53460 Federal Register / Vol. 73, No. 180 / Tuesday, September 16, 2008 / Notices 

5These hourly rate estimates are derived from 

annual salaries reported in: Securities Industry and 

Financial Markets Association, Management and 

Professional Earnings in the Securities Industry 

(2007) and Securities Industry and Financial 

Markets Association, Office Salaries in the 

Securities Industry (2007). 

6This estimate is based on the following 

calculations: $1298.50 (3.5 hours × $371 = $1298.5) 

plus $32.50 (0.5 hours × $65 = $32.50) equals 

$1331.00 (cost of one application); $1331 × 5 

applications = $6655 total cost. 

7This understanding is based on conversations 

with representatives from the fund industry. 

8This estimate is based on the following 

calculation: $5,000 multiplied by 5 (funds) equals 

$25,000. 

9The Investment Company Institute, Unit 

Investment Trust Data, (April, 2008). 

10The number of times UITs rely on the rule to 

make capital gains distributions depends on a wide 

range of factors and, thus, can vary greatly across 

years. A number of UITs are organized as grantor 

trusts, and therefore do not generally make capital 

gains distributions under rule 19b–1(c), or may not 

rely on rule 19b–1(c) as they do not meet the rule’s 

requirements. Other UITs may distribute capital 

gains biannually, annually, quarterly, or at other 

intervals. 

11This estimate is based on the following 

calculation: 6030 UITs multiplied by $50 equals 

$301,500. 

discussed below. The staff estimates 

that, on average, the fund’s investment 

adviser spends approximately four 

hours to review an application, 

including 3.5 hours by an assistant 

general counsel, at a cost of $371 per 

hour, and 0.5 hours by an 

administrative assistant, at a cost of $65 

per hour.5 Thus, the Commission staff 

estimates that the annual hour burden of 

the collection of information imposed 

by rule 19b–1 is approximately four 

hours per fund, at a cost of $1331, for 

a total burden of 20 hours at a cost of 

$6655.6

The Commission staff estimates that 

there is no hour burden associated with 

complying with the collection of 

information component of rule 19b–1(c). 

As noted above, the Commission staff 

understands that funds that file an 

application under rule 19b–1(e) 

generally use outside counsel to prepare 

the application.7 The staff estimates 

that, on average, outside counsel spends 

10 hours preparing a rule 19b–1(e) 

application, including eight hours by an 

associate and two hours by a partner. 

Outside counsel billing arrangements 

and rates vary based on numerous 

factors. Based on conversations with 

outside counsel and average billing rates 

of outside counsel the staff estimates 

that the average cost of outside counsel 

preparation of the 19b–(e) exemptive 

application is $5,000. Thus, the staff 

estimates that the total annual cost 

burden imposed by the exemptive 

application requirements of rule 19b– 

1(e) is $25,000.8

The Commission staff estimates that 

there are approximately 6030 UITs,9

which may rely on rule 19b–1(c) to 

make capital gains distributions. The 

staff estimates that, on average, these 

UITs rely on rule 19b–1(c) once a year 

to make a capital gains distribution.10 In 

most cases, the trustee of the UIT is 

responsible for preparing and sending 

the notices that must accompany a 

capital gains distribution under rule 

19b–1(c)(2). These notices require 

limited preparation, the cost of which 

accounts for only a small, indiscrete 

portion of the comprehensive fee 

charged by the trustee for its services to 

the UIT. The staff believes that as a 

matter of good business practices, and 

for tax preparation reasons, UITs would 

collect and distribute the capital gains 

information required to be sent to 

unitholders under rule 19b–1(c) even in 

the absence of the rule. The staff 

estimates that the cost of preparing a 

notice for a capital gains distribution 

under rule 19b–1(c)(2) is approximately 

$50. There is no separate cost to mail 

the notices because they are mailed with 

the capital gains distribution. Thus, the 

staff estimates that the capital gains 

distribution notice requirement imposes 

an annual cost on UITs of 

approximately $301,500.11 The staff 

therefore estimates that the total cost 

imposed by rule 19b–1 is $326,500 

($301,500 plus $25,000 equals 

$326,500). 

