1 DIVERSIFIED AND SECTOR MUTUAL FUNDS An employee
Description: 1 DIVERSIFIED AND SECTOR MUTUAL FUNDS An employee of the FDA will be working on reviewing and approving requests by drug companies for new medicines. The employees investment portfolio consists of: 100,000 invested in Janus Henderson
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slide1. 1 DIVERSIFIED AND SECTOR MUTUAL FUNDS<br>
slide2. An employee of the FDA will be working on reviewing and approving requests by drug companies for new medicines. The employee’s investment portfolio consists of:
$100,000 invested in Janus Henderson Emerging Markets Fund
$14,000 invested in Vanguard Health Care Fund
$95,000 invested in Fidelity Real Estate Investment Portfolio
$5,000,000 invested in Invesco DWA Technology Momentum 2<br>
slide3. Does an Exemption Apply? 2640.201(a): diversified mutual funds
2640.201(b): sector mutual funds 3<br>
slide4. 2640.201(a) Diversified mutual funds and unit investment trusts. An employee may participate in any particular matter affecting one or more holdings of a diversified mutual fund or a diversified unit investment trust where the disqualifying financial interest in the matter arises because of the ownership of an interest in the fund or trust.
**Is it a mutual fund/unit investment trust?
***Is it diversified? Diversified - Exemption 4<br>
slide5. 2640.201(b)Sector mutual funds. (1) An employee may participate in any particular matter affecting one or more holdings of a sector mutual fund or a sector unit investment trust where the affected holding is not invested in the sector in which the fund or trust concentrates, and where the disqualifying financial interest in the matter arises because of ownership of an interest in the fund or unit investment trust.
(2)(i) An employee may participate in a particular matter affecting one or more holdings of a sector mutual fund or a sector unit investment trust where the disqualifying financial interest in the matter arises because of ownership of an interest in the fund or the unit investment trust and the aggregate market value of interests in any sector fund or funds and any sector unit investment trust or trusts does not exceed $50,000.
***Is it a mutual fund/unit investment trust
***If it’s not diversified, it’s sector Sector Fund- Exemption 5<br>
slide6. Does the Exemption Apply?
Step 1: Is it a Mutual Fund? Mutual fund means an entity which is registered as a management company under the Investment Company Act of 1940, as amended (15 U.S.C. 80a–1 et seq. ). For purposes of this part, the term mutual fund includes open-end and closed-end mutual funds and registered money market funds.
5 CFR § 2640.102(k) 6<br>
slide7. Is the Fund Reported Correctly? The full name of the fund needs to be disclosed (the fund class does not need to be reported)
“Fidelity Smaller Companies fund” when full name is “Fidelity Japan Smaller Companies fund”
“iShares MSCI Europe ETF” when full name is “iShares MSCI Europe Financials ETF” 7<br>
slide8. Ticker Symbols Janus Henderson Emerging Markets Fund - HEMDX
Vanguard Health Care Fund - VGHCX
Fidelity Real Estate Investment Portfolio - FRESX
Invesco DWA Technology Momentum - PTF 8<br>
slide9. Exchange Traded Funds (ETFs) Most exchange-traded funds are:
organized either as open-end investment management companies or as unit investment trusts
registered with the Securities and Exchange Commission (SEC) under the same statutory authorities as traditional mutual funds
qualify for the exemptions in 5 C.F.R. Part 2640 for mutual funds and unit investment trusts.
***ETFs invested in commodities and commodity futures usually do not meet the definitions for mutual fund or unit investment trust because often registered with the Commodity Futures Trading Commission. Example: iShares Gold Trust 9<br>
slide10. Once you determine it is a mutual fund Next Step: Is it diversified or sector? 10 Does the Exemption Apply?
Step 2: Diversified or Sector?<br>
slide11. What is the Fund’s Stated Policy? Does the mutual fund have a stated policy of concentrating its investments in an industry, business, single country other than the United States, or bonds of a single State within the United States? 5 CFR § 2640.102(a) 11<br>
slide12. Investment Objective: The investment seeks long-term growth of capital.
