44884 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices 

1All entities that currently intend to rely on the 

requested order have been named as applicants. 

Any other entity that relies on the order in the 

future will comply with the terms and conditions 

of the application. 

2The Underlying Indices for the Initial Funds are 

the SPADE® Oklahoma Index and the SPADE®

Texas Index. 

is mandatory and all information is 

made available to the public upon 

request. Form 18 takes approximately 8 

hours per response and is filed by 

approximately 5 respondents for a total 

of 40 annual burden hours. It is 

estimated that 100% of the total 

reporting burden is prepared by the 

company. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

control number. 

Written comments regarding the 

above information should be directed to 

the following persons: (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 send an email to Shagufta_Ahmed@omb.eop.gov; 

and (ii) Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, Virginia 22312; 

or send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: August 24, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20867 Filed 8–28–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28851; File No. 812–13504] 

OOK, Inc., et al.; Notice of Application 

August 25, 2009. 

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 (the 

‘‘Act’’) for an exemption from sections 

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

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

12(d)(1)(J) of the Act for an exemption 

from sections 12(d)(1)(A) and 

12(d)(1)(B) of the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order that would permit (a) 

certain open-end management 

investment companies and their series, 

to issue shares (‘‘Fund Shares’’) that can 

be redeemed only in large aggregations 

(‘‘Creation Unit Aggregations’’); (b) 

secondary market transactions in Fund 

Shares to occur at negotiated prices; (c) 

certain affiliated persons of the 

investment companies or series to 

deposit securities into, and receive 

securities from, the investment 

companies or series in connection with 

the purchase and redemption of 

Creation Unit Aggregations; and (d) 

certain registered management 

investment companies and unit 

investment trusts outside of the same 

group of investment companies as the 

investment companies or series to 

acquire Fund Shares. 

APPLICANTS: OOK, Inc. (‘‘OOK’’), TXF 

Funds, Inc. (‘‘TXF’’), OOK Advisors, 

LLC (‘‘Advisor’’), and ALPS 

Distributors, Inc. (‘‘Distributor’’). 

FILING DATES: The application was filed 

on March 5, 2008, and amended on 

March 26, 2008, May 1, 2008, January 7, 

2009, January 28, 2009, and June 23, 

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 16, 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: OOK, Inc., TXF Funds, Inc., 

and OOK Advisors, LLC, One 

Leadership Square, Suite 200, 211 North 

Robinson, Oklahoma City, OK 73102; 

ALPS Distributors, Inc., 1290 Broadway, 

Suite 1100, Denver, CO 80203. 

FOR FURTHER INFORMATION CONTACT: 

Steven I. Amchan, Senior Counsel at 

(202) 551–6826, 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. Each of OOK and TXF is registered 

as an open-end management investment 

company and is organized as a 

Maryland corporation. TXF Large 

Companies ETF is the initial fund of 

TXF (collectively with OOK, the ‘‘Initial 

Funds’’). Applicants may offer 

additional registered open-end 

investment companies in the future as 

well as additional series of TXF and 

series of any future open-end 

investment companies registered under 

the Act, which will be advised by the 

Advisor or an entity controlling, 

controlled by, or under common control 

with the Advisor (‘‘Future Funds’’ and 

together with the Initial Funds, the 

‘‘Funds’’).1

2. The Advisor will serve as the 

investment adviser to the Initial Funds. 

The Advisor is registered as an 

investment adviser under the 

Investment Advisers Act of 1940, as 

amended (the ‘‘Advisers Act’’). In the 

future, the Advisor may enter into subadvisory agreements with one or more 

additional investment advisers to act as 

sub-advisors to particular Funds (‘‘SubAdvisors’’). Any Sub-Advisor will be 

registered under the Advisers Act. The 

Distributor is a broker-dealer registered 

under the Securities Exchange Act of 

1934 (the ‘‘Exchange Act’’) and will act 

as the underwriter and distributor for 

the Creation Unit Aggregations of Fund 

Shares. 

3. Each Fund will hold certain 

securities (‘‘Portfolio Securities’’) 

selected to correspond, before fees and 

expenses, generally to the price and 

yield performance of a specified 

domestic equity securities index (each, 

an ‘‘Underlying Index’’ and collectively, 

‘‘Underlying Indices’’).2 No entity that 

compiles, creates, sponsors or maintains 

an Underlying Index (‘‘Index Provider’’) 

is or will be an affiliated person, as 

defined in section 2(a)(3) of the Act, or 

an affiliated person of an affiliated 

person, of the Funds, of the Advisor, of 


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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices 44885 

3The Index Provider to the Initial Funds is ISBC 

LLC, sometimes referred to as ISBC/SPADE®

Indexes. 

4Applicants represent that each Fund will invest 

at least 90% of its assets in the component 

securities that comprise its Underlying Index 

(‘‘Component Securities’’). Each Fund also may 

invest up to 10% of its assets in cash and cash 

equivalents, such as money market instruments or 

other types of investments not included in its 

Underlying Index, but which the Advisor or SubAdvisor believes will help the Fund track its 

Underlying Index. 

5All representations and conditions contained in 

the application that require a Fund to disclose 

particular information in the Fund’s Prospectus 

and/or annual report shall be effective with respect 

to the Fund until the time that the Fund complies 

with the disclosure requirements adopted by the 

Commission in Investment Company Act Release 

No. 28584 (Jan. 13, 2009). 