Based on these calculations, the total 

number of respondents for rule 19b–1 is 

estimated to be 6035 (6030 UIT 

portfolios + 5 funds filing an application 

under rule 19b–1(e)), the total annual 

hour burden is estimated to be 20 hours, 

and the total annual cost burden is 

estimated to be $326,500. These 

estimates of average annual burden 

hours and costs are made solely for 

purposes of the Paperwork Reduction 

Act. The collections of information 

required by 19b–1(c) and 19b–1(e) are 

necessary to obtain the benefits 

described above. Responses will not be 

kept confidential. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

control number. 

Please direct general comments 

regarding the above information to the 

following persons: (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or email to: 

Kimberly_P._Nelson@omb.eop.gov ; and 

(ii) Lewis W. Walker, Acting Director/ 

Chief Information Officer, Securities 

and Exchange Commission, C/O Shirley 

Martinson, 6432 General Green Way, 

Alexandria, VA 22312; or send an email 

to: PRA_Mailbox@sec.gov. Comments 

must be submitted to OMB within 30 

days of this notice. 

Dated: September 8, 2008. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–21535 Filed 9–15–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28378; 812–13517] 

Global X Funds and Global X 

Management Company LLC; Notice of 

Application 

September 10, 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) 

certain open-end management 

investment companies and their series, 

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

redeemed only in large aggregations 

(‘‘Creation Units’’); (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 

(‘‘Securities Act’’); (d) certain series to 

pay redemption proceeds, under certain 

circumstances, more than seven days 

after the tender of Shares 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 

Units; and (f) certain registered 

management investment companies and 

unit investment trusts outside of the 

same group of investment companies as 

the series to acquire Shares. 

APPLICANTS: Global X Funds and Global 

X Management Company LLC 

(‘‘Adviser’’). 


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1The Initial Fund is Global X FTSE Nordic 30 

ETF. 

2All 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. Any 

Future Fund will be advised by the Adviser or an 

entity controlled by or under common control with 

the Adviser. 

3Applicants represent that each Fund will invest 

at least 80% of its total assets in the component 

securities that comprise its Underlying Index 

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

Funds, Component Securities and depositary 

receipts representing such securities. ‘‘Depositary 

Receipts’’ will typically be American Depositary 

Receipts, but may include Global Depositary 

Receipts and Euro Depositary Receipts. Each Fund 

also may invest up to 20% 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 or SubAdviser believes will help the Fund track its 

Underlying Index. 

4Under the representative sampling strategy, the 

Adviser will seek to construct a Fund’s portfolio so 

that its market capitalization, industry weightings, 

fundamental investment characteristics (such as 

return variability, earnings valuation and yield) and 

liquidity measures perform like those of the 

Underlying Index. 

FILING DATES: The application was filed 

on April 14, 2008 and amended on May 

23, 2008, August 8, 2008 and August 20, 

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 October 2, 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, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090; 

Applicants, 220 Fifth Avenue, 20th 

Floor, New York, NY 10001. 

FOR FURTHER INFORMATION CONTACT: 

Barbara T. Heussler, Senior Counsel at 

(202) 551–6990, or Michael W. Mount, 

Assistant Director, at (202) 551–6820 

(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. 

Applicants’ Representations 

1. Global X Funds is registered as an 

open-end management investment 

company and is organized as a Delaware 

statutory trust that will offer multiple 

series. Global X Funds will initially 

offer one series (‘‘Initial Fund’’), which 

will track a foreign equity securities 

index (‘‘Underlying Index’’).1

Applicants may offer additional 

registered open-end investment 

companies in the future, as well as any 

series of any existing or future open-end 

investment company registered under 

the Act (‘‘Future Funds’’ and together 

with the Initial Funds, the ‘‘Funds’’).2

2. The Adviser is registered as an 

investment adviser under the 

Investment Advisers Act of 1940, as 

amended (the ‘‘Advisers Act’’) and will 

serve as the investment adviser to the 

Initial Fund. In the future, the Adviser 

may enter into sub-advisory agreements 

with other investment advisers to act as 

sub-advisers to particular Funds (‘‘SubAdvisers’’). Each Sub-Adviser will be 

registered under the Advisers Act. SEI 

Investments Distribution Company 

(‘‘Distributor’’) is a broker-dealer 

registered under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’) and will act as the principal 

underwriter and distributor for the 

Creation Units of Shares. 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, before fees and 

