Federal Register / Vol. 71, No. 169 / Thursday, August 31, 2006 / Notices 51869 

collection of information unless it 

displays a currently valid control 

number. 

General 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 e-mail to: 

David_Roster@omb.eop.gov; and (ii) R. 

Corey Booth, Director/Chief Information 

Officer, Securities and Exchange 

Commission, C/O Shirley Martinson, 

6432 General Green Way, Alexandria, 

Virginia 22312, or send and e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: August 23, 2006. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–7302 Filed 8–30–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

27469; 812–13297] 

Claymore Exchange-Traded Fund 

Trust, et al.; Notice of Application 

August 28, 2006. 

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), 22(d), 22(e), and 24(d) 

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

under section 12(d)(1)(J) for an 

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

(B) of the Act, and under sections 6(c) 

and 17(b) of the Act for an exemption 

from sections 17(a)(1) and (a)(2) of the 

Act. 

SUMMARY OF APPLICATION: Applicants 

request an order that would permit (a) 

series of open-end management 

investment companies, 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) dealers to 

sell Fund Shares to purchasers in the 

secondary market unaccompanied by a 

prospectus when prospectus delivery is 

not required by the Securities Act of 

1933 (‘‘Securities Act’’); (d) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days after the tender of a Creation 

Unit Aggregation for redemption; (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 Unit Aggregations; and (f) 

certain registered management 

investment companies and unit 

investment trusts outside of the same 

group of investment companies as the 

series to acquire Fund Shares. 

APPLICANTS: Claymore Exchange-Traded 

Fund Trust and Claymore ExchangeTraded Fund Trust 2 (the ‘‘Trusts’’); 

Claymore Securities, Inc. (‘‘Claymore’’); 

and Claymore Advisers, LLC 

(‘‘Claymore Advisors’’). 

FILING DATES: The application was filed 

on May 27, 2006, and amended on July 

24, 2006. Applicants have agreed to file 

an amendment during the notice period, 

the substance of which is reflected in 

the 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 15, 2006, 

and should be accompanied by proof of 

service on applicants, in the form of an 

affidavit, or for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549–

1090; Applicants, 2455 Corporate West 

Drive, Lisle, IL 60532. 

FOR FURTHER INFORMATION CONTACT: 

Courtney S. Thornton, Senior Counsel at 

(202) 551–6812, or Michael W. Mundt, 

Senior Special Counsel, 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 for a fee at the Public 

Reference Desk, U.S. Securities and 

Exchange Commission, 100 F Street, 

NE., Washington DC 20549–0102, 

telephone (202) 551–5850. 

Applicants’ Representations 

1. Each Trust is registered as an openend management investment company 

and is organized as a Delaware statutory 

trust that will offer multiple series (each 

series, a ‘‘Fund’’). Claymore ExchangeTraded Fund Trust will offer and sell 

Fund Shares of five Funds, each of 

which will track an index of equity 

securities of domestic issuers and nondomestic issuers meeting the 

requirements for trading in U.S. 

markets. Claymore Exchange-Traded 

Fund Trust 2 will offer and sell Fund 

Shares of two Funds (collectively with 

the Funds offered by Claymore 

Exchange-Traded Fund Trust, the 

‘‘Initial Funds’’), each of which will 

track an index of foreign equity 

securities (‘‘Foreign Funds’’). 

2. Each of Claymore and Claymore 

Advisors is registered as an ‘‘investment 

adviser’’ under the Investment Advisers 

Act of 1940, as amended (the ‘‘Advisers 

Act’’). Claymore Advisors will serve as 

the investment adviser to each of the 

Initial Funds (the ‘‘Adviser’’). In the 

future, the Adviser may enter into subadvisory agreements with other 

investment advisers to act as ‘‘subadvisers’’ with respect to particular 

Funds. Any sub-adviser will be 

registered under the Advisers Act or 

exempt from registration. Claymore, a 

broker-dealer registered under the 

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’), will serve as the 

principal underwriter and distributor 

for the Initial Funds (the ‘‘Distributor’’). 

3. Each Fund will hold certain 

securities (‘‘Portfolio Securities’’) 

selected to correspond generally to the 

price and yield performance, before fees 

and expenses, of a specified equity 

securities index (an ‘‘Underlying 

Index’’). No entity that creates, 

compiles, sponsors or maintains an 

Underlying Index 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 Trusts, the 

Adviser, the Distributor, promoter or 

any sub-adviser to a Fund. The Trusts 

may offer additional Funds in the future 

based on other Underlying Indices 

(‘‘Future Funds’’). Any Future Funds 

will (a) comply with the terms and 

conditions of any order granted 

pursuant to the application, and (b) be 

advised by the Adviser. 

4. The investment objective of each 

Fund will be to provide investment 

results that correspond generally to the 

price and yield performance, before fees 

and expenses, of its Underlying Index. 

Intra-day values of the Underlying Index 

will be disseminated every 15 seconds 

throughout the trading day. A Fund will 

utilize either a ‘‘replication’’ or 


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51870 Federal Register / Vol. 71, No. 169 / Thursday, August 31, 2006 / Notices 

1Applicants represent that a Fund will normally 

invest at least 90% of its total assets in the 

component securities that comprise its Underlying 

Index (‘‘Component Securities’’) or, in the case of 

Foreign Funds, Component Securities and 

depositary receipts representing such securities. 

