12832 Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A Managed Fund Share is a security that 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a–1)(the ‘‘1940 Act’’) organized 

as an open-end investment company or similar 

entity that invests in a portfolio of securities 

selected by its investment adviser consistent with 

its investment objectives and policies. In contrast, 

an open-end investment company that issues Index 

Fund Shares, listed and traded on the Exchange 

under NASDAQ Rule 5705, seeks to provide 

investment results that correspond generally to the 

price and yield performance of a specific foreign or 

domestic stock index, fixed income securities index 

or combination thereof. 

4The Commission approved NASDAQ Rule 5735 

in Securities Exchange Act Release No. 57962 (June 

13, 2008) 73 FR 35175 (June 20, 2008) (SR– 

NASDAQ–2008–039). The Fund would not be the 

first actively-managed fund listed on the Exchange; 

see Securities Exchange Act Release No. 66175 

(February 29, 2012), 77 FR 13379 (March 6, 2012) 

(SR–NASDAQ–2012–004) (order approving listing 

and trading of WisdomTree Emerging Markets 

Corporate Bond Fund). Additionally, the 

Commission has previously approved the listing 

and trading of a number of actively managed 

WisdomTree funds on NYSE Arca, Inc. pursuant to 

Rule 8.600 of that exchange. See, e.g., Securities 

Exchange Act Release No. 64643 (June 10, 2011), 76 

FR 35062 (June 15, 2011) (SR–NYSEArca–2011–21) 

(order approving listing and trading of WisdomTree 

Global Real Return Fund). The Exchange believes 

the proposed rule change raises no significant 

issues not previously addressed in those prior 

Commission orders. 

5The Trust has filed an amendment to its 

Registration Statement on Form N–1A for the Fund, 

dated December 19, 2014, under the Securities Act 

of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’) and the 

1940 Act (File Nos. 333–132380 and 811–21864). 

The descriptions of the Fund and the Shares 

contained herein are based, in part, on information 

in the Registration Statement. The Commission has 

issued an order granting certain exemptive relief to 

the Trust under the 1940 Act. See Investment 

Company Act Release No. 28171 (October 27, 2008) 

(File No. 812–13458) (the ‘‘Exemptive Relief’’). In 

compliance with NASDAQ Rule 5735(b)(5), which 

applies to Managed Fund Shares based on an 

international or global portfolio, the Trust’s 

application for exemptive relief under the 1940 Act 

states that the Fund will comply with the federal 

securities laws in accepting securities for deposits 

and satisfying redemptions with redemption 

securities, including that the securities accepted for 

deposits and the securities used to satisfy 

redemption requests are sold in transactions that 

would be exempt from registration under the 

Securities Act. 

6WisdomTree Investments, Inc. (‘‘WisdomTree 

Investments’’) is the parent company of 

WisdomTree Asset Management. 

7The Sub-Adviser is responsible for day-to-day 

management of the Fund and, as such, typically 

makes all decisions with respect to portfolio 

holdings. The Adviser has ongoing oversight 

responsibility. 

8An investment adviser to an open-end fund is 

required to be registered under the Investment 

Advisers Act of 1940 (15 U.S.C. 80b–1) (the 

‘‘Advisers Act’’). As a result, the Adviser and SubAdviser and their related personnel are subject to 

the provisions of Rule 204A–1 under the Advisers 

Act relating to codes of ethics. This Rule requires 

investment advisers to adopt a code of ethics that 

reflects the fiduciary nature of the relationship to 

clients as well as compliance with other applicable 

securities laws. Accordingly, procedures designed 

to prevent the communication and misuse of nonpublic information by an investment adviser must 

be consistent with Rule 204A–1 under the Advisers 

Act (17 CFR 275.204A–1). In addition, Rule 206(4)– 

7 under the Advisers Act (17 CFR 275.206(4)–7) 

makes it unlawful for an investment adviser to 

provide investment advice to clients unless such 

investment adviser has (i) adopted and 

implemented written policies and procedures 

reasonably designed to prevent violation, by the 

investment adviser and its supervised persons, of 

the Advisers Act and the Commission rules adopted 

thereunder; (ii) implemented, at a minimum, an 

annual review regarding the adequacy of the 

policies and procedures established pursuant to 

subparagraph (i) above and the effectiveness of their 

implementation; and (iii) designated an individual 

(who is a supervised person) responsible for 

administering the policies and procedures adopted 

under subparagraph (i) above. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74448; File No. SR– 

NASDAQ–2015–012] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market, LLC; Notice of 

Filing of Proposed Rule Change 

Relating to the Listing and Trading of 

the Shares of the WisdomTree Western 

Unconstrained Bond Fund of the 

WisdomTree Trust 

March 5, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

18, 2015, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in in 

Items I and II below, which Items have 

been prepared by NASDAQ. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASDAQ proposes to list and trade 

shares of the WisdomTree Western 

Unconstrained Bond Fund (the ‘‘Fund’’) 

of the WisdomTree Trust (the ‘‘Trust’’) 

under NASDAQ Rule 5735 (‘‘Managed 

Fund Shares’’).3 The shares of the Fund 

are collectively referred to herein as the 

‘‘Shares.’’ 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASDAQ included statements 

concerning the purpose of, and basis for, 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. 

NASDAQ has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade Shares of the Fund under 

NASDAQ Rule 5735, which governs the 

listing and trading of Managed Fund 

Shares on the Exchange.4 The Fund will 

be an actively managed exchange traded 

fund (‘‘ETF’’). The Shares will be 

offered by the Trust, which was 

established as a Delaware statutory trust 

on December 15, 2005. The Trust is 

registered with the Commission as an 

investment company and has filed a 

registration statement on Form N–1A 

(‘‘Registration Statement’’) with the 

Commission on behalf of the Fund.5

Description of the Shares and the Fund 

WisdomTree Asset Management, Inc. 

(‘‘WisdomTree Asset Management’’) 

will be the investment adviser 

(‘‘Adviser’’) to the Fund.6 Western Asset 

Management Company will serve as 

sub-adviser for the Fund (‘‘SubAdviser’’).7 State Street Bank and Trust 

Company will serve as the 

administrator, custodian and transfer 

agent for the Trust (‘‘Custodian’’ or 

‘‘Transfer Agent,’’ as applicable). ALPS 

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

serve as the distributor for the Trust. 

Paragraph (g) of Rule 5735 provides 

that, if the investment adviser to the 

investment company issuing Managed 

Fund Shares is affiliated with a brokerdealer, such investment adviser shall 

erect a ‘‘fire wall’’ between the 

investment adviser and the brokerdealer with respect to access to 

information concerning the composition 

and/or changes to such investment 

company portfolio.8 In addition, 

paragraph (g) further requires that 

personnel who make decisions on the 

open-end fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material nonpublic information 

regarding the open-end fund’s portfolio. 

Rule 5735(g) is similar to NASDAQ Rule 

5705(b)(5)(A)(i), however, paragraph (g) 

in connection with the establishment of 

a ‘‘fire wall’’ between the investment 

adviser and the broker-dealer reflects 

the open-end fund’s portfolio, not an 

underlying benchmark index, as is the 

case with index-based funds. Neither 


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9Fixed income securities generally represent 

obligations of issuers to re-pay money borrowed. 

The issuer of the fixed income security usually pays 

a fixed, variable or floating rate of interest and 

repays the amount borrowed, usually at the 

maturity of the instrument. Some fixed income 

securities, such as zero coupon bonds, do not pay 

current interest, but are issued at a discount from 

their face values. The Fund may invest in fixed 

income securities that have variable or floating 

interest rates which are readjusted on set dates 

(such as the last day of the month or calendar 

quarter) in the case of variable rates or whenever 

a specified interest rate change occurs in the case 

of a floating rate instrument. Variable or floating 

interest rates generally reduce changes in the 

market price of securities from their original 

purchase price because, upon readjustment, such 

rates approximate market rates. Accordingly, as 

interest rates decrease or increase, the potential for 

capital appreciation or depreciation is less for 

variable or floating rate securities than for fixed rate 

obligations. 

10The term ‘‘under normal market conditions’’ 

includes, but is not limited to, the absence of 

extreme volatility or trading halts in the fixed 

income markets or the financial markets generally; 

operational issues causing dissemination of 

inaccurate market information; or force majeure 

type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of 

terrorism, riot or labor disruption or any similar 

intervening circumstance. In response to adverse 

market, economic, political, or other conditions the 

Fund reserves the right to invest in U.S. government 

securities, other Money Market Securities (as 

defined below), and cash, without limitation, as 

determined by the Adviser or Sub-Adviser. ‘‘Money 

Market Securities’’ shall include: Short-term, high 

quality securities issued or guaranteed by the U.S. 

government or non-U.S. governments, their 

agencies and instrumentalities; repurchase 

agreements backed by U.S. government securities 

and non-U.S. government securities; money market 

mutual funds; and deposit and other obligations of 

U.S. and non-U.S. banks and financial institutions. 

In the event the Fund engages in these temporary 

defensive strategies that are inconsistent with its 

investment strategies, the Fund’s ability to achieve 

its investment objectives may be limited. 

11 Government Securities include securities 

issued or guaranteed by the U.S. Treasury, agencies 

or instrumentalities of the U.S. government or 

government sponsored enterprises (‘‘GSEs’’). The 

Treasury securities in which the Fund may invest 

will include variable rate Treasury securities, 

whose rates are adjusted daily (or at such other 

increment as may later be determined by the 

Department of the Treasury) to correspond with the 

rate paid on one-month or three-month Treasury 

securities, as applicable. 

12The Fund may invest in LPNs with a minimum 

outstanding principal amount of $200 million that 

the Adviser or Sub-Adviser deems to be liquid. 

13A zero coupon bond is a debt security that is 

sold without interest and is therefore priced at a 

discount to the principal amount paid at maturity. 

An interest-only security is an investment in the 

interest portion only of that security (i.e., it does not 

include repayment of principal, which is separated 

and typically sold separately). 

14The Fund may enter into repurchase 

agreements with counterparties that are deemed to 

present acceptable credit risks, and may enter into 

reverse repurchase agreements, which involve the 

sale of securities held by the Fund subject to its 

agreement to repurchase the securities at an agreed 

upon date or upon demand and at a price reflecting 

a market rate of interest. 

