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
45496 Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 

and ‘‘Inverse Funds’’ are Funds that 

seek a specified multiple, up to 300%, 

of the inverse performance of an 

Underlying Index. 

3. Applicants also seek to amend the 

terms and conditions of the Prior 

Application to provide that all 

representations and conditions 

contained in the Prior Application that 

require a Fund to disclose particular 

information in the Fund’s prospectus 

(‘‘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) 

(‘‘Summary Prospectus Rule’’). 

Applicants state that such amendment 

is warranted because the Commission’s 

amendments to Form N–1A with regard 

to exchange-traded funds as part of the 

Summary Prospectus Rule reflect the 

Commission’s view with respect to the 

appropriate types of prospectus and 

annual report disclosures for an 

exchange-traded fund. 

4. Applicants also seek relief to 

introduce Conventional Funds that will 

be 130/30 Funds. Applicants state that 

in general, ‘‘130/30’’ strategies: (a) 

establish long positions in securities 

such that total long exposure amounts to 

approximately 130% of net assets; and 

(b) simultaneously establish short 

positions in other securities such that 

total short exposure amounts to 

approximately 30% of net assets. Each 

130/30 Fund will hold at least 80% of 

its total assets (exclusive of collateral 

held for purposes of securities lending) 

in the Component Securities that are 

specified for the long positions and 

could invest up to 20% in such 

Component Securities, cash equivalents 

or other securities. The 130/30 Funds 

would also enter into financial 

instruments to obtain any remaining 

50% long and 30% short positions 

dictated by its Underlying Index. The 

130/30 Funds will provide full portfolio 

disclosure so that the intraday value of 

a 130/30 Fund can accurately be 

calculated, market participants will be 

able to understand the principal 

investment strategies of the 130/30 

Funds, and informed trading of 130/30 

Funds’ ETS may occur. The creation 

and redemption process for the 130/30 

Funds will be the same as for the 

existing Leveraged Funds in that 

Creation Units of 130/30 Funds will 

generally be purchased and redeemed 

for a basket of in-kind securities and 

cash, or solely cash. 

5. Applicants believe that the 

requested relief continues to meet the 

necessary exemptive standards. 

Applicants’ Legal Analysis: 

1. 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. 

2. Applicants seek to amend the Prior 

Order to delete the relief granted from 

section 24(d) of the Act. Applicants 

state that the deletion of the exemption 

from section 24(d) that was granted in 

the Prior Order is warranted because the 

adoption of the Summary Prospectus 

Rule should supplant any need by a 

Fund to use a product description 

(‘‘Product Description’’). The deletion of 

the relief granted with respect to section 

24(d) of the Act from the Prior Order 

will also result in the deletion of related 

discussions in the Prior Application, 

revision of the Prior Application to 

delete references to Product Description 

including in the conditions, and the 

deletion of condition 4 of the Prior 

Order. 

Applicants’ Conditions: 

Applicants agree that any amended 

order granting the requested relief will 

be subject to the same conditions as 

those imposed by the Prior Order except 

for condition 4 which will be deleted. 

All representations and conditions 

contained in the application and the 

Prior Application that require a Fund to 

disclose particular information in the 

Fund’s Prospectus and/or annual report 

shall remain 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). 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21139 Filed 9–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28888; File No. 812–13221] 

Highland Capital Management, L.P., et 

al.; Notice of Application 

August 27, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (the ‘‘Act’’) for an 

exemption from sections 18(c) and 18(i) 

of the Act, under sections 6(c) and 

23(c)(3) of the Act for an exemption 

from rule 23c–3 under the Act, and for 

an order pursuant to section 17(d) of the 

Act and rule 17d–1 under the Act. 

Summary of Application: Applicants 

request an order to permit certain 

registered closed-end management 

investment companies to issue multiple 

classes of shares and to impose assetbased distribution fees and early 

withdrawal charges. 

Applicants: Highland Capital 

Management, L.P. (‘‘Highland Capital’’), 

Highland Funds Asset Management, 

L.P. (‘‘Highland,’’ and together with 

Highland Capital, the ‘‘Adviser’’) and 

Highland Special Situations Fund II (the 

‘‘Special Situations Fund’’). 

Filing Dates: The application was 

filed on August 3, 2005, and amended 

on July 12, 2007, November 29, 2007, 

June 20, 2008 and August 7, 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 21, 2009 and 

should be accompanied by proof of 

service on the 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, c/o Michael Colvin, 

Highland Capital Management, L.P., 

NexBank Tower, 13455 Noel Road, 

Suite 800, Dallas, TX 75240. 

FOR FURTHER INFORMATION CONTACT: John 

Yoder, Senior Counsel, at (202) 551– 

6878 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:// 


jlentini on DSKJ8SOYB1PROD with NOTICES