Each Fund also may invest up to 10% of its assets 

in certain futures, options and swap contracts, cash 

and cash equivalents, as well as in stocks not 

included in its Underlying Index, but which the 

Adviser believes will help the Fund track its 

Underlying Index. 

2Under the ‘‘representative sampling’’ strategy, 

the Adviser 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. 

3The Trust will sell Creation Unit Aggregations 

of each Fund on any day that the New York Stock 

Exchange, the Exchange, a Fund, and the Custodian 

are open for business, including as required by 

section 22(e) of the Act (a ‘‘Business Day’’). In 

addition to the list of names and amount of each 

security constituting the current Deposit Securities, 

it is intended that, on each Business Day, the Cash 

Component effective as of the previous Business 

Day, per outstanding Fund Share, will be made 

available. Any Exchange on which Fund Shares are 

listed will disseminate, every 15 seconds, during its 

regular trading hours, through the facilities of the 

Consolidated Tape Association, an approximate 

amount per Fund Share representing the sum of the 

estimated Cash Component effective through and 

including the previous Business Day, plus the 

current value of the Deposit Securities, on a per 

Fund Share basis. 

4Where 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 

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. 

5 If Fund Shares are listed on the Nasdaq, no 

particular Market Maker will be contractually 

obligated to make a market in Fund Shares, 

although Nasdaq’s listing requirements stipulate 

that at least two Market Makers must be registered 

as Market Makers in Fund Shares to maintain the 

listing. Registered Market Makers are required to 

make a continuous, two-sided market at all times 

or be subject to regulatory sanctions. 

6Fund 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. 

‘‘representative sampling’’ strategy.1 A 

Fund using a ‘‘replication’’ strategy will 

invest in substantially all of the 

Component Securities in its Underlying 

Index in approximately the same 

weightings 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 illiquid, 

a Fund may use a ‘‘representative 

sampling’’ strategy pursuant to which it 

will invest in some, but not all of the 

relevant Component Securities.2

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 in the 

same weighting as the Underlying 

Index. Applicants expect that each Fund 

will have a tracking error relative to the 

performance of its Underlying Index of 

less than 5 percent. 

5. Fund Shares will be sold at a price 

of between $20 and $60 per Fund Share 

in Creation Unit Aggregations of 50,000 

Fund Shares. 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 Trust and 

Distributor (‘‘Authorized Participant’’). 

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’’). Shares of each 

Fund generally will be sold in Creation 

Unit Aggregations in exchange for an inkind deposit by the purchaser of a 

portfolio of securities designated by the 

Adviser to correspond generally to the 

price and yield performance, before fees 

and expenses, of the relevant 

Underlying Index (the ‘‘Deposit 

Securities’’), together with the deposit of 

a relatively small specified cash 

payment (‘‘Cash Component’’). The 

Cash Component is generally an amount 

equal to the difference between (a) the 

net asset value (‘‘NAV’’) (per Creation 

Unit Aggregation) of the Fund and (b) 

the total aggregate market value (per 

Creation Unit Aggregation) of the 

Deposit Securities.3 Applicants state 

that in some circumstances it may not 

be practicable or convenient for a Fund 

to operate exclusively on an ‘‘in-kind’’

basis. The Trust reserves the right to 

permit, under certain circumstances, a 

purchaser of Creation Unit Aggregations 

to substitute cash in lieu of depositing 

some or all of the requisite Deposit 

Securities. An investor purchasing 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 of Creation Unit 

Aggregations.4 The maximum 

Transaction Fees relevant to each Fund 

(including the maximum Transaction 

Fees) will be fully disclosed in the 

prospectus of such Fund (‘‘Fund’s 

Prospectus’’), and the method for 

calculating the Transaction Fees will be 

disclosed in each Fund’s Prospectus or 

statement of additional information 

(‘‘SAI’’). All orders to purchase Creation 

Unit Aggregations will be placed with 

the Distributor by or through an 

Authorized Participant, and it will be 

the Distributor’s responsibility to 

transmit such orders to the Trust. The 

Distributor also 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 with 

it and the confirmations of acceptance 

furnished by it. In addition, the 

Distributor will maintain a record of the 

instructions given to the Trust to 

implement the delivery of Fund Shares. 

6. 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 the American Stock Exchange, LLC, 

(‘‘Amex’’); Fund Shares of Future Funds 

will be listed and traded on a national 

securities exchange as defined in 

section 2(a)(26) of the Act or on the 

Nasdaq Stock Market (‘‘Nasdaq’’) (each, 

an ‘‘Exchange’’). It is expected that one 

or more member firms of a listing 

Exchange will be designated to act as a 

specialist and maintain a market for 

Fund Shares on the Exchange (a 

‘‘Specialist’’), or if Nasdaq is the listing 

Exchange, one or more member firms of 

Nasdaq will act as a market maker 

(‘‘Market Maker’’) and maintain a 

market for Fund Shares.5 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. 