15A senior loan is an advance commitment of 

funds made by one or more banks or financial 

institutions to one or more corporations, 

partnerships or other business entities and typically 

pays interest at a floating rate that is determined 

periodically at a designated premium above a base 

lending rate, most commonly the London-Interbank 

Offered Rate (‘‘LIBOR’’). 

16See note 10, supra. 

17Mortgage-backed securities are interests in 

pools of residential or commercial mortgage loans, 

including mortgage loans, made by savings and 

loans institutions, mortgage bankers, commercial 

banks and others. Pools of mortgage loans are 

assembled as securities for sale to investors by 

various governmental, government-related and 

private organizations. Interests in pools of 

mortgage-backed securities differ from other forms 

of debt securities, which normally provide for 

periodic payment of interest in fixed amounts with 

principal payments at maturity or specified call 

dates. Instead, mortgage-backed securities provide a 

monthly payment which consists of both principal 

and interest payments. In effect, these payments are 

a ‘‘pass-through’’ of the monthly payments made by 

the individual borrowers on their residential or 

commercial mortgage loans, net of any fees paid to 

the issuer or guarantor of such securities. 

Additional payments are caused by repayments of 

principal resulting from the sale of the underlying 

property, refinancing or foreclosure, net of fees or 

costs which may be incurred. 

18CMBSs include securities that reflect an 

interest in, and are secured by, mortgage loans on 

commercial real property. 

19CMOs are debt obligations of a legal entity that 

are collateralized by mortgages and divided into 

classes. Similar to a bond, interest and prepaid 

principal is paid, in most cases on a monthly basis. 

CMOs may be collateralized by whole mortgage 

loans or private mortgage bonds, but are more 

typically collateralized by portfolios of mortgage 

pass-through securities guaranteed by Ginnie Mae, 

Fannie Mae, Freddie Mac, and their income 

streams. 

20ARMBSs have interest rates that reset at 

periodic intervals. Acquiring ARMBSs permits the 

Fund to participate in increases in prevailing 

current interest rates through periodic adjustments 

in the coupons of mortgages underlying the pool on 

which ARMBSs are based. Such ARMBSs generally 

Continued 

WisdomTree Asset Management nor 

Western Asset Management Company is 

registered as, or affiliated with any 

broker-dealer. In the event (a) the 

Adviser or the Sub-Adviser becomes 

newly registered as, or affiliated with, a 

broker-dealer or (b) any new adviser or 

sub-adviser is registered as or becomes 

affiliated with a broker-dealer, as 

applicable, it will implement a fire wall 

with respect to its relevant personnel or 

such affiliated broker-dealer regarding 

access to information concerning the 

composition and/or changes to a 

portfolio, and will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio. 

WisdomTree Western Unconstrained 

Bond Fund 

Principal Investments 

The Fund seeks to provide a high 

level of total return consisting of both 

income and capital appreciation. The 

Fund intends to achieve its investment 

objective through direct and indirect 

investments in Debt Instruments (as 

defined below). For these purposes, 

Debt Instruments will include: (i) Fixed 

income securities,9 such as bonds and 

notes; and (ii) other debt obligations and 

certain derivatives and other 

instruments based on Debt Instruments 

or currency, each as described below. 

Under normal market conditions,10 the 

Fund intends to invest at least 80% of 

its net assets in Debt Instruments (but 

not more than 35% of Fund assets in 

derivatives that are Debt Instruments). 

The Fund intends to invest in the 

following Debt Instruments: 

• Instruments denominated in U.S. 

dollars or local currencies. 

• Securities or other debt obligations 

issued by corporations or agencies that 

may receive financial support or 

backing from local government. 

• Securities or other debt obligations 

issued by supranational organizations, 

such as the European Investment Bank, 

International Bank for Reconstructions 

and Development, the International 

Finance Corporation or other regional 

development banks. 

• ‘‘Government securities’’ as defined 

in Section 3(a)(42) of the Act 

(‘‘Government Securities’’).11

• Securities issued or guaranteed by 

non-U.S. governments, agencies and 

instrumentalities. 

• Municipal securities (including 

taxable and tax-exempt municipal 

securities), as defined in Section 

3(a)(29) of the Act. 

• ‘‘Putable’’ bonds (bonds that give 

the holder the right to sell the bond to 

the issuer prior to the bond’s maturity), 

when the put date is within a 24 month 

period; and ‘‘busted’’ convertible 

securities (a convertible security that is 

trading well below its conversion value 

minimizing the likelihood that it will 

ever reach its convertible price prior to 

maturity). 

• Loan participation notes 

(‘‘LPNs’’).12

• Zero-coupon securities and interestonly securities.13

• Debt securities linked to inflation 

rates of the U.S. and non-U.S. countries. 

• Repurchase agreements backed by 

Government Securities and non-U.S. 

government securities.14

• Bank loans (including senior 

loans).15

• Money Market Securities.16

• Money market mutual funds. 

• Bank loans (including senior loans). 

• Mortgage-backed securities,17

including commercial mortgage-backed 

securities (‘‘CMBSs’’),18 collateralized 

mortgage obligations (‘‘CMOs’’),19 and 

adjustable rate mortgage back securities 

(‘‘ARMBSs’’),20 and interest-only 


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have higher current yield and lower price 

fluctuations than is the case with more traditional 

Debt Instruments of comparable rating and quality. 

21 In an interest-only mortgage backed security, 

the cash flows to investors are provided from the 

cash flows from the underlying mortgage loans. 

22The principal U.S. government guarantor of 

mortgage-backed securities is Ginnie Mae, a whollyowned corporation within the United States 

Department of Housing and Urban Development. 

23 GSE’s are private corporations created by the 

United States government, often to enhance the 

flow of credit to targeted sectors of the economy. 

The two largest GSEs for mortgage-backed securities 

are Fannie Mae and Freddie Mac. 

24ABSs are bonds backed by pools of loans or 

other receivables. ABSs are created from many 

types of assets, including auto loans, credit card 

receivables, home equity loans, and student loans. 

ABSs are issued through special purpose vehicles 

that are bankruptcy remote from the issuer or the 

collateral. The credit quality of an ABS transaction 

depends on the performance of the underlying 

assets. To protect ABS investors from the possibility 

that some borrowers could miss payments or even 

default on their loans, ABSs include various forms 

of credit enhancement. 

25A credit-linked note is a type of structured note 

whose value is linked to an underling reference 

asset or entity. Credit-linked notes typically provide 

periodic payments of interest as well as payment of 

principal upon maturity. The Fund will invest not 

more than 25% of its net assets in credit-linked 

notes. 

26The Adviser has registered with the 

Commodity Futures Trading Commission (‘‘CFTC’’) 

as a commodity pool operator (‘‘CPO’’) under the 

Commodity Exchange Act with regard to the Fund. 

The exchange-listed futures contracts in which the 

Fund may invest will be listed on exchanges in the 

United States, Brazil, Chile, Germany, Hong Kong, 

Mexico, Singapore, South Korea, or the United 

Kingdom. Each of the futures exchange’s primary 

financial markets regulators are signatories to the 

International Organization of Securities 

Commissions (‘‘IOSCO’’) Multilateral Memorandum 

of Understanding (‘‘MMOU’’), which is a multiparty information sharing arrangement among 

financial regulators. Both the Commission and the 

Commodity Futures Trading Commission are 

signatories to the IOSCO MMOU. The exchangelisted futures contracts in which the Fund may 

invest in the United States, Germany, Hong Kong, 

Singapore, South Korea, or the United Kingdom 

will be listed on exchanges that are members of the 

Intermarket Surveillance Group (‘‘ISG’’) which 

include affiliates of LIFFE Administration and 

Management, Eurex Frankfurt, A.G., the Hong Kong 

Exchanges & Clearing Ltd., the Korea Exchange, the 

Singapore Exchange, Ltd., NASDAQ OMX BX and 

NASDAQ OMX PHLX LLC. At least 90% of Fund 

assets that are invested in exchange-traded 

derivative instruments will be invested in 

instruments that trade in markets that are members 

of ISG or with which the Exchange has in place a 

comprehensive surveillance sharing agreement. 

27A forward currency contract is an agreement to 

buy or sell a specific currency on a future date at 

a price set at the time of the contract. The Fund will 

invest only in currencies, and instruments that 

provide exposure to such currencies, that have 

significant foreign exchange turnover and are 

included in the Bank for International Settlements 

Triennial Central Bank Survey, December 2013 (the 

‘‘BIS Survey’’). The Fund may invest in currencies, 

and instruments that provide exposure to such 

currencies, selected from the top 40 currencies (as 

measured by percentage share of average daily 

turnover for the applicable month and year) 

included in the BIS Survey. 

28A currency swap is a foreign exchange 

agreement between two parties to exchange aspects 

of a loan (i.e., the principal and interest payments) 

of a loan in one currency for equivalent aspects of 

an equal in net present value of a loan in another 

currency. See also note 27, supra, regarding foreign 

currencies in which the Fund may invest. 

29An interest rate swap involves the exchange of 

a floating interest rate payment for a fixed interest 

rate payment. 

30To the extent practicable, the Fund will invest 

in swaps cleared through the facilities of a 

centralized clearing house. The Fund may also 

invest in Money Market Securities that would serve 

as collateral for the futures contracts and swap 

agreements. 

31The Fund will seek, where possible, to use 

counterparties, as applicable, whose financial status 

is such that the risk of default is reduced; however, 

the risk of losses resulting from default is still 

possible. The Adviser or the Sub-Adviser will 

evaluate the creditworthiness of counterparties on 

an ongoing basis. In addition to information 

provided by credit agencies, the Adviser’s or the 

Sub-Adviser’s analysis will evaluate each approved 

counterparty using various methods of analysis and 

may consider such factors as the counterparty’s 

liquidity, its reputation, the Adviser’s or the SubAdviser’s past experience with the counterparty, its 

known disciplinary history, and its share of market 

participation. The Adviser or Sub-Adviser will also 

attempt to mitigate the Fund’s respective credit risk 

by transacting only with large, well-capitalized 

institutions using measures designed to determine 

the creditworthiness of the counterparty. The 

Adviser or Sub-Adviser will take various steps to 

limit counterparty credit risk. The Fund will enter 

into over-the-counter non-centrally cleared 

instruments only with financial institutions that 

meet certain credit quality standards and 

monitoring policies. The Fund may also use various 

techniques to minimize credit risk, including early 

termination or reset and payment, using different 

counterparties, and limiting the net amount due 

from any individual counterparty. The Fund 

generally will collateralize over-the-counter noncentrally cleared instruments with cash and/or 

certain securities. Such collateral will generally be 

held for the benefit of the counterparty in a 

segregated tri-party account at the custodian to 

protect the counterparty against non-payment by 

the Fund. In the event of a default by the 

counterparty, and the Fund is owed money in the 

over-the-counter non-centrally cleared instruments 

transaction, the Fund will seek withdrawal of the 

collateral from the segregated account and may 

incur certain costs exercising its right with respect 

to the collateral. 