6Under the representative sampling strategy, the 

Advisor or the Sub-Advisor will seek to construct 

a Fund’s portfolio so that its market capitalization, 

industry weightings, fundamental investment 

characteristics (such as return variability, earnings 

valuation and yield) and liquidity measures 

perform like those of the Underlying Index. 

7Each Fund will sell and redeem Creation Units 

only on a ‘‘Business Day,’’ which is any day that 

a Fund is required to be open under section 22(e) 

of the Act. Each Business Day, prior to the opening 

of trading on the Exchange (defined below), the list 

of names and the required number of shares of each 

security constituting the current Deposit Securities 

and the Balancing Amount will be made available. 

Any national securities exchange (as defined in 

section 2(a)(26) of the Act) (‘‘Exchange’’) on which 

Fund Shares are listed will disseminate, every 15 

seconds during its regular trading hours, an amount 

per individual Fund Share representing the sum of 

the estimated Balancing Amount and the current 

value of the Deposit Securities. 

8Applicants note that when a substantial 

rebalancing of a Fund’s portfolio is required, the 

Advisor or Sub-Advisor might prefer to receive cash 

rather than stocks so that the Fund may avoid 

transaction costs involved in liquidating part of its 

portfolio to achieve the rebalancing. 

9Where a Fund permits a purchaser to substitute 

cash in lieu of depositing a portion of the requisite 

Deposit Securities, the purchaser may be assessed 

a higher Transaction Fee to cover the cost of 

purchasing such Deposit Securities, including 

operational processing and brokerage costs, and 

part or all of the spread between the expected bid 

and the offer side of the market relating to such 

Deposit Securities. 

10Fund Shares will be registered in book-entry 

form only. DTC or its nominee will be the registered 

owner of all outstanding Fund Shares. DTC or DTC 

Participants will maintain records reflecting 

beneficial owners of Fund Shares. 

any Sub-Advisor to or promoter of a 

Fund, or of the Distributor.3

4. The investment objective of each 

Fund will be to seek to track the 

performance, before fees and expenses, 

of a domestic equity securities index.4

The value of each Fund’s Underlying 

Index will be disseminated every 15 

seconds throughout the trading day. A 

Fund will utilize either a replication or 

representative sampling strategy which 

will be disclosed with regard to each 

Fund in its prospectus (‘‘Prospectus’’).5

A Fund using a replication strategy will 

invest in the Component Securities in 

its Underlying Index in approximately 

the same proportions as in the 

Underlying Index. In certain 

circumstances, such as when there are 

practical difficulties or substantial costs 

involved in holding every security in an 

Underlying Index or when a Component 

Security is less liquid, illiquid or 

unavailable, a Fund may use a 

representative sampling strategy 

pursuant to which it will invest in 

some, but not all of the Component 

Securities of its Underlying Index.6

Applicants anticipate that a Fund that 

utilizes a representative sampling 

strategy will not track the performance 

of its Underlying Index with the same 

degree of accuracy as an investment 

vehicle that invests in every Component 

Security of the Underlying Index with 

the same weighting as the Underlying 

Index. Applicants expect that each Fund 

will have an annual tracking error 

relative to the performance of its 

Underlying Index of less than 5 percent. 

5. The Funds will issue Creation Unit 

Aggregations in groups of 50,000 Fund 

Shares. Applicants expect that the 

initial price of a Creation Unit 

Aggregation will fall in the range of 

$1,000,000 to $2,000,000. All orders to 

purchase Creation Unit Aggregations 

must be placed with the Distributor, by 

or through a party that has entered into 

an agreement with the Distributor 

(‘‘Authorized Participant’’). The 

Distributor will be responsible for 

transmitting the orders to the Funds. An 

Authorized Participant must be either: 

(a) A broker-dealer or other participant 

in the continuous net settlement system 

of the National Securities Clearing 

Corporation (‘‘NSCC’’), a clearing 

agency registered with the Commission, 

or (b) a participant in the Depository 

Trust Company (‘‘DTC’’, and such 

participant, ‘‘DTC Participant’’). Fund 

Shares of each Fund generally will be 

sold in Creation Unit Aggregations in 

exchange for an in-kind deposit by the 

purchaser of a portfolio of securities 

designated by the Advisor or SubAdvisor to correspond generally to the 

price and yield performance of the 

relevant Underlying Index (the ‘‘Deposit 

Securities’’), together with the deposit of 

a specified cash payment (‘‘Balancing 

Amount’’). The Balancing Amount is an 

amount equal to the difference between 

(a) the net asset value (‘‘NAV’’) (per 

Creation Unit Aggregation) of a Fund 

and (b) the total aggregate market value 

(per Creation Unit Aggregation) of the 

Deposit Securities.7 Each Fund may 

permit a purchaser of Creation Unit 

Aggregations to substitute cash in lieu of 

depositing some or all of the Deposit 

Securities if the Advisor or Sub-Advisor 

believes such method would reduce the 

Fund’s transaction costs or enhance the 

Fund’s operating efficiency.8

6. An investor purchasing or 

redeeming a Creation Unit Aggregation 

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 or 

redemption of Creation Unit 

Aggregations.9 The maximum 

Transaction Fees, and any variations or 

waivers thereof, will be fully disclosed 

in each Fund’s Prospectus. The 

Distributor will be responsible for 

delivering the Fund’s Prospectus to 

those persons purchasing Creation Unit 

Aggregations, and for maintaining 

records of both the orders placed and 

the confirmations of acceptance 

furnished. In addition, the Distributor 

will maintain a record of the 

instructions given to the applicable 

Fund to implement the delivery of its 

Fund Shares. 

