45492 Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 

1The mandatory redemption dates are as follows: 

Series D—December 22, 2021; and Series E— 

December 11, 2024. 

9. Applicants submit that extending 

the requested relief to encompass Future 

Contracts and Other Accounts is 

appropriate in the public interest 

because it promotes competitiveness in 

the variable annuity market by 

eliminating the need to file redundant 

exemptive applications prior to 

introducing new variable annuity 

contracts. Investors would receive no 

benefit or additional protection by 

requiring Applicants to repeatedly seek 

exemptive relief that would present no 

issues under the Act not already 

addressed in the application. 

10. Applicants submit, for the reasons 

stated herein, that their exemptive 

request meets the standards set out in 

Section 6(c) of the Act, namely, that the 

exemptions requested are 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 and that, 

therefore, the Commission should grant 

the requested order. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21140 Filed 9–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–28891; File No. 812–13617] 

DNP Select Income Fund Inc., et al.; 

Notice of Application 

August 27, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 6(c) of the 

Investment Company Act of 1940 

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

18(a)(1)(A) and (B) of the Act. 

Applicants: DNP Select Income Fund 

Inc. (‘‘DNP’’) and Duff & Phelps Utility 

and Corporate Bond Trust Inc. (‘‘DUC’’) 

(each of DNP and DUC, a ‘‘Fund’’ and, 

collectively, the ‘‘Funds’’). 

Summary of Application: Applicants 

request an order (‘‘Order’’) granting an 

exemption from sections 18(a)(1)(A) and 

(B) of the Act for a period from the date 

of the Order until October 31, 2010. The 

Order would permit each Fund to issue 

or incur debt subject to asset coverage 

of 200% that would be used to refinance 

the Fund’s issued and outstanding 

auction preferred shares (‘‘APS Shares’’) 

and/or remarketed preferred stock (‘‘RP 

Shares,’’ and, collectively with the APS 

Shares, the ‘‘Preferred Shares’’) issued 

prior to February 1, 2008 that are 

outstanding at the time such post-Order 

debt is issued or incurred. The Order 

also would permit each Fund to declare 

dividends or any other distributions on, 

or purchase, capital stock during the 

term of the Order, provided that such 

post-Order debt has asset coverage of at 

least 200% after deducting the amount 

of such transaction. 

Filing Dates: The application was 

filed on December 29, 2008, and 

amended on June 3, 2009, June 24, 2009, 

and August 26, 2009. 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 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 September 21, 2009, 

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, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants: c/o Nathan I. Partain, Duff 

& Phelps Investment Management Co., 

200 South Wacker Drive, Suite 500, 

Chicago, IL 60606. 

FOR FURTHER INFORMATION CONTACT: Jill 

Ehrlich, Attorney Adviser, at (202) 551– 

6819, or Mary Kay Frech, 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. Each of the Funds is organized as 

a Maryland corporation and is a closedend management investment company 

registered under the Act. Each Fund is 

advised by Duff & Phelps Investment 

Management Co. (‘‘Duff & Phelps’’). 

DNP has outstanding a class of common 

shares and two series each of APS 

Shares and RP Shares, and DUC has 

outstanding a class of common shares 

and one series of APS Shares. 

2. Applicants state that the Funds 

issued their outstanding Preferred 

Shares for purposes of investment 

leverage to augment the amount of 

investment capital available for use in 

the pursuit of their investment 

objectives. Applicants state that, 

through the use of leverage, the Funds 

seek to enhance the investment return 

available to the holders of their common 

shares by earning a rate of portfolio 

return (which includes the return 

obtained from securities that are 

purchased from the proceeds of 

Preferred Share offerings) that exceeds 

the dividend rate that the Funds pay to 

the holders of the Preferred Shares. 