expenses, generally to the price and 

yield performance of an Underlying 

Index. Certain of the Underlying Indices 

may be composed of equity securities of 

domestic issuers and non-domestic 

issuers meeting the requirements for 

trading in U.S. markets (‘‘Domestic 

Indices’’). Other Underlying Indices 

may be composed of foreign equity 

securities (‘‘Foreign Indices’’). Funds 

which track Domestic Indices are 

referred to as ‘‘Domestic Funds’’ and 

Funds which track Foreign Indices are 

referred to as ‘‘Foreign Funds.’’ No 

entity that creates, compiles, sponsors 

or maintains an Underlying Index 

(‘‘Index Provider’’) is or will be an 

affiliated person, as defined in section 

2(a)(3) of the Act, or an affiliated person 

of an affiliated person, of Global X 

Funds or a Fund, the Adviser, any SubAdviser to or promoter of a Fund, or the 

Distributor. 

4. The investment objective of each 

Fund will be to provide investment 

results that correspond, before fees and 

expenses, generally to the price and 

yield performance 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 which will be disclosed with 

regard to each Fund in its prospectus.3

A Fund using a replication strategy will 

invest in the Component Securities in 

its Underlying Index in approximately 

the same proportions as in the 

Underlying Index. In certain 

circumstances, such as when there are 

practical difficulties or substantial costs 

involved in holding every security in an 

Underlying Index or when a Component 

Security is less liquid, illiquid or 

unavailable, a Fund may use a 

representative sampling strategy 

pursuant to which it will invest in 

some, but not all of the Component 

Securities of its Underlying Index.4

Applicants anticipate that a Fund that 

utilizes a representative sampling 

strategy will not track the performance 

of its Underlying Index with the same 

degree of accuracy as an investment 

vehicle that invests in every Component 

Security of the Underlying Index with 

the same weighting as the Underlying 

Index. Applicants expect that each Fund 

will have a tracking error relative to the 

performance of its Underlying Index of 

less than 5 percent. 

5. Creation Units are expected to 

range between 25,000 to 100,000 Shares 

as will be clearly stated in the relevant 

Fund’s prospectus (‘‘Prospectus’’). 

Applicants expect that the initial price 

of a Creation Unit will fall in the range 

of $1,000,000 to $10,000,000. All orders 

to purchase Creation Units must be 

placed with the Distributor, by or 

through a party that has entered into an 

agreement with the Distributor 

(‘‘Authorized Participant’’). The 

Distributor will be responsible for 

transmitting the orders to the Funds. An 

Authorized Participant must be either: 

(a) A broker-dealer or other participant 

in the continuous net settlement system 

of the National Securities Clearing 

Corporation, a clearing agency 

registered with the Commission, or (b) 

a participant in the Depository Trust 

Company (‘‘DTC’’, and such participant, 

‘‘DTC Participant’’). Shares of the Fund 

generally will be sold in Creation Units 

in exchange for an in-kind deposit by 

the purchaser of a portfolio of securities 

designated by the Adviser or SubAdviser to correspond generally to the 

price and yield performance of the 

relevant Underlying Index (the ‘‘Deposit 


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53462 Federal Register / Vol. 73, No. 180 / Tuesday, September 16, 2008 / Notices 

5Each Fund will sell and redeem Creation Units 

only on a ‘‘Business Day’’ which is defined as any 

day that the New York Stock Exchange, the Listing 

Exchange (defined below), and the custodian of a 

Fund are open for business, and includes any day 

that a Fund is required to be open under section 

22(e) of the Act. Each Business Day, prior to the 

opening of trading on the Listing Exchange (defined 

below), the list of names and amount of each 

security constituting the current Deposit Securities 

and the Balancing Amount will be made available. 

Any national securities exchange (as defined in 

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

Shares are listed (‘‘Listing Exchange’’) will 

disseminate, every 15 seconds during its regular 

trading hours, through the facilities of the 

Consolidated Tape Association, an amount per 

individual Share representing the sum of the 

estimated Balancing Amount and the current value 

of the Deposit Securities. 

6Applicants state that in some circumstances or 

in certain countries, it may not be practicable or 

convenient, or permissible under the laws of certain 

countries or the regulations of certain foreign stock 

exchanges, for a Foreign Fund to operate 

exclusively on an ‘‘in-kind’’ basis. Applicants also 

note that when a substantial rebalancing of a Fund’s 

portfolio is required, the Adviser or Sub-Adviser 

might prefer to receive cash rather than stocks so 

that the Fund may avoid transaction costs involved 

in liquidating part of its portfolio to achieve the 

rebalancing. 