Principal Investment Strategies: The fund pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets in securities of issuers in emerging market countries. It normally invests in securities of issuers that (i) are primarily listed on the trading market of an emerging market country; (ii) are incorporated or have their principal business activities in an emerging market country; or (iii) derive 50% or more of their revenues from, or have 50% or more of their assets in, an emerging market country. 12 Janus Henderson Emerging Markets Fund<br>
slide13. Investment Objective: The investment seeks long-term capital appreciation.
Principal Investment Strategies: The investment seeks long-term capital appreciation. The fund invests at least 80% of its assets in the stocks of companies principally engaged in the development, production, or distribution of products and services related to the health care industry. These companies include, among others, pharmaceutical firms, medical supply companies, and businesses that operate hospitals and other health care facilities. It may also consider companies engaged in medical, diagnostic, biochemical, and other research and development activities. 13 Vanguard Health Care Fund<br>
slide14. LA-15-09: Real Estate Funds “For example, a general real estate fund with a stated policy to track the MSCI US REIT Index, to be principally engaged in the real estate industry, or to pursue commercial real estate opportunities, without focusing on a specific industry or single country other than the United States, would be considered to be a diversified fund. However, if a real estate mutual fund’s stated policy is to focus on real estate in an industry such as “Healthcare” or “Hotels and Resorts,” or to focus on real estate in an individual country other than the United States, OGE would consider the fund to be a sector mutual fund.” 14<br>
slide15. Investment objective: The fund seeks above-average income and long-term capital growth, consistent with reasonable investment risk. The fund seeks to provide a yield that exceeds the composite yield of the S&P 500® Index.
Principal Investment Strategies: Normally investing primarily in common stocks. Normally investing at least 80% of assets in securities of companies principally engaged in the real estate industry and other real estate related investments. Investing in domestic and foreign issuers. Using fundamental analysis of factors such as each issuer's financial condition and industry position, as well as market and economic conditions, to select investments. 15 Fidelity Real Estate Fund Investment Portfolio<br>
slide16. “ This Legal Advisory clarifies that mutual funds that have an investment strategy focused broadly on information technology or internet companies are “diversified” mutual funds for purposes of the regulatory exemption. On the other hand, mutual funds with an investment strategy focused on specific information technology products or services or on a particular segment of the information technology or internet field are “sector” mutual funds for purposes of the regulatory exemption.” 16 LA-19-06: Information Technology Funds<br>
slide17. Investment objective: Seeks to track investment results of Dorsey Wright Technology Technical Leaders Index.
Principal Investment Strategies: After giving each eligible security a momentum score, the Index Provider selects at least 30 securities with the highest momentum scores from the technology sector, as determined by the Index Provider, for inclusion in the Underlying Index. Companies in the technology sector are principally engaged in the business of providing technology-related products and services, including computer hardware and software, Internet, electronics and semiconductors, and wireless communication technologies.
The Fund will concentrate its investments(i.e., invest 25% or more of the value of its total assets) insecurities of issuers in any one industry or group of industries only to the extent that the Underlying Index reflects a concentration in that industry or group of industries. The Fund will not otherwise concentrate its investments in securities of issuers in any one industry or group of industries. As of April 30, 2019, the Fund had significant exposure to the information technology sector. The Fund’s portfolio holdings, and the extent to which it concentrates its investments, are likely to change over time. 17 Invesco DWA Technology Momentum<br>
slide18. Janus Henderson Emerging Markets Fund
Vanguard Health Care Fund
Sector fund not eligible for diversified Exemption
Fidelity Real Estate Investment Portfolio
Invesco DWA Technology Momentum Yes No Yes Yes 18 Summary<br>
slide19. Does the Exemption Apply?
