisorySubadvisory Agreements in accordance with the 1940 Act if the relief requested herein is granted by the Commission.

 

The Board reviews or will review information provided by the Adviser and Sub-AdvisersSubadvisers when it is asked to approve or renew Sub-AdvisorySubadvisory Agreements. Each Sub-AdvisedSubadvised Fund discloses or will disclose in its statutory prospectus that a discussion regarding the basis for the Board’s approval and renewal of the Investment Advisory Agreements and any applicable Sub-AdvisorySubadvisory Agreements is available in the Sub-Advised Fund’s annual or semi-annual report to shareholders Subadvised Fund’s reports filed on Form N-CSR for the relevant period in

 

⁸ For the purposes of this Application, a “Sub-AdviserSubadviser” also includes an investment Sub-Advisersubadviser that provides or will provide the Adviser with a model portfolio reflecting a specific strategy, style or focus with respect to the investment of all or a portion of a Sub-AdvisedSubadvised Fund’s assets. The Adviser or another Subadviser may use the model portfolio to determine the securities and other instruments to be purchased, sold, or entered into by a Sub-AdvisedSubadvised Fund’s portfolio or a portion thereof, and place orders with brokers or dealers that it selects.

 

accordance with Item 10(a)(1)(iii) of Form N-1A. The information provided to the Board is or will be maintained as part of the records of the respective Sub-AdvisedSubadvised Fund pursuant to Rule 31a-1(b)(4) and Rule 31a-2 under the 1940 Act.

 

Pursuant to each Sub-AdvisorySubadvisory Agreement, the Adviser has agreed or will agree to pay each Sub-AdviserSubadviser a fee, based on thea percentage of the applicable assets of a Sub-AdvisedSubadvised Fund, from the fee received by the Adviser from a Sub-Advisedthe Subadvised Fund under the Investment Advisory Agreement.⁹ Each Sub-AdviserSubadviser will bear its own expenses of providing investment management services to a Sub-AdvisedSubadvised Fund.

 

III.       REQUEST FOR EXEMPTIVE RELIEF Request For Exemptive Relief

 

Section 6(c) of the 1940 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 1940 Act, or any rule thereunder, if such relief 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 1940 Act. Applicants believe that the requested relief described in this Application meets this standard.

 

IV.       APPLICABLE LAW AND DISCUSSION Applicable Law And Discussion

 

A.

A.               Shareholder Vote

 

1.                   1.                Regulatory Background

 

Section 15(a) of the 1940 Act states, in 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, which contract, whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company.”

 

Section 2(a)(20) of the 1940 Act defines an “investment adviser” as any person who, pursuant to an agreement with such registered investment company or with an investment adviser of such registered investment company, is empowered to determine what securities or other property shall be purchased or sold by such registered investment company. Consequently, the Sub-AdvisersSubadvisers are deemed to be within the definition of an “investment adviser” and, therefore, the Sub-AdvisorySubadvisory Agreements are each subject to Section 15(a) of the 1940 Act to the same extent as the Investment Advisory Agreements.

 

Therefore, Section 15(a) of the 1940 Act requires a majority of the outstanding voting securities of a Sub-AdvisedSubadvised Fund to approve Sub-AdvisorySubadvisory Agreements whenever the Adviser proposes to the Board to hire new Sub-AdvisersSubadvisers for a Sub-AdvisedSubadvised Fund. This provision would also require shareholder approval by a majority vote for any material amendment to Sub-AdvisorySubadvisory Agreements.

 

 

⁹ A Sub-AdvisedSubadvised Fund also may pay advisory fees directly to a Sub-AdviserSubadviser.

 

 

The Sub-Advisory Agreements areEach Subadvisory Agreement is required to terminate automatically and immediately upon theirits “assignment,” which could occur upon a change in control of the Sub-Advisersapplicable Subadviser.¹⁰

 

Rule 2a-6 under the 1940 Act provides that certain transactions that do not result in a “change in actual control or management of the investment adviser” to a registered investment company are not assignments for purposes of Section 15(a)(4) of the 1940 Act, thereby effectively providing an exemption from the shareholder voting requirements in Section 15(a) of the 1940 Act. Applicants do not believe that Rule 2a-6 under the 1940 Act provides a safe harbor to recommend, hire and terminate Sub-AdvisersSubadvisers. Each Sub-AdviserSubadviser is expected to run its own day-to-day operations and each will have its own investment personnel. Therefore, in certain instances appointing certain Sub-AdvisersSubadvisers could be viewed as a change in management and, as a result, an “assignment” within the meaning of the 1940 Act.

 

2.                   2.                Requested Relief

 

Applicants seek relief to (i) select Sub-AdvisersSubadvisers, including Affiliated Sub-AdvisersSubadvisers, for all or a portion of the assets of a Sub-AdvisedSubadvised Fund and enter into Sub-AdvisorySubadvisory Agreements and (ii) materially amend Sub-AdvisorySubadvisory Agreements with such Sub-AdvisersSubadvisers, each subject to the approval of the Board, including a majority of the Independent Trustees, without obtaining shareholder approval required under Section 15(a) of the 1940 Act. Such relief would include, without limitation, the replacement or reinstatement of any Sub-AdviserSubadviser with respect to which a Sub-AdvisorySubadvisory Agreement has automatically terminated as a result of an “assignment,” within the meaning of Section 2(a)(4) of the 1940 Act. Applicants believe that the relief sought should be granted by the Commission because (1) the Adviser either will operate a Sub-AdvisedSubadvised Fund, or may operate the Sub-Adviseda Subadvised Fund, in a manner that is different from conventional investment companies; (2) the relief will benefit shareholders by enabling the Sub-Adviseda Subadvised Fund to operate in a less costly and more efficient manner; and (3) Applicants will consent to a number of conditions that adequately address the policy concerns of Section 15(a) of the 1940 Act, including conditions designed to ensure that shareholder interests are adequately protected through Board oversight.

 

a.                   (a)                    OperationOperations of the Trust

 

Section 15(a) was designed to protect the interests and expectations of a registered investment company’s shareholders by requiring they approve investment advisory contracts, including sub-advisorysubadvisory contracts.¹¹ Section 15(a) is predicated on the belief that if a registered investment company is to be managed by an investment adviser different from the investment adviser selected by shareholders at the time of the investment, the new investment adviser should be approved by shareholders.¹² The relief sought in this Application is consistent with this public policy.

 

¹⁰ See Section 15(a)(4) of the 1940 Act. Section 2(a)(4) of the 1940 Act defines “assignment” as any direct or indirect transfer or hypothecation of a contract.

 

¹¹ See Section 1(b)(6) of the 1940 Act.

