46066 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 

after a change occurs. The Unaffiliated 

Investment Company and the Fund of 

Funds will maintain and preserve a 

copy of the order, the Participation 

Agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of each Fund of Funds, including 

a majority of the Independent Trustees, 

shall find that the advisory fees charged 

under the advisory contract are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Fund of Funds may invest. Such 

finding, and the basis upon which the 

finding was made, will be recorded fully 

in the minute books of the appropriate 

Fund of Funds. 

10. The Advisers will waive fees 

otherwise payable to them by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b-1 under the Act) 

received from an Unaffiliated Fund by 

the Adviser, or an affiliated person of 

the Adviser, other than any advisory 

fees paid to the Adviser or its affiliated 

person by the Unaffiliated Fund, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated Fund. 

Any Sub-Adviser will waive fees 

otherwise payable to the Sub-Adviser, 

directly or indirectly, by the Fund of 

Funds in an amount at least equal to any 

compensation received by the SubAdviser, or an affiliated person of the 

Sub-Adviser, from an Unaffiliated Fund, 

other than any advisory fees paid to the 

Sub-Adviser or its affiliated person by 

the Unaffiliated Investment Company, 

in connection with the investment by 

the Fund of Funds in the Unaffiliated 

Investment Company made at the 

direction of the Sub-Adviser. In the 

event that the Sub-Adviser waives fees, 

the benefit of the waiver will be passed 

through to the Fund of Funds. 

11. With respect to Registered 

Separate Accounts that invest in a Fund 

of Funds, no sales load will be charged 

at the Fund of Funds level or at the 

Underlying Fund level. Other sales 

charges and service fees, as defined in 

NASD Conduct Rule 2830, if any, will 

be charged at the Fund of Funds level 

or at the Underlying Fund level, not 

both. With respect to other investments 

in a Fund of Funds, any sales charges 

and/or service fees charged with respect 

to shares of a Fund of Funds will not 

exceed the limits applicable to funds of 

funds set forth in NASD Conduct Rule 

2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

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

the limits contained in section 

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

extent that such Underlying Fund: (a) 

Receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (b) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

affiliated investment companies for 

short-term cash management purposes, 

or (ii) engage in interfund borrowing 

and lending transactions. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18069 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28350; 812–13425] 

Javelin Exchange-Traded Trust, et al.; 

Notice of Application 

July 31, 2008. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from sections 

2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of 

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

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

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

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

and 17(b) of the Act for an exemption 

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

Act. 

SUMMARY OF APPLICATION: Applicants 

request an order that would permit (a) 

series of open-end management 

investment companies to issue shares 

(‘‘Fund Shares’’) that can be redeemed 

only in large aggregations (‘‘Creation 

Unit Aggregations’’); (b) secondary 

market transactions in Fund Shares to 

occur at negotiated prices; (c) dealers to 

sell Fund Shares to purchasers in the 

secondary market unaccompanied by a 

prospectus when prospectus delivery is 

not required by the Securities Act of 

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

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days after the tender of a Creation 

Unit Aggregation for redemption; (e) 

certain affiliated persons of the series to 

deposit securities into, and receive 

securities from, the series in connection 

with the purchase and redemption of 

Creation Unit Aggregations; and (f) 

certain registered management 

investment companies and unit 

investment trusts outside of the same 

group of investment companies as the 

series to acquire Fund Shares. 

APPLICANTS: Javelin Exchange-Traded 

Trust (the ‘‘Trust’’), Javelin Investment 

Management, LLC (the ‘‘Adviser’’) and 

ALPS Distributors, Inc. (the 

‘‘Distributor’’). 

FILING DATES: The application was filed 

on September 21, 2007, and amended 

on May 9, 2008 and July 31, 2008. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on August 25, 2008, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit, or for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549–

1090; Applicants, c/o Brinton W. Frith, 

Javelin Investment Management, LLC, 

338 The Great Road, Princeton, NJ 

08540. 

FOR FURTHER INFORMATION CONTACT: John 

Yoder, Senior Counsel, at (202) 551–

6878, or Mary Kay Frech, Branch Chief, 

at (202) 551–6821 (Division of 

Investment Management, Office of 

Investment Company Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained for a fee at the Public 

Reference Room, U.S. Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1520, 

telephone (202) 551–5850. 


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1All existing entities that intend to rely on the 

requested order have been named as applicants. 

Any other existing or future entity that 

subsequently relies on the order will comply with 

the terms and conditions of the application. 

2Applicants represent that a Fund will normally 

invest at least 90% of its total assets in the 

component securities that comprise its Underlying 

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

Funds that track a Foreign Index (‘‘Foreign Funds’’), 

Component Securities and depositary receipts 

representing such securities. Each Fund also may 

invest up to 10% of its assets in certain futures, 

options and swap contracts, cash and cash 

equivalents, as well as in stocks not included in its 

Underlying Index, but which the Adviser believes 

will help the Fund track its Underlying Index. 

3Under the ‘‘representative sampling’’ strategy, 

the Adviser will seek to construct a Fund’s portfolio 

so that its market capitalization, industry weighting, 

fundamental investment characteristics (such as 

return variability, earnings valuation and yield) and 

liquidity measures perform like those of the 

Underlying Index. 

4The Trust will sell Creation Unit Aggregations 

of each fund on any day that the New York Stock 

Exchange, the American Stock Exchange 

(‘‘AMEX’’), a Fund, and the custodian are open for 

business, including as required by section 22(e) of 

the Act (a ‘‘Business Day’’). Each Business Day, 

prior to the opening of trading on the Exchange 

(defined below), the list of names and amount of 

each securities constituting the current Deposit 

Securities and the Balancing Amount, effective as 

of the previous Business Day, will be made 

available. Any national securities exchange as 

defined in section 2(a)(26) of the Act (each, an 

‘‘Exchange’’) on which Fund Shares are listed will 

disseminate, every 15 seconds during its regular 

trading hours, through the facilities of the 

Consolidated Tape Association, an amount per 

Fund Share representing the sum of the estimated 

Balancing Amount and the current value of the 

Deposit Securities. 

5Where a Fund permits a purchaser to substitute 

cash in lieu of depositing a portion of the requisite 

Deposit Securities, the purchaser may be assessed 

a higher Transaction Fee to cover the cost of 

purchasing such Deposit Securities, including 

brokerage costs, and part or all of the spread 

between the expected bid and the offer side of the 

market relating to such Deposit Securities. 