7Where a Fund permits a purchaser to substitute 

cash in lieu of depositing a portion of the requisite 

Deposit Securities, the purchaser may be assessed 

a higher Transaction Fee to cover the cost of 

purchasing such Deposit Securities, including 

operational processing and brokerage costs, and 

part or all of the spread between the expected bid 

and the offer side of the market relating to such 

Deposit Securities. 

8Shares will be registered in book-entry form 

only. DTC or its nominee will be the registered 

owner of all outstanding Shares. DTC or DTC 

Participants will maintain records reflecting 

beneficial owners of Shares. 

9As a general matter, the Deposit Securities and 

Fund Securities will correspond pro rata to the 

Portfolio Securities held by each Fund, but Fund 

Securities received on redemption may not always 

be identical to Deposit Securities deposited in 

connection with the purchase of Creation Units for 

the same day. The Funds will comply with the 

federal securities laws in accepting Deposit 

Securities and satisfying redemptions with Fund 

Securities, including that the Deposit Securities and 

Fund Securities are sold in transactions that would 

be exempt from registration under the Securities 

Act. 

Securities’’), together with the deposit of 

a specified cash payment (‘‘Balancing 

Amount’’). The Balancing Amount is an 

amount equal to the difference between 

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

Creation Unit) of a Fund and (b) the 

total aggregate market value (per 

Creation Unit) of the Deposit 

Securities.5 Each Fund may permit a 

purchaser of Creation Units to substitute 

cash in lieu of depositing some or all of 

the Deposit Securities if the Adviser or 

Sub-Adviser believes such method 

would reduce the Fund’s transaction 

costs or enhance the Fund’s operating 

efficiency.6

6. An investor purchasing or 

redeeming a Creation Unit from a Fund 

will be charged a fee (‘‘Transaction 

Fee’’) to prevent the dilution of the 

interests of the remaining shareholders 

resulting from costs in connection with 

the purchase or redemption of Creation 

Units.7 The maximum Transaction Fees 

relevant to each Fund and the method 

of calculating such Transaction Fees 

will be fully disclosed in the Prospectus 

of such Fund or statement of additional 

information (‘‘SAI’’). The Distributor 

also will be responsible for delivering 

the Fund’s Prospectus to those persons 

purchasing Shares in Creation Units 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 applicable Fund to 

implement the delivery of its Shares. 

7. Purchasers of Shares in Creation 

Units may hold such Shares or may sell 

such Shares into the secondary market. 

Shares will be listed and traded on an 

Exchange. It is expected that one or 

more member firms of a Listing 

Exchange will be designated to act as a 

specialist (‘‘Specialist’’) or a market 

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

market for Shares trading on the Listing 

Exchange. Prices of Shares trading on an 

Exchange will be based on the current 

bid/ask market. Shares sold in the 

secondary market will be subject to 

customary brokerage commissions and 

charges. 

8. Applicants expect that purchasers 

of Creation Units 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 Shares, also 

may purchase Creation Units for use in 

its market-making activities. Applicants 

expect that secondary market 

purchasers of Shares will include both 

institutional investors and retail 

investors.8 Applicants expect that the 

price at which Shares trade will be 

disciplined by arbitrage opportunities 

created by the option to continually 

purchase or redeem Creation Units at 

their NAV, which should ensure that 

Shares will not trade at a material 

discount or premium in relation to their 

NAV. 

9. Shares will not be individually 

redeemable, and owners of Shares may 

acquire those Shares from the Fund, or 

tender such Shares for redemption to 

the Fund, in Creation Units only. To 

redeem, an investor will have to 

accumulate enough Shares to constitute 

a Creation Unit. Redemption orders 

must be placed by or through an 

Authorized Participant. An investor 

redeeming a Creation Unit generally 

will receive (a) Portfolio Securities 

designated to be delivered for Creation 

Unit redemptions (‘‘Fund Securities’’) 

on the date that the request for 

redemption is submitted 9 and (b) a 

‘‘Cash Redemption Payment,’’ 

consisting of an amount calculated in 

the same manner as the Balancing 

Amount, although the actual amount of 

the Cash Redemption Payment may 

differ if the Fund Securities are not 

identical to the Deposit Securities on 

that day. An investor may receive the 

cash equivalent of a Fund Security in 

certain circumstances, such as if the 

investor is constrained from effecting 

transactions in the security by 

regulation or policy. 

