Federal Register / Vol. 76, No. 2 / Tuesday, January 4, 2011 / Notices 397 

1Although BFA does not currently expect to enter 

into subadvisory agreements with respect to the 

management of the Funds, it may do so in the 

future. If BFA were to enter into a subadvisory 

agreement with a BFA Affiliate (defined below) or 

other subadviser (each a ‘‘Subadviser’’), such 

Subadviser would be registered as an investment 

adviser under the Advisers Act. 

to the broker-dealer. See Securities 

Exchange Act Release No. 2690 

(November 15, 1940); Securities 

Exchange Act Release No. 9428 

(December 29, 1971). Pursuant to Rule 

8c–1, respondents must collect 

information necessary to prevent the 

hypothecation of customer accounts in 

contravention of the rule, issue and 

retain copies of notices to the pledgee of 

hypothecation of customer accounts in 

accordance with the rule, and collect 

written consents from customers in 

accordance with the rule. The 

information is necessary to ensure 

compliance with the rule, and to advise 

customers of the rule’s protections. 

There are approximately 111 

respondents per year (i.e., brokerdealers that conducted business with 

the public, filed Part II of the FOCUS 

Report, did not claim an exemption 

from the Reserve Formula computation, 

and reported that they had a bank loan 

during at least one quarter of the current 

year) that require an aggregate total of 

2,498 hours to comply with the rule. 

Each of these approximately 111 

registered broker-dealers makes an 

estimated 45 annual responses, for an 

aggregate total of 4,995 responses per 

year. Each response takes approximately 

0.5 hours to complete. Thus, the total 

compliance burden per year is 2,498 

burden hours. The approximate cost per 

hour is $59, resulting in a total cost of 

compliance for the respondents of 

approximately $147,382 (2,498 hours @ 

$59 per hour). 

The retention period for the 

recordkeeping requirement under Rule 

8c–1 is three years. The recordkeeping 

requirement under this rule is 

mandatory to ensure that broker-dealers 

do not commingle their securities or use 

them to finance the broker-dealers’ 

proprietary business. This rule does not 

involve the collection of confidential 

information. Persons should be aware 

that an agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a current valid control 

number. 

The public may view the background 

documentation for this information 

collection at the following Web site: 

http://www.reginfo.gov. Comments 

should be directed to: (i) Desk Officer 

for the Securities and Exchange 

Commission, Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, Room 10102, 

New Executive Office Building, 

Washington, DC 20503, or by sending an 

e-mail to: 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, c/o Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

VA 22312 or send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: December 28, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–33113 Filed 1–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29543; File No. 812–13601] 

iShares Trust, et al.; Notice of 

Application 

December 27, 2010. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(c) of the 

Investment Company Act of 1940 

(‘‘Act’’) for an exemption from sections 

2(a)(32), 5(a)(1), 22(d) and 22(e) of the 

Act and rule 22c–1 under the Act, and 

under sections 6(c) and 17(b) of the Act 

for an exemption from sections 17(a)(1) 

and (a)(2) of the Act. 

Applicants: iShares Trust (‘‘Trust’’), 

iShares, Inc. (‘‘Corporation’’) (the Trust 

and Corporation, together, the 

‘‘Companies’’ and each a ‘‘Company’’), 

BlackRock Fund Advisors (‘‘BFA’’ or 

‘‘Adviser’’) and SEI Investments 

Distribution Co. (‘‘Distributor’’). 

SUMMARY: Summary of Application: 

Applicants request an order that 

permits: (a) Series o 

SUMMARY: f certain actively managed 

open-end management investment 

companies to issue shares (‘‘Shares’’) 

redeemable in large aggregations only 

(‘‘Creation Units’’); (b) secondary market 

transactions in Shares to occur at 

negotiated market prices; (c) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days from the tender of Shares for 

redemption; and (d) certain affiliated 

persons of the series to deposit 

securities into, and receive securities 

from, the series in connection with the 

purchase and redemption of Creation 

Units. 

DATES: Filing Dates: The application was 

filed on November 7, 2008 and amended 

on May 4, 2009, June 17, 2010 and 

November 12, 2010. Applicants have 

agreed to file an amendment during the 

notice period, the substance of which is 

reflected in this notice. 

