[Federal Register Volume 78, Number 87 (Monday, May 6, 2013)]
[Notices]
[Pages 26407-26410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10606]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30496; 812-14078]


Goldman Sachs Trust II, et al.; Notice of Application

April 29, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements.

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SUMMARY:  Summary of Application: Applicants request an order that 
would permit them to enter into and materially amend subadvisory 
agreements without shareholder approval and would grant relief from 
certain disclosure requirements.

APPLICANTS:  Goldman Sachs Trust II (the ``Trust''), Goldman Sachs 
Asset Management L.P. (``GSAM'') and Goldman Sachs Asset Management 
International (``GSAMI'', each of GSAM and GSAMI an ``Adviser'' and 
collectively, ``Advisers,'' and together with the Trust, 
``Applicants'').

DATES:  Filing Dates: The application was filed September 21, 2012, and 
amended on March 8, 2013.

HEARING OR NOTIFICATION OF HEARING:  An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on May 28, 2013 and should be accompanied by proof of service on 
the applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE.,

[[Page 26408]]

Washington, DC 20549-1090. Applicants: Caroline Kraus, Goldman Sachs & 
Co., 200 West Street, 15th Floor, New York, NY 10282.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, 
at (202) 551-6990, or Jennifer L. Sawin, Branch Chief, at (202) 551-
6821 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Trust is organized as a Delaware statutory trust and has 
registered as an open-end management investment company under the Act 
that will offer one or more series of shares (each a ``Series''). The 
Trust has filed a registration statement on Form N-1A to register the 
offering of shares of Goldman Sachs Multi-Manager Alternatives Fund, a 
series of the Trust.\1\ Each Subadvised Fund may offer shares with its 
own distinct investment objectives, policies and restrictions.
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    \1\ Applicants request that the relief sought herein apply to 
the Applicants, as well as to any future Series of the Trust and to 
any other existing or future registered open-end investment company 
or series thereof that: (a) is advised by either GSAM, GSAMI or 
their successors (the foregoing advisers being included in the term 
``Adviser,'' and any such series or investment company, including 
the Trust and its Series, a ``Fund''); (b) uses the manager of 
managers structure described in this Application (``Manager of 
Managers Structure''); and (c) complies with the terms and 
conditions of this Application (the ``Subadvised Funds,'' and each a 
``Subadvised Fund''). The only Trust that currently intends to rely 
on the requested order is named as an Applicant. For purposes of the 
requested order, ``successor'' is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization. If the name of any Subadvised Fund 
contains the name of a Subadviser, the name of the Adviser that 
serves as the primary adviser to that Subadvised Fund or a trademark 
or trade name that is owned by or publicly used to identify that 
Adviser will precede the name of the Subadviser.
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    2. GSAM, a Delaware limited partnership registered with the 
Commission as an investment adviser under the Investment Advisers Act 
of 1940 (``Advisers Act''), is expected to serve as investment adviser 
to certain Series, in each case pursuant to an investment advisory 
agreement with the Trust on behalf of the Series (each a ``GSAM 
Investment Advisory Agreement''). GSAMI, a limited partnership 
organized under the laws of the United Kingdom and registered with the 
Commission as an investment adviser under the Advisers Act, may also 
serve as investment adviser to certain Series, in each case pursuant to 
an investment advisory agreement with the Trust on behalf of the Series 
(each a ``GSAMI Investment Advisory Agreement'').\2\ The GSAM 
Investment Advisory Agreements and the GSAMI Investment Advisory 
Agreements are together referred to as the ``Investment Advisory 
Agreements''. Each Investment Advisory Agreement will be approved by 
the board of trustees of the Trust (the ``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act, of the Trust or the Adviser 
(``Independent Trustees'') and by the shareholders of the relevant 