Applicants represent that holders of 

APS Shares are entitled to receive a 

stated liquidation preference amount of 

$25,000 per share (plus any 

accumulated but unpaid dividends, 

whether or not declared) in any 

liquidation, dissolution or winding up 

of the relevant Fund, before any 

distribution or payment to holders of 

the Fund’s common shares. Applicants 

also state that dividends declared and 

payable on the APS Shares have a 

similar priority over dividends declared 

and payable on the Fund’s common 

shares. In addition, applicants state that 

APS Shares are ‘‘perpetual’’ securities 

and are not subject to mandatory 

redemption by a Fund so long as the 

Fund meets certain asset coverage tests 

specified in its charter. Further, 

applicants state that the APS Shares are 

redeemable at each Fund’s option. 

3. Applicants represent that holders of 

RP Shares are entitled to receive a stated 

liquidation preference amount of 

$100,000 per share (plus any 

accumulated but unpaid dividends, 

whether or not declared) in any 

liquidation, dissolution or winding up 

of DNP, before any distribution or 

payment to holders of its common 

shares. Applicants state that dividends 

declared and payable on the RP Shares 

have a similar priority over dividends 

declared and payable on DNP’s common 

shares. Applicants also state that the RP 

Shares are subject to mandatory 

redemption on a date certain and, 

therefore, are classified as a liability on 

the statement of assets and liabilities 

and the related dividends as interest 

expense on the statement of operations.1

In addition, the RP Shares are subject to 

mandatory redemption if certain asset 


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2For purposes of the requested Order, applicants 

use the term ‘‘auction market’’ to refer generically 

to the auction and remarketing mechanisms that 

serve as a method of providing liquidity for holders 

of APS Shares and RP Shares, respectively, and the 

term ‘‘auction rate securities’’ to refer generically to 

the two types of preferred shares. 

3See, e.g., Eaton Vance Management, SEC NoAction Letter (June 13, 2008) (permitting the 

issuance of ‘‘liquidity protected preferred shares’’ to 

supplement or replace Eaton Vance funds’ auction 

rate preferred stock). 

4Section 18(h) of the Act defines asset coverage 

of a senior security representing indebtedness of an 

issuer as the ratio which the value of the total assets 

of the issuer, less all liabilities and indebtedness 

not represented by senior securities, bears to the 

aggregate amount of senior securities representing 

indebtedness of the issuer. The section defines asset 

coverage of the preferred stock of an issuer as the 

ratio which the value of the total assets of the 

issuer, less all liabilities and indebtedness not 

represented by senior securities, bears to the 

aggregate amount of senior securities representing 

indebtedness of the issuer plus the amount the class 

of senior security would be entitled to on 

involuntary liquidation. 

5An exception is made for the declaration of a 

dividend on a class of preferred stock if the senior 

security representing indebtedness has an asset 

coverage of at least 200% at the time of declaration 

after deduction of the amount of such dividend. See 

section 18(a)(1)(B) of the Act. Further, section 18(g) 

of the Act provides, among other things, that 

‘‘senior security,’’ for purposes of section 

Continued 

coverage tests are not met as specified 

in DNP’s charter. Further, applicants 

state that the RP Shares are redeemable 

at DNP’s option. 

4. Applicants state that, prior to 

February 2008, dividend rates on the 

Preferred Shares for each dividend 

period were set at the market clearing 

rate determined through an auction 

process or a remarketing mechanism, in 

the case of APS Shares or RP Shares, 

respectively, that brought together 

bidders, who sought to buy Preferred 

Shares, and holders of Preferred Shares, 

who sought to sell their Preferred 

Shares. Applicants explain that, if an 

auction fails to clear for a series of APS 

Shares or a remarketing fails for a series 

of RP Shares (because of an imbalance 

of sell orders over bids), the dividend 

payment rate for that series over the 

next dividend period is set at a specified 

maximum applicable rate (the 

‘‘Maximum Rate’’) defined in the 

relevant Fund’s charter, determined by 

reference to a short-term market interest 

rate. Applicants state that a failed 

auction or remarketing is not an event 

of default; the relevant Fund continues 

to pay dividends to all holders of 

Preferred Shares, but at the specified 

Maximum Rate rather than a market 

clearing rate. Applicants state that they 

experienced no unsuccessful auctions or 

remarketings prior to February 2008. 