7. Applicants expect that purchasers 

of Creation Unit Aggregations will 

include institutional investors and 

arbitrageurs (which could include 

institutional investors). A Specialist, or 

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.6 Applicants expect that the 

price at which Fund Shares trade will 

be disciplined by arbitrage 

opportunities created by the ability to 

continually purchase or redeem 

Creation Unit Aggregations at their 

NAV, which should ensure that Fund 

Shares will not trade at a material 

discount or premium in relation to their 

NAV. 


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8. Fund Shares will not be 

individually redeemable, and owners of 

Fund Shares may acquire those Fund 

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) a 

portfolio of securities designated to be 

delivered for Creation Unit Aggregation 

redemptions on the date that the request 

for redemption is submitted (‘‘Fund 

Securities’’), which may not be identical 

to the Deposit Securities required to 

purchase Creation Unit Aggregations on 

that date, and (b) a ‘‘Cash Redemption 

Payment,’’ consisting of an amount 

calculated in the same manner as the 

Cash Component, although the actual 

amount of the Cash Redemption 

Payment may differ from the Cash 

Component 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. A redeeming 

investor may pay a Transaction Fee, 

calculated in the same manner as a 

Transaction Fee payable in connection 

with purchases of Creation Unit 

Aggregations. 

9. Neither the Trusts nor any 

individual Fund will be marketed or 

otherwise held out as an ‘‘open-end 

investment company’’ or a ‘‘mutual 

fund.’’ Instead, each Fund will be 

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

an ‘‘investment company,’’ a ‘‘fund,’’ or 

a ‘‘trust.’’ All marketing materials that 

describe the method of obtaining, 

buying or selling Fund Shares, 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 

SAI, shareholder reports and investor 

educational materials issued or 

circulated in connection with the Fund 

Shares. The Funds will provide copies 

of their annual and semi-annual 

shareholder reports to DTC Participants 

for distribution to beneficial owners of 

Fund Shares. 

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), 22(d), 

22(e), and 24(d) of the Act and rule 22c–

1 under the Act, under section 

12(d)(1)(J) for an exemption from 

sections 12(d)(1)(A) and (B) of 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. 

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 provisions 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 Trusts to register 

as open-end management investment 

companies and issue Fund Shares that 

are redeemable in Creation Units 

Aggregations only. Applicants state that 

investors may purchase Fund Shares in 

Creation Unit Aggregations and redeem 

Creation Unit Aggregations from each 

Fund. Applicants further state that 

because the market price of Fund Shares 

will be disciplined by arbitrage 

opportunities, investors should be able 

to sell Fund Shares in the secondary 

market at prices that do not vary 

substantially from their NAV. 

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

1 Under the Act 

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

other things, prohibits a dealer from 

selling a redeemable security, which is 

currently being offered to the public by 

or through a principal underwriter, 

except at a current public offering price 

described in the prospectus. Rule 22c–

1 under the Act generally requires that 

a dealer selling, redeeming or 

repurchasing a redeemable security do 

so only at a price based on its NAV. 

Applicants state that secondary market 

trading in 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 

involve the Funds as parties and cannot 

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 arbitrage 


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51872 Federal Register / Vol. 71, No. 169 / Thursday, August 31, 2006 / Notices 

7Applicants state that they are not seeking relief 

from the prospectus delivery requirement for nonsecondary market transactions, such as transactions 

in which an investor purchases Fund Shares from 

the Trusts or an underwriter. Applicants further 

state that each Fund’s Prospectus will caution 

broker-dealers and others that some activities on 

their part, depending on the circumstances, may 

result in their being deemed statutory underwriters 

and subject them to the prospectus delivery and 

liability provisions of the Securities Act. For 

example, a broker-dealer firm and/or its client may 

be deemed a statutory underwriter if it purchases 

Creation Unit Aggregations from a Fund, breaks 

them down into the constituent Fund Shares, and 

sells those Fund Shares directly to customers, or if 

it chooses to couple the creation of a supply of new 

Fund Shares with an active selling effort involving 

solicitation of secondary market demand for Fund 

Shares. Each Fund’s Prospectus will state that 

whether a person is an underwriter depends upon 

all of the facts and circumstances pertaining to that 

person’s activities. Each Fund’s Prospectus will 

caution dealers who are not ‘‘underwriters’’ but are 

participating in a distribution (as contrasted to 

ordinary secondary market trading transactions), 

and thus dealing with Fund Shares that are part of 

an ‘‘unsold allotment’’ within the meaning of 

section 4(3)(C) of the Securities Act, that they 

would be unable to take advantage of the 

prospectus delivery exemption provided by section 

4(3) of the Securities Act. 

8The Bid-Ask Price per Fund Share of a Fund is 

determined using the highest bid and the lowest 

offer on the Exchange on which the Fund Shares 

are listed. 

9Rule 15c6–1 under the Exchange Act requires 

that most securities transactions be settled within 

three business days of the trade. Applicants 

acknowledge that no relief obtained from the 

requirements of section 22(e) will affect any 

obligations applicants may have under rule 15c6–

1. 

activity will ensure that the difference 

between the market price of Fund 

Shares and their NAV remains narrow. 