Subadvised Fund in the manner required by sections 15(a) and 15(c) of 
the Act and rule 18f-2 under the Act.\3\ Any future Adviser also will 
be registered with the Commission as an investment adviser under the 
Advisers Act and will enter into investment advisory agreements with or 
on behalf of future Subadvised Funds, and such future agreements shall 
be included in the term ``Investment Advisory Agreements.''
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    \2\ GSAM and GSAMI are wholly-owned subsidiaries of the Goldman 
Sachs Group, Inc.
    \3\ The term ``Board'' also includes the board of trustees or 
directors of a future Subadvised Fund.
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    3. Under the terms of each Investment Advisory Agreement, the 
Adviser to a Subadvised Fund, subject to the oversight of the 
applicable Board, shall furnish a continuous investment program for the 
Subadvised Fund. The Adviser shall periodically review each Subadvised 
Fund's investment policies and strategies and based on the need of a 
particular Subadvised Fund may recommend changes to the investment 
policies and strategies of the Subadvised Fund for consideration by its 
Board. For its services to each Subadvised Fund, the Adviser shall 
receive an investment advisory fee from that Subadvised Fund as 
specified in the applicable Investment Advisory Agreement based on each 
Subadvised Fund's average daily total or net assets. The terms of the 
Investment Advisory Agreements also permit the applicable Adviser, 
subject to the approval of the relevant Board, including a majority of 
the Independent Trustees, and the shareholders of the applicable 
Subadvised Fund (if required by applicable law), to delegate portfolio 
management responsibilities of all or a portion of the assets of the 
Subadvised Fund to one or more subadvisers (``Subadvisers''). Each 
Subadviser will be an investment adviser as defined in section 2(a)(20) 
of the Act, and either registered with the Commission as an investment 
adviser under the Advisers Act or not subject to such registration. The 
Adviser shall have overall responsibility for the management and 
investment of the assets of each Subadvised Fund and, with respect to 
each Subadvised Fund, the Adviser's responsibilities shall include, for 
example, recommending the removal or replacement of Subadvisers, and 
determining the portion of that Subadvised Fund's assets to be managed 
by any given Subadviser and reallocating those assets as necessary from 
time to time. The Adviser shall evaluate, select and recommend 
Subadvisers to manage the assets of Subadvised Fund, and shall monitor 
and review the Subadviser and its performance and its compliance with 
that Subadvised Fund's investment policies and restrictions. For 
services provided under each Subadvisory Agreement, it is currently 
intended that the applicable Subadviser will receive from the 
applicable Adviser a fee based on a percentage of the Subadvised Fund's 
average daily total or net assets (``Subadvisory fees''). All 
Subadvisers are expected to be compensated by the applicable Adviser 
out of the advisory fees the Adviser receives pursuant to the relevant 
Investment Advisory Agreement. As a matter of convenience, the 
applicable Adviser may request that (a) amounts payable to a Subadviser 
by the Adviser be transmitted directly to the Subadviser by the 
Subadvised Fund and (b) that such amount be deducted from the amounts 
payable by the Subadvised Fund to the Adviser. Subadvised Funds may 
directly pay advisory fees to Subadvisers in the future, although any 
amendment to a Subadvisory Agreement that would increase the total 
management and advisory fees payable by a Subadvised Fund would require 
shareholder approval.
    4. Applicants request an order to permit the Adviser, subject to 
Board approval, to select certain Subadvisers to manage all or a 
portion of the assets of a Subadvised Fund pursuant to a Sub-Advisory 
Agreement and materially amend Sub-Advisory Agreements without 
obtaining shareholder approval. The requested relief will not extend to 
any Subadviser that is an affiliated person, as defined in section 
2(a)(3) of the Act, of the Trust, a Subadvised Fund or the Adviser, 
other than by reason of serving as a Subadviser to a Subadvised Fund 
(``Affiliated Subadviser'').
    5. Applicants also request an order exempting the Subadvised Funds 
from certain disclosure provisions described