 

¹² Hearings on S. 3580 before a Subcomm. of the Senate Comm. on Banking and Currency, 76th Cong., 3d Sess. 253 (1940) (statement of David Schenker).

 

In the case of a traditional investment company, the investment adviser is a single entity that employs one or more individuals as portfolio managers to make the day-to-day investment decisions. The investment adviser may terminate or hire portfolio managers without board or shareholder approval and has sole discretion to set the compensation it pays to the portfolio managers. Alternatively, for sub-advisedsubadvised funds, the investment adviser is not normally responsible for the day-to-day investment decisions and instead, the investment adviser selects, oversees, and evaluates sub-adviserssubadvisers who ultimately are responsible for the day-to-day investment decisions.

 

Primary responsibility for management of a Sub-AdvisedSubadvised Fund’s assets, including the selection and oversight of the Sub-AdvisersSubadvisers, is vested in the Adviser, subject to the oversight of the Board.

 

Applicants believe that it is consistent with the protection of investors to vest the selection and oversight of the Sub-AdvisersSubadvisers in the Adviser in light of Applicants’ multi-manager structure, as well as the shareholders’ expectation that the Adviser is in possession of information necessary to select the most capable Sub-AdvisersSubadvisers. The Adviser has the requisite expertise to evaluate, select and oversee the Sub-AdvisersSubadvisers. The Adviser will not normally make day-to-day investment decisions for a Sub-AdvisedSubadvised Fund.¹³

 

From the perspective of the shareholder, the role of the Sub-AdvisersSubadvisers is substantially equivalent to the role of the individual portfolio managers employed by an investment adviser to a traditional investment company. The individual portfolio managers and the Sub-AdvisersSubadvisers are each charged with the selection of portfolio investments in accordance with a Sub-AdvisedSubadvised Fund’s investment objectives and policies and have no broad supervisory, or management or administrative responsibilities with respect to a Sub-AdvisedSubadvised Fund. Shareholders expect the Adviser, subject to review and approval of the Board, to select a Sub-AdviserSubadviser who is in the best position to achieve a Sub-AdvisedSubadvised Fund’s investment objective. Shareholders also rely on the Adviser for the overall management of a Sub-AdvisedSubadvised Fund and a Sub-AdvisedSubadvised Fund’s total investment performance.

 

Whenever required by Section 15(c) of the 1940 Act, the Board will request and the Adviser and each Sub-AdviserSubadviser will furnish such information as may be reasonably necessary for the Board to evaluate the terms of the Investment Advisory Agreements and the Sub-AdvisorySubadvisory Agreements. The information that is provided to the Board will be maintained as part of the records of the Sub-Advised FundSubadvised Funds in accordance with the applicable recordkeeping requirements under the 1940 Act and made available to the Commission in the manner prescribed by the 1940 Act.

 

In addition, the Adviser and the Board will consider the reasonableness of the Sub-Adviser’sSubadviser’s compensation with respect to each Sub-AdvisedSubadvised Fund for which the Sub-AdviserSubadviser will provide portfolio management services. Although only the Adviser’s fee is payable directly by a Sub-AdvisedSubadvised Fund, and the Sub-Adviser’sSubadviser’s fee is payable by the Adviser,¹⁴ the Sub-Adviser’sSubadviser’s fee directly bears on the amount and reasonableness of the Adviser’s fee payable by a Sub-AdvisedSubadvised Fund. Accordingly, the Adviser and the Board will analyze the fees paid to Sub-AdvisersSubadvisers in evaluating the reasonableness of the overall arrangements.

 

¹³ Although the Adviser will not normally make such day-to-day investment decisions, it may manage all or a portion of a Sub-AdvisedSubadvised Fund.

 

¹⁴ A Sub-AdvisedSubadvised Fund also may pay advisory fees directly to a Sub-AdviserSubadviser.

 

 

With respect to oversight, Applicants note that the Adviser performs and will perform substantially identical oversight of all Sub-AdvisersSubadvisers, regardless of whether they are affiliated with the Adviser. Such oversight is similar in many respects to how the Adviser would oversee its own internal portfolio management teams.

 

b.                   (b)                   Lack of Economic Incentives

 

In allocating the management of Sub-AdvisedSubadvised Fund assets between itself and one or more Sub-AdvisersSubadvisers, Applicants acknowledge that the Adviser has an incentive to consider the benefit it will receive, directly or indirectly, from the fee paid for the management of those assets. However, Applicants believe that the protections afforded by the conditions set forth in this Application would prevent the Adviser from acting to the detriment of a Sub-AdvisedSubadvised Fund and its shareholders. Applicants assert that the proposed conditions are designed to provide the Board with sufficient independence and the resources and information it needs to monitor and address conflicts of interest. In particular, the Adviser will provide the Board with any information that may be relevant to the Board’s evaluation of material conflicts of interest present in any sub-advisorysubadvisory arrangement when the Board is considering, with respect to a Sub-AdvisedSubadvised Fund, a change in Sub-AdviserSubadviser or an existing Sub-AdvisorySubadvisory Agreement as part of its annual review process. The Board will also have to make a separate finding, reflected in the Board minutes, that any change in Sub-AdvisersSubadviser or any renewal of an existing Sub-AdvisorySubadvisory Agreement is in the best interests of the Sub-AdvisedSubadvised Fund and its shareholders and, based on the information provided to it, does not involve a conflict of interest from which the Adviser, a Sub-AdviserSubadviser, or any officer or Trustee of the Sub-AdvisedSubadvised Fund or any officer or board member of the Adviser derives an inappropriate advantage.

 

Applicants note that the relief they are requesting would not be subject to two conditions that have been customary in previous exemptive orders for similar relief, including (i) restrictions on the ownership of interest in Sub-AdvisersSubadvisers by trustees and officers of the Sub-Advised FundSubadvised Funds and the Adviser, and (ii) a requirement that the Adviser provide the Board with profitability reports each quarter. Applicants believe eliminating these conditions is appropriate with respect to the requested relief. As to the condition on ownership, Applicants assert that restricting ownership of interests in a Sub-AdviserSubadviser by trustees and officers would not be meaningful where the Adviser may itself own an interest in the Sub-AdviserSubadviser and the Sub-AdviserSubadviser may be selected for a Sub-AdvisedSubadvised Fund under the requested relief.¹⁵ As to the condition requiring quarterly profitability reports, Applicants note that the Board reviews and will continue to review profitability information at the time of any proposed Sub-AdviserSubadviser change (see condition 7) and as part of its annual review of each Sub-AdvisorySubadvisory Agreement pursuant to Section 15(c) of the 1940 Act.