Section 24(d) of the Act 

7. Section 24(d) of the Act provides, 

in relevant part, that the prospectus 

delivery exemption provided to dealer 

transactions by section 4(3) of the 

Securities Act does not apply to any 

transaction in a redeemable security 

issued by an open-end investment 

company. Applicants seek relief from 

section 24(d) to permit dealers selling 

Fund Shares to rely on the prospectus 

delivery exemption provided by section 

4(3) of the Securities Act.7

8. Applicants state that Fund Shares 

are bought and sold in the secondary 

market in the same manner as closedend fund shares. Applicants note that 

transactions in closed-end fund shares 

are not subject to section 24(d), and thus 

closed-end fund shares are sold in the 

secondary market without a prospectus. 

Applicants contend that Fund Shares 

likewise merit a reduction in the 

unnecessary compliance costs and 

regulatory burdens resulting from the 

imposition of the prospectus delivery 

obligations in the secondary market. 

Because Fund Shares will be listed on 

an Exchange, prospective investors will 

have access to information about the 

product over and above what is 

normally available about an open-end 

security. Applicants state that 

information regarding market price and 

volume will be continually available on 

a real time basis throughout the day on 

brokers’ computer screens and other 

electronic services. The previous day’s 

price and volume information will be 

published daily in the financial section 

of newspapers. In addition, a website 

will be maintained that will include 

each Fund’s Prospectus and SAI, the 

relevant Underlying Index for each 

Fund, and additional quantitative 

information that is updated on a daily 

basis, including the mid-point of the 

bid-ask spread at the time of the 

calculation of NAV (‘‘Bid/Ask Price’’),8

the NAV for each Fund, and information 

about the premiums and discounts at 

which the Fund Shares have traded. 

9. Applicants will arrange for brokerdealers selling Fund Shares in the 

secondary market to provide purchasers 

with a product description (‘‘Product 

Description’’) that describes, in plain 

English, the relevant Fund and the Fund 

Shares it issues. Applicants state that a 

Product Description is not intended to 

substitute for a full Fund’s Prospectus. 

Applicants state that the Product 

Description will be tailored to meet the 

information needs of investors 

purchasing Fund Shares in the 

secondary market. 

Section 22(e) 

10. Section 22(e) generally prohibits a 

registered investment company from 

suspending the right of redemption or 

postponing the date of payment of 

redemption proceeds for more than 

seven days after the tender of a security 

for redemption. The principal reason for 

the requested exemption is that 

settlement of redemptions for the 

Foreign Funds is contingent not only on 

the settlement cycle of the United States 

market, but also on currently practicable 

delivery cycles in local markets for 

underlying foreign securities held by the 

Foreign Funds. Applicants state that 

local market delivery cycles for 

transferring certain foreign securities to 

investors redeeming Creation Unit 

Aggregations, together with local market 

holiday schedules, will under certain 

circumstances require a delivery process 

in excess of seven calendar days for the 

Foreign Funds. Applicants request relief 

under section 6(c) of the Act from 

section 22(e) to allow the Foreign Funds 

to pay redemption proceeds up to 14 

calendar days (or, with respect to future 

Foreign Funds, within not more than 

the number of calendar days known to 

applicants as being the maximum 

number of calendar days required for 

such payment or satisfaction in the 

principal local foreign market(s) where 

transactions in Portfolio Securities of 

each such Fund customarily clear and 

settle) after the tender of a Creation Unit 

Aggregation for redemption. At all other 

times and except as disclosed in the 

relevant Fund’s Prospectus and/or SAI, 

applicants expect that each Foreign 

Fund will be able to deliver redemption 

proceeds within seven days.9 With 

respect to future Foreign Funds, 

applicants seek the same relief from 

section 22(e) only to the extent that 

circumstances similar to those described 

in the application exist. 

11. Applicants state that section 22(e) 

was designed to prevent unreasonable, 

undisclosed and unforeseen delays in 

the payment of redemption proceeds. 

Applicants assert that the requested 

relief will not lead to the problems that 

section 22(e) was designed to prevent. 

Applicants state that the SAI will 

disclose those local holidays (over the 

period of at least one year following the 

date of the SAI), if any, that are 

expected to prevent the delivery of 

redemption proceeds in seven calendar 

days, and the maximum number of days 

needed to deliver the proceeds for the 

relevant Foreign Fund. 

Section 12(d)(1) 

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

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. 

13. Applicants request an exemption 

to permit management investment 

companies (‘‘Purchasing Management 

Companies’’) and unit investment trusts 

(‘‘Purchasing Trusts’’) registered under 

the Act that are not part of the same 

‘‘group of investment companies,’’ as 


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10 In addition to the Funds, applicants request 

that this relief apply to other exchange-traded funds 

(‘‘ETFs’’) that are (1) advised by the Adviser or an 

entity controlling, controlled by, or under common 

control with the Adviser, and (2) part of the same 

‘‘group of investment companies’’ as each Trust 

within the meaning of section 12(d)(1)(G)(ii) of the 

Act. Such open-end ETFs, collectively with the 

Funds, are referred to as ‘‘Open-end Funds,’’ and 

unit investment trust ETFs are referred to as ‘‘UIT 

Funds.’’