10. No Fund will be marketed or 

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

fund. Instead, each Fund will be 

marketed as an ‘‘ETF,’’ an ‘‘investment 

company,’’ a ‘‘fund,’’ or a ‘‘trust.’’ All 

marketing materials that describe the 

features or method of obtaining, buying 

or selling Creation Units or Shares 

traded on an Exchange, or refer to 

redeemability, will prominently 

disclose that Shares are not individually 

redeemable and that the owners of 

Shares may purchase or redeem Shares 

from the Fund in Creation Units only. 

The same approach will be followed in 

the SAI, shareholder reports and 

investor educational materials issued or 

circulated in connection with the 

Shares. The Funds will provide copies 

of their annual and semi-annual 

shareholder reports to DTC Participants 

for distribution to shareholders. 

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of the Act for an exemption 

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


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10Applicants state that they are not seeking relief 

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

in which an investor purchases Shares from the 

Fucghnds or an underwriter. Applicants further 

state that each Fund’s Prospectus will caution 

broker-dealers and others that some activities on 

their part, depending on the circumstances, may 

result in their being deemed statutory underwriters 

and subject them to the prospectus delivery and 

liability provisions of the Securities Act. For 

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

be deemed a statutory underwriter if it purchases 

Creation Units from a Fund, breaks them down into 

the constituent individual Shares, and sells those 

Shares directly to customers, or if it chooses to 

couple the creation of a supply of new Shares with 

an active selling effort involving solicitation of 

secondary market demand for 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 

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. 

11The Bid-Ask Price per individual Share of a 

Fund is determined using the highest bid and the 

lowest offer on the Listing Exchange. 

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 Shares 

will not be individually redeemable, 

applicants request an order that would 

permit the Funds to register as open-end 

management investment companies and 

issue Shares that are redeemable in 

Creation Units only. Applicants state 

that investors may purchase Shares in 

Creation Units and redeem Creation 

Units from each Fund. Applicants state 

that because Creation Units may always 

be purchased and redeemed at NAV, the 

market price of the Shares should not 

vary substantially from their NAV. 

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

1 under the Act 

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

other things, prohibits a dealer from 

selling a redeemable security, which is 

currently being offered to the public by 

or through a principal underwriter, 

except at a current public offering price 

described in the prospectus. Rule 22c– 

1 under the Act generally requires that 

a dealer selling, redeeming or 

repurchasing a redeemable security do 

so only at a price based on its NAV. 

Applicants state that secondary market 

trading in 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 

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 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 risklesstrading 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 Shares to trade in the 

secondary market at negotiated prices. 

Applicants state that (a) secondary 

market trading in Shares does not 

involve a Fund as a party and will not 

result in dilution of an investment in 

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 Shares will not lead to 

discrimination or preferential treatment 

among purchasers. Finally, applicants 

contend that the proposed distribution 

system will be orderly because 

competitive forces will ensure that the 

difference between the market price of 

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 

Shares in the secondary markets to rely 

on the prospectus delivery exemption 

provided by section 4(3) of the 

Securities Act.10

8. Applicants state that 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 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 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 closing price and volume 

information for 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 

Portfolio Securities and 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’’),11 the NAV for each 

Fund, and information about the 

premiums and discounts at which the 

Shares have traded. 

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

market to provide purchasers with a 

product description (‘‘Product 

Description’’) that describes, in plain 

English, the relevant Fund and the 

Shares it issues. Applicants state that a 

Product Description is not intended to 

substitute for a full Prospectus. 


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12Rule 15c6–1 under the Exchange Act requires 

that most securities transactions be settled within 

three business days of the trade. Applicants 

acknowledge that no relief obtained from the 

requirements of section 22(e) will affect any 

obligations applicants may have under rule 

15c6–1. 

13A ‘‘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. 

Applicants state that the Product 

Description will be tailored to meet the 

information needs of investors 

purchasing Shares in the secondary 

market. 

Section 22(e) 

10. Section 22(e) of the Act 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. Applicants 

state that settlement of redemptions for 

the Foreign Fund is contingent not only 

on the settlement cycle of the United 

States market, but also on current 

delivery cycles in local markets for 

underlying foreign securities held by the 

Foreign Fund. Applicants state that 

delivery cycles for transferring Fund 

Securities to redeeming investors, 

coupled with local market holiday 

schedules, will require a delivery 

process longer than seven calendar days 

for the Foreign Fund. Applicants 

request relief under section 6(c) of the 

Act from section 22(e) to allow the 

Foreign Fund to pay redemption 

proceeds up to 14 calendar days after 

the tender of any Creation Units for 

redemption. Except as disclosed in the 

relevant Foreign Fund’s Prospectus and/ 

or SAI, applicants expect that each 

Foreign Fund will be able to deliver 

redemption proceeds within seven 

days.12 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 creations and redemptions of 

Creation Units in-kind. 