Step 3: Is the Value of the Sector Fund(s) Below $50,000? Is the aggregate market value of the employee’s interests in all sector mutual funds that concentrate in the same sector and have one or more holdings that might be affected by the particular matter $50,000 or less? 5 CFR § 2640.201(b)(2) 19<br>
slide20. Vanguard Health Care Fund
*$15,000 is safely below the de minimis for sector funds
**The nominee reviewer should make sure that the filer has been counseled and will not be purchasing more
***Agency supplemental regulations may still require divestiture 20 Value of the Sector Fund<br>
slide21. 21 Thank You!!!<br>
slide2. An employee of the FDA will be working on reviewing and approving requests by drug companies for new medicines. The employee’s investment portfolio consists of:
$100,000 invested in Janus Henderson Emerging Markets Fund
$14,000 invested in Vanguard Health Care Fund
$95,000 invested in Fidelity Real Estate Investment Portfolio
$5,000,000 invested in Invesco DWA Technology Momentum 2<br>
slide3. Does an Exemption Apply? 2640.201(a): diversified mutual funds
2640.201(b): sector mutual funds 3<br>
slide4. 2640.201(a) Diversified mutual funds and unit investment trusts. An employee may participate in any particular matter affecting one or more holdings of a diversified mutual fund or a diversified unit investment trust where the disqualifying financial interest in the matter arises because of the ownership of an interest in the fund or trust.
**Is it a mutual fund/unit investment trust?
***Is it diversified? Diversified - Exemption 4<br>
slide5. 2640.201(b)Sector mutual funds. (1) An employee may participate in any particular matter affecting one or more holdings of a sector mutual fund or a sector unit investment trust where the affected holding is not invested in the sector in which the fund or trust concentrates, and where the disqualifying financial interest in the matter arises because of ownership of an interest in the fund or unit investment trust.
(2)(i) An employee may participate in a particular matter affecting one or more holdings of a sector mutual fund or a sector unit investment trust where the disqualifying financial interest in the matter arises because of ownership of an interest in the fund or the unit investment trust and the aggregate market value of interests in any sector fund or funds and any sector unit investment trust or trusts does not exceed $50,000.
***Is it a mutual fund/unit investment trust
***If it’s not diversified, it’s sector Sector Fund- Exemption 5<br>
slide6. Does the Exemption Apply?
Step 1: Is it a Mutual Fund? Mutual fund means an entity which is registered as a management company under the Investment Company Act of 1940, as amended (15 U.S.C. 80a–1 et seq. ). For purposes of this part, the term mutual fund includes open-end and closed-end mutual funds and registered money market funds.
5 CFR § 2640.102(k) 6<br>
slide7. Is the Fund Reported Correctly? The full name of the fund needs to be disclosed (the fund class does not need to be reported)
“Fidelity Smaller Companies fund” when full name is “Fidelity Japan Smaller Companies fund”
“iShares MSCI Europe ETF” when full name is “iShares MSCI Europe Financials ETF” 7<br>
slide8. Ticker Symbols Janus Henderson Emerging Markets Fund - HEMDX
Vanguard Health Care Fund - VGHCX
Fidelity Real Estate Investment Portfolio - FRESX
Invesco DWA Technology Momentum - PTF 8<br>
slide9. Exchange Traded Funds (ETFs) Most exchange-traded funds are:
organized either as open-end investment management companies or as unit investment trusts
registered with the Securities and Exchange Commission (SEC) under the same statutory authorities as traditional mutual funds
qualify for the exemptions in 5 C.F.R. Part 2640 for mutual funds and unit investment trusts.
***ETFs invested in commodities and commodity futures usually do not meet the definitions for mutual fund or unit investment trust because often registered with the Commodity Futures Trading Commission. Example: iShares Gold Trust 9<br>
slide10. Once you determine it is a mutual fund Next Step: Is it diversified or sector? 10 Does the Exemption Apply?
Step 2: Diversified or Sector?<br>
slide11. What is the Fund’s Stated Policy? Does the mutual fund have a stated policy of concentrating its investments in an industry, business, single country other than the United States, or bonds of a single State within the United States? 5 CFR § 2640.102(a) 11<br>
slide12. Investment Objective: The investment seeks long-term growth of capital.