[[Page 26409]]

below that may require the Applicants to disclose fees paid to each 
Subadviser by the Adviser or a Subadvised Fund. Applicants seek an 
order to permit each Subadvised Fund to disclose (as a dollar amount 
and a percentage of a Subadvised Fund's total or net assets) only: (a) 
The aggregate fees paid to the Subadvised Fund's Adviser and any 
Affiliated Subadvisers; and (b) the aggregate fees paid to Subadvisers 
other than Affiliated Subadvisers (collectively, the ``Aggregate Fee 
Disclosure''). A Subadvised Fund that employs an Affiliated Subadviser 
will provide separate disclosure of any fees paid to the Affiliated 
Subadviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 19(a)(3) of Form N-1A requires disclosure of 
the method and amount of the investment adviser's compensation.
    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to an investment company to comply with Schedule 14A under the 
Securities Exchange Act of 1934 (``Exchange Act''). Items 22(c)(1)(ii), 
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together, 
require a proxy statement for a shareholder meeting at which the 
advisory contract will be voted upon to include the ``rate of 
compensation of the investment adviser,'' the ``aggregate amount of the 
investment adviser's fees,'' a description of the ``terms of the 
contract to be acted upon,'' and, if a change in the advisory fee is 
proposed, the existing and proposed fees and the difference between the 
two fees.
    4. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of a registered investment 
company's registration statement and shareholder reports filed with the 
Commission. Sections 6-07(2)(a), (b) and (c) of Regulation S-X require 
a registered investment company to include in its financial statement 
information about the investment advisory fees.
    5. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants state that the requested relief meets this standard for 
the reasons discussed below.
    6. Applicants assert that the shareholders expect the Adviser, 
subject to the review and approval of the Board, to select the 
Subadvisers who are best suited to achieve the Subadvised Fund's 
investment objective. Applicants assert that, from the perspective of 
the shareholder, the role of the Subadviser is substantially equivalent 
to the role of the individual portfolio managers employed by an 
investment adviser to a traditional investment company. Applicants 
state that requiring shareholder approval of each Subadvisory Agreement 
would impose unnecessary delays and expenses on the Subadvised Funds 
and may preclude the Subadvised Funds from acting promptly when the 
Adviser and Board consider it appropriate to hire Subadvisers or amend 
Subadvisory Agreements. Applicants note that the Investment Advisory 
Agreement for each Subadvised Fund and Subadvisory Agreements with 
Affiliated Subadvisers (if any) will continue to be subject to the 
shareholder approval requirements of section 15(a) of the Act and rule 
18f-2 under the Act.
    7. If new Subadvisers are hired, the Subadvised Funds will inform 
shareholders of the hiring of a new Subadviser pursuant to the 
following procedures (``Modified Notice and Access Procedures''): (a) 
Within 90 days after a new Subadviser is hired for any Subadvised Fund, 
that Subadvised Fund will send its shareholders either a Multi-manager 
Notice or a Multi-manager Notice and Multi-manager Information 
Statement;\4\ and (b) the Subadvised Fund will make the Multi-manager 
Information Statement available on the Web site identified in the 
Multi-manager Notice no later than when the Multi-manager Notice (or 
Multi-manager Notice and Multi-manager Information Statement) is first 
sent to shareholders, and will maintain it on that Web site for at 
least 90 days. In the circumstances described in this Application, a 
proxy solicitation to approve the appointment of new Subadvisers 
provides no more meaningful information to shareholders than the 
proposed Multi-manager Information Statement. Moreover, as indicated 
above, the applicable Board would comply with the requirements of 
Sections 15(a) and 15(c) of the Act before entering into or amending 
Sub-Advisory Agreements.
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    \4\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Exchange 
Act, and specifically will, among other things: (a) Summarize the 
relevant information regarding the new Subadviser; (b) inform 
shareholders that the Multi-manager Information Statement is 
available on a Web site; (c) provide the Web site address; (d) state 
the time period during which the Multi-manager Information Statement 
will remain available on that Web site; (e) provide instructions for 
accessing and printing the Multi-manager Information Statement; and 
(f) instruct the shareholder that a paper or email copy of the 
Multi-manager Information Statement may be obtained, without charge, 
by contacting the Subadvised Funds.
    A ``Multi-manager Information Statement'' will meet the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Exchange Act for an information statement, except as 
modified by the requested order to permit Aggregate Fee Disclosure. 
Multi-manager Information Statements will be filed electronically 
with the Commission via the EDGAR system.
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    8. Applicants assert that the requested disclosure relief would 
benefit shareholders of the Subadvised Funds because it would improve 
each Adviser's ability to negotiate the fees paid to Subadvisers. 
Applicants state that if the Adviser is not required to disclose the 
Subadvisers' fees to the public, the Adviser may be able to negotiate 
rates that are below a Subadviser's ``posted'' amounts. Applicants 
submit that the requested relief will also encourage Subadvisers to 
negotiate lower subadvisory fees with the Adviser(s) if the lower fees 
are not required to be made public.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Subadvised Fund may rely on the order requested herein, 
the operation of the Subadvised Fund in the manner described in the 
Application will be approved by a majority of the Subadvised Fund's 
outstanding voting securities as defined in the Act or, in the case of 
a Subadvised Fund whose public shareholders purchase shares on the 
basis of a prospectus containing the disclosure contemplated by 
condition 2 below, by the initial shareholder before such Subadvised 
Fund's shares are offered to the public.
    2. The prospectus for each Subadvised Fund will disclose the 
existence, substance, and effect of any order granted pursuant to the 
Application. In addition, each Subadvised Fund will hold itself out to 
the public as employing the Manager of