Applicants’ Representations 

1. The Trust is an open-end 

management investment company 

registered under the Act and is 

organized as a Delaware statutory trust. 

The Trust will offer Fund Shares of the 

Javelin DJ Latin America Index Fund 

(the ‘‘Initial Index Fund’’), a series of 

the Trust, which will track an index of 

selected Latin American equity 

securities. Applicants may establish one 

or more registered investment 

companies in the future (‘‘Future 

Funds,’’ collectively with the Initial 

Index Fund, ‘‘Funds’’), which will be 

advised by the Adviser or an entity 

controlled by or under common control 

with the Adviser.1

2. The Adviser will serve as the 

investment adviser to the Initial Index 

Fund. The Adviser is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’). In the future, the 

Adviser may enter into sub-advisory 

agreements with other investment 

advisers to act as sub-advisers (‘‘SubAdvisers’’) with respect to the Funds. 

Any Sub-Adviser will be registered 

under the Advisers Act. The Distributor, 

a broker-dealer (‘‘Broker’’) registered 

under the Securities Exchange Act of 

1934 (the ‘‘Exchange Act’’), will serve as 

the principal underwriter and 

distributor for the Initial Index Fund. 

The Distributor is not affiliated with the 

Adviser or any Sub-Adviser. 

3. Each Fund will hold certain equity 

securities (‘‘Portfolio Securities’’) 

selected to correspond generally to the 

price and yield performance, before fees 

and expenses, of a specified equity 

securities index (an ‘‘Underlying 

Index’’). Each Underlying Index will be 

comprised of equity securities issued by 

(a) domestic issuers and non-domestic 

issuers meeting the requirements for 

trading in U.S. markets (‘‘Domestic 

Index’’), or (b) foreign equity securities 

(‘‘Foreign Index’’). No entity that 

creates, compiles, sponsors or maintains 

an Underlying Index (an ‘‘Index 

Provider’’) is or will be an affiliated 

person, as defined in section 2(a)(3) of 

the Act, or an affiliated person of an 

affiliated person, of the Trust, the 

Adviser, the Distributor, promoter or 

any Sub-Adviser to a Fund. 

4. The investment objective of each 

Fund will be to provide investment 

results that correspond generally to the 

price and yield performance, before fees 

and expenses, of its Underlying Index. 

Intra-day values of the Underlying Index 

will be disseminated every 15 seconds 

throughout the trading day. A Fund will 

utilize either a ‘‘replication’’ or 

‘‘representative sampling’’ strategy.2 A 

Fund using a ‘‘replication’’ strategy will 

invest in substantially all of the 

Component Securities in its Underlying 

Index in approximately the same 

weightings as in the Underlying Index. 

In certain circumstances, such as when 

there are practical difficulties or 

substantial costs involved in holding 

every security in an Underlying Index or 

when a Component Security is illiquid, 

a Fund may use a ‘‘representative 

sampling’’ strategy pursuant to which it 

will invest in some, but not all, of the 

relevant Component Securities.3

Applicants anticipate that a Fund that 

utilizes a ‘‘representative sampling’’

strategy will not track the performance 

of its Underlying Index with the same 

degree of accuracy as an investment 

vehicle that invests in every Component 

Security of the Underlying Index in the 

same weighting as the Underlying 

Index. Applicants expect that each Fund 

will have a tracking error relative to the 

performance of its Underlying Index of 

less than 5 percent. 

5. Fund Shares will be sold at a price 

between $20 and $300 per Fund Share 

in Creation Unit Aggregations of 50,000 

to 100,000 Fund Shares. All orders to 

purchase Creation Unit Aggregations 

must be placed with the Distributor by 

or through a party that has entered into 

an agreement with the Distributor 

(‘‘Authorized Participant’’). An 

Authorized Participant must be either: 

(a) A broker-dealer or other participant 

in the continuous net settlement system 

of the National Securities Clearing 

Corporation (‘‘NSCC’’), a clearing 

agency registered with the Commission, 

or (b) a participant in the Depository 

Trust Company (‘‘DTC,’’ and such 

participant, ‘‘DTC Participant’’). Fund 

Shares generally will be sold in Creation 

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

portfolio of securities designated by the 

Adviser or the Sub-Adviser to 

correspond generally to the price and 

yield performance of the relevant 

Underlying Index (the ‘‘Deposit 

Securities’’), together with the deposit of 

a specified cash payment (‘‘Balancing 

Amount’’). The Balancing Amount is 

generally an amount equal to the 

difference between (a) the net asset 

value (‘‘NAV’’) (per Creation Unit 

Aggregation) of the Fund and (b) the 

total aggregate market value (per 

Creation Unit Aggregation) of the 

Deposit Securities.4 Applicants state 

that in some circumstances, it may not 

be practicable or convenient for a Fund 

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

basis. The Trust reserves the right to 

permit, under certain circumstances, a 

purchaser of Creation Unit Aggregations 

to substitute cash in lieu of depositing 

some or all of the requisite Deposit 

Securities. 

6. An investor purchasing a Creation 

Unit Aggregation from a Fund will be 

charged a fee (‘‘Transaction Fee’’) to 

prevent the dilution of the interests of 

the remaining shareholders resulting 

from costs in connection with the 

purchase of Creation Unit 

Aggregations.5 The exact amounts of 

Transaction Fees relevant to each Fund 

(including the maximum Transaction 

Fees) will be fully disclosed in the 

prospectus of such Fund (‘‘Fund’s 

Prospectus’’), and the method for 

calculating the Transaction Fees will be 

disclosed in each Fund’s Prospectus or 

statement of additional information 

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

Unit Aggregations will be placed with 

the Distributor by or through an 

Authorized Participant, and it will be 

the Distributor’s responsibility to 


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6 If Fund Shares are listed on NASDAQ, no 

particular Market maker will be contractually 

obligated to make a market in Fund Shares, 

although NASDAQ’s listing requirements stipulate 

that at least two Market Makers must be registered 

as Market Makers in Fund Shares to maintain the 

listing. Registered Market makers are required to 

make a continuous, two-sided market at all times 

or be subject to regulatory sanctions. 

7Fund Shares will be registered in book-entry 

form only. DTC or its nominee will be the registered 

owner of all outstanding Fund Shares. DTC or DTC 

Participants will maintain records reflecting 

beneficial owners of Fund Shares. 