11All parties that currently intend to rely on the 

requested relief from section 12(d)(1) are named as 

applicants. Any other party that relies on this relief 

in the future will comply with the terms and 

conditions of the application. A Purchasing Fund 

may rely on the requested order only to invest in 

the Funds and not in any other registered 

investment company. 

12A ‘‘Purchasing Fund Affiliate’’ is a Purchasing 

Fund Adviser, Sub-Adviser, Sponsor, promoter, and 

principal underwriter of a Purchasing Fund, and 

any person controlling, controlled by, or under 

common control with any of those entities. 

defined in section 12(d)(1)(G)(ii) of the 

Act, as the Trusts (Purchasing 

Management Companies and Purchasing 

Trusts collectively, ‘‘Purchasing 

Funds’’) to acquire shares of a Fund 

beyond the limits of section 

12(d)(1)(A).10 Purchasing Funds exclude 

registered investment companies that 

are, or in the future may be, part of the 

same group of investment companies 

within the meaning of section 

12(d)(1)(G)(ii) of the Act as the Funds. 

In addition, applicants seek relief to 

permit a Fund and the Distributor or 

any broker or dealer (‘‘Broker’’) that is 

registered under the Exchange Act to 

knowingly sell shares of a Fund to a 

Purchasing Fund in excess of the limits 

of section 12(d)(1)(B). Applicants 

request that the relief sought apply to (a) 

Funds that are advised by the Adviser 

and in the same group of investment 

companies as the Trusts, (b) each 

Purchasing Fund that enters into an 

agreement with a Fund for the purchase 

of Fund Shares (‘‘Purchasing Fund 

Agreement’’), and (c) any Broker.11

14. Each Purchasing Management 

Company will be advised by an 

investment adviser within the meaning 

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

‘‘Purchasing Fund Adviser’’) and may 

be advised by one or more investment 

advisers within the meaning of section 

2(a)(20)(B) of the Act (each a ‘‘SubAdviser’’). Any investment adviser to a 

Purchasing Fund will be registered 

under the Advisers Act or exempt from 

registration. Each Purchasing Trust will 

be sponsored by a sponsor (‘‘Sponsor’’). 

15. Applicants submit that the 

proposed conditions to the relief 

requested adequately address the 

concerns underlying the limits in 

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

include concerns about undue 

influence, excessive layering of fees and 

overly complex structures. Applicants 

believe that the requested exemption is 

consistent with the public interest and 

the protection of investors. 

16. Applicants believe that neither the 

Purchasing Funds nor a Purchasing 

Fund Affiliate would be able to exert 

undue influence over the Funds.12 To 

limit the control that a Purchasing Fund 

may have over a Fund, applicants 

propose a condition prohibiting a 

Purchasing Fund Adviser or a Sponsor, 

any person controlling, controlled by, or 

under common control with a 

Purchasing Fund Adviser 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 a Purchasing Fund 

Adviser or Sponsor, or any person 

controlling, controlled by, or under 

common control with a Purchasing 

Fund Adviser or Sponsor (‘‘Purchasing 

Fund Adviser/Sponsor 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 SubAdviser, any person controlling, 

controlled by or under common control 

with the Sub-Adviser, 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 

Sub-Adviser or any person controlling, 

controlled by or under common control 

with the Sub-Adviser (‘‘Sub-Adviser 

Group’’). Applicants propose other 

conditions to limit the potential for 

undue influence over the Funds, 

including that no Purchasing Fund or 

Purchasing 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, 

Purchasing Fund Adviser, Sub-Adviser, 

employee or Sponsor of a Purchasing 

Fund, or a person of which any such 

officer, director, member of an advisory 

board, Purchasing Fund Adviser, SubAdviser, employee, or Sponsor is an 

affiliated person (except any person 

whose relationship to the Fund is 

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

an Underwriting Affiliate). 

17. Applicants do not believe the 

proposed arrangement will involve 

excessive layering of fees. The board of 

directors or trustees of any Purchasing 

Management Company, including a 

majority of the disinterested directors or 

trustees, will find that the advisory fees 

charged to the Purchasing 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 Purchasing 

Management Company may invest. In 

addition, a Purchasing Fund Adviser or 

a trustee (‘‘Trustee’’) or Sponsor of a 

Purchasing Trust will waive fees 

otherwise payable to it by the 

Purchasing Management Company or 

Purchasing Trust 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 

Purchasing Fund Adviser or Trustee or 

Sponsor to the Purchasing Trust or an 

affiliated person of the Purchasing Fund 

Adviser, Trustee or Sponsor, from the 

Funds in connection with the 

investment by the Purchasing 

Management Company or Purchasing 

Trust in the Fund. Applicants state that 

any sales loads or service fees charged 

with respect to shares of a Purchasing 

Fund will not exceed the limits 

applicable to a fund of funds set forth 

in Conduct Rule 2830 of the NASD. 