5. Applicants state that, prior to 

February 2008, if investors did not 

purchase all of the APS Shares tendered 

for sale at an auction or all of the RP 

Shares tendered for sale in a 

remarketing, dealers would enter into 

such auction or remarketing and 

purchase any excess APS Shares or RP 

Shares to prevent the auction or 

remarketing from failing. Applicants 

represent that, for approximately twenty 

years, auction rate securities traded 

successfully in the auction market with, 

so far as applicants are aware, very few 

exceptions.2 Applicants state that they 

understand that Preferred Shares were 

bought by many retail investors 

believing that they were safe short-term 

liquid investments and, in many 

situations, the equivalent of cash. 

6. Applicants state that, in February 

2008, the financial institutions that 

historically provided ‘‘back stop’’ 

liquidity to APS Share auctions and RP 

Share remarketings stopped 

participating in them. Applicants state 

that, since February 2008, all closed-end 

funds advised by Duff & Phelps that had 

Preferred Shares outstanding, including 

the Funds, have experienced 

unsuccessful auctions and remarketings 

due to an imbalance between buy and 

sell orders. Applicants also state that 

they believe an established secondary 

market for Preferred Shares does not 

exist today that would assure that 

holders of APS Shares would receive 

the liquidation preference of $25,000 

per share and that holders of RP Shares 

would receive the liquidation 

preference of $100,000 per share. 

Applicants state that, on March 6, 2009, 

each Fund entered into a committed 

borrowing facility (each a ‘‘Committed 

Facility’’) under a prime brokerage 

arrangement that permits such Fund to 

borrow money to redeem their 

outstanding Preferred Shares. As 

described more fully in the application, 

applicants state that, as of June 24, 2009, 

the Funds have redeemed seven series 

of Preferred Shares with an aggregate 

liquidation preference of $695 million. 

Applicants state, however, that neither 

Fund can borrow enough money under 

its respective Committed Facility to 

redeem all of its remaining series of 

Preferred Shares without violating the 

300% asset coverage requirements of 

section 18(a)(1)(A) of the Act. As a 

result, applicants state that there is 

currently no reliable mechanism for 

holders of auction rate securities, 

including the Funds’ Preferred Shares, 

to obtain liquidity and believe that, 

industry-wide, the current lack of 

liquidity is causing distress for a 

substantial number of holders of auction 

rate securities and creating severe 

hardship for many investors. 

7. Applicants seek relief for a 

temporary period from the date on 

which the Order is granted until 

October 31, 2010 (‘‘Exemption Period’’). 

The proposed replacement of the 

Preferred Shares with debt would 

provide liquidity for the holders of 

applicants’ Preferred Shares, while 

applicants continue their diligent efforts 

to obtain a more permanent form of 

financing (such as a new type of senior 

security that is equity) that fully 

complies with the asset coverage 

requirements of section 18.3 Applicants 

state that it is uncertain when, or if, the 

securities and capital markets will 

return to conditions that would enable 

the Funds to achieve compliance with 

the asset coverage requirements that 

would apply in the absence of the 

Order. In particular, applicants believe 

that the development of a robust market 

for alternative forms of equity-based 

leverage could take up to a year, or 

longer. Applicants further state that, 

once such a market has developed, the 

negotiation, execution and closing of an 

issuance of replacement equity-based 

securities for each Fund might require 

an additional several months to 

consummate. Given the uncertainty and 

the current and continuing unsettled 

state of the securities and capital 

markets, applicants believe that the 

Exemption Period is reasonable and 

appropriate. Each Fund’s refinancing of 

Preferred Shares is subject to approval 

of such arrangements by the Fund’s 

board (‘‘Board’’). 