8The Funds will comply with the federal 

securities laws in accepting Deposit Securities and 

satisfying redemptions with Fund Shares, including 

with the Deposit Securities and Fund Securities are 

sold in transactions that would be exempt from 

registration under the Securities Act. As a general 

matter, the Deposit Securities and Fund Securities 

will correspond pro rata to the securities held by 

each Fund. 

transmit such orders to the Funds. The 

Distributor also will be responsible for 

delivering a Fund’s Prospectus to those 

persons purchasing Creation Unit 

Aggregations, and for maintaining 

records of both the orders placed with 

it and the confirmations of acceptance 

furnished by it. In addition, the 

Distributor will maintain a record of the 

instructions given to the Fund to 

implement the delivery of Fund Shares. 

7. Purchasers of Fund Shares in 

Creation Unit Aggregations may hold 

such Fund Shares or may sell such 

Fund Shares into the secondary market. 

Fund Shares of the Initial Index Fund 

will be listed and traded on the AMEX; 

Fund Shares of Future Funds will be 

listed and traded on an Exchange. It is 

expected that one or more member firms 

of a listing Exchange will be designated 

to act as a specialist and maintain a 

market for Fund Shares on the Exchange 

(a ‘‘Specialist’’), or if NASDAQ is the 

listing Exchange, one or more member 

firms of NASDAQ will act as a market 

maker (‘‘Market Maker’’) and maintain a 

market for Fund Shares.6 Prices of Fund 

Shares trading on an Exchange will be 

based on the current bid/offer market. 

Fund Shares sold in the secondary 

market will be subject to customary 

brokerage commissions and charges. 

8. Applicants expect that purchasers 

of Creation Unit Aggregations will 

include institutional investors and 

arbitrageurs (which could include 

institutional investors). A Specialist, or 

Market Maker, in providing a fair and 

orderly secondary market for the Fund 

Shares, also may purchase Creation Unit 

Aggregations for use in its marketmaking activities. Applicants expect 

that secondary market purchasers of 

Fund Shares will include both 

institutional investors and retail 

investors.7 Applicants expect that the 

price at which Fund Shares trade will 

be disciplined by arbitrage 

opportunities created by the ability to 

continually purchase or redeem 

Creation Unit Aggregations at their 

NAV, which should ensure that Fund 

Shares will not trade at a material 

discount or premium in relation to their 

NAV. 

9. Fund Shares will not be 

individually redeemable, and owners of 

Fund Shares may acquire those Fund 

Shares from the Fund, or tender such 

Fund Shares for redemption to the 

Fund, in Creation Unit Aggregations 

only. To redeem, an investor will have 

to accumulate enough Fund Shares to 

constitute a Creation Unit Aggregation. 

Redemption orders must be placed by or 

through an Authorized Participant. An 

investor redeeming a Creation Unit 

Aggregation generally will receive (a) a 

portfolio of securities designated to be 

delivered for Creation Unit Aggregation 

redemptions on the date that the request 

for redemption is submitted (‘‘Fund 

Securities’’), which may not be identical 

to the Deposit Securities required to 

purchase Creation Unit Aggregations on 

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

Payment,’’ consisting of an amount 

calculated in the same manner as the 

Balancing Amount, although the actual 

amount of the Cash Redemption 

Payment may differ from the Balancing 

Amount if the Fund Securities are not 

identical to the Deposit Securities on 

that day.8 An investor may receive the 

cash equivalent of a Fund Security in 

certain circumstances, such as if the 

investor is constrained from effecting 

transactions in the security by 

regulation or policy. A redeeming 

investor will be subject to a Transaction 

Fee, calculated in the same manner as 

a Transaction Fee payable in connection 

with purchases of Creation Unit 

Aggregations. 

10. Neither the Trust nor any 

individual Fund will be marketed or 

otherwise held out as an ‘‘open-end 

investment company’’ or a ‘‘mutual 

fund.’’ Instead, each Fund will be 

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

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

a ‘‘trust.’’ All marketing materials that 

describe the features or method of 

obtaining, buying or selling Fund 

Shares, or refer to redeemability, will 

prominently disclose that Fund Shares 

are not individually redeemable and 

that the owners of Fund Shares may 

purchase or redeem Fund Shares from 

the Fund in Creation Unit Aggregations 

only. The same approach will be 

followed in the SAI, shareholder reports 

and investor educational materials 

issued or circulated in connection with 

the Fund Shares. The Funds will 

provide copies of their annual and semiannual shareholder reports to DTC 

Participants for distribution to 

beneficial owners of Fund Shares. 

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of the Act for an exemption 

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

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

1 under the Act, under section 

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

sections 12(d)(1)(A) and (B) of the Act, 

and under sections 6(c) and 17(b) of the 

Act for an exemption from sections 

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

2. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security or transaction, or any 

class of persons, securities or 

transactions, from any provision of the 

Act, if and to the extent that such 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. Section 17(b) 

of the Act authorizes the Commission to 

exempt a proposed transaction from 

section 17(a) of the Act if evidence 

establishes that the terms of the 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned, and the proposed 

transaction is consistent with the 

policies of the registered investment 

company and the general provisions of 

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

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

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

exemption is consistent with the public 

interest and the protection of investors. 

Sections 5(a)(1) and 2(a)(32) of the Act 

3. Section 5(a)(1) of the Act defines an 

‘‘open-end company’’ as a management 

investment company that is offering for 

sale or has outstanding any redeemable 

security of which it is the issuer. 

Section 2(a)(32) of the Act defines a 

redeemable security as any security, 

other than short-term paper, under the 

terms of which the owner, upon its 

presentation to the issuer, is entitled to 

receive approximately his proportionate 

share of the issuer’s current net assets, 

or the cash equivalent. Because Fund 

Shares will not be individually 

redeemable, applicants request an order 

that would permit the Trust to register 

as an open-end management investment 

company and issue Fund Shares that are 


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9Applicants state that they are not seeking relief 

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

in which an investor purchases Fund Shares from 

the Trust or an underwriter. Applicants further state 

that each Fund’s Prospectus will causation brokerdealers and others that some activities on their part, 

depending on the circumstances, may result in their 

being deemed statutory underwriters and subject 

them to the prospectus delivery and liability 

provisions of the Securities Act. For example, a 

broker-dealer firm and/or its client may be deemed 

a statutory underwriter if it purchases Creation Unit 

Aggregations from a Fund, breaks them down into 

the constituent Fund Shares, and sells those Fund 

Shares directly to customers, or if it chooses to 

couple the creation of a supply of new fund Shares 

with an active selling effort involving solicitation of 

secondary market demand for Fund Shares. Each 

Fund’s Prospectus will state that whether a person 

is an underwriter depends upon all of the facts and 

circumstances pertaining to that person’s activities. 