7. Purchasers of Fund Shares in 

Creation Unit Aggregations may hold 

such Fund Shares or may sell such 

Fund Shares into the secondary market. 

Fund Shares will be listed and traded 

on an Exchange. It is expected that one 

or more member firms of a listing 

Exchange will be designated to act as a 

specialist or a market maker (each a 

‘‘Market Maker’’) and maintain a market 

for Fund Shares trading on the listing 

Exchange. Prices of Fund Shares trading 

on an Exchange will be based on the 

current bid/offer market. Fund Shares 

sold in the secondary market will be 

subject to customary brokerage 

commissions and charges. 

8. Applicants expect that purchasers 

of Creation Unit Aggregations will 

include institutional investors and 

arbitrageurs (which could include 

institutional investors). A Market 

Maker, in providing a fair and orderly 

secondary market for the Fund Shares, 

also may purchase Creation Unit 

Aggregations for use in its marketmaking activities. Applicants expect 

that secondary market purchasers of 

Fund Shares will include both 

institutional investors and retail 

investors.10 Applicants expect that the 

price at which Fund Shares trade will 

be disciplined by arbitrage 

opportunities created by the option to 

continually purchase or redeem 

Creation Unit Aggregations, which 

should ensure that Fund Shares will not 

trade at a material discount or premium. 

9. Fund Shares will not be 

individually redeemable, and owners of 

Fund Shares may acquire those Fund 


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44886 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices 

11As a general matter, the Deposit Securities and 

Fund Securities will correspond pro rata to the 

securities held by each Fund, but Fund Securities 

received on redemption may not always be 

identical to Deposit Securities deposited in 

connection with the purchase of Creation Units for 

the same day. The Funds will comply with the 

federal securities laws in accepting Deposit 

Securities and satisfying redemptions with Fund 

Securities, including that the Deposit Securities and 

Fund Securities are sold in transactions that would 

be exempt from registration under the Securities 

Act. 

Shares from the Fund, or tender such 

Fund Shares for redemption to the 

Fund, in Creation Unit Aggregations 

only. To redeem, an investor will have 

to accumulate enough Fund Shares to 

constitute a Creation Unit Aggregation. 

Redemption orders must be placed by or 

through an Authorized Participant. An 

investor redeeming a Creation Unit 

Aggregation generally will receive (a) 

Portfolio Securities designated to be 

delivered for Creation Unit Aggregation 

redemptions (‘‘Fund Securities’’) on the 

date that the request for redemption is 

made 11 and (b) a ‘‘Cash Redemption 

Payment,’’ consisting of an amount 

calculated in the same manner as the 

Balancing Amount, although the actual 

amount of the Cash Redemption 

Payment may differ if the Fund 

Securities are not identical to the 

Deposit Securities on that day. An 

investor may receive the cash equivalent 

of a Fund Security in certain 

circumstances, such as if the investor is 

constrained from effecting transactions 

in the security by regulation or policy. 

10. No Fund will be marketed or 

otherwise held out as a traditional openend investment company or a mutual 

fund. Instead, each Fund will be 

marketed as an ‘‘exchange-traded fund,’’ 

an ‘‘ETF,’’ an ‘‘investment company,’’ or 

a ‘‘fund.’’ All marketing materials that 

describe the features or method of 

obtaining, buying or selling Creation 

Unit Aggregations or Fund Shares 

traded on an Exchange, or refer to 

redeemability, will prominently 

disclose that Fund Shares are not 

individually redeemable and that the 

owners of Fund Shares may purchase or 

redeem Fund Shares from the Fund in 

Creation Unit Aggregations only. The 

same approach will be followed in the 

statement of additional information 

(‘‘SAI’’), shareholder reports and 

investor educational materials issued or 

circulated in connection with the Fund 

Shares. Each Fund will provide copies 

of its annual and semi-annual 

shareholder reports to DTC Participants 

for distribution to shareholders. 

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of the Act for an exemption 

from sections 2(a)(32), 5(a)(1), and 22(d) 

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

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, and under 

section 12(d)(1)(J) of the Act for an 

exemption from sections 12(d)(1)(A) and 

(B) 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 authorizes the Commission to 

exempt a proposed transaction from 

section 17(a) of the Act if evidence 

establishes 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 purposes of 

the Act. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

any provisions of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

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 owner, upon its 

presentation to the issuer, is entitled to 

receive approximately his proportionate 

share of the issuer’s current net assets, 

or the cash equivalent. Because Fund 

Shares will not be individually 

redeemable, applicants request an order 

that would permit the Funds to register 

as open-end management investment 

companies and issue Fund Shares that 

are redeemable in Creation Unit 

Aggregations only. Applicants state that 

investors may purchase Fund Shares in 

Creation Unit Aggregations and redeem 

Creation Unit Aggregations from each 

Fund. Applicants state that because 

Creation Unit Aggregations may always 

be purchased and redeemed at NAV, the 

market price of the Fund Shares should 

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 Fund Shares will take place 

at negotiated prices, not at a current 

offering price described in a Fund’s 

Prospectus, and not at a price based on 

NAV. Thus, purchases and sales of 

Fund 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 Fund 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 riskless-trading schemes by 

principal underwriters and contract 

dealers, (b) prevent unjust 

discrimination or preferential treatment 

among buyers, and (c) ensure an orderly 

distribution of investment company 

shares by eliminating price competition 

from dealers offering shares at less than 

the published sales price and 

repurchasing shares at more than the 

published redemption price. 