 

Until the Carillon Order, the Commission hadhas granted the requested relief solely with respect to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers through numerous exemptive orders. That relief hadhas been premised on the fact that such a Sub-AdviserSubadviser serves in the same limited capacity as an individual portfolio manager. Applicants believe this same rationale supports extending the requested relief to Affiliated Sub-AdvisersSubadvisers. Moreover, Applicants note that, while the Adviser’s judgment in recommending a Sub-AdviserSubadviser can be affected by certain conflicts of interest or economic incentives, they do not warrant denying the extension of the requested relief to Affiliated Sub-AdvisersSubadvisers. For one, the Adviser faces those conflicts and incentives in allocating fund assets between itself and a Sub-AdviserSubadviser, and across Sub-AdvisersSubadvisers, as it has an interest in considering the benefit it will receive, directly or indirectly, from the fee the fund pays for the management

 

¹⁵ Any Trustee of the Board whothat has an ownership interest in a Sub-AdviserSubadviser would not be deemed an Independent Trustee under Section 2(a)(19) of the 1940 Act.

 

 

of those assets. Moreover, the Adviser has employed and will continue to employ the same methodology to evaluate potential conflicts of interest, regardless of the affiliation between the Adviser and Sub-AdviserSubadviser. While the selection and retention of Affiliated Sub-AdvisersSubadvisers by the Adviser potentially presents different or additional conflicts of interest than may be the case with Non-Affiliated or Wholly-Owned Sub-AdvisersSubadvisers, the proposed terms and conditions of the requested relief are designed to address the potential conflicts of interest with respect to both those common to all types of Sub-AdvisersSubadvisers and specific to Affiliated Sub-AdvisersSubadvisers. In particular, Applicants believe that the proposed conditions are protective of shareholder interests by ensuring the Board’s independence and providing the Board with the appropriate resources and information to monitor and address conflicts.

 

c.                    (c)                   Benefits to Shareholders

 

Without the requested relief, when a new Affiliated Sub-AdviserSubadviser is retained by the Adviser on behalf of a Sub-AdvisedSubadvised Fund, the shareholders of the Sub-AdvisedSubadvised Fund are required to approve the Sub-AdvisorySubadvisory Agreement. Similarly, if an existing Sub-AdvisorySubadvisory Agreement with an Affiliated Sub-Advisera Subadviser is amended in any material respect, approval by the shareholders of the affected Sub-AdvisedSubadvised Fund is required. Moreover, if a Sub-AdvisorySubadvisory Agreement with an Affiliated Sub-Advisera Subadviser is “assigned” as a result of a change in control of the Sub-AdviserSubadviser, the shareholders of the affected Sub-AdvisedSubadvised Fund will be required to approve retaining the existing Sub-AdviserSubadviser. In all these instances the need for shareholder approval requires a Sub-AdvisedSubadvised Fund to call and hold a shareholder meeting, create and distribute proxy materials, and solicit votes from shareholders on behalf of the Sub-AdvisedSubadvised Fund, and generally necessitates the retention of a proxy solicitor. This process is time-intensive, expensive and slow, and, in the case of a poorly performing Sub-AdviserSubadviser or one whose management team has parted ways with the Sub-AdviserSubadviser, potentially harmful to a Sub-AdvisedSubadvised Fund and its shareholders.

 

As noted above, shareholders investing in a Sub-Advised Fund that has a Sub-AdviserSubadviser are effectively hiring the Adviser to manage a Sub-AdvisedSubadvised Fund’s assets by overseeing, monitoring and evaluating the Sub-AdviserSubadviser rather than by the Adviser hiring its own employees to oversee the Sub-AdvisedSubadvised Fund. Applicants believe that permitting the Adviser to perform the duties for which the shareholders of a Sub-AdvisedSubadvised Fund are paying the Adviser — the selection, oversight and evaluation of Sub-AdvisersSubadvisers, including Affiliated Sub-AdvisersSubadvisers — without incurring unnecessary delays or expenses is appropriate and in the interest of a Sub-AdvisedSubadvised Fund’s shareholders and will allow such Sub-AdvisedSubadvised Fund to operate more efficiently. Within this structure, the Adviser is in the better position to make an informed selection and evaluation of a Sub-AdviserSubadviser than are individual shareholders. Without the delay inherent in holding shareholder meetings (and the attendant difficulty in obtaining the necessary quorums), a Sub-AdvisedSubadvised Fund will be able to hire or replace Sub-AdvisersSubadvisers more quickly and at less cost, when the Board, including a majority of the Independent Trustees, and the Adviser believe that a change would benefit a Sub-AdvisedSubadvised Fund and its shareholders.

 

Until the Carillon Order, the Commission hadhas previously granted the requested relief solely with respect to certain Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers through numerous exemptive orders. That relief had permitted Sub-Advisedwould permit Subadvised Funds to avoid the time-intensive and expensive shareholder solicitation process with respect to hiring or making a material amendment to a Sub-AdvisorySubadvisory Agreement with respect to such sub-adviserssubadvisers. As discussed above, Applicants believe the same rationale supports extending the requested relief to Affiliated Sub-AdvisersSubadvisers as well, and while Affiliated Sub-AdvisersSubadvisers may give rise to different or

 

 

additional conflicts of interests, the proposed terms and conditions, including the enhanced oversight by the Board, address such potential conflicts. Moreover, treating all Sub-AdvisersSubadvisers equally under the requested relief might help avoid the selection of Sub-AdvisersSubadvisers potentially being influenced by considerations regarding the applicable regulatory requirements (i.e., whether a shareholder vote is required) and the associated costs and delays.¹⁶

 

If the relief requested is granted, each Investment Advisory Agreement will continue to be fully subject to Section 15(a) of the 1940 Act. Moreover, the relevant Board will consider the Investment Advisory Agreements and Sub-AdvisorySubadvisory Agreements in connection with its annual contract renewal process under Section 15(c) of the 1940 Act, and the standards of Section 36(b) of the 1940 Act will be applied to the fees paid to each Sub-AdviserSubadviser.

 

3.                   3.                   Shareholder Notification

 

With the exception of the relief requested in connection with Aggregate Fee Disclosure (as defined below), the prospectus and statement of additional information for each Sub-AdvisedSubadvised Fund will include all information required by Form N-1A concerning the Sub-AdvisersSubadvisers, including Affiliated Sub-AdvisersSubadvisers, if the requested relief is granted. If a new Sub-AdviserSubadviser is retained, an existing Sub-AdviserSubadviser is terminated, or a Sub-AdvisorySubadvisory Agreement is materially amended, a Sub-AdvisedSubadvised Fund’s prospectus and statement of additional information will be supplemented promptly pursuant to Rule 497(e) under the Securities Act.