HEARING OR NOTIFICATION OF HEARING: 

An order granting the requested relief 

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 January 21, 2011, and 

should be accompanied by proof of 

service on 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: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

1090. Applicants: Andrew Josef, Esq., 

BlackRock Fund Advisors, 400 Howard 

Street, San Francisco, CA 94105 for the 

Companies and BFA, and SEI 

Investments Distribution Co., One 

Freedom Valley Drive, Oaks, PA 19456. 

FOR FURTHER INFORMATION CONTACT: Jaea 

F. Hahn, Senior Counsel, at (202) 551– 

6870 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 an open-end 

management investment company 

registered under the Act and organized 

as a Delaware statutory trust. The 

Corporation is an open-end management 

investment company registered under 

the Act and organized as a Maryland 

corporation. The Adviser, an investment 

adviser registered under the Investment 

Advisers Act of 1940 (‘‘Advisers Act’’), 

will serve as investment adviser to the 

initial Funds (‘‘Initial Funds’’).1 The 

Distributor, a broker-dealer registered 

under the Securities Exchange Act of 

1934 (‘‘Exchange Act’’), will serve as the 


jlentini on DSKJ8SOYB1PROD with NOTICES
398 Federal Register / Vol. 76, No. 2 / Tuesday, January 4, 2011 / Notices 

2All entities that currently intend to rely on the 

order are named as applicants. Any other entity that 

relies on the order in the future will comply with 

the terms and conditions of the application. 

3Each Fund will comply with the disclosure 

requirements adopted by the Commission in 

Investment Company Act Release No. 28584 (Jan. 

13, 2009), as well as any other applicable disclosure 

requirements. 

4A Fund will not invest in any Depositary 

Receipts that the Adviser deems illiquid or for 

which pricing information is not readily available. 

No affiliated persons of Applicant will serve as the 

depositary bank for any Depositary Receipts held by 

a Fund. 

5On each day that a Fund is open, including as 

required by section 22(e) of the Act (‘‘Business 

Day’’), the list of names and required number of 

each Deposit Security, the estimated Cash 

Component for the current day and the Cash 

Component as of the previous Business Day will be 

made available immediately prior to the opening of 

trading on the listing Exchange (as defined below). 

The Exchange will disseminate every 15 seconds 

throughout the trading day, through the facilities of 

the Consolidated Tape Association an amount 

representing, on a per Share basis, the sum of 

current value of the Deposit Securities and the 

estimated Cash Component. 

6Where a Fund permits an in-kind purchaser to 

substitute cash in lieu of depositing a portion of the 

Deposit Securities, the purchaser may be assessed 

a higher Transaction Fee to cover the cost of 

purchasing such Deposit Securities, including 

brokerage costs. 

7 If Shares are listed on the NASDAQ, no 

particular Specialist will be contractually obligated 

to make a market in Shares, although NASDAQ’s 

listing requirements stipulate that at least two 

Market Makers must be registered as Market Makers 

in Shares to maintain the listing. Registered Market 

Makers are required to make a continuous, twosided market at all times or be subject to regulatory 

sanctions. 

8Shares will be registered in book-entry form 

only. DTC or its nominee will be the registered 

owner of all outstanding Shares. DTC or DTC 

Participants will maintain records reflecting 

beneficial owners of Shares. 

9Applicants state that a cash-in-lieu amount will 

replace any ‘‘to-be-announced’’ (‘‘TBA’’) transaction 

that is listed as a Deposit Security or Redemption 

Security of any Fund. A TBA transaction is a 

method of trading mortgage-backed securities where 

the buyer and seller agree upon general trade 

principal underwriter of the Funds’ 

shares. 