Applicants’ Legal Analysis: 

1. Section 18(a)(1)(A) of the Act 

provides that it is unlawful for any 

registered closed-end investment 

company to issue any class of senior 

security representing indebtedness, or to 

sell such security of which it is the 

issuer, unless such class of senior 

security will have an asset coverage of 

at least 300% immediately after 

issuance or sale. Section 18(a)(2)(A) of 

the Act provides that it is unlawful for 

any registered closed-end investment 

company to issue any class of senior 

security that is a stock, or to sell any 

such security of which it is the issuer, 

unless such class of senior security will 

have an asset coverage of at least 200% 

immediately after such issuance or 

sale.4

2. Section 18(a)(1)(B) prohibits a 

closed-end fund from declaring a 

dividend or other distribution on, or 

purchasing, its own capital stock unless 

its outstanding indebtedness will have 

an asset coverage of at least 300% 

immediately after deducting the amount 

of such dividend, distribution or 

purchase price.5 Section 18(a)(2)(B) 


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45494 Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 

18(a)(1)(B), does not include any promissory note 

or other evidence of indebtedness issued in 

consideration of any loan, extension or renewal 

thereof, made by a bank or other person and 

privately arranged, and not intended to be publicly 

distributed. 6See supra note 1. 

7Applicants acknowledge that managing any 

portfolio that relies on borrowing for leverage 

entails the risk that, when the borrowing matures 

and must be repaid or refinanced, an economically 

attractive form of replacement leverage may not be 

available in the capital markets. For that reason, any 

portfolio that relies on borrowing for leverage is 

subject to the risk that it may have to forcibly 

deleverage, which could be disadvantageous to the 

portfolio’s common shareholders. Applicants 

therefore state that they regard leveraging through 

borrowing as potentially a temporary, interim step, 

with the issuance of new preferred stock as a 

possible longer-term replacement source of 

portfolio leverage. 

prohibits a closed-end fund from 

declaring a dividend or other 

distribution on, or purchasing, its own 

common stock unless its outstanding 

preferred stock will have an asset 

coverage of at least 200% immediately 

after deducting the amount of such 

dividend, distribution or purchase 

price. 

3. Section 6(c) of the Act provides, in 

relevant part, that the Commission, by 

order upon application, may 

conditionally or unconditionally 

exempt any person, security, or 

transaction from any provision of the 

Act if and to the extent 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. 

4. Applicants request that the 

Commission issue an Order under 

section 6(c) of the Act to exempt each 

Fund from the 300% asset coverage 

requirements set forth in sections 

18(a)(1)(A) and (B) of the Act. 

Specifically, the Funds seek relief from 

the section 18 asset coverage 

requirements for senior securities 

representing indebtedness for the 

Exemption Period to permit the Funds 

to refinance any Preferred Shares issued 

prior to February 1, 2008 that are 

outstanding at the time of the Order 

with debt issued or incurred after the 

issuance of the Order subject to the 

200% asset coverage requirement that 

applies to each Fund’s existing 

Preferred Shares, rather than the 300% 

asset coverage that would ordinarily 

apply under section 18 to senior 

securities representing indebtedness, (a) 

when they incur that debt, and (b) when 

they declare dividends or any other 

distributions on, or purchase, their 

capital stock, after deduction of the 

amount of such dividend, distribution 

or purchase price. Applicants state that, 

except as permitted under the requested 

Order, if issued, the Funds would meet 

all of the asset coverage requirements of 

section 18(a) of the Act. In addition, 

applicants state that each Fund that 

borrows in reliance on the Order will 

either pay down or refinance the debt 

within the Exemption Period so that, 

upon expiration of the Exemption 

Period, it will have asset coverage of at 

least 300% for each class of senior 

security representing indebtedness. 

5. Applicants state that section 18 

reflects congressional concerns 

regarding preferential treatment for 

certain classes of shareholders, complex 

capital structures, and the use of 

excessive leverage. Applicants submit 

that another concern was that senior 

securities gave the misleading 

impression of safety from risk. 

Applicants believe that the request for 

temporary relief is necessary, 

appropriate and in the public interest 

and that such relief is consistent with 

the protection of investors and the 

purposes intended by the policy and 

provisions of the Act. 

6. Applicants note that the illiquidity 

of Preferred Shares is a unique, exigent 

situation that is posing urgent, and in 

some cases devastating, hardships on 

their holders. Applicants represent that 

the proposed replacement of the 

Preferred Shares with debt would 

provide liquidity for the holders of 

applicants’ Preferred Shares, while 

applicants continue their diligent efforts 

to obtain a more permanent form of 

financing (such as a new type of senior 

security that is equity) that fully 

complies with the asset coverage 

requirements of section 18.6

7. Applicants represent that the Order 

would help avoid the potential harm to 

common shareholders that could result 

if the Funds were to deleverage their 

portfolios in the current difficult market 

environment or that could result if a 

reduction in investment return reduced 

the market price of common shares. 