32See note 10, supra. 

33The term ‘‘investment grade,’’ for purposes of 

Money Market Securities only, is intended to mean 

securities rated A1 or A2 by one or more Nationally 

Recognized Statistical Rating Organizations 

(‘‘NRSROs’’). 

mortgage-backed securities, 21 including 

in each case, agency mortgage-backed 

securities,22 GSE issued or guaranteed 

mortgage-backed securities,23 and 

privately issued mortgage-backed 

securities. 

• Asset-backed securities (‘‘ABSs’’).24

The Fund may invest up to 20% of its 

net assets, in the aggregate, in privately 

issued mortgage backed securities and 

privately-issued ABSs. Debt Instruments 

will also include debt securities which 

are secured with collateral consisting of 

mortgage-backed securities or ABSs. 

The Fund may invest in the aggregate 

up to 35% of its assets in the following 

derivatives which are also Debt 

Instruments: 

• Credit-linked notes.25

• Listed futures contracts on Debt 

Instruments.26

• Non-deliverable forward currency 

contracts.27

• Currency swaps.28

• Interest rate swaps.29

• Listed currency options. 

• Listed options on futures contracts 

on Debt instruments. 

The Fund may invest in combinations 

of investments that provide similar 

exposure to local currency debt, such as 

investment in U.S. dollar denominated 

bonds combined with forward currency 

positions or swaps.30 Forward currency 

contracts and swap positions can be 

incorporated with bonds denominated 

in non-U.S. currencies to hedge bond 

exposures back into U.S. dollars. 

Conversely, forward currency contracts 

and swap positions can be implemented 

in combination with U.S. dollar 

denominated bonds to create local 

currency bond exposures. Additionally, 

the Fund’s use of forward contracts and 

swaps may be combined with 

investments in short-term, high quality 

U.S. Money Market Securities in a 

manner designed to provide exposure to 

similar investments in local currency 

deposits.31

The Fund will use derivative 

instruments primarily to hedge interest 

rate risk and actively manage interest 

rate exposure and, as described below, 

to hedge foreign currency risk and 

actively manage foreign currency 

exposure. The Fund may also use 

derivative instruments to enhance 

returns, as a substitute for, or to gain 

exposure to, a position in an underlying 

asset, to reduce transaction costs, to 

maintain full market exposure (which 

means to adjust the characteristics of its 

investments to more closely 

approximate those of the markets in 

which it invests), to manage cash flows 

or to preserve capital. The Fund’s use of 

derivative instruments will be 

collateralized by investments in Money 

Market Securities and other liquid Debt 

Instruments.32 Such investments will be 

consistent with the Fund’s investment 

objective and will not be used to 

enhance leverage. For example, the 

Fund may engage in swap transactions 

that provide exposure to Debt 

Instruments or to interest rates. All 

Money Market Securities acquired by 

the Fund will be rated investment 

grade,33 except that the Fund may invest 

in unrated Money Market Securities that 

are deemed by the Adviser or SubAdviser to be of comparable quality to 


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34The determination that an unrated security is 

of comparable quality to a rated security (including, 

as applicable, an investment grade security) by the 

Adviser or Sub-Adviser will be based on, among 

other factors, a comparison between the unrated 

security and securities issued by similarly situated 

companies to determine where in the spectrum of 

credit quality the unrated security would fall. The 

Adviser or Sub-Adviser would also perform an 

analysis of the unrated security and its issuer 

similar, to the extent possible, to that performed by 

a NRSRO in rating similar securities and issuers. 

See Credit Analysis of Portfolio Securities, 

Commission No-Action Letter (May 8, 1990). 

35See 15 U.S.C. 80a–18; Investment Company Act 

Release No. 10666 (April 18, 1979), 44 FR 25128 

(April 27, 1979); Dreyfus Strategic Investing, 

Commission No-Action Letter (June 22, 1987); 

Merrill Lynch Asset Management, L.P., Commission 

No-Action Letter (July 2, 1996). 

36The Fund may invest up to 50% of Fund assets 

in securities issued by issuers that are organized in 

or maintain their principal place of business in 

emerging market countries. According to the 

Adviser, while there is no universally accepted 

definition of what constitutes an ‘‘emerging 

market,’’ in general, emerging market countries are 

characterized by developing commercial and 

financial infrastructure with significant potential 

for economic growth and increased capital market 

participation by foreign investors. The Adviser and 

Sub-Adviser look at a variety of commonly-used 

factors when determining whether a country is an 

‘‘emerging’’ market. In general, the Adviser and 

Sub-Adviser consider a country to be an emerging 

market if: (1) It is either (a) classified by the World 

Bank in the lower middle or upper middle income 

designation for one of the past 5 years (i.e., per 

capita gross national product of less than U.S. 

$9,385), (b) has not been a member of the 

Organization for Economic Co-operation and 

Development (‘‘OECD’’) for the past five years or (c) 

classified by the World Bank as high income and 

a member in OECD in each of the last five years, 

but with a currency that has been primarily traded 

on a non-delivered basis by offshore investors (e.g., 

Korea and Taiwan); and (2) the country’s debt 

market is considered relatively accessible by foreign 

investors in terms of capital flow and settlement 

considerations. This definition could be expanded 

or exceptions made depending on the evolution of 

market and economic conditions. 

37According to the Adviser, ‘‘investment grade’’ 

(other than with respect to Money Market 

Securities) means securities rated in the Baa/BBB 

categories or above by one or more NRSROs. If a 

security is rated by multiple NRSROs and receives 

different ratings, the Fund will treat the security as 

being rated in the highest rating category received 

from an NRSRO. Rating categories may include subcategories or gradations indicating relative standing. 

38 In reaching liquidity decisions, the Adviser or 

Sub-Adviser may consider the following factors: 

The frequency of trades and quotes for the security; 

the number of dealers wishing to purchase or sell 

the security and the number of other potential 

purchasers; dealer undertakings to make a market 

in the security; and the nature of the security and 

the nature of the marketplace in which it trades 

(e.g., the time needed to dispose of the security, the 

method of soliciting offers and the mechanics of 

transfer). 

39See Exchange Rule 5705(a)(4)(A). The Fund 

will meet the following requirements of Rule 

5705(a)(4)(A): (i) The index or portfolio must 

consist of fixed income securities (which are 

generally defined to include Debt Instruments) 

(Rule 5705(a)(4)(A)(i)); (ii) components that in the 

aggregate account for at least 75% of the weight of 

the index or portfolio must each have a minimum 

original principal amount outstanding of $100 

million or more (Rule 5705(a)(4)(A)(ii)); (iii) a 

component may be a convertible security, however, 

once the convertible security converts to an 

underlying equity security, the component is 

removed from the index or portfolio (Rule 

5705(a)(4)(A)(iii)); (iv) no component fixed-income 

security (excluding Treasury Securities) will 

represent more than 30% of the weight of the index 

or portfolio, and the five highest weighted 

component fixed-income securities do not in the 

aggregate account for more than 65% of the weight 

of the index or portfolio (Rule 5705(a)(4)(A)(iv)); (v) 

an underlying index or portfolio (excluding 

exempted securities) must include securities from 

a minimum of 13 non-affiliated issuers (Rule 

5705(a)(4)(A)(v)); and (vi) component securities that 

in the aggregate account for at least 90% of the 

weight of the index or portfolio must be from 

issuers that have a worldwide market value of its 

outstanding common equity held by non-affiliates 

of $700 million or more (Rule 5705(a)(4)(A)(vi)(c)). 

40See note 26, supra. 

41A total return swap is an agreement between 

two parties in which one party agrees to make 

payments of the total return of a reference asset in 

return for payments equal to a rate of interest on 

another reference asset. 

42A credit default swap is a financial swap 

agreement that the seller of the credit default swap 

Continued 

Money Market Securities rated 

investment grade.34

The Fund will comply with the 

regulatory requirements of the 

Commission to maintain assets as 

‘‘cover,’’ maintain segregate accounts, 

and make margin payments when it 

takes positions in derivative 

instruments involving obligations to 

third parties (i.e., instruments other 

than purchase options). With respect to 

certain kinds of derivative transactions 

entered into by the Fund that involve 

obligations to make future payments to 

third parties, including, but not limited 

to, futures and forward contracts, swap 

contracts, the purchase of securities on 

a when-issued or delayed delivery basis, 

or reverse repurchase agreements, the 

Fund, in accordance with applicable 

federal securities laws, rules, and 

interpretations thereof, will ‘‘set aside’’ 

liquid assets, or engage in other 

measures to ‘‘cover’’ open positions 

with respect to such transactions.35

The Fund intends to provide exposure 

across geographic regions and countries, 

world-wide. The Fund intends to invest 

in Debt Instruments originating in the 

following regions/countries: North 

America, South America, Asia, 

Australia and New Zealand, Latin 

America, Europe, Africa and the Middle 

East. The Fund intends to invest 

primarily in developed and emerging 

markets countries.36 The Fund’s credit 

exposure will be monitored on an 

ongoing basis from a risk perspective, 

and may be modified, reduced, or 

eliminated. The Fund’s exposure to any 

single corporate issuer generally will be 

limited to 10% of the Fund’s assets. The 

Fund’s exposure to any single sovereign 

issuer generally will be limited to 25% 

of the Fund’s assets (excluding 

exempted securities as defined in 

Section 3(a)(12) of the Act). The 

percentage of the Fund’s assets in a 

specific region, country or issuer will 

change from time to time. The Fund’s 

exposure to any one country (other than 

the United States) generally will be 

limited to 30% of the Fund’s assets 

though this percentage may change from 

time to time in response to economic 

events and changes to the respective 

credit ratings of the Debt Instruments in 

such country. 