Each Fund’s Prospectus will caution dealers who 

are not ‘‘underwriters’’ but are participating in a 

distribution (as contrasted to ordinary secondary 

market trading transactions), and thus dealing with 

Fund Shares that are part of an ‘‘unsold allotment’’

within the meaning of section 4(3)(C) of the 

Securities Act, that they would be unable to take 

advantage of the prospectus delivery exemption 

provided by section 4(3) of the Securities Act. 

10The Bid/Ask Price per Fund Share of a Fund 

is determined using the highest bid and the lowest 

offer on the Exchange on which the Fund Shares 

are listed. 

redeemable in Creation Units 

Aggregations only. Applicants state that 

investors may purchase Fund Shares in 

Creation Unit Aggregations and redeem 

Creation Unit Aggregations from each 

Fund. Applicants further state that 

because the market price of Fund Shares 

will be disciplined by arbitrage 

opportunities, investors should be able 

to sell Fund Shares in the secondary 

market at prices that do not vary 

substantially from their NAV. 

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

1 Under the Act 

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

other things, prohibits a dealer from 

selling a redeemable security, which is 

currently being offered to the public by 

or through a principal underwriter, 

except at a current public offering price 

described in the prospectus. Rule 22c–

1 under the Act generally requires that 

a dealer selling, redeeming or 

repurchasing a redeemable security do 

so only at a price based on its NAV. 

Applicants state that secondary market 

trading in Fund Shares will take place 

at negotiated prices, not at a current 

offering price described in a Fund’s 

Prospectus, and not at a price based on 

NAV. Thus, purchases and sales of 

Fund Shares in the secondary market 

will not comply with section 22(d) of 

the Act and rule 22c–1 under the Act. 

Applicants request an exemption under 

section 6(c) from these provisions. 

5. Applicants assert that the concerns 

sought to be addressed by section 22(d) 

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

with respect to pricing are equally 

satisfied by the proposed method of 

pricing Fund Shares. Applicants 

maintain that while there is little 

legislative history regarding section 

22(d), its provisions, as well as those of 

rule 22c–1, appear to have been 

designed to (a) prevent dilution caused 

by certain riskless-trading schemes by 

principal underwriters and contract 

dealers, (b) prevent unjust 

discrimination or preferential treatment 

among buyers, and (c) ensure an orderly 

distribution of investment company 

shares by eliminating price competition 

from dealers offering shares at less than 

the published sales price and 

repurchasing shares at more than the 

published redemption price. 

6. Applicants believe that none of 

these purposes will be thwarted by 

permitting Fund Shares to trade in the 

secondary market at negotiated prices. 

Applicants state that (a) secondary 

market trading in Fund Shares does not 

involve the Funds as parties and cannot 

result in dilution of an investment in 

Fund Shares, and (b) to the extent 

different prices exist during a given 

trading day, or from day to day, such 

variances occur as a result of third-party 

market forces, such as supply and 

demand. Therefore, applicants assert 

that secondary market transactions in 

Fund Shares will not lead to 

discrimination or preferential treatment 

among purchasers. Finally, applicants 

contend that the proposed distribution 

system will be orderly because 

competitive forces in the marketplace 

will ensure that the difference between 

the market price of Fund Shares and 

their NAV remains narrow. 

Section 24(d) of the Act 

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

in relevant part, that the prospectus 

delivery exemption provided to dealer 

transactions by section 4(3) of the 

Securities Act does not apply to any 

transaction in a redeemable security 

issued by an open-end investment 

company. Applicants seek relief from 

section 24(d) to permit dealers selling 

Fund Shares in the secondary market to 

rely on the prospectus delivery 

exemption provided by section 4(3) of 

the Securities Act.9

8. Applicants state that Fund Shares 

are bought and sold in the secondary 

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

transactions in closed-end fund shares 

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

closed-end fund shares are sold in the 

secondary market without a prospectus. 

Applicants contend that Fund Shares 

likewise merit a reduction in the 

unnecessary compliance costs and 

regulatory burdens resulting from the 

imposition of the prospectus delivery 

obligations in the secondary market. 

Because Fund Shares will be listed on 

an Exchange, prospective investors will 

have access to information about the 

product over and above what is 

normally available about an open-end 

security. Applicants state that 

information regarding market price and 

volume will be continually available on 

a real time basis throughout the day on 

brokers’ computer screens and other 

electronic services. The previous day’s 

price and volume information for Fund 

Shares will be published daily in the 

financial section of newspapers. In 

addition, a Web site will be maintained 

that will include each Fund’s 

Prospectus and SAI, the relevant 

Underlying Index for each Fund, and 

additional quantitative information that 

is updated on a daily basis, including 

the mid-point of the bid-ask spread at 

the time of the calculation of NAV 

(‘‘Bid/Ask Price’’),10 the NAV for each 

Fund, and information about the 

premiums and discounts at which the 

Fund Shares have traded. 

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

secondary market to provide purchasers 

with a product description (‘‘Product 

Description’’) that describes, in plain 

English, the relevant Fund and the Fund 

Shares it issues. Applicants state that a 

Product Description is not intended to 

substitute for a full Fund’s Prospectus. 

Applicants state that the Product 

Description will be tailored to meet the 

information needs of investors 

purchasing Fund Shares in the 

secondary market. 

Section 22(e) 

10. Section 22(e) generally prohibits a 

registered investment company from 

suspending the right of redemption or 

postponing the date of payment of 

redemption proceeds for more than 

seven days after the tender of a security 

for redemption. The principal reason for 

the requested exemption is that 

settlement of redemptions for the 

Foreign Funds is contingent not only on 

the settlement cycle of the United States 

market, but also on currently practicable 

delivery cycles in local markets for 

underlying foreign securities held by the 

Foreign Funds. Applicants state that 

local market delivery cycles for 

transferring certain foreign securities to 

investors redeeming Creation Unit 

Aggregations, together with local market 

holiday schedules, will under certain 

circumstances require a delivery process 

in excess of seven calendar days for the 


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11Rule 15c6–1 under the Exchange Act that most 

securities transactions be settled within three 

business days of the trade. Applicants acknowledge 

that no relief obtained from the requirements of 

section 22(e) will affect any obligations applicants 

may have under rule 15c6–1. 