2. Applicants request that the order 

apply to the Initial Funds and any 

future series of a Company or of other 

open-end management investment 

companies advised by BFA or an entity 

controlling, controlled by, or under 

common control with BFA (a ‘‘BFA 

Affiliate’’) that may utilize active 

management strategies, subject to the 

terms and conditions of the application 

(‘‘Future Funds’’, together with the 

Initial Funds, the ‘‘Funds’’).2 Each Fund 

will have a distinct investment objective 

and will attempt to achieve such 

objective by utilizing an ‘‘active’’ 

management strategy.3 The Funds may 

invest in equity or fixed income 

securities traded in the U.S or non-U.S. 

markets, or a combination of equity and 

fixed income securities, as well as 

shares of other exchange traded funds 

(‘‘ETFs’’) and shares of money market 

mutual funds or other investment 

companies. Certain of the Funds may 

invest in equity securities or fixed 

income securities traded in 

international markets (the ‘‘International 

Funds’’). Applicants anticipate that 

certain Funds, including the 

International Funds, will invest a 

portion of their assets in depositary 

receipts representing foreign securities 

in they seek to invest (‘‘Depositary 

Receipts’’).4 The Funds will not invest 

in options contracts, futures contracts or 

swap agreements. 

3. Shares of the Funds will be sold at 

a price between $25 and $100 per Share 

in Creation Units of 50,000 Shares. All 

orders to purchase Creation Units must 

be placed with the Distributor by or 

through an ‘‘Authorized Participant,’’ 

which is either: (a) A broker-dealer or 

other participant in the shares clearing 

process through the continuous net 

settlement system of the National 

Securities Clearing Corporation, or (b) a 

participant in the Depository Trust 

Company (‘‘DTC,’’ and such participant, 

‘‘DTC Participant’’), which in either case 

has executed an agreement with a 

Company, the Distributor and the 

Transfer Agent, with respect to creations 

and redemptions of Creation Units. Each 

Fund will sell Shares in Creation Units, 

generally in exchange for an in-kind 

deposit by the purchaser of a particular 

portfolio of securities designated by the 

Adviser (the ‘‘Deposit Securities’’), 

together with the deposit or refund of a 

specified cash payment as the case may 

be (‘‘Cash Component’’). The Cash 

Component is an amount equal to the 

difference between (a) the net asset 

value (‘‘NAV’’) per Creation Unit and (b) 

the market value per Creation Unit of 

the Deposit Securities.5 Applicants state 

that in some circumstances there may be 

operational problems with a Fund 

operating exclusively on an ‘‘in-kind’’ 

basis. Each Fund therefore may permit, 

under certain circumstances, a 

purchaser of Creation Units to substitute 

cash in lieu of depositing some or all of 

the requisite Deposit Securities. 

4. An investor purchasing a Creation 

Unit from a Fund will be charged a fee 

(‘‘Transaction Fee’’) to prevent the 

dilution of the interests of the remaining 

shareholders resulting from costs in 

connection with the purchase of 

Creation Units.6 All orders to purchase 

Creation Units will be placed with the 

Distributor by or through an Authorized 

Participant and it will be the 

Distributor’s responsibility to transmit 

such orders to the Funds. The 

Distributor also will be responsible for 

maintaining records of both the orders 

placed with it and the confirmations of 

acceptance furnished by it. 

5. Purchasers of Shares in Creation 

Units may hold such Shares or may sell 

such Shares into the secondary market. 

Shares will be listed and traded on a 

national securities exchange as defined 

in section 2(a)(26) of the Act 

(‘‘Exchange’’). One or more member 

firms of the Exchange will act as a 

specialist and maintain a market for 

Shares on the Exchange (the 

‘‘Specialist’’), or one or more member 

firms will act as a market maker 

(‘‘Market Maker’’) and maintain a market 

for Shares.7 The prices of Shares trading 

on the Exchange will be based on a 

current bid/offer market. Shares sold in 

the secondary market will be subject to 

customary brokerage commissions and 

charges. 

7. Applicants expect that purchasers 

of Creation Units will include 

institutional investors and arbitrageurs 

(which could include institutional 

investors). The Specialist, or Market 

Maker, in providing a fair and orderly 

secondary market for the Shares, also 

may purchase Creation Units for use in 

its market-making activities. Applicants 

expect that secondary market 

purchasers of Shares will include both 

institutional investors and retail 

investors.8 Applicants expect that the 

price at which the Shares trade will be 

disciplined by so-called ‘‘arbitrage 

opportunities’’ created by the ability to 

continually purchase or redeem 

Creation Units at their NAV, which 

should ensure that the Shares will not 

trade at a material discount or premium 

in relation to their NAV. 