18. 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. Applicants also 

represent that to ensure that Purchasing 

Funds comply with the terms and 

conditions of the requested relief from 

section 12(d)(1), any Purchasing Fund 

that intends to invest in a Fund in 

reliance on the requested order will be 

required to enter into a Purchasing Fund 

Agreement between the Fund and the 

Purchasing Fund. The Purchasing Fund 

Agreement will require the Purchasing 

Fund to adhere to the terms and 

conditions of the requested order and 

participate in the proposed transactions 

in a manner that addresses concerns 

regarding the requested relief. The 

Purchasing Fund Agreement also will 

include an acknowledgement from the 

Purchasing Fund that it may rely on the 

order only to invest in the Funds and 

not in any other investment company. 

The Purchasing Fund Agreement will 

further require any Purchasing Fund 


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13Applicants believe that a Purchasing Fund will 

purchase Fund Shares in the secondary market and 

will not purchase or redeem Creation Unit 

Aggregations directly from a Fund. Nonetheless, a 

Purchasing Fund that owns 5% or more of a Fund 

could seek to transact in Creation Unit Aggregations 

directly with a Fund pursuant to the section 17(a) 

relief requested. 

that exceeds the 5% or 10% limitations 

in section 12(d)(1)(A)(ii) and (iii) to 

disclose in its prospectus that it may 

invest in ETFs, and to disclose, in 

‘‘plain English,’’ in its prospectus the 

unique characteristics of the Purchasing 

Funds investing in ETFs, including but 

not limited to the expense structure and 

any additional expenses of investing in 

ETFs. 

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

19. Section 17(a) of the Act generally 

prohibits an affiliated person of a 

registered investment company, or an 

affiliated person of such a person, from 

selling any security to or purchasing any 

security from the company. Section 

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

person’’ to include any person directly 

or indirectly owning, controlling or 

holding with power to vote 5% or more 

of the outstanding voting securities of 

the other person, 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 

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. 

Applicants state that if Creation Unit 

Aggregations of all of the Funds or of 

one or more particular Funds are held 

by twenty or fewer investors, including 

a Specialist or Market Maker, some or 

all of such investors will be 5% owners 

of the Fund, and one or more investors 

may hold in excess of 25% of the Fund. 

Such investors would be deemed to be 

affiliated persons of the Fund. 

20. 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 that are affiliated 

persons of the Funds solely by virtue of 

holding 5 percent or more, or in excess 

of 25 percent of the outstanding Fund 

Shares of one or more Funds (or 

affiliated persons of such persons so 

long as they are not otherwise affiliated 

with the Funds) to effectuate purchases 

and redemptions ‘‘in-kind.’’

21. 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 

affiliated persons of a Fund, or the 

affiliated persons of such affiliated 

persons, to effect a transaction 

detrimental to other holders of Fund 

Shares. Applicants also believe that inkind purchases and redemptions will 

not result in self-dealing or overreaching 

of the Fund. 

22. Applicants also seek relief from 

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

affiliated person of a Purchasing Fund 

because the Purchasing Fund holds 5% 

or more of the Fund Shares of the Fund 

to sell its Fund Shares to and redeem its 

Fund Shares from a Purchasing Fund.13

Applicants believe that any proposed 

transactions directly between the Funds 

and Purchasing Funds will be consistent 

with the policies of each Purchasing 

Fund. The purchase of Creation Unit 

Aggregations by a Purchasing Fund 

directly from a Fund will be 

accomplished in accordance with the 

investment restrictions of any such 

Purchasing Fund and will be consistent 

with the investment policies set forth in 

the Purchasing Fund’s registration 

statement. The Purchasing Fund 

Agreement will require any Purchasing 

Fund that purchases Creation Unit 

Aggregations directly from a Fund to 

represent that the purchase of Creation 

Unit Aggregations from a Fund by a 

Purchasing Fund will be accomplished 

in compliance with the investment 

restrictions of the Purchasing Fund and 

will be consistent with the investment 

policies set forth in the Purchasing 

Fund’s registration statement. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Applicants will not register a 

Future Fund of a Trust by means of 

filing a post-effective amendment to a 

Trust’s registration statement or by any 

other means, unless either: (a) 

Applicants have requested and received 

with respect to such Future Fund, either 

exemptive relief from the Commission 

or a no-action letter from the Division of 

Investment Management of the 

Commission; or (b) the Future Fund will 

be listed on an Exchange without the 

need for a filing pursuant to rule 19b–

4 under the Exchange Act. 

2. As long as the Trusts operate in 

reliance on the requested order, Fund 

Shares will be listed on an Exchange. 

3. Neither the Trusts nor any Fund 

will 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 site maintained for each 

Fund, which will be publicly accessible 

at no charge, will contain the following 

information, on a per Fund Share basis, 

for each Fund: (a) The prior Business 

Day’s NAV and the 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. In addition, 

the Product Description for each Fund 

will state that the Web site for the Fund 

has information about the premiums 

and discounts at which Fund Shares 

have traded. 

5. The Fund’s Prospectus and annual 

report for each Fund also will include: 

(a) the information listed in condition 

4(b), (i) in the case of the Fund’s 

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. Before a Fund may rely on the 

order, the Commission will have 

approved, pursuant to rule 19b–4 under 

the Exchange Act, an Exchange rule 

requiring Exchange members and 

member organizations effecting 

transactions in Fund Shares to deliver a 


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Product Description to purchasers of 

Fund Shares. 