 

If new Sub-AdvisersSubadvisers are hired, the Sub-Advised FundSubadvised Funds will inform shareholders of the hiring of a new Sub-AdviserSubadviser pursuant to the following procedures (“Modified Notice and Access Procedures”): (a) within 90 days after a new Sub-AdviserSubadviser is hired for any Sub-AdvisedSubadvised Fund, that Sub-AdvisedSubadvised Fund will send its shareholders either a Multi-manager Notice or a Multi-manager Notice and Multi-manager Information Statement;¹⁷ and (b) a Sub-AdvisedSubadvised Fund will make the Multi-manager Information Statement available on the website 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 website for at least 90 days. Under the requested relief, a Sub-AdvisedSubadvised Fund would not furnish a Multi-manager Information Statement to shareholders when an existing Sub-

 

¹⁶ The Adviser is responsible for selecting Sub-AdvisersSubadvisers in the best interests of the Sub-Adviseda Subadvised Fund, regardless of the costs or timing constraints that may be associated with the process of seeking shareholder approval of Sub-AdvisorySubadvisory Agreements and material amendments thereto.

 

¹⁷ 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 Sub-AdviserSubadviser (except as modified to permit Aggregate Fee Disclosure as defined in this Application); (b) inform shareholders that the Multi-manager Information Statement is available on a website; (c) provide the website address; (d) state the time period during which the Multi-manager Information Statement will remain available on that website; (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 a Sub-Advisedthe applicable Subadvised Fund.

 

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 with the Commission via the EDGAR system.

 

 

AdvisorySubadvisory Agreement is materially modified. In the circumstances described in this Application, a proxy solicitation to approve the appointment of new Sub-AdvisersSubadvisers provides no more meaningful information to shareholders than the proposed Multi-manager Information Statement. Moreover, as indicated above, the Board would comply with the requirements of Sections 15(a) and 15(c) of the 1940 Act before entering into or amending Sub-AdvisorySubadvisory Agreements.

 

Prior to any Sub-AdvisedSubadvised Fund relying on the requested relief in this Application, the Board, including its Independent Trustees, will have approved the Sub-Advised Fund’sits operations as described herein. Additionally, the shareholders of the applicable Sub-AdvisedSubadvised Fund have approved, or will approve, its operation as described herein by a vote of a majority of the outstanding voting securities, within the meaning of the 1940 Act, or by the sole shareholder prior to a Sub-AdvisedSubadvised Fund offering its shares.¹⁸

 

B.

B.                   Fee Disclosure

 

1.                   1.                   Regulatory Background

 

Form N-1AN-lA is the registration statement used by open-end investment companies. Item 19(a)(3) of Form N-1A requires a registered investment company to disclose in its statement of additional information the method of computing the “advisory fee payable” by the investment company with respect to each investment adviser, including the total dollar amounts that the investment company “paid to the adviser (aggregated with amounts paid to affiliated advisers, if any), and any advisers who are not affiliated persons of the adviser, under the investment advisory contract for the last three fiscal years.”

 

Rule 20a-1 under the 1940 Act requires proxies solicited with respect to a registered investment company to comply with Schedule 14A under the Exchange Act. Item 22 of Schedule 14A sets forth the information that must be included in a registered investment company’s proxy statement. Item 22(c)(1)(ii) requires a proxy statement for a shareholder meeting at which action will be taken on an investment advisory agreement to describe the terms of the advisory contract, “including the rate of compensation of the investment adviser.” Item 22(c)(1)(iii) requires a description of the “aggregate amount of the investment adviser’s fees and the amount and purpose of any other material payments” by the investment company to the investment adviser, or any affiliated person of the investment adviser during the fiscal year. Item 22(c)(8) requires a description of “the terms of the contract to be acted upon, and, if the action is an amendment to, or a replacement of, an investment advisory contract, the material differences between the current and proposed contract.” Finally, Item 22(c)(9) requires a proxy statement for a shareholder meeting at which a change in the advisory fee will be sought to state (i) the aggregate amount of the investment adviser’s fee during the last year; (ii) the amount that the adviser would have received had the proposed fee been in effect; and (iii) the difference between (i) and (ii) stated as a percentage of the amount in (i). Together, these provisions may require a Sub-AdvisedSubadvised Fund to disclose the fees paid to a Sub-AdviserSubadviser in connection with shareholder action with respect to entering into, or materially amending, an advisory agreement or establishing, or increasing, advisory fees.

 

¹⁸ If a Sub-AdvisedSubadvised Fund has obtained shareholder approval to operate pursuant to an exemptive order that would permit it to operate in a multi-manager structure where the Adviser would enter into or amend Sub-AdvisorySubadvisory Agreements only with respect to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers subject to Board approval but without obtaining shareholder approval and has met all other terms and conditions of the requested order, the Sub-AdvisedSubadvised Fund may rely on the applicable part of the order requested in this Application (i.e., hiring, amending Sub-AdvisorySubadvisory Agreements with, and including Aggregate Fee Disclosure (as defined below) in response to the disclosure requirements discussed herein with respect to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers).

 

 

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. These provisions could require a Sub-AdvisedSubadvised Fund’s financial statements to disclose information concerning fees paid to a Sub-AdviserSubadviser. The exemption from Regulation S-X requested below would permit a Sub-AdvisedSubadvised Fund to include only the Aggregate Fee Disclosure (as defined below); all other items required by Sections 6-07(2)(a), (b) and (c) of Regulation S-X will be disclosed.

 

2.                   2.                   Requested Relief

 

Applicants seek relief to permit the Sub-Advisedeach Subadvised Fund to disclose (as a dollar amount and a percentage of the Sub-AdvisedSubadvised Fund’s net assets) (a) the aggregate fees paid to the Adviser and any Wholly-Owned Sub-AdvisersSubadvisers; and (b) the aggregate fees paid to Affiliated and Non-Affiliated Sub-AdvisersSubadvisers (collectively, the “Aggregate Fee Disclosure”) in lieu of disclosing the fees that may be required by Item 19(a)(3) of Form N-1AN-lA, Items 22(c)(1)(ii), 22(c)(21)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, and Section 6-07(2)(a), (b) and (c) of Regulation S-X.¹⁹ The Aggregate Fee Disclosure would be presented as both a dollar amount and as a percentage of a Sub-Advisedthe Subadvised Fund’s net assets. Applicants believe that the relief sought in this Application should be granted because the Adviser intends to operate Sub-Advisedthe Subadvised Funds under a multi-manager structure. As a result, disclosure of the individual fees that the Adviser pays to the Sub-AdvisersSubadvisers would not serve any meaningful purpose.