6. Applicants believe that none of 

these purposes will be thwarted by 

permitting Fund Shares to trade in the 

secondary market at negotiated prices. 

Applicants state that (a) secondary 

market trading in Fund Shares does not 

directly involve Fund assets and will 

not result in dilution of an investment 

in Fund 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 

Fund Shares will not lead to 

discrimination or preferential treatment 

among purchasers. Finally, applicants 

contend that the proposed distribution 

system will be orderly because 

competitive forces will ensure that the 

difference between the market price of 


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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Notices 44887 

12An ‘‘Investing Fund Affiliate’’ is an Investing 

Fund Advisor, Investing Fund SubAdvisor, 

Sponsor, promoter, and principal underwriter of an 

Investing Fund, and any person controlling, 

controlled by, or under common control with any 

of these entities. A ‘‘Fund Affiliate’’ is an 

investment adviser, promoter, or principal 

underwriter of a Fund and any person controlling, 

controlled by or under common control with any 

of these entities. 

13Any references to NASD Conduct Rule 2830 

include any successor or replacement rule to NASD 

Conduct Rule 2830 that may be adopted by the 

Financial Industry Regulatory Authority. 

Fund Shares and their NAV remains 

narrow. 

Section 12(d)(1) 

7. Section 12(d)(1)(A) of the Act, in 

relevant part, prohibits a registered 

investment company from acquiring 

securities of an investment company if 

such securities represent more than 3% 

of the total outstanding voting stock of 

the acquired company, more than 5% of 

the total assets of the acquiring 

company, or, together with the 

securities of any other investment 

companies, more than 10% of the total 

assets of the acquiring company. Section 

12(d)(1)(B) of the Act prohibits a 

registered open-end investment 

company, its principal underwriter and 

any other broker-dealer from selling the 

investment company’s shares to another 

investment company if the sale will 

cause the acquiring company to own 

more than 3% of the acquired 

company’s voting stock, or if the sale 

will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. 

8. Applicants request an exemption to 

permit management investment 

companies (‘‘Investing Management 

Companies’’) and unit investment trusts 

(‘‘Investing Trusts’’ and, collectively 

with the Investing Management 

Companies, ‘‘Investing Funds’’) 

registered under the Act that are not 

sponsored or advised by the Advisor or 

any entity controlling, controlled by, or 

under common control with the Advisor 

and are not part of the same ‘‘group of 

investment companies,’’ as defined in 

section 12(d)(1)(G)(ii) of the Act, as the 

Funds, to acquire Fund Shares beyond 

the limits of section 12(d)(1)(A). 

Investing Funds do not include the 

Funds. In addition, applicants seek 

relief to permit the Distributor and any 

brokers or dealers that are registered 

under the Exchange Act to sell Fund 

Shares to an Investing Fund in excess of 

the limits of section 12(d)(1)(B). 

9. Each Investing Management 

Company will be advised by an 

investment adviser within the meaning 

of section 2(a)(20)(A) of the Act (the 

‘‘Investing Fund Advisor’’) and may be 

sub-advised by one or more investment 

advisers within the meaning of section 

2(a)(20)(B) of the Act (each an 

‘‘Investing Fund SubAdvisor’’). Any 

Investing Fund Advisor or Investing 

Fund SubAdvisor will be registered 

under the Advisers Act. Each Investing 

Trust will be sponsored by a sponsor 

(‘‘Sponsor’’). 

10. Applicants submit that the 

proposed conditions to the requested 

relief adequately address the concerns 

underlying the limits in sections 

12(d)(1)(A) and (B), which include 

concerns about undue influence by a 

fund of funds over underlying funds, 

excessive layering of fees and overly 

complex fund structures. Applicants 

believe that the requested exemption is 

consistent with the public interest and 

the protection of investors. 

11. Applicants believe that neither the 

Investing Funds nor an Investing Fund 

Affiliate would be able to exert undue 

influence over the Funds.12 To limit the 

control that an Investing Fund may have 

over a Fund, applicants propose a 

condition prohibiting an Investing Fund 

Advisor or a Sponsor, any person 

controlling, controlled by, or under 

common control with an Investing Fund 

Advisor or Sponsor, and any investment 

company and any issuer that would be 

an investment company but for sections 

3(c)(1) or 3(c)(7) of the Act that is 

advised or sponsored by an Investing 

Fund Advisor or Sponsor, or any person 

controlling, controlled by, or under 

common control with an Investing Fund 

Advisor or Sponsor (‘‘Investing Fund’s 

Advisory Group’’) from controlling 

(individually or in the aggregate) a Fund 

within the meaning of section 2(a)(9) of 

the Act. The same prohibition would 

apply to any Investing Fund 

SubAdvisor, any person controlling, 

controlled by or under common control 

with the Investing Fund SubAdvisor, 

and any investment company or issuer 

that would be an investment company 

but for sections 3(c)(1) or 3(c)(7) of the 

Act (or portion of such investment 

company or issuer) advised or 

sponsored by the Investing Fund 

SubAdvisor or any person controlling, 

controlled by or under common control 

with the Investing Fund SubAdvisor 

(‘‘Investing Fund’s SubAdvisor Group’’). 

