FR 2021-02269

Summary of the Document

The document is a notice from the Securities and Exchange Commission (SEC) detailing applications from several investment companies seeking deregistration under the Investment Company Act of 1940. These companies have ceased operations and distributed their assets to shareholders, or transferred them to other entities. The process involves either liquidation or reorganization, with associated financial expenses often covered by investment advisers or related parties. Applications for deregistration were filed or amended primarily in the years 2020 and 2021. Prominent among these seeking deregistration are entities like the American Independence Funds Trust and the Boston Income Portfolio.

Significant Issues or Concerns

One notable issue in the document is a typographical error in the filing dates, where "Deember 29, 2020" should clearly read "December 29, 2020." Such errors, albeit minor, could cause confusion or affect the perceived credibility of the document. Another concern is the use of financial terminology such as "liquidating distribution" and "net asset value" that may not be easily understood by general readers. The document inconsistently uses the terms "reorganization" and "liquidation" without clear definitions, potentially leading to misunderstandings. Additionally, though expenses are frequently listed, the document does not explain why these expenses were necessary or provide justification, prompting questions about their potential wastefulness.

Impact on the Public

For the general public, this document is crucial as it reflects changes within the investment landscape. It directly affects shareholders of the involved companies, as they receive distributions depending on the company's residual net asset value. Additionally, by understanding which companies are deregistering, investors can get insights into trends or shifts in the investment market that might influence their decisions.

Impact on Specific Stakeholders

Shareholders of these investment companies are directly impacted, as their investments are either returned or transitioned to new funds. Some might experience gains based on the net asset value at liquidation, while others might incur losses if the market value decreased prior to the distribution. For the companies' investment advisers and associated entities, there is a significant financial impact due to expenses related to these processes. Positively, deregistering might allow these entities to reduce operational complexities and focus resources elsewhere. However, the process could also entail a burden in terms of financial expenditure and effort required to satisfy SEC regulations and procedures.

Overall, this document provides critical information on shifts within the investment sector, detailing complex financial processes that could indirectly influence broader market dynamics and investor behavior.

The document under review is a notice from the Securities and Exchange Commission detailing various applications for deregistration by investment companies. A notable theme throughout the document is the financial handling related to the processes of liquidation or reorganization for these companies. Below is a commentary on these financial references and issues surrounding them.

Financial Expenses in Liquidation and Reorganization

The document mentions specific financial expenditures incurred during processes such as liquidation and reorganization. These expenses are often significant and vary widely across the different applicants:

• The American Independence Funds Trust incurred $357,000 in expenses related to its liquidation process.
• The Equinox Funds Trust had expenses totaling $201,870.29 for their reorganization, covered by the acquiring fund's investment advisor or its affiliates.
• Lazard World Dividend & Income Fund, Inc. faced the highest reported reorganization expenses with a total of $1,206,186.54, shared among the applicant, its investment adviser, and the acquiring fund.
• In contrast, the Miles Funds, Inc. had relatively minimal liquidation expenses of $18,861.95.

These financial allocations demonstrate the varying costs that can accompany investment company liquidations or reorganizations. The expenses incurred can depend on factors such as the size of the company, the complexity of its assets, and the structure of the acquiring or liquidation entities.

Issues Relating to Financial References

1. Lack of Justification for Expenses: A critical issue that emerges is the lack of clarity or justification provided for these expenses. While amounts are listed, the document does not delve into the necessity or justification for such significant financial allocations. This omission might raise questions from stakeholders about the efficiency and necessity of the cost incurred during these processes.

2. Inconsistency in Expense Reporting: There is an inconsistency in reported expenses, where some companies had significant costs, while others, like the Boston Income Portfolio and the Rx Funds Trust, reported no expenses incurred during their liquidations. This divergent reporting can appear inconsistent and might benefit from additional context or explanation to clarify why some liquidations required more substantial financial outlays than others.

3. Complex Financial Terminology: Terms used, such as "liquidating distribution" and "net asset value", involve complex financial concepts that could obscure understanding for a general readership. Furthermore, without detailed explanations, the financial figures and their implications may not be entirely clear to readers lacking expertise in investment management.

In summary, while the document provides detailed financial figures associated with the deregistration processes of these investment companies, the lack of detailed contextual information surrounding these expenses leaves room for further inquiry. Providing a broader explanation for the costs incurred and standardizing how these costs are detailed could improve transparency and understanding for all readers.