The universe of Debt Instruments will 

include securities that are rated 

‘‘investment grade’’ as well as ‘‘noninvestment grade’’ (commonly referred 

to as ‘junk bonds’).37 The Fund may 

invest in Debt Instruments of any credit 

quality, including unrated securities, 

and with effective or final maturities of 

any length. 

Liquidity will be an important factor 

in the Fund’s security selection 

process.38 Under normal market 

conditions, at least 80% of the Fund’s 

net assets that are invested in Debt 

Instruments will be invested in Debt 

Instruments that are issued by issuers 

with outstanding debt of at least $200 

million (or the foreign currency 

equivalent thereof). 

The Fund will be actively-managed 

and will not be tied to an index. The 

Exchange notes, however, that the 

Fund’s investment portfolio will meet 

the criteria for non-actively managed, 

index-based, fixed income ETFs 

contained in NASDAQ Rule 

5705(a)(4)(A).39

Secondary Investments in Derivatives 

and Foreign Currencies 

The Fund’s investments in derivative 

instruments will be made in accordance 

with the 1940 Act and consistent with 

the Fund’s investment objectives and 

policies. Derivative instruments are 

financial contracts whose values depend 

upon, or are derived from, the value of 

any underlying asset, reference rate or 

index, and may relate to, among other 

things, interest rates, currencies or 

currency exchange rates. Under normal 

market conditions, no more than 35% of 

the Fund’s investments will be in 

derivative instruments (with no more 

than 20% of the Fund’s investments in 

derivative instruments that are not 

within the definition of ‘‘Debt 

Instruments’’). The Fund may invest in 

the following derivative instruments (in 

addition to Debt Instruments that are 

derivatives): listed futures contracts 

(other than on Debt Instruments),40 total 

return swaps,41 credit default swaps,42


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will compensate the buyer in the event of a loan 

default or other credit event. 

43See note 30, supra. 

44See note 10, supra. 

45See note 30, supra. 

46When used herein, ETPs may include, without 

limitation: Portfolio Depository Receipts and Index 

Fund Shares (as described in NASDAQ Rule 5705); 

Securities Linked to the Performance of Indexes and 

Commodities (as described in NASDAQ Rule 5710); 

Index-Linked Exchangeable Notes; Equity Gold 

Shares; Trust Certificates; Commodity-Based Trust 

Shares; Currency Trust Shares; Commodity Index 

Trust Shares; Commodity Futures Trust Shares; 

Partnership Units; Trust Units; Managed Trust 

Securities; and Currency Warrants (as described in 

NASDAQ Rule 5711); Alpha-Index Linked 

Securities (as described in NASDAQ Rule 5712); 

Equity-Linked Debt Securities (as described in 

NASDAQ Rule 5715); Trust Issued Receipts (as 

described in NASDAQ Rule 5720); Index Warrants 

(as described in NASDAQ Rule 5725); Securities 

Not Otherwise Specified (as described in NASDAQ 

Rule 5730); Managed Fund Shares (as described in 

NASDAQ Rule 5735); and closed-end funds. The 

ETPs in which the Fund may invest all will be 

listed and traded on U.S. registered exchanges. The 

Fund will invest in the securities of registered 

investment company ETPs consistent with the 

requirements of Section 12(d)(1) of the 1940 Act or 

any rule, regulation or order of the Commission or 

interpretation thereof. The Fund will only make 

such investments in conformity with the 

requirements of Section 817 of the Internal Revenue 

Code of 1986. The ETPs in which the Fund may 

invest will primarily be indexed-based ETFs that 

hold substantially all of their assets in securities 

representing a specific index. While the Fund may 

invest in ETPs, the Fund will not invest in 

leveraged or inverse leveraged (e.g., 2X, ¥2X, 3X, 

or ¥3X) ETPs. 

47Except for commercial paper that is included 

within the meaning of ‘‘Debt Instruments,’’ the 

Fund will only invest in commercial paper rated A– 

1 or higher by an NRSRO. 

48The equity securities in which the Fund may 

invest will be limited to securities that trade on 

markets that are members of the ISG. See note 26, 

supra. The Fund may invest in non-U.S. equity 

securities by means of American Depository 

Receipts (‘‘ADRs’’), European Depository Receipts 

(‘‘EDRs’’), and Global Depository Receipts 

(‘‘GDRs’’). ADRs are receipts typically issued by an 

American Bank or trust company that evidence 

ownership of underlying securities issued by a 

foreign corporation. EDRs are receipts issued in 

Europe that evidence a similar ownership 

arrangement. GDRs are receipts issued throughout 

the world that evidence a similar ownership 

arrangement. 

49See note 38, supra, regarding the method by 

which the Adviser or the Sub-Adviser, as 

applicable, will determine liquidity of an 

instrument. 

50See note 39, supra. 

51The Fund’s Sub-Adviser is responsible for 

complying with the Fund’s restrictions on investing 

in illiquid assets. See note 38, supra. 

52The Commission has stated that long-standing 

Commission guidelines have required open-end 

funds to hold no more than 15% of their net assets 

in illiquid securities and other illiquid assets. See 

Investment Company Act Release No. 28193 (March 

11, 2008), 73 FR 14618 (March 18, 2008), footnote 

34. See also, Investment Company Act Release No. 

5847 (October 21, 1969), 35 FR 19989 (December 

31, 1970) (Statement Regarding ‘‘Restricted 

Securities’’); Investment Company Act Release No. 

18612 (March 12, 1992), 57 FR 9828 (March 20, 

1992) (Revisions of Guidelines to Form N–1A). A 

fund’s portfolio security is illiquid if it cannot be 

disposed of in the ordinary course of business 

within seven days at approximately the value 

ascribed to it by the fund. See Investment Company 

Act Release No. 14983 (March 12, 1986), 51 FR 

9773 (March 21, 1986) (adopting amendments to 

Rule 2a–7 under the 1940 Act); Investment 

Company Act Release No. 17452 (April 23, 1990), 

55 FR 17933 (April 30, 1990) (adopting Rule 144A 

under the Securities Act of 1933 (15 U.S.C. 77a). 

53The Fund will include appropriate risk 

disclosure in its offering documents, including 

leveraging risk. Leveraging risk is the risk that 

certain transactions of a fund, including a fund’s 

use of derivatives, may give rise to leverage, causing 

a fund to be more volatile than if it had not been 

leveraged. To mitigate leveraging risk, the Adviser 

will segregate or earmark liquid assets or otherwise 

cover the transactions that give rise to such risk. See 

15 U.S.C. 80a–18; Investment Company Act Release 

No. 10666 (April 18, 1979), 44 FR 25128 (April 27, 

1979); Dreyfus Strategic Investing, Commission NoAction Letter (June 22, 1987); Merrill Lynch Asset 

Management, L.P., Commission No-Action Letter 

(July 2, 1996). 

and listed options on futures contracts 

(other than on Debt Instruments).43

As discussed above, the Fund’s use of 

derivative instruments will be 

collateralized by investments in Money 

Market Securities and other liquid Debt 

Instruments.44 Such investments will be 

consistent with the Fund’s investment 

objective and will not be used to 

enhance leverage. 

The Fund may engage in foreign 

currency transactions, and may invest 

directly in foreign currencies in the 

form of bank and financial institution 

deposits, and certificates of deposit 

denominated in a specified non-U.S. 

currency. The Fund may enter into 

forward currency contracts in order to 

‘‘lock in’’ the exchange rate between the 

currency it will deliver and the currency 

it will receive for the duration of the 

contract.45

Other Fund Investments 

The Fund may invest up to 20% of its 

net assets in one or more of the 

following instruments. The Fund may 

invest in the securities of other 

investment companies (including 

exchange-traded products (‘‘ETPs’’), 

such as other ETFs.46 The Fund may 

invest in debt instruments that do not 

fall within the meaning of ‘‘Debt 

Instruments’’ above, including bank 

loans; banker’s acceptances, which are 

short-term credit instruments used to 

finance commercial transactions; bank 

time deposits, which are monies kept on 

deposit with banks or savings and loan 

associations for a stated period of time 

at a fixed rate of interest; commercial 

paper, which is short-term unsecured 

promissory notes,47 and certificates of 

deposit issued against funds deposited 

in a bank or savings and loan 

association. The Fund may invest in 

U.S. and non-U.S. equity securities.48

The Fund may also hold cash. 

Investment Restrictions 

The Fund will invest only in 

corporate bonds that the Adviser or SubAdviser deems to be sufficiently 

liquid.49 The Fund will only buy 

performing debt securities and not 

distressed debt. Generally, a corporate 

bond will be required to have $150 

million or more par amount outstanding 

and significant par value traded to be 

considered as an eligible investment. 

Economic and other conditions may, 

from time to time, lead to a decrease in 

the average par amount outstanding of 

bond issuances. Therefore, although the 

Fund does not intend to do so, it may 

invest up to 5% of its net assets in 

corporate bonds with less than $150 

million par amount outstanding if (1) 

the Adviser or Sub-Adviser deems such 

security to be sufficiently liquid based 

on its analysis of the market for such 

security (based on, for example, brokerdealer quotations or its analysis of the 

trading history of the security or the 

trading history of other securities issued 

by the issuer), (2) such investment is 

deemed by the Adviser or Sub-Adviser 

to be in the best interest of the Fund, 

and (3) such investment is deemed 

consistent with the Fund’s goal of 

providing exposure to a broad range of 

countries and issuers.50

The Fund may hold up to an aggregate 

of 15% of its net assets in illiquid assets 

(calculated at the time of investment), 

including Rule 144A securities deemed 

illiquid by the Adviser or SubAdviser.51 The Fund will monitor its 

portfolio liquidity on an ongoing basis 

to determine whether, in light of current 

circumstances, an adequate level of 

liquidity is being maintained, and will 

consider taking appropriate steps in 

order to maintain adequate liquidity if 

through a change in values, net assets, 

or other circumstances, more than 15% 

of the Fund’s net assets are held in 

illiquid assets. Illiquid assets include 

securities subject to contractual or other 

restrictions on resale and other 

instruments that lack readily available 

markets as determined in accordance 

with Commission staff guidance.52 The 

Fund’s investments will be consistent 

with the Fund’s investment objectives 

and will not be used to enhance 

leverage. 53

The Fund may invest in Debt 

Instruments with effective or final 

maturities of any length. The Fund will 

seek to keep the average effective 

duration of its portfolio between -5 and 

10 years under normal market 

conditions. Effective duration is an 

indication of an investment’s interest 

rate risk or how sensitive an investment 

or a fund is to changes in interest rates. 