Applicants propose other conditions to 

limit the potential for undue influence 

over the Funds, including that no 

Investing Fund or Investing Fund 

Affiliate (except to the extent it is acting 

in its capacity as an investment adviser 

to a Fund) will cause a Fund to 

purchase a security in any offering of 

securities during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

Underwriting Affiliate (‘‘Affiliated 

Underwriting’’). An ‘‘Underwriting 

Affiliate’’ is a principal underwriter in 

any underwriting or selling syndicate 

that is an officer, director, member of an 

advisory board, Investing Fund Advisor, 

Investing Fund SubAdvisor, employee 

or Sponsor of an Investing Fund, or a 

person of which any such officer, 

director, member of an advisory board, 

Investing Fund Advisor, Investing Fund 

SubAdvisor, employee, or Sponsor is an 

affiliated person (except that any person 

whose relationship to the Fund is 

covered by section 10(f) of the Act is not 

an Underwriting Affiliate). 

12. Applicants assert that the 

proposed conditions address any 

concerns regarding excessive layering of 

fees. The board of directors or trustees 

of any Investing Management Company, 

including a majority of the directors or 

trustees who are not ‘‘interested 

persons’’ within the meaning of section 

2(a)(19) of the Act (‘‘disinterested 

directors or trustees’’), will find that the 

advisory fees charged to the Investing 

Management Company are based on 

services provided that will be in 

addition to, rather than duplicative of, 

services provided under the advisory 

contract(s) of any Fund in which the 

Investing Management Company may 

invest. In addition, except as provided 

in condition 11, an Investing Fund 

Advisor or a trustee (‘‘Trustee’’) or 

Sponsor of an Investing Trust will, as 

applicable, waive fees otherwise 

payable to it by the Investing Fund in 

an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by a Fund 

under rule 12b–1 under the Act) 

received by the Investing Fund Advisor 

or Trustee or Sponsor or an affiliated 

person of the Investing Fund Advisor, 

Trustee or Sponsor, from the Fund in 

connection with the investment by the 

Investing Fund in the Fund. Applicants 

state that any sales loads or service fees 

charged with respect to shares of an 

Investing Fund will not exceed the 

limits applicable to a fund of funds set 

forth in Conduct Rule 2830 of the 

National Association of Securities 

Dealers (‘‘NASD’’).13

13. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Fund may 

acquire securities of any investment 

company or company relying on 

sections 3(c)(1) or 3(c)(7) of the Act in 

excess of the limits contained in section 

12(d)(1)(A) of the Act, except as 

permitted pursuant to rule 12d1–1 


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14Applicants acknowledge that the receipt of 

compensation by (a) an affiliated person of an 

Investing Fund, or an affiliated person of such 

person, for the purchase by the Investing Fund of 

Fund Shares of a Fund or (b) an affiliated person 

of a Fund, or an affiliated person of such person, 

for the sale by the Fund of its Fund Shares to an 

Investing Fund, may be prohibited by section 

17(e)(1) of the Act. The Participation Agreement 

also will include this acknowledgment. 

15Applicants believe that an Investing Fund will 

purchase Fund Shares in the secondary market and 

will not purchase or redeem Creation Unit 

Aggregations directly from a Fund. However, the 

requested relief would apply to direct sales of 

Creation Unit Aggregations by a Fund to an 

Investing Fund and redemptions of those Fund 

Shares. 16See note 5, supra. 

under the Act. To ensure that Investing 

Funds comply with the terms and 

conditions of the requested relief from 

section 12(d)(1), any Investing Fund that 

intends to invest in a Fund in reliance 

on the requested order will enter into a 

Participation Agreement between the 

Fund and the Investing Fund requiring 

the Investing Fund to adhere to the 

terms and conditions of the requested 

order. The Participation Agreement also 

will include an acknowledgement from 

the Investing Fund that it may rely on 

the requested order only to invest in the 

Fund and not in any other investment 

company. 

14. Applicants also note that a Fund 

may choose to reject a direct purchase 

of Fund Shares in Creation Unit 

Aggregations by an Investing Fund. To 

the extent that an Investing Fund 

purchases Fund Shares in the secondary 

market, a Fund would still retain its 

ability to reject initial purchases of 

Fund Shares made in reliance on the 

requested order by declining to enter 

into the Participation Agreement prior 

to any investment by an Investing Fund 

in excess of the limits of section 

12(d)(1)(A). 