Applicants also state that the requested 

Order would permit the Funds to 

continue to provide the holders of their 

common shares with the enhanced 

returns that leverage may provide. 

8. Applicants believe that the interests 

of all classes of the Funds’ current 

investors would be well served by the 

requested Order—the holders of 

Preferred Shares because they would 

achieve the liquidity that the market 

currently cannot provide, as well as full 

recovery of the liquidation value of their 

shares, and the holders of common 

shares because the cost of the new form 

of leverage would, over time, be lower 

than that of the total cost of the 

Preferred Shares based on their 

Maximum Rates and the adverse 

consequences of deleveraging would be 

avoided. 

9. Applicants represent that the 

proposed borrowing would be obtained 

from banks, insurance companies or 

qualified institutional buyers (as 

defined in Rule 144A(a)(1) under the 

Securities Act of 1933), who would be 

capable of assessing the risk associated 

with the transaction. Applicants also 

state that, to the extent the Act’s asset 

coverage requirements were aimed at 

limiting leverage because of its potential 

to magnify losses as well as gains, they 

believe that the proposal would not 

unduly increase the speculative nature 

of the Funds’ common shares because 

the relief is temporary and the Funds 

would be no more highly leveraged if 

they replace the existing Preferred 

Shares with borrowing.7 Applicants also 

state that the proposed liquidity 

solution would not make the Funds’ 

capital structure more complex, opaque, 

or hard to understand or result in 

pyramiding or inequitable distribution 

of control. 

10. Applicants submit that the current 

state of the credit markets, which has 

affected auction rate securities of all 

types, including applicants’ Preferred 

Shares, is a historic event of unusual 

severity and requires a creative and 

flexible response on the part of both the 

private and public sectors. Applicants 

believe that these issues have created an 

urgent need for limited, prompt, 

thoughtful and responsive solutions. 

Applicants believe that the request 

meets the standards for exemption 

under section 6(c) of the Act. 

Applicants’ Conditions: 

Applicants agree that any order 

granting the requested relief shall be 

subject to the following conditions: 

1. Each Fund that borrows subject to 

200% asset coverage under the Order 

will do so only if such Fund’s Board, 

including a majority of the members of 

the Board who are not ‘‘interested 

persons’’ (as defined in section 2(a)(19) 

of the Act) (‘‘Independent Board 

Members’’), shall have determined that 

such borrowing is in the best interests 

of such Fund, the holders of its common 

shares and the holders of its Preferred 

Shares. Each Fund shall make and 

preserve for a period of not less than six 

years from the date of such 

determination, the first two years in an 

easily accessible place, minutes 

specifically describing the deliberations 

by the Board and the information and 

documents supporting those 

deliberations, the factors considered by 

the Board in connection with such 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 45495 

1Rafferty Asset Management, LLC, et al., 

Investment Company Act Release Nos. 28379 (Sep. 

12, 2008) (notice) and 28434 (Oct. 6, 2008) (order). 

determination, and the basis of such 

determination. 

2. Upon expiration of the Exemption 

Period, each Fund will have asset 

coverage of at least 300% for each class 

of senior security representing 

indebtedness. 

3. The Board of any Fund that has 

borrowed in reliance on the Order shall 

receive and review, no less frequently 

than quarterly during the Exemption 

Period, detailed progress reports 

prepared by management (or other 

parties selected by the Independent 

Board Members) regarding and assessing 

the efforts that the Fund has 

undertaken, and the progress that the 

Fund has made, towards achieving 

compliance with the appropriate asset 

coverage requirements under section 18 

by the expiration of the Exemption 

Period. The Board, including a majority 

of the Independent Board Members, will 

make such adjustments as it deems 

necessary or appropriate to ensure that 

the Fund comes into compliance with 

section 18 of the Act within a 

reasonable period of time, not to exceed 

the expiration of the Exemption Period. 