 

As noted above, the Adviser may operate the Sub-Advised Fundsa Subadvised Fund in a manner different from a traditional investment company. By investing in a Sub-AdvisedSubadvised Fund, shareholders are hiring the Adviser to manage the Sub-AdvisedSubadvised Fund’s assets by overseeing, evaluating, monitoring, and recommending Sub-AdvisersSubadvisers rather than by hiring its own employees to manage the assets directly. The Adviser, under the oversight of the Board, is responsible for overseeing the Sub-AdvisersSubadvisers and recommending their hiring and replacement. In return, the Adviser receives an advisory fee from each Sub-AdvisedSubadvised Fund. Pursuant to each Sub-AdvisorySubadvisory Agreement, the Adviser has agreed or will agree to pay each Sub-AdviserSubadviser a fee, based on thea percentage of the assets of a Sub-AdvisedSubadvised Fund, from the fee received by the Adviser from a Sub-AdvisedSubadvised Fund under the Investment Advisory Agreement.²⁰ Each Sub-AdviserSubadviser will bear its own expenses of providing investment management services to a Sub-AdvisedSubadvised Fund.²⁰ Disclosure of the individual fees that the Adviser would pay to the Sub-AdvisersSubadvisers does not serve any meaningful purpose since investors pay the Adviser to oversee, monitor, evaluate and

 

¹⁹ As used herein, a “Wholly-Owned Sub-AdviserSubadviser” is any investment adviser that is (1) an indirect or direct “wholly-owned subsidiary” (as such term is defined in Section 2(a)(43) of the 1940 Act) of the Adviser, (2) a “sister company” of the Adviser that is an indirect or direct “wholly-owned subsidiary” of the same company that indirectly or directly wholly owns the Adviser (the Adviser’s “parent company”), or (3) a parent company of the Adviser. A “Non-Affiliated Sub-AdviserSubadviser” is any investment adviser that is not an “affiliated person” (as defined in the 1940 Act) of a Fund or the Adviser, except to the extent that an affiliation arises solely because the Sub-AdviserSubadviser serves as a Sub-Advisersubadviser to one or more Funds. Section 2(a)(43) of the 1940 Act defines “wholly-owned subsidiary” of a person as a company 95 per centum or more of the outstanding voting securities of which are, directly or indirectly, owned by such a person.

 

²⁰ A Subadvised Fund also may pay advisory fees directly to a Subadviser.

 

²⁰A Sub-Advised Fund also may pay advisory fees directly to a Sub-Adviser. 

 

 

compensate the Sub-AdvisersSubadvisers. Applicants contend that the primary reasons for requiring disclosure of individual fees paid to Sub-AdvisersSubadvisers are to inform shareholders of expenses to be charged by a particular Sub-AdvisedSubadvised Fund and to enable shareholders to compare the fees to those of other comparable investment companies. Applicants believe that the requested relief satisfies these objectives because the Sub-Advisedeach Subadvised Fund’s overall advisory fee will be fully disclosed and, therefore, shareholders will know what a Sub-AdvisedSubadvised Fund’s fees and expenses are and will be able to compare the advisory fees a Sub-AdvisedSubadvised Fund is charged to those of other investment companies.

 

Indeed, in a more conventional arrangement, requiring the Sub-Advised FundSubadvised Funds to disclose the fees negotiated between the Adviser and the Sub-AdvisersSubadvisers would be the functional equivalent of requiring single adviser investment companies to disclose the salaries of individual portfolio managers employed by that investment adviser. In the case of a traditional investment company, disclosure is made of the compensation paid to the investment adviser, but shareholders are not told or asked to vote on the salary paid by the investment adviser to individual portfolio managers. Similarly, in the case of the Sub-Advised FundSubadvised Funds, the shareholders will have chosen to employ the Adviser and to rely upon the Adviser’s expertise in monitoring the Sub-AdvisersSubadvisers, recommending the Sub-AdvisersSubadvisers’ selection, replacement and termination (if necessary), and negotiating the compensation of the Sub-AdvisersSubadvisers. There are no policy reasons that require shareholders of the Sub-Advised FundSubadvised Funds to be informed of the individual Sub-Adviser’sSubadviser’s fees any more than shareholders of a traditional investment company (single investment adviser) would be informed of the particular investment adviser’s portfolio managers’ salaries.²¹

 

The requested relief would benefit shareholders of the Sub-Advised FundSubadvised Funds because it would improve the Adviser’s ability to negotiate the fees paid to Sub-AdvisersSubadvisers, including Affiliated Sub-AdvisersSubadvisers. The Adviser’s ability to negotiate with the various Sub-AdvisersSubadvisers would be adversely affected by public disclosure of fees paid to each Sub-AdviserSubadviser. If the AdviserTrust is not required to disclose the Sub-AdvisersSubadvisers’ fees to the public, the Adviserit may be ablepossible to negotiate rates that are below a Sub-Adviser’sSubadviser’s “posted” amounts as the rate would not be disclosed to the Sub-Adviser’sSubadviser’s other clients. Moreover, if one Sub-AdviserSubadviser is aware of the advisory fee paid to another Sub-AdviserSubadviser, the Sub-AdviserSubadviser would likely take it into account in negotiating its own fee.

 

Until the Carillon Order, the Commission hadhas previously granted the requested relief solely with respect to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers through numerous exemptive orders. That relief only permitted the disclosure of aggregate fees paid to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers and required disclosure of individual fees paid to Affiliated Sub-AdvisersSubadvisers. If the requested relief under Section 15(a) of the 1940 Act is granted to extend to Affiliated Sub-AdvisersSubadvisers, Applicants believe it is appropriate to permit each Sub-AdvisedSubadvised Fund to disclose only aggregate fees paid to Affiliated Sub-AdvisersSubadvisers for

 

²¹ The relief would be consistent with the Commission’s disclosure requirements applicable to fund portfolio managers that were previously adopted. See Investment Company Act Release No. 26533 (Aug. 23, 2004). Under these disclosure requirements, a fund is required to include in its statement of additional information, among other matters, a description of the structure of and the method used to determine the compensation structure of its “portfolio managers.” Applicants state that with respect to each Sub-AdvisedSubadvised Fund, the statement of additional information will describe the structure of, and method used to determine, the compensation received by each portfolio manager employed by any Sub-AdviserSubadviser. In addition to this disclosure with respect to portfolio managers, Applicants state that with respect to each Sub-AdvisedSubadvised Fund, the statement of additional information will describe the structure of, and method used to determine, the compensation received by each Sub-AdviserSubadviser.