7. Each Fund’s Prospectus and 

Product Description will clearly 

disclose that, for purposes of the Act, 

Fund Shares are issued by the Fund, 

which is a registered investment 

company, and that 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 of 

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

and conditions, including that the 

registered investment company enter 

into a Purchasing Fund Agreement with 

the Fund regarding the terms of the 

investment. 

8. The members of a Purchasing 

Fund’s Advisory Group will not control 

(individually or in the aggregate) a Fund 

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

the Act. The members of a Purchasing 

Fund’s Sub-Advisory Group will not 

control (individually or in the aggregate) 

a Fund within the meaning of section 

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

decrease in the outstanding Fund Shares 

of a Fund, a Purchasing Fund’s 

Advisory Group or a Purchasing Fund’s 

Sub-Advisory Group, each in the 

aggregate, becomes a holder of more 

than 25% of the outstanding Fund 

Shares of a Fund, 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 

the Purchasing Fund’s Sub-Advisory 

Group with respect to a Fund for which 

the Purchasing Fund’s Sub-Adviser or a 

person controlling, controlled by, or 

under common control with the 

Purchasing Fund Sub-Adviser acts as 

the investment adviser within the 

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

(in the case of an Open-end Fund) or as 

the sponsor (in the case of a UIT Fund). 

9. No Purchasing Fund or Purchasing 

Fund Affiliate will cause any existing or 

potential investment by the Purchasing 

Fund in a Fund to influence the terms 

of any services or transactions between 

the Purchasing Fund or Purchasing 

Fund Affiliate and the Fund or a Fund 

Affiliate. 

10. The board of directors or trustees 

of a Purchasing Management Company, 

including a majority of the disinterested 

directors or trustees, will adopt 

procedures reasonably designed to 

ensure that the Purchasing Fund 

Adviser and Purchasing Fund SubAdviser are conducting the investment 

program of the Purchasing Management 

Company without taking into account 

any consideration received by the 

Purchasing Management Company or a 

Purchasing Fund Affiliate from a Fund 

or a Fund Affiliate in connection with 

any services or transactions. 

11. No Purchasing Fund or 

Purchasing Fund Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to an Open-end 

Fund or sponsor to a UIT Fund) will 

cause a Fund to purchase a security in 

any Affiliated Underwriting. 

12. Before investing in a Fund in 

excess of the limits in section 

12(d)(1)(A), each Purchasing Fund and 

the Fund will execute a Purchasing 

Fund Agreement stating, without 

limitation, that their boards of directors 

or trustees and their investment advisers 

or sponsors or trustees, 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 shares of an 

Open-end Fund in excess of the limit in 

section 12(d)(1)(A)(i), a Purchasing 

Fund will notify the Open-end Fund of 

the investment. At such time, the 

Purchasing Fund will also transmit to 

the Fund a list of names of each 

Purchasing Fund Affiliate and 

Underwriting Affiliate. The Purchasing 

Fund will notify the Fund of any 

changes to the list of names as soon as 

reasonably practicable after a change 

occurs. The relevant Fund and the 

Purchasing Fund will maintain and 

preserve a copy of the order, the 

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. 

13. The Purchasing Fund Adviser, 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Purchasing Fund in an amount at least 

equal to any compensation (including 

fees received under any plan adopted by 

an Open-end Fund under rule 12b–1 

under the Act) received from a Fund by 

the Purchasing Fund Adviser, Trustee or 

Sponsor, or an affiliated person of the 

Purchasing Fund Adviser, Trustee or 

Sponsor, other than any advisory fees 

paid to the Purchasing Fund Adviser, 

Trustee or Sponsor, or its affiliated 

person by an Open-end Fund, in 

connection with the investment by the 

Purchasing Fund in the Fund. Any 

Purchasing Fund Sub-Adviser will 

waive fees otherwise payable to the 

Purchasing Fund Sub-Adviser, directly 

or indirectly, by the Purchasing 

Management Company in an amount at 

least equal to any compensation 

received from a Fund by the Purchasing 

Fund Sub-Adviser, or an affiliated 

person of the Purchasing Fund SubAdviser, other than any advisory fees 

paid to the Purchasing Fund SubAdviser or its affiliated person by the 

Open-end Fund, in connection with the 

investment by the Purchasing 

Management Company in a Fund made 

at the direction of the Purchasing Fund 

Sub-Adviser. In the event that the 

Purchasing Fund Sub-Adviser waives 

fees, the benefit of the waiver will be 

passed through to the Purchasing 

Management Company. 

14. Any sales charges and/or service 

fees charged with respect to shares of a 

Purchasing Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in Conduct Rule 2830 of the 

NASD. 

15. Once an investment by a 

Purchasing Fund in the securities of a 

Fund exceeds the limit in section 

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

directors/trustees of an Open-end Fund 

(‘‘Board’’), including a majority of the 

disinterested Board members, will 

determine that any consideration paid 

by the Open-end Fund to a Purchasing 

Fund or a Purchasing 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 Open-end 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 an 

Open-end Fund and its investment 

adviser(s), or any person controlling, 

controlled by, or under common control 

with such investment adviser(s). 