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Managers Structure. The prospectus will prominently disclose that the 
Adviser has the ultimate responsibility, subject to oversight by the 
Board, to oversee the Subadvisers and recommend their hiring, 
termination, and replacement.
    3. Subadvised Funds will inform shareholders of the hiring of a new 
Subadviser within 90 days after the hiring of the new Subadviser 
pursuant to the Modified Notice and Access Procedures.
    4. An Adviser will not enter into a Subadvisory Agreement with any 
Affiliated Subadviser unless such agreement, including the compensation 
to be paid thereunder, has been approved by the shareholders of the 
applicable Subadvised Fund.
    5. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
    6. Independent legal counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Trustees. The 
selection of such counsel will be within the discretion of the then-
existing Independent Trustees.
    7. Whenever a Subadviser change is proposed for a Subadvised Fund 
with an Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
Board minutes, that the change is in the best interests of the 
Subadvised Fund and its shareholders, and does not involve a conflict 
of interest from which the applicable Adviser or the Affiliated 
Subadviser derives an inappropriate advantage.
    8. Whenever a Subadviser is hired or terminated, the applicable 
Adviser will provide the Board with information showing the expected 
impact on the profitability of the Adviser.
    9. Each Adviser will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Adviser on a 
per Subadvised Fund basis. The information will reflect the impact on 
profitability of the hiring or termination of any Subadviser during the 
applicable quarter.
    10. Each applicable Adviser will provide general management 
services to each Subadvised Fund, including overall supervisory 
responsibility for the general management and investment of the 
Subadvised Fund's assets and, subject to review and approval of the 
Board, will: (i) Set the Subadvised Fund's overall investment 
strategies; (ii) evaluate, select, and recommend Subadvisers to manage 
all or a portion of the Subadvised Fund's assets; (iii) allocate and, 
when appropriate, reallocate the Subadvised Fund's assets among 
Subadvisers; (iv) monitor and evaluate the Subadvisers' performance; 
and (v) implement procedures reasonably designed to ensure that 
Subadvisers comply with the Subadvised Fund's investment objective, 
policies and restrictions.
    11. No Trustee or officer of a Trust or of a Fund or director or 
officer of the applicable Adviser will own directly or indirectly 
(other than through a pooled investment vehicle that is not controlled 
by such person) any interest in a Subadviser except for (i) ownership 
of interests in the Adviser or any entity that controls, is controlled 
by or is under common control with the Adviser; or (ii) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of any publicly traded company that is either a Subadviser or an 
entity that controls, is controlled by or is under common control with 
a Subadviser.
    12. Each Subadvised Fund will disclose in its registration 
statement the Aggregate Fee Disclosure.
    13. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the Application, the requested order will expire on the effective 
date of that rule.
    14. For Subadvised Funds that pay fees to a Subadviser directly 
from fund assets, any changes to a Subadvisory Agreement that would 
result in an increase in the total management and advisory fees payable 
by a Subadvised Fund will be required to be approved by the 
shareholders of the Subadvised Fund.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10606 Filed 5-3-13; 8:45 am]
BILLING CODE 8011-01-P