 

 

the same reasons that similar relief has been granted to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers, as discussed above.

 

C.

C.                   Precedent

 

Applicants note that substantially identical relief was granted by the Commission in the Carillon Order, the Total Fund and more recently in the Roundhill Order, the Two RoadsBondBloxx Order, the Investment Managers SeriesRM Opportunity Order, the TouchstoneAdvisors Trust Order, the Semper Capital Management Order, the Hamilton Lane Order, the Uncommon Investment Funds Order, New Age Alpha Trust Order, and the LFT Order, the Azzad Order, the Distillate Capital Order, the Esoterica Order, the Clearshares Order, the OSI ETF Order, and the Investment Managers Order. Applicants note that substantially the same exemptions requested herein with respect to relief from Section 15(a) and relief from the disclosure requirements of the rules and forms discussed herein for Sub-AdvisersSubadvisers, including Affiliated Sub-AdvisersSubadvisers, have been granted previously by the Commission with respect to Wholly-Owned and Non-Affiliated Sub-AdvisersSubadvisers. See, e.g., Natixis Funds Trust I, et al., Investment Company Act Release Nos. 33265 (October 5, 2018) (notice) and 33287 (October 31, 2018) (order); Advisors Asset Management, Inc. and ETF Series Solutions, Investment Company Act Release Nos. 33169 (July 24, 2018) (notice) and 33207 (August 21, 2018) (order); TriLine Index Solutions, LLC and ETF Series Solutions, Investment Company Act Release Nos. 33159 (July 11, 2018) (notice) and 33192 (August 6, 2018) (order); SL Advisors, LLC and ETF Series Solutions, Investment Company Act Release Nos. 33158 (July 11, 2018) (notice) and 33193 (August 6, 2018) (order); DMS ETF Trust I, et al., Investment Company Act Release Nos. 33156 (July 10, 2018) (notice) and 33196 (August 7, 2018) (order).

 

For the reasons set forth above, Applicants believe that the relief sought would be appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.

 

V.                   CONDITIONS Conditions

 

Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions:

 

(1.) Before a Sub-AdvisedSubadvised Fund may rely on the order requested herein, the operation of the Sub-AdvisedSubadvised Fund in the manner described in this Application will be, or has been, approved by a majority of the Sub-AdvisedSubadvised Fund’s outstanding voting securities as defined in the 1940 Act, or, in the case of a Sub-AdvisedSubadvised 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 Sub-AdvisedSubadvised Fund’s shares are offered to the public.

 

(2.) The prospectus for each Sub-AdvisedSubadvised Fund will disclose the existence, substance and effect of any order granted pursuant to the Application. In addition, each Sub-AdvisedSubadvised Fund will hold itself out to the public as employing the multi-manager structure described in this Application. The prospectus will prominently disclose that the Adviser has the ultimate responsibility, subject to oversight by the Board, to oversee the Sub-AdvisersSubadvisers and recommend their hiring, termination, and replacement.

 

(3.) The Adviser will provide general management services to each Sub-AdvisedSubadvised Fund, including overall supervisory responsibility for the general management and investment of the Sub-AdvisedSubadvised Fund’s assets, and subject to review

 

 

and oversight of the Board, will (i) set the Sub-AdvisedSubadvised Fund’s overall investment strategies, (ii) evaluate, select, and recommend Sub-AdvisersSubadvisers for all or a portion of the Sub-AdvisedSubadvised Fund’s assets, (iii) allocate and, when appropriate, reallocate the Sub-AdvisedSubadvised Fund’s assets among Sub-AdvisersSubadvisers, (iv) monitor and evaluate the Sub-AdvisersSubadvisers’ performance, and (v) implement procedures reasonably designed to ensure that Sub-AdvisersSubadvisers comply with the Sub-AdvisedSubadvised Fund’s investment objective, policies and restrictions.

 

(4. Each Sub-Advised Fund) Subadvised Funds will inform shareholders of the hiring of a new Sub-AdviserSubadviser within 90 days after the hiring of the new Sub-AdviserSubadviser pursuant to the Modified Notice and Access Procedures.

 

(5.) At all times, at least a majority of the Board will be Independent Trustees, and the selection and 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-l0-1(a)(6) under the 1940 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 Sub-AdviserSubadviser is hired or terminated, the Adviser will provide the Board with information showing the expected impact on the profitability of the Adviser.

 

(8.) The Board must evaluate any material conflicts that may be present in a sub-advisorysubadvisory arrangement. Specifically, whenever a sub-advisersubadviser change is proposed for a Sub-AdvisedSubadvised Fund (“Sub-AdviserSubadviser Change”) or the Board considers an existing Sub-AdvisorySubadvisory Agreement as part of its annual review process (“Sub-AdviserSubadviser Review”):

 

(a) the Adviser will provide the Board, to the extent not already being provided pursuant to Section 15(c) of the 1940 Act, with all relevant information concerning:

 

(i) any material interest in the proposed new Sub-AdviserSubadviser, in the case of a Sub-AdviserSubadviser Change, or the Sub-AdviserSubadviser in the case of a Sub-AdviserSubadviser Review, held directly or indirectly by the Adviser or a parent or sister company of the Adviser, and any material impact the proposed Sub-AdvisorySubadvisory Agreement may have on that interest;

 

(ii) any arrangement or understanding in which the Adviser or any parent or sister company of the Adviser is a participant that (A) may have had a material effect on the proposed Sub-AdviserSubadviser Change or Sub-AdviserSubadviser Review, or (B) may be materially affected by the proposed Sub-AdviserSubadviser Change or Sub-AdviserSubadviser Review;

 

(iii) any material interest in a Sub-AdviserSubadviser held directly or indirectly by an officer or Trustee of the Sub-AdvisedSubadvised Fund, or an officer or board member of the Adviser (other than through a pooled investment vehicle not controlled by such person); and

 

 

(iv) any other information that may be relevant to the Board in evaluating any potential material conflicts of interest in the proposed Sub-AdviserSubadviser Change or Sub-AdviserSubadviser Review.

 

(b) the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the Board minutes, that the Sub-AdviserSubadviser Change or continuation after Sub-AdviserSubadviser Review is in the best interests of the Sub-AdvisedSubadvised Fund and its shareholders and, based on the information provided to the Board, does not involve a conflict of interest from which the Adviser, a Sub-AdviserSubadviser, any officer or Trustee of the Sub-AdvisedSubadvised Fund, or any officer or board member of the Adviser derives an inappropriate advantage.

 

(9.) Each Sub-AdvisedSubadvised Fund will disclose in its registration statement the Aggregate Fee Disclosure.