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54Negative duration would occur when the total 

duration of the Fund’s liabilities (e.g., through short 

positions in U.S. government securities or related 

futures positions) is less than the total duration of 

the Fund’s assets. 

55See Form N–1A, Item 9. The Commission has 

taken the position that a fund is concentrated if it 

invests more than 25% of the value of its total 

assets in any one industry. See, e.g., Investment 

Company Act Release No. 9011 (October 30, 1975), 

40 FR 54241 (November 21, 1975). 

56 26 U.S.C. 851. 

57Repurchase agreements will not be used by the 

Fund to enhance leverage. 

58The NAV of the Fund’s Shares generally is 

calculated once daily Monday through Friday as of 

the close of regular trading on the New York Stock 

Exchange, generally 4:00 p.m. Eastern time (the 

‘‘NAV Calculation Time’’). NAV per Share is 

calculated by dividing the Fund’s net assets by the 

number of Fund Shares outstanding. For more 

information regarding the valuation of the Fund’s 

investments in calculating the Fund’s NAV, see the 

Registration Statement. 

Generally, a fund or instrument with a 

longer effective duration is more 

sensitive to interest rate fluctuations, 

and, therefore, more volatile, than a 

similar fund with a shorter effective 

duration. To potentially protect the 

Fund against the impact of rising rates, 

the Adviser or Sub-Adviser may take the 

duration of the Fund below zero 

through strategic short positions in 

instruments such as U.S. Treasury 

futures (subject to the Fund’s limits on 

investments in derivative instruments as 

described below). A negative duration 

suggests that the Fund may benefit from 

a rise in rates.54 The Fund’s actual 

portfolio duration may be longer or 

shorter depending on market 

conditions. 

The Fund intends to invest in Debt 

Instruments of at least 13 non-affiliated 

issuers. The Fund will not concentrate 

25% or more of the value of its total 

assets (taken at market value at the time 

of each investment) in any one industry, 

as that term is used in the 1940 Act 

(except that this restriction does not 

apply to obligations issued by the U.S. 

government or its respective agencies 

and instrumentalities or governmentsponsored enterprises).55

The Fund intends to qualify each year 

as a regulated investment company (a 

‘‘RIC’’) under Subchapter M of the 

Internal Revenue Code of 1986, as 

amended.56 In addition to satisfying the 

above referenced RIC diversification 

requirements, no portfolio security held 

by the Fund (other than U.S. 

government securities) will represent 

more than 30% of the weight of the 

Fund’s portfolio and the five highest 

weighted portfolio securities of the 

Fund (other than U.S. government 

securities) will not in the aggregate 

account for more than 65% of the 

weight of the Fund’s portfolio. For these 

purposes, the Fund may treat 

repurchase agreements collateralized by 

U.S. government securities as U.S. 

government securities.57

Creation and Redemption of Shares 

The Fund will issue and redeem 

Shares on a continuous basis at net asset 

value (‘‘NAV’’) 58 only in large blocks of 

Shares (‘‘Creation Units’’) in 

transactions with Authorized 

Participants (as defined below). Creation 

Units generally will consist of 100,000 

Shares, though this may change from 

time to time. Creation Units are not 

expected to consist of less than 50,000 

Shares. According to the Registration 

Statement and consistent with the 

Exemptive Relief, the Fund will issue 

and redeem Creation Units in exchange 

for a portfolio of Debt Instruments and 

other instruments (‘‘Deposit Securities’’) 

and/or an amount of U.S. cash 

representing one or more Deposit 

Securities (‘‘Deposit Cash’’) providing 

exposure to the holdings of the Fund 

and cash. 

Together, the Deposit Securities and/ 

or Deposit Cash and the Cash 

Component (defined below) will 

constitute the ‘‘Fund Deposit,’’ which 

represents the minimum initial and 

subsequent investment amount for a 

Creation Unit of the Fund. The ‘‘Cash 

Component’’ will be an amount equal to 

the difference between the NAV of the 

Shares (per Creation Unit) and the 

market value of the Deposit Securities 

(e.g., if the NAV per Creation Unit is 

less than the market value of the Deposit 

Securities), the Cash Component will be 

a corresponding negative amount and 

the creator will be entitled to receive 

cash in an amount equal to the Cash 

Component. The Cash Component will 

serve the function of compensating for 

any differences between the NAV per 

Creation Unit and the market value of 

the Deposit Securities and/or Deposit 

Cash, as applicable. 

To be eligible to place orders with 

respect to creations and redemptions of 

Creation Units, an entity must be (i) a 

‘‘Participating Party,’’ i.e., a brokerdealer or other participant in the 

clearing process through the Continuous 

Net Settlement System of the National 

Securities Clearing Corporation 

(‘‘NSCC’’); or (ii) a Depository Trust 

Company (‘‘DTC’’) participant. In 

addition, each Participating Party or 

DTC participant (each, an ‘‘Authorized 

Participant’’) must execute an agreement 

that has been agreed to by the 

Distributor and the Transfer Agent, and 

that has been accepted by the Trust, 

with respect to purchases and 

redemptions of Creation Units. All 

standard orders to create Creation Units 

must be received by the Transfer Agent 

no later than the closing time of the 

regular trading session of the New York 

Stock Exchange (ordinarily 4:00 p.m., 

Eastern Time) (the ‘‘Closing Time’’) in 

each case on the date such order is 

placed in order for the creation of 

Creation Units to be effected based on 

the NAV of Shares as next determined 

on such date after receipt of the order 

in proper form. Shares may be redeemed 

only in Creation Units at their NAV next 

determined after receipt not later than 

the Closing Time of a redemption 

request in proper form by the Fund 

through the Transfer Agent only on a 

business day. 

The Custodian, through the NSCC, 

will make available on each business 

day, immediately prior to the opening of 

business on the Exchange’s Core 

Trading Session (currently 9:30 a.m. 

E.T.), the list of names and the required 

number or amount of each Deposit 

Security and/or the amount of the 

Deposit Cash, to be included in the 

current Fund Deposit (based on 

information at the end of the previous 

business day) for the Fund. The Fund 

Deposit is subject to any applicable 

adjustments, in order to effect purchases 

of Creation Units of the Fund until such 

time as the next-announced 

composition of the Deposit Securities is 

made available. 

With respect to the Fund, the 

Custodian, through the NSCC, will make 

available immediately prior to the 

opening of business on the Exchange 

(9:30 a.m. E.T.) on each business day, 

the list of the names and quantities of 

the Fund’s portfolio securities (‘‘Fund 

Securities’’) that will be applicable 

(subject to possible amendment or 

correction) to redemption requests 

received in proper form on that day. 

Fund Securities on redemption may not 

be identical to Deposit Securities. 

Shares may be redeemed only in 

Creation Units at their NAV next 

determined after receipt of a redemption 

request in proper form by the Fund 

through the Transfer Agent and only on 

a business day. 

Redemption proceeds for a Creation 

Unit will be paid either in-kind or in 

cash or a combination thereof, as 

determined by the Trust. With respect to 

in-kind redemptions of the Fund, 

redemption proceeds will consist of 

Fund Securities as announced by the 

Custodian on the business day of the 

request for redemption received in 

proper form plus cash in an amount 

equal to the difference between the NAV 

of the Shares being redeemed, as next 

determined after receipt of a request in 

proper form, and the value of the Fund 


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59 International Data Corporation (‘‘IDC’’) is 

expected to be the primary price source for the 

Fund’s assets. The Fund may also rely, however, on 

other recognized third-party pricing sources, 

including without limitation Bloomberg, WM 

Reuters, JP Morgan, Markit and JJ Kenney, to 

provide prices for certain asset categories, including 

among others, currency swaps, forward currency 

contracts, spot currencies, and corporate securities, 

in each case as determined, from time to time, by 

the Fund’s Board, as defined below. Each of these 

pricing sources is a ‘‘Pricing Service’’ for purposes 

of this proposed rule change. 

60The Trust’s Board has established a Pricing 

Committee that is composed of officers of the Trust 

and investment management personnel of the 

Adviser. The Pricing Committee is responsible for 

the valuation and revaluation of any portfolio 

investments for which market quotations are not 

readily available. The Pricing Committee has 

implemented procedures designed to prevent the 

use and dissemination of material, non-public 

information regarding valuation and revaluation of 

any portfolio investment. 

Securities (the ‘‘Cash Redemption 

Amount’’), less a fixed redemption 

transaction fee and any applicable 

variable charge as set forth in the 

Registration Statement. In the event the 

Fund Securities have a value greater 

than the NAV of the Shares, a 

compensating cash payment equal to the 

differential will be required to be made 

by or through an Authorized Participant 

by the redeeming shareholder. 

Notwithstanding the foregoing, at the 

Trust’s discretion, an Authorized 

Participant may receive the 

corresponding cash value of the 

securities in lieu of the in-kind 

securities value representing one or 

more Fund Securities. Once created, 

Shares of the Fund will trade on the 

secondary market in amounts less than 

a Creation Unit. 

Net Asset Value 

The NAV of the Fund will be 

calculated by the Custodian and 

determined at the close of the regular 

trading session on the NASDAQ Stock 

Market (ordinarily 4:00 p.m. E.T.) on 

each day that the Exchange is open, 

provided that fixed-income assets may 

be valued as of the announced closing 

time for trading in fixed-income 

instruments on any day that the 

Securities Industry and Financial 

Markets Association (or the applicable 

exchange or market on which the 

Fund’s investments are traded) 

announces an early closing time. The 

NAV per Share for the Fund will be 

computed by dividing the value of the 

net assets of the Fund (i.e., the value of 

its total assets less total liabilities) by 

the total number of Shares outstanding, 

rounded to the nearest cent. Expenses 

and fees, including the management 

fees, are accrued daily and taken into 

account for purposes of determining 

NAV.59 Creation/redemption order cutoff times may also be earlier on such 

days. 