8. Shares will not be individually 

redeemable, and owners of Shares may 

acquire those Shares from a Fund, or 

tender such Shares for redemption to 

the Fund, in Creation Units only. To 

redeem, an investor will have to 

accumulate enough Shares to constitute 

a Creation Unit. Redemption orders 

must be placed by or through an 

Authorized Participant. Shares generally 

will be redeemed in Creation Units in 

exchange for a particular portfolio of 

securities (‘‘Redemption Securities’’) 

plus or minus a ‘‘Cash Redemption 

Amount,’’ equal to the difference 

between the NAV per Creation Unit of 

the Shares being redeemed and the 

market value of the Redemption 

Securities. An investor may receive the 

cash equivalent of a Redemption 

Security in certain circumstances, such 

as if the investor is constrained from 

effecting transactions in the security by 

regulation or policy.9 A redeeming 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 2 / Tuesday, January 4, 2011 / Notices 399 

parameters such as agency, settlement date, par 

amount and price. The actual pools delivered 

generally are determined two days prior to the 

settlement date. The amount of substituted cash in 

the case of TBA transactions will be equivalent to 

the value of the TBA transaction listed as a Deposit 

Security or Redemption Security. 

10 In accepting Deposit Securities and satisfying 

redemptions with Redemption Securities that are 

restricted securities eligible for resale pursuant to 

rule 144A under the Securities Act, the relevant 

Funds will comply with the conditions of rule 

144A, including in satisfying redemptions with 

such rule 144A eligible restricted Redemption 

Securities. 

11There may be minor differences between a 

basket of Deposit Securities or Redemption 

Securities and a true pro rata slice of a Fund’s 

portfolio solely when (A) it is impossible to break 

up bonds beyond certain minimum sizes needed for 

transfer and settlement or, (B) in the case of equity 

securities, rounding is necessary to eliminate 

fractional shares or lots that are not tradeable round 

lots. A tradeable round lot for an equity security 

will be the standard unit of trading in that 

particular type of security in its primary market. 

12Applicants note that under accounting 

procedures followed by the Funds, trades made on 

the prior Business Day (‘‘T’’) will be booked and 

reflected in NAV on the current Business Day (‘‘T 

+ 1’’). Accordingly, the Funds will be able to 

disclose at the beginning of the Business Day the 

portfolio that will form the basis for the NAV 

calculation at the end of the Business Day. 

investor may pay a Transaction Fee, 

calculated in the same manner as a 

Transaction Fee payable in connection 

with the purchases of a Creation Unit. 

9. Applicants state that a Fund will 

comply with Federal securities laws in 

accepting Deposit Securities and 

satisfying redemptions with 

Redemption Securities, including that 

the Deposit Securities and Redemption 

Securities are sold in transactions that 

would be exempt from registration 

under the Securities Act.10 For each 

Fund utilizing an in-kind process, the 

Deposit Securities and Redemption 

Securities will consist of a pro rata 

basket of the Fund’s portfolio.11

10. No Company nor any individual 

Fund will be advertised or marketed as 

an ‘‘open-end investment company’’ or a 

‘‘mutual fund.’’ Instead, each Fund will 

be marketed as an ‘‘actively-managed 

exchange-traded fund.’’ In all marketing 

materials where the features or method 

of obtaining, buying or selling Shares 

traded on the Exchange are described, 

applicants state that there will be a 

statement or statements to the effect that 

Shares are not individually redeemable. 

Any advertising materials where 

features of obtaining, buying or selling 

Creation Units are described or where 

there is a reference to redeemability will 

prominently disclose that Shares are not 

individually redeemable and that 

owners of Shares may acquire Shares 

from a Fund and tender those Shares for 

redemption to a Fund in Creation Units 

only. 

11. The Funds’ Web site, which will 

be publicly available prior to the public 

offering of Shares, will include, or will 

include links to, the current summary 

prospectus, the prospectus, statement of 

information (‘‘SAI’’), and most recent 

annual and semi-annual reports to 

shareholders if required. The Web site 

will also include additional quantitative 

information updated on a daily basis, 

including, on a per Share basis, for each 

Fund, daily trading volume, the prior 

Business Day’s NAV and the market 

closing price or mid-point of the bid/ask 

spread at the time of calculation of such 

NAV (‘‘Bid/Ask Price’’). On each 

Business Day, before commencement of 

trading in Shares on the Exchange, each 

Fund will disclose the identities and 

quantities of the securities and other 

assets held by the Fund that will form 

the basis for the Fund’s calculation of 

NAV at the end of the Business Day.12

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of the Act granting an 

exemption from sections 2(a)(32), 

5(a)(1), 22(d) and 22(e) of the Act and 

rule 22c-1 under the Act; and under 

sections 6(c) and 17(b) of the Act 

granting an exemption from sections 

17(a)(1) and (a)(2) of the Act. 

2. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security or transaction, or any 

class of persons, securities or 

transactions, from any provision of the 

Act, if and to the extent that 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. Section 17(b) 

of the Act provides that the Commission 

may approve the sale of securities to an 

investment company and the purchase 

of securities from an investment 

company, in both cases by an affiliated 

person of such company, if the 

Commission finds that the terms of the 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned, and the proposed 

transaction is consistent with the 

policies of the registered investment 

company and the general provisions of 

the Act. 

Sections 5(a)(1) and 2(a)(32) of the Act 

3. Section 5(a)(1) of the Act defines an 

‘‘open-end company’’ as a management 

investment company that is offering for 

sale or has outstanding any redeemable 

security of which it is the issuer. 

Section 2(a)(32) of the Act defines a 

redeemable security as any security, 

other than short-term paper, under the 

terms of which the holder, upon its 

presentation to the issuer, is entitled to 

receive approximately a proportionate 

share of the issuer’s current net assets, 

or the cash equivalent. Because Shares 

will not be individually redeemable, 

applicants request an order that would 

permit each Fund, as an open-end 

company, to issue Shares that are 

redeemable in Creation Units only. 

Applicants state that investors may 

purchase Shares in Creation Units from 

each Fund and that Creation Units are 

always redeemable in accordance with 

the provisions of the Act. Applicants 

further state that because the market 

price of Shares will be disciplined by 

arbitrage opportunities, investors should 

be able to sell Shares in the secondary 

market at prices that do not vary 

substantially from their NAV. 

Section 22(d) of the Act and Rule 22c– 

1 Under the Act 

4. Section 22(d) of the Act, among 

other things, prohibits a dealer from 

selling a redeemable security, which is 

currently being offered to the public by 

or through a principal underwriter, 

except at a current public offering price 

described in the prospectus. Rule 22c– 

1 under the Act generally requires that 

a dealer selling, redeeming, or 

repurchasing a redeemable security do 

so only at a price based on its NAV. 

Applicants state that secondary market 

trading in Shares will take place at 

negotiated prices, not at a current 

offering price described in the 

prospectus, and not at a price based on 

NAV. Thus, purchases and sales of 

Shares in the secondary market will not 

comply with section 22(d) of the Act 

and rule 22c–1 under the Act. 

Applicants request an exemption under 

section 6(c) from these provisions. 

5. Applicants assert that the concerns 

sought to be addressed by section 22(d) 

of the Act and rule 22c–1 under the Act 

with respect to pricing are equally 

satisfied by the proposed method of 

pricing Shares. Applicants maintain that 

while there is little legislative history 

regarding section 22(d), its provisions, 

as well as those of rule 22c–1, appear to 

have been designed to (a) Prevent 

dilution caused by certain risklesstrading schemes by principal 

underwriters and contract dealers, (b) 

prevent unjust discrimination or 

preferential treatment among buyers 

resulting from sales at different prices, 

and (c) assure an orderly distribution of 

investment company shares by 

eliminating price competition from 

dealers offering shares at less than the 

published sales price and repurchasing 


jlentini on DSKJ8SOYB1PROD with NOTICES
400 Federal Register / Vol. 76, No. 2 / Tuesday, January 4, 2011 / Notices 

13Rule 15c6–1 under the Exchange Act requires 

that most securities be settled within three business 

days of the trade. Applicants acknowledge that no 

relief obtained from the requirements of section 

22(e) will affect any obligations applicants may 

have under rule 15c6–1. 

shares at more than the published 

redemption price. 

6. Applicants believe that none of 

these purposes will be thwarted by 

permitting Shares to trade in the 

secondary market at negotiated prices. 