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

15. Section 17(a) of the Act generally 

prohibits an affiliated person of a 

registered investment company, or an 

affiliated person of such a person 

(‘‘second tier affiliates’’), from selling 

any security to or purchasing any 

security from the company. Section 

2(a)(3) of the Act defines ‘‘affiliated 

person’’ to include (a) 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, (b) 

any person 5% or more of whose 

outstanding voting securities are 

directly or indirectly owned, controlled 

or held with the power to vote by the 

other person, and (c) 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. 

16. Applicants request an exemption 

from section 17(a) of the Act pursuant 

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

permit persons to effectuate in-kind 

purchases and redemptions with a Fund 

when they are affiliated persons or 

second tier affiliates of the Funds solely 

by virtue of one or more of the 

following: (a) Holding 5% or more, or in 

excess of 25%, of the outstanding Fund 

Shares; (b) having an affiliation with a 

person with an ownership interest 

described in (a); or (c) holding 5% or 

more, or more than 25%, of the shares 

of one or more other registered 

investment companies (or series thereof) 

advised by the Advisor, or an entity 

controlling, controlled by, or under 

common control with the Advisor. 

17. Applicants assert that no useful 

purpose would be served by prohibiting 

these types of affiliated persons from 

purchasing or redeeming Creation Unit 

Aggregations through ‘‘in-kind’’ 

transactions. The deposit procedures for 

both in-kind purchases and in-kind 

redemptions of Creation Unit 

Aggregations will be the same for all 

purchases and redemptions. Deposit 

Securities and Fund Securities will be 

valued in the same manner as Portfolio 

Securities. Therefore, applicants state 

that in-kind purchases and redemptions 

will afford no opportunity for the 

specified affiliated persons, or second 

tier affiliates, of a Fund to effect a 

transaction detrimental to other holders 

of Fund Shares. Applicants also believe 

that in-kind purchases and redemptions 

will not result in self-dealing or 

overreaching of a Fund. 

18. Applicants also seek relief from 

section 17(a) to permit a Fund that is an 

affiliated person of an Investing Fund to 

sell its Fund Shares to and redeem its 

Fund Shares from an Investing Fund, 

and to engage in the accompanying inkind transactions with the Investing 

Fund.14 Applicants state that the terms 

of the transactions are fair and 

reasonable and do not involve 

overreaching. Applicants note that any 

consideration paid by an Investing Fund 

for the purchase or redemption of Fund 

Shares directly from a Fund will be 

based on the NAV of the Fund.15

Applicants believe that any proposed 

transactions directly between the Funds 

and Investing Funds will be consistent 

with the policies of each Investing 

Fund. The purchase of Creation Unit 

Aggregations by an Investing Fund 

directly from a Fund will be 

accomplished in accordance with the 

investment restrictions of any such 

Investing Fund and will be consistent 

with the investment policies set forth in 

the Investing Fund’s registration 

statement. The Participation Agreement 

will require any Investing Fund that 

purchases Creation Unit Aggregations 

directly from a Fund to represent that 

the purchase of Creation Unit 

Aggregations from a Fund by an 

Investing Fund will be accomplished in 

compliance with the investment 

restrictions of the Investing Fund and 

will be consistent with the investment 

policies set forth in the Investing Fund’s 

registration statement. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 16

1. Each Fund’s Prospectus will clearly 

disclose that, for purposes of the Act, 

the Fund Shares are issued by the 

Funds, which are registered investment 

companies, and the acquisition of Fund 

Shares by investment companies is 

subject to the restrictions of section 

12(d)(1) of the Act, except as permitted 

by an exemptive order that permits 

registered investment companies to 

invest in a Fund beyond the limits in 

section 12(d)(1), subject to certain terms 

and conditions, including that the 

registered investment company enter 

into a Participation Agreement with the 

Fund regarding the terms of the 

investment. 

2. As long a Fund operates in reliance 

on the requested order, its Fund Shares 

will be listed on an Exchange. 

3. The Funds will not be advertised or 

marketed as an open-end investment 

company or a mutual fund. Each Fund’s 

Prospectus will prominently disclose 

that Fund Shares are not individually 

redeemable shares and will disclose that 

the owners of Fund Shares may acquire 

those Fund Shares from the Fund and 

tender those Fund Shares for 

redemption to the Fund in Creation Unit 

Aggregations only. Any advertising 

material that describes the purchase or 

sale of Creation Unit Aggregations or 

refers to redeemability will prominently 

disclose that Fund Shares are not 

individually redeemable and that 

owners of Fund Shares may acquire 

those Fund Shares from the Fund and 

tender those Fund Shares for 

redemption to the Fund in Creation Unit 

Aggregations only. 

4. The Web sites maintained for the 

Funds, which are and will be publicly 

accessible at no charge, will contain the 

following information, on a per Fund 

Share basis: (a) The prior Business Day’s 

NAV and the mid-point of the bid-ask 


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spread at the time of the calculation of 

the NAV (‘‘Bid/Ask Price’’) and a 

calculation of the premium or discount 

of the Bid/Ask Price at the time of 

calculation of the NAV against such 

NAV; and (b) data in chart format 

displaying the frequency distribution of 

discounts and premiums of the daily 

Bid/Ask Price against the NAV, within 

appropriate ranges, for each of the four 

previous calendar quarters. 