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

Fund Adviser, Purchasing Fund Sub-Adviser, 

Sponsor, promoter, and principal underwriter of a 

Purchasing Fund, and any person controlling, 

controlled by, or under common control with any 

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

investment adviser, promoter, or principal 

underwriter of a Fund and any person controlling, 

controlled by, or under common control with any 

of these entities. 

Foreign Funds. Applicants request relief 

under section 6(c) of the Act from 

section 22(e) to allow the Initial Index 

Fund to pay redemption proceeds up to 

14 calendar days (or, with respect to 

future Foreign Funds, within not more 

than the number of calendar days 

known to applicants as being the 

maximum number of calendar days 

required for such payment or 

satisfaction in the principal local foreign 

market(s) where transactions in 

Portfolio Securities of each such Fund 

customarily clear and settle but in any 

event not more than 14 calendar days) 

after the tender of a Creation Unit 

Aggregation for redemption. At all other 

times and except as disclosed in the 

relevant Fund’s Prospectus and/or SAI, 

applicants expect that each Foreign 

Fund will be able to deliver redemption 

proceeds within seven days.11 With 

respect to future Foreign Funds, 

applicants seek the same relief from 

section 22(e) only to the extent that 

circumstances similar to those described 

in the application exist. 

11. Applicants state that section 22(e) 

was designed to prevent unreasonable, 

undisclosed and unforeseen delays in 

the payment of redemption proceeds. 

Applicants assert that the requested 

relief will not lead to the problems that 

section 22(e) was designed to prevent. 

Applicants state that the SAI will 

disclose those local holidays (over the 

period of at least one year following the 

date of the SAI), if any, that are 

expected to prevent the delivery of 

redemption proceeds in seven calendar 

days, and the maximum number of days 

needed to deliver the proceeds for the 

relevant Foreign Fund. Applicants are 

not seeking relief from section 22(e) 

with respect to Foreign Funds that do 

not effect in-kind purchases and 

redemptions of Creation Unit 

Aggregations. 

Section 12(d)(1) 

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

prohibits a registered investment 

company from acquiring securities of an 

investment company if such securities 

represent more than 3% of the total 

outstanding voting stock of the acquired 

company, more than 5% of the total 

assets of the acquiring company, or, 

together with the securities of any other 

investment companies, more than 10% 

of the total assets of the acquiring 

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

prohibits a registered open-end 

investment company, its principal 

underwriter and any other broker-dealer 

from selling the investment company’s 

shares to another investment company if 

the sale will cause the acquiring 

company to own more than 3% of the 

acquired company’s voting stock, or if 

the sale will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. 

13. Applicants request an exemption 

to permit management investment 

companies (‘‘Purchasing Management 

Companies’’) and unit investment trusts 

(‘‘Purchasing Trusts’’) registered under 

the Act that are not sponsored or 

advised by the Adviser or any entity 

controlling, controlled by, or under 

common control with the Adviser and 

are not part of the same ‘‘group of 

investment companies,’’ as defined in 

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

Trust (Purchasing Management 

Companies and Purchasing Trusts 

collectively, ‘‘Purchasing Funds’’) to 

acquire shares of a Fund beyond the 

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

Funds exclude registered investment 

companies that are, or in the future may 

be, part of the same group of investment 

companies within the meaning of 

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

Funds. In addition, applicants seek 

relief to permit the Funds or any Broker 

that is registered under the Exchange 

Act to sell Fund Shares to a Purchasing 

Fund in excess of the limits of section 

12(d)(1)(B). 

14. Each Purchasing Management 

Company will be advised by an 

investment adviser within the meaning 

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

‘‘Purchasing Fund Adviser’’) and may 

be sub-advised by one or more 

investment advisers within the meaning 

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

‘‘Purchasing Fund Sub-Adviser’’). Any 

investment adviser to a Purchasing 

Management Company will be 

registered under the Advisers Act or 

exempt from registration. Each 

Purchasing Trust will be sponsored by 

a sponsor (‘‘Sponsor’’). 

15. Applicants submit that the 

proposed conditions to the relief 

requested, including the requirement 

that Purchasing Funds enter into an 

agreement with a Fund for the purchase 

of Fund Shares (a ‘‘Purchasing Fund 

Agreement’’), adequately address the 

concerns underlying the limits in 

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

include concerns about undue 

influence, excessive layering of fees and 

overly complex structures. Applicants 

believe that the requested exemption is 

consistent with the public interest and 

the protection of investors. 

16. Applicants believe that neither the 

Purchasing Funds nor a Purchasing 

Fund Affiliate would be able to exert 

undue influence over the Funds.12 To 

limit the control that a Purchasing Fund 

may have over a Fund, applicants 

propose a condition prohibiting a 

Purchasing Fund Adviser or a Sponsor, 

any person controlling, controlled by, or 

under common control with a 

Purchasing Fund Adviser or Sponsor, 

and any investment company and any 

issuer that would be an investment 

company but for sections 3(c)(1) or 

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

sponsored by a Purchasing Fund 

Adviser or Sponsor, or any person 

controlling, controlled by, or under 

common control with a Purchasing 

Fund Adviser or Sponsor (‘‘Purchasing 

Fund Advisory Group’’) from 

controlling (individually or in the 

aggregate) a Fund within the meaning of 

section 2(a)(9) of the Act. The same 

prohibition would apply to any 

Purchasing Fund Sub-Adviser, any 

person controlling, controlled by or 

under common control with the 

Purchasing Fund Sub-Adviser, and any 

investment company or issuer that 

would be an investment company but 

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

(or portion of such investment company 

or issuer) advised or sponsored by the 

Purchasing Fund Sub-Adviser or any 

person controlling, controlled by or 

under common control with the 

Purchasing Fund Sub-Adviser 

(‘‘Purchasing Fund Sub-Advisory 

Group’’). Applicants propose other 

conditions to limit the potential for 

undue influence over the Funds, 

including that no Purchasing Fund or 

Purchasing Fund Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to a Fund) will cause 