Applicants state that (a) secondary 

market trading in Shares does not 

involve the Funds as parties and cannot 

result in dilution of an investment in 

Shares, and (b) to the extent different 

prices exist during a given trading day, 

or from day to day, such variances occur 

as a result of third-party market forces, 

such as supply and demand. Therefore, 

applicants assert that secondary market 

transactions in Shares will not lead to 

discrimination or preferential treatment 

among purchasers. Finally, applicants 

contend that the proposed distribution 

system will be orderly because arbitrage 

activity should ensure that the 

difference between the market price of 

Shares and their NAV remains narrow. 

Section 22(e) 

7. Section 22(e) of the Act generally 

prohibits a registered investment 

company from suspending the right of 

redemption or postponing the date of 

payment of redemption proceeds for 

more than seven days after the tender of 

a security for redemption. Applicants 

state that settlement of redemptions for 

the International Funds is contingent 

not only on the securities settlement 

cycle of the U.S. market, but also on 

currently practicable delivery cycles in 

local markets for underlying foreign 

securities held by the International 

Funds. Applicants state that local 

market delivery cycles for transferring 

Redemption Securities to redeeming 

investors, coupled with local market 

holiday schedules, will, under certain 

circumstances, require a delivery 

process longer than seven calendar days 

for International Funds. Applicants 

request relief under section 6(c) of the 

Act from section 22(e) to allow 

International Funds that deliver 

Redemption Securities in-kind to pay 

redemption proceeds up to a maximum 

of 14 calendar days following the tender 

of a Creation Unit of such Funds. Except 

as disclosed in the relevant 

International Fund’s SAI, applicants 

expect that each International Fund will 

be able to deliver redemption proceeds 

within seven days.13 With respect to 

future International Funds, applicants 

seek the same relief from section 22(e) 

only to the extent that circumstances 

similar to those described in the 

application exist. 

8. Applicants state that section 22(e) 

was designed to prevent unreasonable 

and unforeseen delays in the payment of 

redemption proceeds. Applicants assert 

that the requested relief will not lead to 

the problems that section 22(e) was 

designed to prevent. Applicants state 

that the SAI will disclose those local 

holidays (over the period of at least one 

year following the date of the SAI), if 

any, that are expected to prevent the 

delivery of redemption proceeds in 

seven calendar days, and the maximum 

number of days, up to 14 calendar days, 

needed to deliver the proceeds for the 

relevant International Fund. Applicants 

are not seeking relief from section 22(e) 

with respect to International Funds that 

do not effect creations and redemptions 

of Creation Units in-kind. 

Sections 17(a)(1) and (2) of the Act 

9. Section 17(a)(1) and (2) of the Act 

generally prohibit an affiliated person of 

a registered investment company, or an 

affiliated person of such a person 

(‘‘second tier affiliate’’), from selling any 

security to or purchasing any security 

from the company. Section 2(a)(3) of the 

Act defines ‘‘affiliated person’’ to 

include any person directly or indirectly 

owning, controlling, or holding with 

power to vote 5% or more of the 

outstanding voting securities of the 

other person and any person directly or 

indirectly controlling, controlled by, or 

under common control with, the other 

person. Section 2(a)(9) of the Act 

provides that a control relationship will 

be presumed where one person owns 

more than 25% of another person’s 

voting securities. The Funds may be 

deemed to be controlled by BFA or any 

BFA Affiliate and hence are affiliated 

persons of each other. In addition, the 

Funds may be deemed to be under 

common control with any other 

registered investment company (or 

series thereof) advised by BFA or a BFA 

Affiliate (an ‘‘Affiliated Fund’’). 

10. Applicants request an exemption 

from section 17(a) under sections 6(c) 

and 17(b), to permit in-kind purchases 

and redemptions of Creation Units by 

persons that are affiliated persons or 

second tier affiliates of the Funds solely 

by virtue of one or more of the 

following: (1) Holding 5% or more, or 

more than 25%, of the outstanding 

Shares of a Company or one or more 

Funds; (2) an affiliation with a person 

with an ownership interest described in 

(1); or (3) holding 5% or more, or more 

than 25%, of the shares of one or more 

Affiliated Funds. 