Each Fund will make and preserve 

minutes describing these reports and the 

Board’s review, including copies of such 

reports and all other information 

provided to or relied upon by the Board, 

for a period of not less than six years, 

the first two years in an easily accessible 

place. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21141 Filed 9–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28889; File No. 812–13610] 

Rafferty Asset Management, LLC, et 

al.; Notice of Application 

August 27, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application to 

amend a prior order under section 6(c) 

of the Investment Company Act of 1940 

(‘‘Act’’) granting an exemption from 

sections 2(a)(32), 5(a)(1), 22(d), 22(e) 

and 24(d) 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 17(a)(2) of the 

Act. 

Applicants: Rafferty Asset 

Management, LLC (‘‘Adviser’’) and 

Direxion Shares ETF Trust (‘‘Trust’’). 

Summary of Application: Applicants 

request an order to amend a prior order 

that permits: (a) Series of an open-end 

management investment company to 

issue shares (‘‘ETS’’) redeemable in 

large aggregations only (‘‘Creation 

Units’’); (b) secondary market 

transactions in ETS to occur at 

negotiated prices; (c) dealers to sell ETS 

to purchasers in the secondary market 

unaccompanied by a prospectus, when 

prospectus delivery is not required by 

the Securities Act of 1933; (d) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days after the tender of ETS for 

redemption; and (e) 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 (‘‘Prior Order’’).1 Applicants seek 

to amend the Prior Order to: (a) Provide 

greater operational flexibility to the 

existing and future series of the Trust 

(‘‘Funds’’); (b) expand the category of 

Funds designed to correspond to the 

return of an underlying securities index 

(‘‘Underlying Index’’ and such Funds, 

the ‘‘Conventional Funds’’) to include 

Funds that seek to match the 

performance of an Underlying Index 

primarily focused on United States 

equity securities that apply a strategy 

referred to as 130/30 (‘‘130/30 Funds’’); 

(c) supersede the definition of 

Leveraged Funds and Inverse Funds in 

the application on which the Prior 

Order was issued (‘‘Prior Application’’); 

(d) delete the relief granted in the Prior 

Order from section 24(d) of the Act and 

revise the Prior Application 

accordingly; and (e) amend the terms 

and conditions of the Prior Application 

with respect to certain disclosure 

requirements. 

Filing Dates: The application was 

filed on December 17, 2008, and 

amended on February 13, 2009, June 3, 

2009 and July 20, 2009. 

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 September 21, 2009, 

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, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants, 33 Whitehall Street, 10th 

Floor, New York, New York 10004. 

FOR FURTHER INFORMATION CONTACT: 

Laura L. Solomon, Senior Counsel, at 

(202) 551–6915, or Julia Kim Gilmer, 

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 Trust 

offers series that operate pursuant to the 

Prior Order. The Adviser, which is 

registered as an investment adviser 

under the Investment Advisers Act of 

1940 (‘‘Advisers Act’’), or an entity 

controlled by or under common control 

with the Adviser will serve as 

investment adviser to each Fund. 

2. Applicants request relief that 

would provide greater operational 

flexibility to the Funds by permitting: 

(a) The Funds to enter into short 

positions in the component securities 

comprising the relevant Underlying 

Index (‘‘Component Securities’’); (b) 

each Conventional Fund to invest at 

least 80% of its total assets (exclusive of 

collateral held for purposes of securities 

lending) in Component Securities and/ 

or investments that have economic 

characteristics that are substantially 

identical to the economic characteristics 

of Component Securities; and (c) 

Leveraged Funds (defined below) to 

determine what percentage, if any, of its 

total assets to invest in Component 

Securities. Applicants state this greater 

operational flexibility will provide the 

Funds with the ability to pursue more 

cost-effective techniques in seeking to 

achieve their investment objectives. 

‘‘Leveraged Funds’’ are Funds that seek 

a specified multiple, up to 300%, of the 

performance of an Underlying Index 


jlentini on DSKJ8SOYB1PROD with NOTICES