 

(10.) In the event that the Commission adopts a rule under the 1940 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.

 

 (11.) Any new Sub-AdvisorySubadvisory Agreement or any amendment to an existing Investment Advisory Agreement or Sub-AdvisorySubadvisory Agreement that directly or indirectly results in an increase in the aggregate advisory fee rate payable by the Sub-Adviseda Subadvised Fund will be submitted to the Sub-AdvisedSubadvised Fund’s shareholders for approval.

 

VI.                   PROCEDURAL MATTERS Procedural Matters

 

All of the requirements for execution and filing of this Application on behalf of Applicants have been complied with in accordance with the applicable organizational documents of Applicants, and the undersigned officers of Applicants are fully authorized to execute this Application. The certifications of the Applicants, including the resolution of the Trust authorizing the filing of this Application, and any amendments hereto. The authorizations to file are attached as Exhibits A-1 and A-2 to this Application in accordance with the requirements of Rule 0-2(c)(1) under the 1940 Act and the verifications required by Rule 0-2(d) under the 1940 Act are attached as Exhibits B-1 and B-2 to this Application. In Marked copies of the Application are included as Exhibits C-1 and C-2 to this Application in accordance with the requirements for a request for expedited review of this application, marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required byof Rule 0-5(e) ofunder the 1940 Act are attached as Exhibit C.

 

Pursuant to the requirements of Rule 0-2(f) under the 1940 Act, each Applicant herebythe Trust states that its address is:

1475 Dunwoody Drive, Suite 200, West Chester, PA, 19380 and the Adviser states that its address is 1475 Dunwoody Drive, Suite 200, West Chester, PA, 19380, and that co/ BondBloxx Investment Management Corporation

700 Larkspur Landing Circle, Suite 250

Larkspur, CA 94939

Copies of all notices, orders, oral or written communications or questions regarding this Application should be directed to: the individuals and addresses indicated on the first page of this Application.

 

Edward Baer

 

 

Ropes & Gray LLP

Three Embarcadero Center

San Francisco, CA 94111

[email protected]

Phone: (415) 315-6328

and

Joanna Gallegos

BondBloxx Investment Management Corporation

700 Larkspur Landing Circle, Suite 250

Larkspur, CA 94939

[email protected]

Applicants requestdesire that the Commission issue anthe requested order without a hearing pursuant to Rule 0-5 under the 1940 Act without conducting a hearing.

 

VII.                   CONCLUSION Conclusion

 

For the foregoing reasons, Applicants respectfully request that the Commission issue an order under Section 6(c) of the 1940 Act granting the relief sought in thisrequested in the Application.

 

Applicants submit that the requested exemption is necessary or appropriate in the public interest, consistent with the protection of investors, and consistent with the purposespurpose fairly intended by the policy and provisions of the 1940 Act.

 

IN WITNESS WHEREOF, each Applicant has caused this Application to be duly executed as of the date set forth below:

			Respectfully submitted,
BONDBLOXX ETF TRUST			BONDBLOXX INVESTMENT MANAGEMENT CORPORATION
			Venerable Variable Insurance Trust
By:	/s/ Tony Kelly		By:	/s/ Joanna GallegosMichal Levy
Name:	Tony Kelly		Name:	Joanna GallegosName: Michal Levy
Title:	Chief Financial Officer, Chief Accounting Officer, Vice President and Treasurer		Title:	Chief Operating OfficerTitle: President
Date:	January 26, 2024		Date: January 26, 2024

 

 

			Venerable Investment Advisers, LLC
			By:	/s/ Timothy Brown
				Name: Timothy Brown
				Title: President

January 27, 2025

 

 

Exhibit Index

 

EXHIBITS TO APPLICATION

The following materials are made a part of the Application and are attached hereto:

Designation		DocumentAuthorization of Venerable Variable Insurance Trust	Exhibit A-1
Exhibits A-1 and A-2		Authorizations Authorization of Venerable Investment Advisers, LLC	Exhibit A-2
		Verification of Venerable Variable Insurance Trust	Exhibit B-1
Exhibits B-1 and B-2		VerificationsVerification of Venerable Investment Advisers, LLC	Exhibit B-2
Exhibit C		Marked Copies of the Application Pursuant to Rule 0-5(e)(3) Comparisons	Exhibits C-1 and C-2

 

 

EXHIBITExhibit A-1

AUTHORIZATION OF BONDBLOXX ETF TRUST

 

Venerable Variable Insurance Trust

Authorization to File Exemptive Application

 

The undersigned, Tony KellyKristina Magolis, hereby certifies that heshe is the duly elected Chief Financial Officer, Chief Accounting Officer, Vice President and Treasurer of BondBloxx ETFappointed Secretary of Venerable Variable Insurance Trust (the “Trust”); that, with respect to the attached application for exemption from the provisions of the Investment Company Act of 1940, as amended (the “1940 Act”), the rules and forms thereunder and any amendments thereto (such application along with any amendments, the “Application”), all actions necessary to authorize the execution and filing of the Application under the Amended and Restated Agreement and Declaration of Trust and By-LawsBylaws of the Trust have been taken and the person signing and filing the Application on behalf of the Trust is fully authorized to do so; and that the following is a complete, true and correct copy of the resolutions duly adopted by the Board of TrusteesInitial Trustee of the Trust at a meeting held on JuneOctober 23, 2023, in accordance with the By-LawsBylaws of the Trust, and that such resolutions have not been revoked, modified, rescinded, or amended and are in full force and effect:

 

VOTED:

That the appropriate officers of the Trust be, and hereby are, authorized to file on behalf of the Trust an application with the SEC for an order pursuant to Section 6(c) of the 1940 Act, exempting the Trust and Venerable Investment Advisers, LLC (the “Adviser”) from: (i) the provisions of Section 15(a) of the 1940 Act to permit the Adviser (or a sub-adviser with respect to money managers), subject to the supervision of the Board, to appoint new sub-advisers and money managers to a fund for which the Adviser serves as investment adviser and to make material changes to the sub-advisory agreements and money manager agreements with sub-advisers and money managers to a fund without obtaining shareholder approval of the applicable fund; and (ii) the disclosures required pursuant to 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, and Sections 6-07(2)(a)-(c) of Regulation S-X relating to sub-adviser and money manager compensation.