a Fund to purchase a security in any 

offering of securities during the 

existence of any underwriting or selling 

syndicate of which a principal 

underwriter is an Underwriting Affiliate 

(‘‘Affiliated Underwriting’’). An 

‘‘Underwriting Affiliate’’ is a principal 

underwriter in any underwriting or 

selling syndicate that is an officer, 

director, member of an advisory board, 

Purchasing Fund Adviser, Purchasing 

Fund Sub-Adviser, employee or 

Sponsor of a Purchasing Fund, or a 


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13Applicants acknowledge that receipt of 

compensation by (a) an affiliated person of a 

Purchasing Fund, or an affiliated person of such 

person, for the purchase by the Purchasing Fund of 

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

or an affiliated person of such person, for the sale 

by the Fund of its Fund Shares to a Purchasing 

Fund may be prohibited by section 17(e)(1) of the 

Act. The Purchasing Fund Agreement also will 

include this acknowledgement. 

14Applicants believe that a Purchasing Fund will 

purchase Fund Shares in the secondary market and 

will not purchase or redeem Creation Unit 

Aggregations directly from a Fund. Nonetheless, a 

Purchasing Fund that owns 5% or more of a Fund 

could seek to transact in Creation Unit Aggregations 

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

relief requested. 

person of which any such officer, 

director, member of an advisory board, 

Purchasing Fund Adviser, Purchasing 

Fund Sub-Adviser, employee, or 

Sponsor is an affiliated person (except 

any person whose relationship to the 

Fund is covered by section 10(f) of the 

Act is not an Underwriting Affiliate). 

17. Applicants do not believe the 

proposed arrangement will involve 

excessive layering of fees. The board of 

directors or trustees of any Purchasing 

Management Company, including a 

majority of the disinterested directors or 

trustees, will find that the advisory fees 

charged to the Purchasing Management 

Company are based on services 

provided that will be in addition to, 

rather than duplicative of, services 

provided under the advisory contract(s) 

of any Fund in which the Purchasing 

Management Company may invest. In 

addition, a Purchasing Fund Adviser or 

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

Purchasing Trust will waive fees 

otherwise payable to it by the 

Purchasing Fund in an amount at least 

equal to any compensation (including 

fees received pursuant to any plan 

adopted by a Fund under rule 12b-1 

under the Act) received by the 

Purchasing Fund Adviser or Trustee or 

Sponsor to the Purchasing Trust or an 

affiliated person of the Purchasing Fund 

Adviser, Trustee or Sponsor, from the 

Funds in connection with the 

investment by the Purchasing Fund in 

the Fund. Applicants state that any sales 

loads or service fees charged with 

respect to shares of a Purchasing Fund 

will not exceed the limits applicable to 

a fund of funds set forth in Conduct 

Rule 2830 of the NASD. 

18. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Fund may 

acquire securities of any investment 

company or company relying on 

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

excess of the limits contained in section 

12(d)(1)(A) of the Act. Applicants also 

represent that to ensure that Purchasing 

Funds comply with the terms and 

conditions of the requested relief from 

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

that intends to invest in a Fund in 

reliance on the requested order will be 

required to enter into a Purchasing Fund 

Agreement between the Fund and the 

Purchasing Fund. The Purchasing Fund 

Agreement will require the Purchasing 

Fund to adhere to the terms and 

conditions of the requested order. The 

Purchasing Fund Agreement also will 

include an acknowledgement from the 

Purchasing Fund that it may rely on the 

order only to invest in the Funds and 

not in any other investment company. 

The Purchasing Fund Agreement will 

further require any Purchasing Fund 

that exceeds the 5% or 10% limitations 

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

disclose in its prospectus that it may 

invest in ETFs, and to disclose, in 

‘‘plain English,’’ in its prospectus the 

unique characteristics of the Purchasing 

Funds investing in exchange-traded 

funds (‘‘ETFs’’), including but not 

limited to the expense structure and any 

additional expenses of investing in 

ETFs. 

19. Applicants also note that a Fund 

may choose to reject a direct purchase 

of Fund Shares in Creation Unit 

Aggregations by a Purchasing Fund. To 

the extent that a Purchasing Fund 

purchases Fund Shares in the secondary 

market, a Fund would still retain its 

ability to reject initial purchases of 

Fund Shares made in reliance on the 

requested order by declining to enter 

into the Purchasing Fund Agreement 

prior to any investment by a Purchasing 

Fund in excess of the limits of section 

12(d)(1)(A). 

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

20. Section 17(a) of the Act generally 

prohibits an affiliated person of a 

registered investment company, or an 

affiliated person of such a person, from 

selling any security to or purchasing any 

security from the company. Section 

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

person’’ to include any person directly 

or indirectly owning, controlling or 

holding with power to vote 5% or more 

of the outstanding voting securities of 

the other person, any person 5% or 

more of whose outstanding voting 

securities are directly or indirectly 

owned, controlled or held with the 

power to vote by the other person, and 

any person directly or indirectly 

controlling, controlled by or under 

common control with the other person. 

Section 2(a)(9) of the Act provides that 

a control relationship will be presumed 

where one person owns more than 25% 

of another person’s voting securities. 

21. Applicants request an exemption 

from section 17(a) of the Act pursuant 

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

permit persons to effectuate in-kind 

purchases and redemptions with a Fund 

when they are affiliated persons, or 

affiliated persons of affiliated persons, 

of the Fund solely by virtue of one or 

more of the following: (a) Holding 5 

percent or more, or in excess of 25 

percent, of the outstanding Fund Shares 

of one or more Funds; (b) having an 

affiliation with a person with an 

ownership interest described in (a); or 

(c) holding 5 percent or more, or more 

than 25 percent, of the shares of one or 

more other registered investment 

companies (or series thereof) advised by 

the Adviser or an entity controlling, 

controlled by or under common control 

with the Adviser. 

22. Applicants assert that no useful 

purpose would be served by prohibiting 

these types of affiliated persons from 

purchasing or redeeming Creation Unit 

Aggregations through ‘‘in-kind’’

transactions. The deposit procedures for 

both in-kind purchases and in-kind 

redemptions of Creation Unit 

Aggregations will be the same for all 

purchases and redemptions. Deposit 

Securities and Fund Securities will be 

valued in the same manner as Portfolio 

Securities. Therefore, applicants state 

that in-kind purchases and redemptions 

will afford no opportunity for these 

affiliated persons of a Fund, or the 

affiliated persons of such affiliated 

persons, to effect a transaction 

detrimental to other holders of Fund 

Shares. Applicants also believe that inkind purchases and redemptions will 

not result in self-dealing or overreaching 

of the Funds. 