In calculating the Fund’s NAV per 

Share, the Fund’s investment will 

generally be valued using market 

valuations. A market valuation generally 

means a valuation (i) obtained from an 

exchange, a pricing service, or a major 

market maker (or dealer), (ii) based on 

a price quotation or other equivalent 

indication of value supplied by an 

exchange, a pricing service, or a major 

market maker or dealer, or (iii) based on 

amortized cost, for securities with 

remaining maturities of 60 days or less. 

The Adviser may use various Pricing 

Services or discontinue the use of any 

Pricing Service, as approved by the 

Fund’s board of trustees (‘‘Board’’) from 

time to time. A price obtained from a 

Pricing Service based on such Pricing 

Service’s valuation matrix may be 

considered a market valuation. Any 

assets or liabilities denominated in 

currencies other than the U.S. dollar 

will be converted into U.S. dollars at the 

current market rates on the date of 

valuation as quoted by one or more 

Pricing Service. Bank deposits held in 

U.S. dollars will be valued at their 

actual dollar amount; bank deposits 

held in foreign currencies will be 

converted into U.S. dollars and valued 

at their actual amounts in U.S. dollars. 

According to the Adviser, debt 

instruments (including Money Market 

Securities), including without 

limitation, Debt Instruments, will 

generally be valued using prices 

received from independent Pricing 

Services as of the announced closing 

time for trading in fixed-income 

instruments in the respective market or 

exchange. In determining the value of a 

fixed-income investment, Pricing 

Services determine valuations for 

normal institutional-size trading units of 

such securities using valuation models 

or matrix pricing, which incorporates 

yield and/or price with respect to bonds 

that are considered comparable in 

characteristics such as rating, interest 

rate and maturity date and quotations 

from securities dealers to determine 

current value. 

Exchange traded assets (including 

without limitation, equity securities, 

listed futures contracts, listed currency 

options, listed options on futures, and 

ETPs) will be valued at the last reported 

sale price or the official closing price on 

that exchange where the security or 

other instrument is primarily traded on 

the day that the valuation is made. 

Shares of money market funds 

(including Money Market Securities that 

are money market funds) will be valued 

at their net asset values as reported on 

the applicable fund’s Web site or to 

major market vendors. 

With respect to derivative 

instruments, if, however, neither the last 

sales price nor the official closing price 

is available, each of these derivative 

instruments will be valued at either the 

last reported sale price or official 

closing price as of the close of regular 

trading of the principal market on 

which the instrument is listed 

consistent with the primary benchmark. 

Spot currencies and non-exchange– 

traded derivatives, including nondeliverable forward currency contracts, 

currency swaps, interest rate swaps, 

total return swaps, credit default swaps, 

and credit-linked notes will normally be 

valued on the basis of quotes obtained 

from brokers and dealers or Pricing 

Services using data reflecting the earlier 

closing of the principal markets for 

those assets. Prices from independent 

Pricing Services will also include prices 

based on valuation models or matrix 

pricing to determine current value. 

Prices obtained from independent 

Pricing Services typically use 

information provided by market makers 

or bond dealers or estimates of market 

values obtained by reference to yield 

data relating to investments or securities 

with similar characteristics, including 

rating, interest rate, maturity date, 

option adjusted spread models, 

prepayment projections, interest rate 

spreads and yield surveys. Matrix 

pricing is an estimated price or value for 

a fixed income security. Matrix pricing 

is considered a form of fair value 

pricing, discussed below. In the event 

that current market valuations are not 

readily available or such valuations do 

not reflect current market value, the 

Trust’s procedures require the Pricing 

Committee to determine an asset’s fair 

value if a market price is not readily 

available in accordance with the 1940 

Act.60 In determining such value, the 

Trust’s Pricing Committee may 

consider, among other things, (i) price 

comparisons among multiple sources, 

(ii) a review of corporate actions and 

news events, and (iii) a review of 

relevant financial indicators (e.g., 

movement in interest rates and market 

indices). In these cases a Fund’s NAV 

may reflect certain portfolio assets’ fair 

values rather than their market prices. 

Fair value pricing involves subjective 

judgments and it is possible that the fair 

value determination for a security is 

materially different than the value that 

could be realized upon the sale of the 

security. 

Because foreign securities exchanges 

may be open on different days than the 

days during which an investor may 

purchase or sell Shares, the value of the 


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61The Bid/Ask Price of the Fund will be 

determined using the midpoint of the highest bid 

and the lowest offer on the Exchange as of the time 

of calculation of such Fund’s NAV. The records 

relating to Bid/Ask Prices will be retained by the 

Fund and its service providers. 

62See NASDAQ Rule 4120(b)(4) (describing the 

three trading sessions on the Exchange: (1) PreMarket Session from 4 a.m. to 9:30 a.m. Eastern 

time; (2) Regular Market Session from 9:30 a.m. to 

4 p.m. or 4:15 p.m. Eastern time; and (3) PostMarket Session from 4 p.m. or 4:15 p.m. to 8 p.m. 

Eastern time). 

63Under accounting procedures to be followed by 

the Fund, trades made on the prior business day 

(‘‘T’’) will be booked and reflected in NAV on the 

current business day (‘‘T+1’’). Notwithstanding the 

foregoing, portfolio trades that are executed prior to 

the opening of the Exchange on any business day 

may be booked and reflected in NAV on such 

business day. Accordingly, the Fund will be able to 

disclose at the beginning of the business day the 

portfolio that will form the basis for the NAV 

calculation at the end of the business day. 

64Currently, the NASDAQ OMX Global Index 

Data Service (‘‘GIDS’’) is the NASDAQ OMX global 

index data feed service, offering real-time updates, 

daily summary messages, and access to widely 

followed indexes and ETFs. GIDS provides 

investment professionals with the daily and 

historical information needed to track or trade 

NASDAQ OMX indexes, listed ETFs or third-party 

partner indexes and ETFs. 

Fund’s securities may change on days 

when investors are not able to purchase 

or sell Shares. Assets denominated in 

foreign currencies will be converted into 

U.S. dollars at the exchange rate of such 

currencies against the U.S. dollar as 

provided by a Pricing Service. The value 

of assets denominated in foreign 

currencies will be converted into U.S. 

dollars at the exchange rates at the time 

of valuation. 

The pre-established pricing methods 

and valuation policies and procedures 

outlined above may change, subject to 

review and approval of the Pricing 

Committee and the Board, as necessary. 

Availability of Information 

The Fund’s Web site 

(www.wisdomtree.com), which will be 

publicly available prior to the public 

offering of Shares, will include a form 

of the prospectus for the Fund that may 

be downloaded. The Web site will 

include additional quantitative 

information updated on a daily basis, 

including, for the Fund: (1) the prior 

business day’s reported NAV, mid-point 

of the bid/ask spread at the time of 

calculation of such NAV (the ‘‘Bid/Ask 

Price’’),61 and a calculation of the 

premium and discount of the Bid/Ask 

Price against the NAV; and (2) 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. On each business day, before 

commencement of trading in Shares in 

the Regular Market Session 62 on the 

Exchange, the Trust will disclose on its 

Web site (www.wisdomtree.com) the 

identities and quantities of the portfolio 

of securities and other assets (the 

‘‘Disclosed Portfolio’’ as defined in 

Nasdaq Rule 5732(c)(2)) held by the 

Fund that will form the basis for the 

Fund’s calculation of NAV at the end of 

the business day.63 The Disclosed 

Portfolio will include, as applicable, the 

names, quantity, ticker symbol (if 

applicable), percentage weighting and 

market value of Debt Instruments, and 

other assets held by the Fund and the 

characteristics of such assets, as 

discussed below. The Fund’s disclosure 

of forward positions will include 

information regarding the underlying 

instruments for such positions that 

market participants can use to value 

these positions intraday, and this 

information may include ticker symbols 

or other identifiers, or the underlying 

index. The Web site and information 

will be publicly available at no charge. 

A basket composition file, which will 

include the security names and 

quantities of securities and other assets 

required to be delivered in exchange for 

Fund Shares, together with estimates 

and actual cash components, will be 

publicly disseminated prior to the 

opening of the Exchange via the NSCC. 

The basket will represent one Creation 

Unit of the Fund. The NAV of the Fund 

will normally be determined as of the 

close of the regular trading session on 

the Exchange (ordinarily 4:00 p.m. ET) 

on each business day. Authorized 

Participants may refer to the basket 

composition file for information 

regarding Debt Instruments and any 

other instrument that may comprise the 

Fund’s basket on a given day. 

In addition, an estimated value, 

defined in Rule 5735 as the ‘‘Intraday 

Indicative Value’’ (as defined in Nasdaq 

Rule 5753(c)(3)), that reflects an 

estimated intraday value of the Fund’s 

portfolio, will be disseminated. 

Moreover, the Intraday Indicative Value, 

available on the NASDAQ OMX 

Information LLC proprietary index data 

service,64 will be based upon the current 

value for the components of the 

Disclosed Portfolio and will be updated 

and widely disseminated by one or 

more major market data vendors at least 

every 15 seconds during the Regular 

Market Session. In addition, during 

hours when the markets for local debt 

and other assets in the Fund’s portfolio 

are closed, the Intraday Indicative Value 

will be updated at least every 15 

seconds during the Regular Market 

Session to reflect currency exchange 

fluctuations. 

The dissemination of the Intraday 

Indicative Value, together with the 

Disclosed Portfolio, will allow investors 

to determine the value of the underlying 

portfolio of the Fund on a daily basis 

and to provide a close estimate of that 

value throughout the trading day. 

Investors can also obtain Trust’s 

Statement of Additional Information 

(‘‘SAI’’), the Fund’s Shareholder 

Reports, and its Form N–CSR and Form 

N–SAR, filed twice a year. The Trust’s 

SAI and Shareholder Reports will be 

available free upon request from the 

Trust, and those documents and the 

Form N–CSR may be viewed on screen 

or downloaded from the Commission’s 

Web site at www.sec.gov. 

Information regarding market price 

and volume of the Shares will be 

continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. The previous day’s closing 

price and trading volume information 

for the Shares will be published daily in 

the financial section of newspapers. 

Quotation and last sale information will 

be available via NASDAQ proprietary 

quote and trade services, as well as in 

accordance with the Unlisted Trading 

Privileges and the Consolidated Tape 

Association (‘‘CTA’’) plans for the 

Shares and any underlying ETPs. 