5. Each Fund’s Prospectus and annual 

report will also include: (a) The 

information listed in condition 4(b), (i) 

in the case of the Prospectus, for the 

most recently completed year (and the 

most recently completed quarter or 

quarters, as applicable) and (ii) in the 

case of the annual report, for the 

immediately preceding five years, as 

applicable; and (b) the following data, 

calculated on a per Fund Share basis for 

one, five and ten year periods (or life of 

the Fund), (i) the cumulative total return 

and the average annual total return 

based on NAV and Bid/Ask Price, and 

(ii) the cumulative total return of the 

relevant Underlying Index. 

6. The requested relief to permit 

exchange traded fund (‘‘ETF’’) 

operations will expire on the effective 

date of any Commission rule under the 

Act that provides relief permitting the 

operation of index-based ETFs. 

Section 12(d)(1) Relief 

7. The members of an Investing 

Fund’s Advisory Group will not control 

(individually or in the aggregate) any 

Fund within the meaning of section 

2(a)(9) of the Act. The members of an 

Investing Fund’s SubAdvisor Group will 

not control (individually or in the 

aggregate) any Fund within the meaning 

of section 2(a)(9) of the Act. If, as a 

result of a decrease in the outstanding 

Fund Shares, an Investing Fund’s 

Advisory Group or an Investing Fund’s 

SubAdvisor Group, each in the 

aggregate, becomes the holder of more 

than 25 percent of the Fund Shares, it 

will vote its Fund Shares in the same 

proportion as the vote of all other 

holders of the Fund Shares. This 

condition does not apply to an Investing 

Fund’s SubAdvisor Group if the 

Investing Fund SubAdvisor or a person 

controlling, controlled by, or under 

common control with the Investing 

Fund SubAdvisor acts as the investment 

adviser within the meaning of section 

2(a)(20)(A) of the Act. 

8. No Investing Fund or Investing 

Fund Affiliate will cause any existing or 

potential investment by the Investing 

Fund in a Fund to influence the terms 

of any services or transactions between 

the Investing Fund or Investing Fund 

Affiliate and the Fund or Fund Affiliate. 

9. The board of directors or trustees of 

an Investing Management Company, 

including a majority of the disinterested 

directors or trustees, will adopt 

procedures reasonably designed to 

assure that the Investing Fund’s Advisor 

and any Investing Fund SubAdvisor are 

conducting the investment program of 

the Investing Management Company 

without taking into account any 

consideration received by the Investing 

Management Company or an Investing 

Fund Affiliate from a Fund or a Fund 

Affiliate in connection with any services 

or transactions. 

10. Once an investment by an 

Investing Fund in Fund Shares exceeds 

the limit in section 12(d)(1)(A)(i) of the 

Act, the board of directors of a Fund 

(‘‘Board’’), including a majority of 

directors who are not ‘‘interested 

persons’’ within the meaning of section 

2(a)(19) of the Act (‘‘disinterested Board 

members’’), will determine that any 

consideration paid by the Fund to the 

Investing Fund or an Investing Fund 

Affiliate in connection with any services 

or transactions: (a) Is fair and reasonable 

in relation to the nature and quality of 

the services and benefits received by the 

Fund; (b) is within the range of 

consideration that the Fund would be 

required to pay to another unaffiliated 

entity in connection with the same 

services or transactions; and (c) does not 

involve overreaching on the part of any 

person concerned. This condition does 

not apply with respect to any services 

or transactions between a Fund and its 

investment adviser(s), or any person 

controlling, controlled by or under 

common control with such investment 

adviser(s). 

11. An Investing Fund Advisor or a 

Trustee or Sponsor of an Investing Trust 

will waive fees otherwise payable to it 

by the Investing Management Company 

or Investing Trust in an amount at least 

equal to any compensation (including 

fees received pursuant to any plan 

adopted by the Fund under rule 12b–1 

under the Act) received from a Fund by 

the Investing Fund Advisor or Trustee 

or Sponsor, or an affiliated person of the 

Investing Fund Advisor, Trustee or 

Sponsor, other than any advisory fees 

paid to the Investing Fund Advisor or 

Trustee or Sponsor, or an affiliated 

person of the Investing Fund Advisor, 

Trustee or Sponsor by the Fund, in 

connection with the investment by the 

Investing Management Company or 

Investing Trust in the Fund. Any 

Investing Fund SubAdvisor will waive 

fees otherwise payable to the Investing 

Fund SubAdvisor, directly or indirectly, 

by the Investing Management Company 

in an amount at least equal to any 

compensation received from a Fund by 

the Investing Fund SubAdvisor, or an 

affiliated person of the Investing Fund 

SubAdvisor, other than any advisory 

fees paid to the Investing Fund 

SubAdvisor or its affiliated person by a 

Fund, in connection with the 

investment by the Investing 

Management Company in a Fund made 

at the direction of the Investing Fund 

SubAdvisor. In the event that the 

Investing Fund SubAdvisor waives fees, 

the benefit of the waiver will be passed 

through to the Investing Management 

Company. 

12. No Investing Fund or Investing 

Fund Affiliate (except to the extent it is 

acting in its capacity as an investment 

adviser to a Fund) will cause a Fund to 

purchase a security in an Affiliated 

Underwriting. 