23. Applicants also seek relief from 

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

affiliated person of a Purchasing Fund 

because the Purchasing Fund holds 5% 

or more of the Fund Shares of the Fund 

to sell its Fund Shares to and redeem its 

Fund Shares from a Purchasing Fund 

and to engage in the accompanying inkind transactions with the Purchasing 

Fund.13 Applicants note that Creation 

Unit Aggregations that are purchased or 

redeemed directly from a Fund will be 

based on the NAV of the Fund.14

Applicants believe that any proposed 

transactions directly between the Funds 

and Purchasing Funds will be consistent 

with the policies of each Purchasing 

Fund. The purchase of Creation Unit 

Aggregations by a Purchasing Fund 

directly from a Fund will be 

accomplished in accordance with the 

investment restrictions of any such 

Purchasing Fund and will be consistent 

with the investment policies set forth in 

the Purchasing Fund’s registration 

statement. The Purchasing Fund 


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Agreement will require any Purchasing 

Fund that purchases Creation Unit 

Aggregations directly from a Fund to 

represent that the purchase of Creation 

Unit Aggregations from a Fund by a 

Purchasing Fund will be accomplished 

in compliance with the investment 

restrictions of the Purchasing Fund and 

will be consistent with the investment 

policies set forth in the Purchasing 

Fund’s registration statement. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

ETF Relief 

1. As long as the Funds operate in 

reliance on the requested order, Fund 

Shares will be listed on an Exchange. 

2. Neither the Trust nor any Fund will 

be advertised or marketed as an openend investment company or a mutual 

fund. Each Fund’s Prospectus will 

prominently disclose that Fund Shares 

are not individually redeemable shares 

and will disclose that the owners of 

Fund Shares may acquire those Fund 

Shares from the Fund and tender those 

Fund Shares for redemption to the Fund 

in Creation Unit Aggregations only. Any 

advertising material that describes the 

purchase or sale of Creation Unit 

Aggregations or refers to redeemability 

will prominently disclose that Fund 

Shares are not individually redeemable, 

and that owners of Fund Shares may 

acquire those Fund Shares from the 

Fund and tender those Fund Shares for 

redemption to the Fund in Creation Unit 

Aggregations only. 

3. The Web site maintained for the 

Funds, which will be publicly 

accessible at no charge, will contain the 

following information, on a per Fund 

Share basis, for each Fund: (a) The prior 

Business Day’s NAV and the Bid/Ask 

Price, and a calculation of the premium 

or discount of the Bid/Ask Price at the 

time of calculation of the NAV against 

such NAV; and (b) data in chart format 

displaying the frequency distribution of 

discounts and premiums of the daily 

Bid/Ask Price against the NAV, within 

appropriate ranges, for each of the four 

previous calendar quarters. In addition, 

the Product Description for each Fund 

will state that the Web site for the Fund 

has information about the premiums 

and discounts at which Fund Shares 

have traded. 

4. Each Fund’s Prospectus and annual 

report also will include: (a) The 

information listed in condition 3(b), (i) 

in the case of the Fund’s Prospectus, for 

the most recently completed year (and 

the most recently completed quarter or 

quarters, as applicable) and (ii) in the 

case of the annual report, for the 

immediately preceding five years, as 

applicable; and (b) the following data, 

calculated on a per Fund Share basis for 

one, five and ten year periods (or life of 

the Fund): (i) The cumulative total 

return and the average annual total 

return based on NAV and Bid/Ask Price, 

and (ii) the cumulative total return of 

the relevant Underlying Index. 

5. Before a Fund may rely on the 

order, the Commission will have 

approved, pursuant to rule 19b–4 under 

the Exchange Act, an Exchange rule 

requiring Exchange members and 

member organizations effecting 

transactions in Fund Shares to deliver a 

Product Description to purchasers of 

Fund Shares. 

6. Each Fund’s Prospectus and 

Product Description will clearly 

disclose that, for purposes of the Act, 

Fund Shares are issued by the Fund, 

which is a registered investment 

company, and that the acquisition of 

Fund Shares by investment companies 

is subject to the restrictions of section 

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

by an exemptive order that permits 

registered investment companies to 

invest in a Fund beyond the limits in 

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

and conditions, including that the 

registered investment company enter 

into a Purchasing Fund Agreement with 

a Fund regarding the terms of the 

investment. 

7. The requested relief to permit ETF 

operations will expire on the effective 

date of any Commission rule under the 

Act that provides relief permitting the 

operation of index-based exchangetraded funds. 

Section 12(d)(1) Relief 

8. The members of a Purchasing Fund 

Advisory Group will not control 

(individually or in the aggregate) a Fund 

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

the Act. The members of a Purchasing 

Fund Sub-Advisory Group will not 

control (individually or in the aggregate) 

a Fund within the meaning of section 

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

decrease in the outstanding Fund Shares 

of a Fund, a Purchasing Fund Advisory 

Group or a Purchasing Fund SubAdvisory Group, each in the aggregate, 

becomes a holder of more than 25% of 

the outstanding Fund Shares of a Fund, 

it will vote its Fund Shares in the same 

proportion as the vote of all other 

holders of the Fund Shares. This 

condition does not apply to the 

Purchasing Fund Sub-Advisory Group 

with respect to a Fund for which the 

Purchasing Fund Sub-Adviser or a 

person controlling, controlled by, or 

under common control with the 

Purchasing Fund Sub-Adviser acts as 

the investment adviser within the 

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

Act. 

9. No Purchasing Fund or Purchasing 

Fund Affiliate will cause any existing or 

potential investment by the Purchasing 

Fund in a Fund to influence the terms 

of any services or transactions between 

the Purchasing Fund or Purchasing 

Fund Affiliate and the Fund or a Fund 

Affiliate. 