16. The Board, including a majority of 

the disinterested Board members, will 

adopt procedures reasonably designed 

to monitor any purchases of securities 

by an Open-end Fund in an Affiliated 

Underwriting once the investment by a 

Purchasing Fund in the securities of the 

Fund 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 

Purchasing Fund in the Open-end Fund. 

The Board will consider, among other 

things: (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the Open-end 

Fund; (b) how the performance of 

securities purchased in an Affiliated 

Underwriting compares to the 

performances of comparable securities 

purchased during a comparable period 

of time in underwritings other than 


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51876 Federal Register / Vol. 71, No. 169 / Thursday, August 31, 2006 / Notices 

Affiliated Underwritings or to a 

benchmark such as a comparable market 

index; and (c) 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 interests 

of shareholders of the Open-end Fund. 

17. Each Open-end 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 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 a Purchasing 

Fund in Fund Shares of the Fund 

exceeds the limits 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 materials upon which 

the Board’s determinations were made. 

18. Before approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Purchasing Management Company, 

including a majority of the disinterested 

directors or trustees, will find that the 

advisory fees charged under such 

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 

Open-end Fund in which the 

Purchasing Management Company may 

invest. These findings and their basis 

will be recorded fully in the minute 

books of the appropriate Purchasing 

Management Company. 

19. No Fund will acquire securities of 

any other investment company or 

companies 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. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–7353 Filed 8–30–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–27467] 

Notice of Applications for 

Deregistration Under Section 8(f) of the 

Investment Company Act of 1940 

August 25, 2006. 

The following is a notice of 

applications for deregistration under 

section 8(f) of the Investment Company 

Act of 1940 for the month of August, 

2006. A copy of each application may be 

obtained for a fee at the SEC’s Public 

Reference Branch (tel. 202–551–5850). 

An order granting each application will 

be issued unless the SEC orders a 

hearing. Interested persons may request 

a hearing on any application by writing 

to the SEC’s Secretary at the address 

below and serving the relevant 

applicant with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the SEC by 5:30 

p.m. on September 19, 2006, and should 

be accompanied by proof of service on 

the applicant, 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 Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549–

1090. 

For Further Information Contact: 

Diane L. Titus at (202) 551–6810, SEC, 

Division of Investment Management, 

Office of Investment Company 

Regulation, 100 F Street, NE., 

Washington, DC 20549–4041. 

Lebenthal Funds, Inc. [File No. 811–

6170] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On May 1, 2006, 

applicant transferred its assets to 

corresponding series of Merrill Lynch 

Multi-State Municipal Series Trust, 

based on net asset value. Expenses of 

$487,358 incurred in connection with 

the reorganization were paid by Fund 

Asset Management, L.P., applicant’s 

investment adviser. 

Filing Date: The application was filed 

on July 26, 2006. 

Applicant’s Address: Merrill Lynch 

Investment Management, L.P., 800 

Scudders Mill Rd., Plainsboro, NJ 

08536. 

Oppenheimer International Large Cap 

Core Trust [File No. 811–21370] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On April 13, 

2006, applicant made a liquidating 

distribution to its shareholders, based 

on net asset value. Expenses of 

approximately $20,499 incurred in 

connection with the liquidation were 

paid by applicant. 

Filing Dates: The application was 

filed on April 21, 2006, and amended on 

August 16, 2006. 

Applicant’s Address: 6803 Tucson 

Way, Centennial, CO 80112. 

MurphyMorris Investment Trust [File 

No. 811–21444] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On June 1, 2005, 

applicant transferred its assets to PMFM 

Core Advantage Portfolio Trust, a series 

of PMFM Investment Trust, based on 

net asset value. Expenses of 

approximately $30,800 incurred in 

connection with the reorganization were 

paid by MuphyMorris Money 

Management Co., applicant’s investment 

adviser. 

Filing Dates: The application was 

filed on April 26, 2006, and amended on 

August 17, 2006. 

Applicant’s Address: 1551 Jennings 

Mill Rd., Suite 2400A, Bogart, GA 

30622. 

Columbia Short Term Bond Fund, Inc. 

[File No. 811–4842]; Columbia Fixed 

Income Securities Fund, Inc. [File No. 

811–3581] 

Summary: Each applicant seeks an 

order declaring that it has ceased to be 

an investment company. On September 

23, 2005 and October 7, 2005, 

respectively, each applicant transferred 

its assets to a corresponding series of 

Columbia Funds Series Trust, based on 

net asset value. Expenses of 

approximately $90,526 and $109,747, 

respectively, incurred in connection 

with the reorganizations were paid by 

applicants and Columbia Management 

Advisors, LLC, applicants’ investment 

adviser. 

Filing Date: The applications were 

filed on June 23, 2006. 

Applicants’ Address: 1301 SW. Fifth 

Ave., Portland, OR 97201. 

Columbia International Stock Fund, 

Inc. [File No. 811–7024] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On October 10, 

2005, applicant transferred its assets to 

a corresponding series of Columbia 

Funds Series Trust I, based on net asset 

value. Expenses of approximately 

$19,103 incurred in connection with the 

reorganization were paid by Columbia 


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