13. The Board, including a majority of 

the disinterested Board members, will 

adopt procedures reasonably designed 

to monitor any purchase of securities by 

a Fund in an Affiliated Underwriting 

once an investment by the Investing 

Fund in the Fund Shares exceeds the 

limit of section 12(d)(1)(A)(i) of the Act, 

including any purchases made directly 

from an Underwriting Affiliate. The 

Board will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Investing Fund in the 

Fund. The Board will consider, among 

other things: (i) Whether the purchases 

were consistent with the investment 

objectives and policies of the Fund; (ii) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (iii) 

whether the amount of securities 

purchased by the Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders. 

14. Each Fund will maintain and 

preserve permanently in an easily 

accessible place a written copy of the 

procedures described in the preceding 

condition, and any modifications to 

such procedures, and will maintain and 

preserve for a period not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 


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1All existing closed-end investment companies 

that currently intend to rely on the requested order 

are named as applicants. Applicants request that 

any order granting the requested relief also apply 

to any registered closed-end investment company 

that in the future: (a) Is advised by the Adviser 

(including any successor in interest) or by any 

entity controlling, controlled by, or under common 

control (within the meaning of section 2(a)(9) of the 

Act) with the Adviser; and (b) complies with the 

terms and conditions of the application (included 

in ‘‘Funds’’). A successor in interest is limited to 

entities that result from a reorganization into 

another jurisdiction or a change in the type of 

business organization. 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in Affiliated Underwritings 

once an investment by an Investing 

Fund in Fund Shares exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

setting forth from whom the securities 

were acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or material upon which the 

Board’s determinations were made. 

15. Before investing in a Fund in 

excess of the limits in section 

12(d)(1)(A), the Investing Fund and the 

Fund will execute a Participation 

Agreement stating, without limitation, 

that their boards of directors or trustees 

and their investment advisers, and the 

Trustee and Sponsor, as applicable, 

understand the terms and conditions of 

the order, and agree to fulfill their 

responsibilities under the order. At the 

time of its investment in Fund Shares in 

excess of the limit in section 

12(d)(1)(A)(i), an Investing Fund will 

notify the Fund of the investment. At 

such time, the Investing Fund will also 

transmit to the Fund a list of the names 

of each Investing Fund Affiliate and 

Underwriting Affiliate. The Investing 

Fund will notify the Fund of any 

changes to the list of names as soon as 

reasonably practicable after a change 

occurs. The Fund and the Investing 

Fund will maintain and preserve a copy 

of the order, the Participation 

Agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

16. Before approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Investing Management Company, 

including a majority of the disinterested 

directors or trustees, will find that the 

advisory fees charged under such 

advisory contract are based on services 

provided that will be in addition to, 

rather than duplicative of, the services 

provided under the advisory contract(s) 

of any Fund in which the Investing 

Management Company may invest. 

These findings and their basis will be 

recorded fully in the minute books of 

the appropriate Investing Management 

Company. 

17. Any sales charges and/or service 

fees charged with respect to shares of an 

Investing Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in Conduct Rule 2830 of the 

NASD. 

18. No Fund will acquire securities of 

any investment company or company 

relying on sections 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

as permitted pursuant to rule 12d1–1 

under the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20870 Filed 8–28–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28850; File No. 812–13105] 

Clough Global Allocation Fund, et al.; 

Notice of Application 

August 24, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application under 

section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from section 19(b) of the Act and rule 

19b-1 under the Act. 

Summary of Application: Applicants 

request an order to permit certain 

registered closed-end investment 

companies to make periodic 

distributions of long-term capital gains 

with respect to their outstanding 

common stock as often as monthly in 

any one taxable year, and as frequently 

as distributions are specified by or in 

accordance with the terms of any 

outstanding preferred stock that such 

investment companies may issue. 

Applicants: Clough Global Allocation 

Fund, Clough Global Equity Fund, 

Clough Global Opportunities Fund 

(collectively, the ‘‘Funds’’) and Clough 

Capital Partners, L.P. (the ‘‘Adviser’’). 

Filing Dates: The application was 

filed on July 9, 2004 and amended on 

February 12, 2007, October 14, 2008, 

July 29, 2009 and August 24, 2009. 

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 18, 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 Clough Capital Partners, 

L.P., One Post Office Square, 40th Floor, 

Boston, MA 02109, Attention: James E. 

Canty. 

FOR FURTHER INFORMATION CONTACT: 

Keith A. Gregory, Senior Counsel, at 

(202) 551–6815, 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 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. Each Fund is a closed-end 

management investment company 

registered under the Act.1 Each Fund 

has a primary investment objective of 

seeking a high level of total return. The 

common shares issued by each Fund are 

listed on the NYSE Amex. Although the 

Funds have not issued preferred shares, 

each Fund is authorized to do so. 

Applicants believe that the shareholders 

of each Fund are generally conservative, 

dividend-sensitive investors who desire 

current income periodically and may 

favor a fixed distribution policy. 

2. The Adviser is a Delaware limited 

partnership registered under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’). The Adviser serves as 

investment adviser to each Fund and 

may in the future serve as investment 

adviser to one or more additional 

Funds. Each Fund will be advised by 

investment advisers that are registered 

under the Advisers Act. 

3. Applicants state that on December 

13, 2006, the boards of trustees (the 

‘‘Board’’) of each Fund, including a 


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