Intra-day, executable price quotations 

on Debt Instruments, including fixed 

rate, variable rate and zero coupon 

securities, Money Market Securities that 

are Debt Instruments (i.e., other than 

money market mutual funds), LPNs, 

senior loans, ABSs, mortgage backed 

securities (including CMBSs, ARMBSs, 

CMOs and interest only securities), 

putable bonds, busted convertible 

bonds, credit-linked notes, inflationlinked securities, Government 

Securities, foreign sovereign debt 

securities, supranational debt securities, 

corporate debt securities, and municipal 

securities, as well as on other debt 

securities, and non-exchange traded 

derivative instruments, such as nondeliverable forward currency contracts, 

currency swaps, total return swaps, and 

credit default swaps, are available from 

major broker-dealer firms. Intra-day 

price information is available through 

subscription services, such as 

Bloomberg and Thomson Reuters, 

which can be accessed by Authorized 

Participants and other investors. Intraday and closing price information 

regarding equity securities, ETPs and 

listed currency options traded on a 

national securities exchange, and 

regarding non-securities derivative 

instruments traded on an exchange, 

including futures contracts and listed 

options on futures contracts will be 


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12840 Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Notices 

65See 17 CFR 240.10A–3. 

66FINRA surveils trading on the Exchange 

pursuant to a regulatory services agreement. The 

Exchange is responsible for FINRA’s performance 

under this regulatory services agreement. 

67For a list of the current members of ISG, see 

www.isgportal.org. The Exchange notes that not all 

components of the Disclosed Portfolio may trade on 

markets that are members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. 

68See notes 26, 46, and 48, supra. 

available from the exchange on which 

such securities or other instruments are 

traded. Price information regarding nonexchange listed derivative instruments, 

including swap agreements, creditlinked notes, and forward currency 

contracts and regarding spot currencies 

is available from major market vendors. 

Money market funds are typically 

priced once each business day and their 

prices are available through the 

applicable fund’s Web site or from 

major market vendors. Intra-day and 

closing price information is available for 

bank deposits held in foreign currencies 

(i.e., non-U.S. dollar accounts). 

Additional information regarding the 

Fund and the Shares, including 

investment strategies, risks, creation and 

redemption procedures, fees, Fund 

holdings disclosure policies, 

distribution and taxes will be included 

in the Registration Statement. 

Disclosed Portfolio 

The Fund’s disclosure of derivative 

positions in the Disclosed Portfolio will 

include information that market 

participants can use to value these 

positions intraday. On a daily basis, the 

Fund will disclose on the Fund’s Web 

site the following information regarding 

each portfolio holding, as applicable to 

the type of holding: Ticker symbol, 

CUSIP number or other identifier, if 

any; a description of the holding 

(including the type of holding); the 

identity of the security or other asset or 

instrument underlying the holding, if 

any; for options, the option strike price; 

quantity held (as measured by, for 

example, par value, notional value or 

number of shares, contracts or units); 

maturity date, if any; coupon rate, if 

any; effective date, if any; market value 

of the holding; and the percentage 

weighting of the holding in the Fund’s 

portfolio. 

Initial and Continued Listing 

The Shares will be subject to Rule 

5735, which sets forth the initial and 

continued listing criteria applicable to 

Managed Fund Shares. The Exchange 

represents that, for initial and/or 

continued listing, the Fund must be in 

compliance with Rule 10A–3 65 under 

the Act. A minimum of 100,000 Shares 

for the Fund will be outstanding at the 

commencement of trading on the 

Exchange. The Exchange will obtain a 

representation from the issuer of the 

Shares that the NAV per Share will be 

calculated daily and that the NAV and 

the Disclosed Portfolio will be made 

available to all market participants at 

the same time. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

the Fund. NASDAQ will halt trading in 

the Shares under the conditions 

specified in NASDAQ Rules 4120 and 

4121, including the trading pauses 

under NASDAQ Rules 4120(a)(11) and 

(12). Trading may be halted because of 

market conditions or for reasons that, in 

the view of the Exchange, make trading 

in the Shares inadvisable. These may 

include: (1) The extent to which trading 

is not occurring in the securities and/or 

the financial instruments comprising 

the Disclosed Portfolio of the Fund; or 

(2) whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. Trading in the 

Shares also will be subject to Rule 

5735(d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund may be halted. 

Trading Rules 

NASDAQ deems the Shares to be 

equity securities, thus rendering trading 

in the Shares subject to NASDAQ’s 

existing rules governing the trading of 

equity securities. NASDAQ will allow 

trading in the Shares from 4:00 a.m. 

until 8:00 p.m. Eastern time. The 

Exchange has appropriate rules to 

facilitate transactions in the Shares 

during all trading sessions. As provided 

in NASDAQ Rule 5735(b)(3), the 

minimum price variation for quoting 

and entry of orders in Managed Fund 

Shares traded on the Exchange is $0.01. 

Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by both NASDAQ and also 

FINRA on behalf of the Exchange, 

which are designed to detect violations 

of Exchange rules and applicable federal 

securities laws.66 The Exchange 

represents that these procedures are 

adequate to properly monitor Exchange 

trading of the Shares in all trading 

sessions and to deter and detect 

violations of Exchange rules and 

applicable federal securities laws. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

FINRA, on behalf of the Exchange, 

will communicate as needed regarding 

trading in the Shares and the U.S and 

non-U.S. equity securities, ETPs, listed 

options, and listed futures contracts and 

other instruments held by the Fund 

with other markets and other entities 

that are members of the ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement.67 FINRA may obtain trading 

information regarding trading in the 

Shares and the U.S. and non-U.S. equity 

securities, ETPs, listed options, listed 

futures contracts and other instruments 

held by the Fund from such markets and 

other entities. The Exchange also will 

communicate as needed regarding 

trading in the Shares and the U.S and 

non-U.S. equity securities, ETPs, listed 

options, and listed futures contracts and 

other instruments held by the Fund 

with other markets and other entities 

that are members of the ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement. In addition, the Exchange 

may obtain information regarding 

trading in the Shares and the exchangetraded securities and instruments held 

by the Fund from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement. Moreover, FINRA, on behalf 

of the Exchange, is able to obtain trading 

information regarding certain Debt 

Instruments held by the Fund reported 

to FINRA’s Trade Reporting and 

Compliance Engine (‘‘TRACE’’). At least 

90% of the Fund’s assets that are 

invested in exchange-traded derivative 

instruments will be invested in 

instruments that trade in markets that 

are members of ISG or are parties to a 

comprehensive surveillance sharing 

agreement with the Exchange. The ETPs 

and other equity securities in which the 

Fund will invest will be traded solely 

on ISG member exchanges.68

The Exchange also has a general 

policy prohibiting the distribution of 

material, non-public information by its 

employees. 


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Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Notices 12841 

69 15 U.S.C. 78f. 70 15 U.S.C. 78f(b)(5). 

71For a list of the current members of ISG, see 

www.isgportal.org. The Exchange notes that not all 

components of the Disclosed Portfolio may trade on 

markets that are members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. 72See note 53, supra. 

Information Circular 

Prior to the commencement of trading 

of the Shares, the Exchange will inform 

its members in an Information Circular 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Circular 

will discuss the following: (1) The 

procedures for purchases and 

redemptions of Shares in Creation Units 

(and that Shares are not individually 

redeemable); (2) NASDAQ Rule 2310, 

which imposes suitability obligations on 

NASDAQ members with respect to 

recommending transactions in the 

Shares to customers; (3) how and by 

whom information regarding the 

Intraday Indicative Value and Disclosed 

Portfolio are disseminated; (4) the risks 

involved in trading the Shares during 

the Pre-Market and Post-Market 

Sessions when an updated Intraday 

Indicative Value will not be calculated 

or publicly disseminated; (5) the 

requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; and (6) trading information. 

In addition, the Information Circular 

will advise members, prior to the 

commencement of trading, of the 

prospectus delivery requirements 

applicable to the Fund. Members 

purchasing Shares from the Fund for 

resale to investors will deliver a 

prospectus to such investors. The 

Information Circular will also discuss 

any exemptive, no-action and 

interpretive relief granted by the 

Commission from any rules under the 

Act. 

Additionally, the Information Circular 

will reference that the Fund is subject 

to various fees and expenses described 

in the Registration Statement. The 

Information Circular will also disclose 

the trading hours of the Shares of the 

Fund and the NAV Calculation Time for 

the Shares. The Information Circular 

will disclose that information about the 

Shares of the Fund will be publicly 

available on the Fund’s Web site. 

2. Statutory Basis 

NASDAQ believes that the proposal is 

consistent with Section 6(b) of the Act 69

in general and Section 6(b)(5) of the 

Act 70 in particular in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanism of a free and open market 

and in general, to protect investors and 

the public interest. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares will 

be listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in NASDAQ Rule 5735. 

The Exchange represents that trading in 

the Shares will be subject to the existing 

trading surveillances administered by 

both NASDAQ and FINRA on behalf of 

the Exchange, which are designed to 

detect violations of the Exchange rules 

and applicable federal securities laws. 

Neither the Adviser nor the Sub-Adviser 

is a broker-dealer or is affiliated with 

any broker-dealer. In the event (a) the 

Adviser or the Sub-Adviser becomes 

newly registered as a broker-dealer or 

affiliated with a broker-dealer, or (b) any 

new adviser or sub-adviser is a brokerdealer or becomes newly affiliated with 

a broker-dealer, as applicable, they will 

implement a fire wall with respect to its 

relevant personnel or such broker-dealer 

regarding access to information 

concerning the composition and/or 

changes to a portfolio, and will be 

subject to procedures designed to 

prevent the use and dissemination of 

material non-public information 

regarding such portfolio as required by 

paragraph (g) of NASDAQ Rule 5735. 