11. Applicants contend that no useful 

purpose would be served by prohibiting 

such affiliated persons or second tier 

affiliates of a Fund from purchasing or 

redeeming Creation Units through ‘‘inkind’’ transactions. The deposit 

procedure for in-kind purchases and the 

redemption procedure for in-kind 

redemptions will be the same for all 

purchases and redemptions. Deposit 

Securities and Redemption Securities 

will be valued under the same objective 

standards applied to valuing portfolio 

securities. Absent the unusual 

circumstances described in the 

application, the Fund Deposit and 

Redemption Securities will be the same. 

Therefore, applicants state that in-kind 

purchases and redemptions will create 

no opportunity for the affiliated persons 

and second tier affiliates described 

above to effect a transaction detrimental 

to the other holders of Shares. 

Applicants also believe that in-kind 

purchases and redemptions will not 

result in abusive self-dealing or 

overreaching of the Fund. 

Applicants’ Conditions 

The applicants agree that any order of 

the Commission granting the requested 

relief will be subject to the following 

conditions: 

1. As long as a Fund operates in 

reliance on the requested order, the 

Shares of the Fund will be listed on an 

Exchange. 

2. Neither a Company nor any Fund 

will be advertised or marketed as an 

open-end investment company or a 

mutual fund. Any advertising material 

that describes the purchase or sale of 

Creation Units or refers to redeemability 

will prominently disclose that the 

Shares are not individually redeemable 

and that owners of the Shares may 

acquire those Shares from the Fund and 

tender those Shares for redemption to 

the Fund in Creation Units only. 

3. The Web site for the Funds, which 

is and will be publicly accessible at no 

charge, will contain, on a per Share 

basis, for each Fund the prior Business 

Day’s NAV and the market closing price 

or Bid/Ask Price of the Shares, and a 

calculation of the premium or discount 

of the market closing price or Bid/Ask 

Price against such NAV. 

4. On each Business Day, before 

commencement of trading in Shares on 

the Exchange, the Fund will disclose on 

its Web site the identities and quantities 

of the portfolio securities and other 

assets held by the Fund that will form 

the basis for the Fund’s calculation of 

NAV at the end of the Business Day. 

5. No Adviser or Subadviser, directly 

or indirectly, will cause any Authorized 

Participant (or any investor on whose 

behalf an Authorized Participant may 

transact with the Fund) to acquire any 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 2 / Tuesday, January 4, 2011 / Notices 401 

Deposit Security for the Fund through a 

transaction in which the Fund could not 

engage directly. 

6. The requested order will expire on 

the effective date of any Commission 

rule under the Act that provides relief 

permitting the operation of actively 

managed exchange-traded funds. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–33116 Filed 1–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–29544; File No. 812–13816] 

MetLife Insurance Company of 

Connecticut, et al. 

December 28, 2010. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order pursuant to Section 26(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) approving certain substitutions of 

securities and an order of exemption 

pursuant to Section 17(b) of the Act 

from Section 17(a) of the Act. 