10. The board of directors or trustees 

of a Purchasing Management Company, 

including a majority of the disinterested 

directors or trustees, will adopt 

procedures reasonably designed to 

ensure that the Purchasing Fund 

Adviser and Purchasing Fund SubAdviser are conducting the investment 

program of the Purchasing Management 

Company without taking into account 

any consideration received by the 

Purchasing Management Company or a 

Purchasing Fund Affiliate from a Fund 

or a Fund Affiliate in connection with 

any services or transactions. 

11. No Purchasing Fund or 

Purchasing Fund Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to a Fund) will cause 

a Fund to purchase a security in any 

Affiliated Underwriting. 

12. Before investing in a Fund in 

excess of the limits in section 

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

the Fund will execute a Purchasing 

Fund Agreement stating, without 

limitation, that their boards of directors 

or trustees and their investment advisers 

or sponsors and trustees, as applicable, 

understand the terms and conditions of 

the order, and agree to fulfill their 

responsibilities under the order. At the 

time of its investment in Fund Shares in 

excess of the limit in section 

12(d)(1)(A)(i), a Purchasing Fund will 

notify the Fund of the investment. At 

such time, the Purchasing Fund will 

also transmit to the Fund a list of the 

names of each Purchasing Fund Affiliate 

and Underwriting Affiliate. The 

Purchasing Fund will notify the Fund of 

any changes to the list of names as soon 

as reasonably practicable after a change 

occurs. The relevant Fund and the 

Purchasing Fund will maintain and 

preserve a copy of the order, the 

agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

13. The Purchasing Fund Adviser, 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Purchasing Fund in an amount at least 

equal to any compensation (including 

fees received under any plan adopted by 


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a Fund under rule 12b–1 under the Act) 

received from a Fund by the Purchasing 

Fund Adviser, Trustee or Sponsor, or an 

affiliated person of the Purchasing Fund 

Adviser, Trustee or Sponsor, other than 

any advisory fees paid to the Purchasing 

Fund Adviser, Trustee or Sponsor, or its 

affiliated person by a Fund, in 

connection with the investment by the 

Purchasing Fund in the Fund. Any 

Purchasing Fund Sub-Adviser will 

waive fees otherwise payable to the 

Purchasing Fund Sub-Adviser, directly 

or indirectly, by the Purchasing 

Management Company in an amount at 

least equal to any compensation 

received from a Fund by the Purchasing 

Fund Sub-Adviser, or an affiliated 

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

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

Fund, in connection with the 

investment by the Purchasing 

Management Company in a Fund made 

at the direction of the Purchasing Fund 

Sub-Adviser. In the event that the 

Purchasing Fund Sub-Adviser waives 

fees, the benefit of the waiver will be 

passed through to the Purchasing 

Management Company. 

14. Any sales charges and/or service 

fees charged with respect to shares of a 

Purchasing Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in Conduct Rule 2830 of the 

NASD. 

15. Once an investment by a 

Purchasing Fund in the securities of a 

Fund exceeds the limit in section 

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

directors/trustees of a Fund (‘‘Board’’), 

including a majority of the disinterested 

Board members, will determine that any 

consideration paid by the Fund to a 

Purchasing Fund or a Purchasing Fund 

Affiliate in connection with any services 

or transactions: (a) Is fair and reasonable 

in relation to the nature and quality of 

the services and benefits received by the 

Fund; (b) is within the range of 

consideration that the Fund would be 

required to pay to another unaffiliated 

entity in connection with the same 

services or transactions; and (c) does not 

involve overreaching on the part of any 

person concerned. This condition does 

not apply with respect to any services 

or transactions between a Fund and its 

investment adviser(s), or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

16. The Board, including a majority of 

the disinterested Board members, will 

adopt procedures reasonably designed 

to monitor any purchases of securities 

by a Fund in an Affiliated Underwriting 

once the investment by a Purchasing 

Fund in a Fund exceeds the limit of 

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

including any purchases made directly 

from an Underwriting Affiliate. The 

Board will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Purchasing Fund in a 

Fund. The Board will consider, among 

other things: (a) Whether the purchases 

were consistent with the investment 

objectives and policies of the Fund; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders of the Fund. 

17. Each Fund will maintain and 

preserve permanently in an easily 

accessible place a written copy of the 

procedures described in the preceding 

condition, and any modifications to 

such procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in Affiliated Underwritings, 

once an investment by a Purchasing 

Fund in shares of the Fund exceeds the 

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

setting forth from whom the securities 

were acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or materials upon which 

the Board’s determinations were made. 

18. Before approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Purchasing Management Company, 

including a majority of the disinterested 

directors or trustees, will find that the 

advisory fees charged under such 

contract are based on services provided 

that will be in addition to, rather than 

duplicative of, the services provided 

under the advisory contract(s) of any 

Fund in which the Purchasing 

Management Company may invest. 

These findings and their basis will be 

recorded fully in the minute books of 

the appropriate Purchasing Management 

Company. 

19. No Fund will acquire securities of 

any other investment company or 

companies relying on sections 3(c)(1) or 

3(c)(7) of the Act in excess of the limits 

contained in section 12(d)(1)(A) of the 

Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18151 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28349; 812–13507] 

Van Eck Associates Corporation, et al.; 

Notice of Application 

July 31, 2008. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application to 

amend a prior order under section 6(c) 

of the Investment Company Act of 1940 

(‘‘Act’’) to grant exemptions from 

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

and 24(d) of the Act and rule 22c–1 

under the Act, under section 12(d)(1)(J) 

of the Act for an exemption from 

sections 12(d)(1)(A) and (B) of the Act, 

and under sections 6(c) and 17(b) of the 

Act granting an exemption from sections 

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

Summary of Application: Applicants 

request an order to amend a prior order 

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

management investment company that 

are based on equity or fixed-income 

indexes for which no entity that creates, 

compiles, sponsors, or maintains the 

indexes is or will be an affiliated 

person, or an affiliated person of an 

affiliated person, of any applicant, or 

any sub-adviser or promoter to a series, 

to issue shares that can be redeemed 

only in large aggregations; (b) secondary 

market transactions in shares to occur at 

negotiated prices; (c) dealers to sell 

shares to purchasers in the secondary 

market unaccompanied by a prospectus 

when prospectus delivery is not 

required by the Securities Act of 1933; 

(d) certain affiliated persons of the 

series to deposit securities into, and 

receive securities from, the series in 

connection with the purchase and 

redemption of large aggregations of 

shares; (e) under specified limited 


sroberts on PROD1PC70 with NOTICES