Principal Investment Strategies: The fund pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets in securities of issuers in emerging market countries. It normally invests in securities of issuers that (i) are primarily listed on the trading market of an emerging market country; (ii) are incorporated or have their principal business activities in an emerging market country; or (iii) derive 50% or more of their revenues from, or have 50% or more of their assets in, an emerging market country. 12 Janus Henderson Emerging Markets Fund<br>
slide13. Investment Objective: The investment seeks long-term capital appreciation.
Principal Investment Strategies: The investment seeks long-term capital appreciation. The fund invests at least 80% of its assets in the stocks of companies principally engaged in the development, production, or distribution of products and services related to the health care industry. These companies include, among others, pharmaceutical firms, medical supply companies, and businesses that operate hospitals and other health care facilities. It may also consider companies engaged in medical, diagnostic, biochemical, and other research and development activities. 13 Vanguard Health Care Fund<br>
slide14. LA-15-09: Real Estate Funds “For example, a general real estate fund with a stated policy to track the MSCI US REIT Index, to be principally engaged in the real estate industry, or to pursue commercial real estate opportunities, without focusing on a specific industry or single country other than the United States, would be considered to be a diversified fund. However, if a real estate mutual fund’s stated policy is to focus on real estate in an industry such as “Healthcare” or “Hotels and Resorts,” or to focus on real estate in an individual country other than the United States, OGE would consider the fund to be a sector mutual fund.” 14<br>
slide15. Investment objective: The fund seeks above-average income and long-term capital growth, consistent with reasonable investment risk. The fund seeks to provide a yield that exceeds the composite yield of the S&P 500® Index.
Principal Investment Strategies: Normally investing primarily in common stocks. Normally investing at least 80% of assets in securities of companies principally engaged in the real estate industry and other real estate related investments. Investing in domestic and foreign issuers. Using fundamental analysis of factors such as each issuer's financial condition and industry position, as well as market and economic conditions, to select investments. 15 Fidelity Real Estate Fund Investment Portfolio<br>
slide16. “ This Legal Advisory clarifies that mutual funds that have an investment strategy focused broadly on information technology or internet companies are “diversified” mutual funds for purposes of the regulatory exemption. On the other hand, mutual funds with an investment strategy focused on specific information technology products or services or on a particular segment of the information technology or internet field are “sector” mutual funds for purposes of the regulatory exemption.” 16 LA-19-06: Information Technology Funds<br>
slide17. Investment objective: Seeks to track investment results of Dorsey Wright Technology Technical Leaders Index.
Principal Investment Strategies: After giving each eligible security a momentum score, the Index Provider selects at least 30 securities with the highest momentum scores from the technology sector, as determined by the Index Provider, for inclusion in the Underlying Index. Companies in the technology sector are principally engaged in the business of providing technology-related products and services, including computer hardware and software, Internet, electronics and semiconductors, and wireless communication technologies.
The Fund will concentrate its investments(i.e., invest 25% or more of the value of its total assets) insecurities of issuers in any one industry or group of industries only to the extent that the Underlying Index reflects a concentration in that industry or group of industries. The Fund will not otherwise concentrate its investments in securities of issuers in any one industry or group of industries. As of April 30, 2019, the Fund had significant exposure to the information technology sector. The Fund’s portfolio holdings, and the extent to which it concentrates its investments, are likely to change over time. 17 Invesco DWA Technology Momentum<br>
slide18. Janus Henderson Emerging Markets Fund
Vanguard Health Care Fund
Sector fund not eligible for diversified Exemption
Fidelity Real Estate Investment Portfolio
Invesco DWA Technology Momentum Yes No Yes Yes 18 Summary<br>
slide19. Does the Exemption Apply?
Step 3: Is the Value of the Sector Fund(s) Below $50,000? Is the aggregate market value of the employee’s interests in all sector mutual funds that concentrate in the same sector and have one or more holdings that might be affected by the particular matter $50,000 or less? 5 CFR § 2640.201(b)(2) 19<br>
slide20. Vanguard Health Care Fund
*$15,000 is safely below the de minimis for sector funds
**The nominee reviewer should make sure that the filer has been counseled and will not be purchasing more
***Agency supplemental regulations may still require divestiture 20 Value of the Sector Fund<br>
slide21. 21 Thank You!!!<br>