 

RESOLVED:

that the appropriate officers of the Trust are authorized and directed to prepare and execute on behalf of the Trust, and to file with the Securities and Exchange Commission, an application, in a form satisfactory to such officers and counsel to the Trust, and any subsequent amendments as required, for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (“1940 Act”), exempting the Trust and BondBloxx Investment Management Corporation (the “Adviser”) from: (i) the provisions of Section 15(a) of the 1940 Act to permit the Adviser, subject to the supervision of the Trust’s Board of Trustees, to appoint new sub-advisers of a Trust series for which the Adviser serves as investment adviser (each a “Sub-Advised Fund”) and to make material changes to the sub-advisory agreements with sub-advisers of a Sub-Advised Fund without obtaining shareholder approval of the applicable Sub-Advised Fund; and (ii) the disclosures required pursuant to 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, and Sections 6-07(2)(a)-(c) of Regulation S-X relating to sub-adviser compensation (the “Exemptive Application”); and be it further

VOTED:

That the appropriate officers of the Trust be, and hereby are, authorized to file on behalf of the Trust with the SEC any amendments to the exemptive application in such form as the officers or any one of the officers deem necessary and appropriate to do any and all things necessary or proper under the 1940 Act, the Investment Advisers

 

 

Act of 1940, as amended (the “Advisers Act”), the 1933 Act, and the Securities Exchange Act of 1934, as amended (the “1934 Act”), including the submission and filing of any and all amendments, reports and other documents deemed by such officer to be necessary or proper to accomplish the objectives of these resolutions.

 

VOTED:

That the appropriate officers of the Trust be, and each of them hereby is, authorized, empowered and directed to take all actions and to execute all documents necessary to give full effect to the foregoing resolutions in such manner or such forms as the officer or officers shall approve in his, her, or their discretion, in each case as conclusively evidenced by his, her, or their actions thereby or signatures thereon.

 

RESOLVED:

that the Exemptive Application may include relief requested on behalf of any future Trust series and any other registered open-end management investment companies and their series that are advised by the Adviser or any entity controlling, controlled by, or under common control with the Adviser or its successor.

 

BONDBLOXX ETF TRUST
By:	/s/ Tony KellyKristina Magolis
Name:	Tony KellyKristina Magolis
Title:	Chief Financial Officer, Chief Accounting Officer, Vice President and TreasurerSecretary
DateDated:	January 2627, 2024 2025

 

EXHIBITExhibit A-2

AUTHORIZATION OF

BONDBLOXX INVESTMENT MANAGEMENT CORPORATION

 

Venerable Investment Advisers, LLC

Authorization to File Exemptive Application

 

I, Joanna Gallegos, do hereby certify that I amThe undersigned, Timothy Brown, hereby certifies that he is the duly appointed Chief Operating Officer of BondBloxxelected President of Venerable Investment Management Corporation (the “Adviser” or the “Corporation”)Advisers, LLC (“VIA”); that, with respect to the attached application for exemptive reliefexemption from certainthe provisions of the Investment Company Act of 1940, rules and forms thereunder and any amendments thereto (such application along with any amendments, the “Application”), all actions necessary to authorize the execution and filing of the Application under the Adviser’s organizationalcharter documents of VIA have been taken and that I am fully authorized to sign and file the Application on behalf of the Adviser; and that the Adviser has adopted the following resolution on November 17, 2023, in accordance with its organizational documents:; and that the person signing and filing the Application by VIA is fully authorized to do so.

 

RESOLVED, that the appropriate officers of the Corporation be, and hereby are, authorized to file on behalf of the Corporation an application with the Securities and Exchange Commission for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (“1940 Act”), exempting BondBloxx ETF Trust (“Trust”) and the Corporation from: (i) the provisions of Section 15(a) of the 1940 Act to permit the Corporation, subject to the supervision of the Trust’s board of trustees, to appoint new sub-advisers to a Trust series for which the Corporation serves as investment adviser (each a “Sub-Advised Fund”) and to make material changes to the sub-advisory agreements with sub-advisers to the Sub-Advised Fund without

 

 

 

 

obtaining shareholder approval of the applicable Sub-Advised Series; and (ii) the disclosures required pursuant to Item 19(a)(3) of Form N-IA, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A of Schedule 14A, and Sections 6-07(2) (a)-(c) of Regulation S-X relating to sub-adviser compensation.

 

BONDBLOXX INVESTMENT MANAGEMENT CORPORATION
	By:	/s/ Joanna GallegosTimothy Brown
	Name:	Joanna GallegosTimothy Brown
	Title:	Chief Operating OfficerPresident
Date:	January 26, 2024

 

 

EXHIBITExhibit B-1

VERIFICATION OF BONDBLOXX ETF TRUST

 

Venerable Variable Insurance Trust

 

Verification Pursuant to Rule 0-2(d)

 

The undersigned states heshe has duly executed the attached Application dated January 26, 2024 for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (“1940 Act”), on behalf of BondBloxx ETF Trust (the “Trust”); that he is Chief Financial Officer, Chief Accounting Officer, Vice President and Treasurer of the Trust and is authorized to sign the Application on behalf of the Trust27, 2025, for and on behalf of Venerable Variable Insurance Trust; that she is the President of such trust; and that all action by shareholders and the Trust’s Board of Trustees, trustees and other bodies necessary to authorize the undersigned to execute and file the applicationsuch instrument has been taken. The undersigned further statessays that heshe is familiar with the Applicationsuch instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information, and belief.

  

Venerable Variable Insurance Trust

 

BONDBLOXX ETF TRUST
	By:	/s/ Tony KellyMichal Levy
	Name:	Tony KellyMichal Levy
	Title:	Chief Financial Officer, Chief Accounting Officer, Vice President and Treasurer
Date:	January 26, 2024

 

 

EXHIBITExhibit B-2

VERIFICATION OF

BONDBLOXX INVESTMENT MANAGEMENT CORPORATION

 

Venerable Investment Advisers, LLC

 

Verification Pursuant to Rule 0-2(d)

 

The undersigned states that shehe has duly executed the attached Application dated January 26, 2024 for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”),27, 2025, for and on behalf of BondBloxxVenerable Investment Management Corporation; that she is Chief Operating Officer of BondBloxx Investment Management Corporation and is authorized to sign the application on behalf of BondBloxx Investment Management CorporationAdvisers, LLC; that he is the President of such company; and that all action by the officers, directors and other personsbodies necessary to authorize the undersigned to execute and file the applicationsuch instrument has been taken. The undersigned further statessays that shehe is familiar with the applicationsuch instrument, and the contents thereof, and that the facts therein set forth are true to the best of herhis knowledge, information, and belief.

 

	BONDBLOXX INVESTMENT MANAGEMENT CORPORATIONVenerable Investment Advisers, LLC
	By:	/s/ Joanna GallegosTimothy Brown
	Name:	Joanna GallegosTimothy Brown
	Title:	Chief Operating OfficerPresident
Date:	January 26, 2024