The Exchange may obtain information 

regarding trading in the Shares and the 

other exchange traded securities and 

other instruments held by the Fund via 

ISG from other exchanges that are 

members of ISG or with which the 

Exchange has entered into a 

comprehensive surveillance sharing 

agreement. FINRA, on behalf of the 

Exchange, will communicate as needed 

regarding trading in the Shares and the 

exchange-traded securities and other 

instruments held by the Fund with 

other markets and other entities that are 

members of the ISG.71 FINRA may 

obtain trading information regarding 

trading in the Shares and the exchangetraded securities and other instruments 

held by the Fund from markets and 

other entities that are members of ISG, 

which includes securities and futures 

exchanges, or with which the Exchange 

has in place a comprehensive 

surveillance sharing agreement. In 

addition, FINRA, on behalf of the 

Exchange, is able to obtain trading 

information regarding certain Debt 

Instruments through its TRACE serve 

[sic]. At least 90% of the Fund’s net 

assets that are invested in exchangetraded derivative instruments will be 

invested in instruments that trade in 

markets that are members of ISG or are 

parties to a comprehensive surveillance 

sharing agreement with the Exchange. 

The Exchange also has a general policy 

prohibiting the distribution of material, 

non-public information by its 

employees. 

The Fund’s investments will be 

consistent with the Fund’s investment 

objectives and will not be used to 

enhance leverage.72 Under normal 

circumstances, the Fund will invest at 

least 80% of its assets in Debt 

Instruments. The Fund’s exposure to 

any single corporate issuer generally 

will be limited to 10% of the Fund’s 

assets. The Fund’s exposure to any 

single sovereign issuer (other than the 

United States government) will typically 

be limited to 25% of the Fund’s assets. 

The Fund’s exposure to any single 

country (other than the United States) 

generally will be limited to 30% of the 

Fund’s assets. There is no limit on the 

amount of the Fund’s assets that may be 

invested in non-investment grade and 

unrated securities. The Fund will invest 

only in corporate bonds that the Adviser 

or Sub-Adviser deems to be sufficiently 

liquid and, generally, a corporate bond 

will be required to have $150 million or 

more par amount outstanding and 

significant par value traded to be 

considered as an eligible investment. 

The Fund intends to invest in Debt 

Instruments of at least 13 non-affiliated 

issuers. The Fund’s investments in 

derivative instruments will be made in 

accordance with the 1940 Act and the 

Fund’s investment objectives and 

policies. Under normal market 

conditions, no more than 35% of the 

value of the Fund’s net assets will be 

invested in derivative instruments (and 

no more than 20% of the Fund’s net 

assets will be invested in derivative 

instruments that are not Debt 

Instruments). Such investments will be 

consistent with the Fund’s investment 

objective. The Fund will comply with 

the regulatory requirements of the 

Commission to maintain assets as 

‘‘cover,’’ maintain segregated accounts, 

and/or make margin payments when it 

takes positions in derivative 

instruments involving obligations to 

third parties (i.e., instruments other 

than purchase options). The Fund’s 

investments in derivative instruments 

will not be used to seek to achieve a 

multiple or inverse multiple of an index 

or other benchmark. The Fund will 


Rmajette on DSK2VPTVN1PROD with NOTICES
12842 Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Notices 

73See note 71, supra. 

seek, where possible, to use 

counterparties, as applicable, whose 

financial status is such that the risk of 

default is reduced; however, the risk of 

losses resulting from default is still 

possible. The Adviser or Sub-Adviser 

will also attempt to mitigate the Fund’s 

respective credit risk by transacting only 

with large, well-capitalized institutions 

using measures designed to determine 

the creditworthiness of the 

counterparty. 

The Fund may invest up to 20% of its 

net assets, in the aggregate, in privately 

issued ABSs and privately issued 

mortgage-backed securities. The Fund 

may invest up to 25% of its net assets 

in credit-linked notes. The Fund may 

invest up to 20% of its net assets in both 

U.S. and non-U.S. equity securities, 

including ETPs. The Fund may also 

invest up to 20% of its net assets in debt 

instruments that do not fall within the 

meaning of ‘‘Debt Instrument.’’ 

The Fund may hold up to an aggregate 

amount of 15% of its net assets in 

illiquid securities (calculated at the time 

of investment), including Rule 144A 

securities deemed illiquid by the 

Adviser or the Sub-Adviser. Prior to the 

commencement of trading in the Shares 

of the Fund, the Exchange will inform 

its members in an Information Circular 

of the special characteristics and risks 

associated with trading the Shares. 

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that the Exchange will 

obtain a representation from the issuer 

of the Shares that the NAV per Share 

will be calculated daily and that the 

NAV and the Disclosed Portfolio will be 

made available to all market 

participants at the same time. In 

addition, a large amount of information 

is publicly available regarding the Fund 

and the Shares, thereby promoting 

market transparency. Moreover, the 

Intraday Indicative Value, available on 

the NASDAQ OMX Information LLC 

proprietary index data service will be 

widely disseminated by one or more 

major market data vendors at least every 

15 seconds during the Regular Market 

Session. On each business day, before 

commencement of trading in Shares in 

the Regular Market Session on the 

Exchange, the Fund will disclose on its 

Web site the Disclosed Portfolio that 

will form the basis for the Fund’s 

calculation of NAV at the end of the 

business day. Information regarding 

market price and trading volume of the 

Shares will be continually available on 

a real-time basis throughout the day on 

brokers’ computer screens and other 

electronic services, and quotation and 

last sale information will be available 

via NASDAQ proprietary quote and 

trade services, as well as in accordance 

with the Unlisted Trading Privileges 

and the Consolidated Tape Association 

plans for the Shares and any underlying 

exchange-traded products. Intra-day, 

executable price quotations on Debt 

Instruments as well as derivative 

instruments are available from major 

broker-dealer firms. Intra-day price 

information is available through 

subscription services, such as 

Bloomberg and Thomson Reuters, 

which can be accessed by Authorized 

Participants and other investors. 

Quotation and last sale information 

for ETFs will be available via the CTA 

high-speed line, and will be available 

from the national securities exchange on 

which they are listed. Pricing 

information for ETFs and exchangetraded derivatives and other 

instruments will be available from the 

exchanges on which they trade and from 

major market vendors. Pricing 

information for Debt Instruments, 

forward currency contracts, spot 

currencies, and debt instruments that do 

not fall within the meaning of ‘‘Debt 

Instruments,’’ in which the Fund may 

invest that are described under ‘‘Other 

Investments’’ will be available from 

major broker-dealer firms, major market 

data vendors or Pricing Services, as 

applicable. Money market funds are 

typically priced once each business day 

and their prices will be available 

through the applicable fund’s Web site 

or major market vendors. 

The Fund’s Web site will include a 

form of prospectus for the fund and 

additional data relating to NAV and 

other applicable quantitative 

information. Trading in Shares of the 

Fund will be halted under the condition 

specified in Nasdaq Rules 4120 and 

4121 or because of market conditions or 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable, and trading in the Shares 

will be subject to Nasdaq Rule 

5735(d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund may be halted. In addition, as 

noted above, investors will have ready 

access to information regarding the 

Fund’s holdings, the Intraday Indicative 

Value, the Disclosed Portfolio, and 

quotation and last sale information for 

the Shares. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest in that 

it will facilitate the listing and trading 

of an additional type of activelymanaged exchange-traded product that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. The Exchange may 

obtain information regarding trading in 

the Shares and the other exchange 

traded securities and other instruments 

held by the Fund via ISG from other 

exchanges that are members of ISG or 

with which the Exchange has entered 

into a comprehensive surveillance 

sharing agreement. FINRA, on behalf of 

the Exchange, will communicate as 

needed regarding trading in the Shares 

and the exchange-traded securities and 

other instruments held by the Fund 

with other markets and other entities 

that are members of the ISG.73 FINRA 

may obtain trading information 

regarding trading in the Shares and the 

exchange-traded securities and other 

instruments held by the Fund from 

markets and other entities that are 

members of ISG, which includes 

securities and futures exchanges, or 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement. In addition, FINRA, on 

behalf of the Exchange, is able to obtain 

trading information regarding certain 

Debt Instruments through its TRACE 

serve [sic]. In addition, as noted above, 

investors will have ready access to 

information regarding the Fund’s 

holdings, the Intraday Indicative Value, 

the Disclosed Portfolio, and quotation 

and last sale information for the Shares. 

For the above reasons, NASDAQ 

believes the proposed rule change is 

consistent with the requirements of 

Section 6(b)(5) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposed rule 

change will facilitate the listing and 

trading of an additional activelymanaged exchange-traded product that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 


Rmajette on DSK2VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Notices 12843 

74 17 CFR 200.30–3(a)(12). 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2015–012 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2015–012. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2015–012 and should be 

submitted on or before April 1, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.74

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–05514 Filed 3–10–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, March 12, 2015 at 2:00 

p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or her designee, has 

certified that, in her opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matter at the Closed Meeting. 

Commissioner Gallagher, as duty 

officer, voted to consider the items 

listed for the Closed Meeting in closed 

session, and determined that no earlier 

notice thereof was possible. 

The subject matter of the Closed 

Meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Resolution of litigation claims; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact the Office of the Secretary at 

(202) 551–5400. 

Dated: March 6, 2015. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–05631 Filed 3–9–15; 4:15 pm] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Saint Lawrence Seaway Development 

Corporation 

Advisory Board; Notice of Meeting 

Pursuant to section 10(a)(2) of the 

Federal Advisory Committee Act (Pub. 

L. 92–463; 5 U.S.C. App. I), notice is 

hereby given of a meeting of the 

Advisory Board of the Saint Lawrence 

Seaway Development Corporation 

(SLSDC), to be held from 2:00 p.m. to 

3:30 p.m. (EDT) on Monday, March 23, 

2015 via conference call. The agenda for 

this meeting will be as follows: Opening 

Remarks; Consideration of Minutes of 

Past Meeting; Quarterly Report; Old and 

New Business; Closing Discussion; 

Adjournment. 

Attendance at the meeting is open to 

the interested public but limited to the 

space available. With the approval of 

the Administrator, members of the 

public may present oral statements at 

the meeting. Persons wishing further 

information should contact, not later 

than Thursday, March 19, 2015, Carrie 

Lavigne, Chief Counsel, Saint Lawrence 

Seaway Development Corporation, 180 

Andrews Street, Massena, N.Y. 13662; 

315–764–3231. 

Any member of the public may 

present a written statement to the 

Advisory Board at any time. 

Issued at Washington, DC, on March 6, 

2015. 

Carrie Lavigne, 

Chief Counsel. 

[FR Doc. 2015–05524 Filed 3–10–15; 8:45 am] 

BILLING CODE 4910–61–P 


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