APPLICANTS: MetLife Insurance 

Company of Connecticut (‘‘MetLife of 

CT’’), MetLife of CT Separate Account 

Eleven for Variable Annuities (‘‘Separate 

Account Eleven’’), MetLife of CT 

Separate Account QPN for Variable 

Annuities (‘‘Separate Account QPN’’), 

MetLife of CT Fund UL for Variable Life 

Insurance (‘‘Fund UL’’), MetLife of CT 

Fund UL III for Variable Life Insurance 

(‘‘Fund UL III’’), MetLife of CT Separate 

Account CPPVUL I (‘‘Separate Account 

CPPVUL 1’’), MetLife Investors 

Insurance Company (‘‘MetLife 

Investors’’), MetLife Investors Variable 

Annuity Account One (‘‘VA Account 

One’’), MetLife Investors Variable Life 

Account One (‘‘VL Account One’’), First 

MetLife Investors Insurance Company 

(‘‘First MetLife Investors’’), First MetLife 

Investors Variable Annuity Account 

One (‘‘First VA Account One’’), MetLife 

Investors USA Insurance Company 

(‘‘MetLife Investors USA’’), MetLife 

Investors USA Separate Account A 

(‘‘Separate Account A’’), Metropolitan 

Life Insurance Company (‘‘MetLife’’), 

Metropolitan Life Separate Account 

DCVL (‘‘Separate Account DCVL’’), 

Metropolitan Life Separate Account UL 

(‘‘Separate Account UL’’), Metropolitan 

Life Variable Annuity Separate Account 

II (‘‘Separate Account II’’), Security 

Equity Separate Account No. 13S (‘‘SE 

Separate Account 13S’’), Security Equity 

Separate Account No. 485 (‘‘SE Separate 

Account 485’’), General American Life 

Insurance Company (‘‘General 

American’’), General American Separate 

Account Seven (‘‘GA Separate Account 

Seven’’), General American Separate 

Account Eleven (‘‘GA Separate Account 

Eleven’’), General American Separate 

Account Thirty-Three (‘‘GA Separate 

Account Thirty-Three’’), (together with 

Separate Account Eleven, Separate 

Account QPN, Fund UL, Fund UL III, 

Separate Account CPPVUL 1, VA 

Account One, VL Account One, First 

VA Account One, Separate Account A, 

Separate Account DCVL, Separate 

Account UL, Separate Account II, SE 

Separate Account 13S, SE Separate 

Account 485, GA Separate Account 

Seven, GA Separate Account Eleven, GA 

Separate Account Thirty-Three, the 

‘‘Separate Accounts’’), Met Investors 

Series Trust (‘‘MIST’’) and Metropolitan 

Series Fund, Inc. (‘‘Met Series Fund’’) 

(together with MIST, the ‘‘Investment 

Companies’’). The Insurance Companies 

and the Separate Accounts are referred 

to as the ‘‘Substitution Applicants.’’ The 

Insurance Companies, the Separate 

Accounts and the Investment 

Companies are referred to as the 

‘‘Section 17 Applicants.’’ 

SUMMARY OF APPLICATION: Applicants 

seek an order approving the substitution 

of certain series of the Investment 

Companies for shares of series of other 

unaffiliated registered investment 

companies held by the Separate 

Accounts to fund certain group and 

individual variable annuity contracts 

and variable life insurance policies 

issued by the Insurance Companies 

(collectively, the ‘‘Contracts’’). The 

Section 17 Applicants seek an order 

pursuant to Section 17(b) of the Act to 

permit certain in-kind transactions in 

connection with certain of the 

Substitutions. 

FILING DATE: The application was filed 

on August 26, 2010, and an amended 

and restated application was filed on 

December 9, 2010 and December 27, 

2010. 

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 

Secretary of the Commission 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 January 21, 

2011, and should be accompanied by 

proof of service on 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 issue contested. Persons may request 

notification of a hearing by writing to 

the Secretary of the Commission. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants c/o Paul G. Cellupica, Chief 

Counsel—Securities Regulation and 

Corporate Services, MetLife Group, 1095 

Avenue of the Americas, 40th Floor, 

New York, NY 10036 and David C. 

Mahaffey, Esq., Sullivan & Worcester 

LLP, 1666 K Street, NW., Washington, 

DC 20006. 

FOR FURTHER INFORMATION CONTACT: 

Alison T. White, Senior Counsel, or 

Joyce M. Pickholz, Branch Chief, Office 

of Insurance Products, Division of 

Investment Management, at (202) 551– 

6795. 

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 for an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm, or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. MetLife of CT is a stock life 

insurance company organized in 1863 

under the laws of Connecticut. MetLife 

Investors is a stock life insurance 

company organized on August 17, 1981 

under the laws of Missouri. First 

MetLife Investors is a stock life 

insurance company organized on 

December 31, 1992 under the laws of 

New York. MetLife Investors USA is a 

stock life insurance company organized 

on September 13, 1960 under the laws 

of Delaware. MetLife is a stock life 

insurance company organized in 1868 

under the laws of New York. General 

American is a stock life insurance 

company organized in 1933 under the 

laws of Missouri. 

2. Separate Account Eleven, Fund UL, 

Fund UL III, VA Account One, VL 

Account One, First VA Account One, 

Separate Account A, Separate Account 

UL, Separate Account II, SE Separate 

Account 13S and GA Separate Account 

Eleven are registered under the Act as 

unit investment trusts for the purpose of 

funding the Contracts. Security interests 

under the Contracts have been 

registered under the Securities Act of 

1933. 

3. Separate Account QPN is exempt 

from registration under the Act. Security 

interests under the Contracts have been 


jlentini on DSKJ8SOYB1PROD with NOTICES