Section 12(d)(1) 

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

relevant part, prohibits a registered 

investment company from acquiring 

securities of an investment company if 

such securities represent more than 3% 

of the total outstanding voting stock of 

the acquired company, more than 5% of 

the total assets of the acquiring 

company, or, together with the 

securities of any other investment 

companies, more than 10% of the total 

assets of the acquiring company. Section 

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

registered open-end investment 

company, its principal underwriter and 

any other broker-dealer from selling the 

investment company’s shares to another 

investment company if the sale will 

cause the acquiring company to own 

more than 3% of the acquired 

company’s voting stock, or if the sale 

will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. 

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 

Global X Funds (collectively, 

‘‘Purchasing Funds’’) to acquire shares 

of a Fund beyond the limits of section 

12(d)(1)(A). Purchasing Funds do not 

include the Funds. In addition, 

applicants seek relief to permit a Fund 

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

registered under the Exchange Act to 

sell 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 

Fund will be registered under the 

Advisers Act. Each Purchasing Trust 

will be sponsored by a sponsor 

(‘‘Sponsor’’). 

15. Applicants submit that the 

proposed conditions to the requested 

relief adequately address the concerns 

underlying the limits in section 

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

concerns about undue influence by a 

fund of funds over underlying funds, 

excessive layering of fees and overly 

complex fund structures. Applicants 

believe that the requested exemption is 

consistent with the public interest and 

the protection of investors. 

16. Applicants believe that neither the 

Purchasing Funds nor a Purchasing 

Fund Affiliate would be able to exert 

undue influence over the Funds.13 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 


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14Applicants 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 

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

Fund, or an affiliated person of such person, for the 

sale by the Fund of its Shares to a Purchasing Fund 

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

The Purchasing Fund Agreement also will include 

this acknowledgment. 

15Applicants believe that a Purchasing Fund will 

purchase Shares in the secondary market and will 

not purchase or redeem Creation Units directly 

from a Fund. Nonetheless, a Purchasing Fund that 

owns 5% or more of a Fund could seek to transact 

in Creation Units directly with a Fund pursuant to 

the section 17(a) relief requested. 

‘‘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 

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 

that any person whose relationship to 

the Fund is covered by section 10(f) of 

the Act is not an Underwriting 

Affiliate). 

17. Applicants assert that the 

proposed conditions address any 

concerns regarding excessive layering of 

fees. The board of directors or trustees 

of any Purchasing Management 

Company, including a majority of the 

directors or trustees who are not 

‘‘interested persons’’ within the 

meaning of section 2(a)(19) of the Act 

(‘‘disinterested directors or trustees’’), 

will find that the advisory fees charged 

to the 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, except as provided in 

condition 13, a Purchasing Fund 

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

Sponsor of a Purchasing Trust will, as 

applicable, 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 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 NASD 

Conduct Rule 2830. 

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. 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 enter into an agreement 

(‘‘Purchasing Fund Agreement’’) 

between the Fund and the Purchasing 

Fund requiring the Purchasing Fund to 

adhere to the terms and conditions of 

the requested order. The Purchasing 

Fund Agreement also will include an 

acknowledgment from the Purchasing 

Fund that it may rely on the requested 

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 the Funds, and to disclose, in 

‘‘plain English,’’ in its prospectus the 

unique characteristics of the Purchasing 

Funds investing in the Funds, including 

but not limited to the expense structure 

and any additional expenses of 

investing in the Funds. 

19. Applicants also note that a Fund 

may choose to reject a direct purchase 

of Shares in Creation Units by a 

Purchasing Fund. To the extent that a 

Purchasing Fund purchases Shares in 

the secondary market, a Fund would 

still retain its ability to reject initial 

purchases of 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). 

Sections 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 

(‘‘Second-Tier Affiliate’’), from selling 

any security to or purchasing any 

security from the company. Section 

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

person’’ to include (a) any person 

directly or indirectly owning, 

controlling or holding with power to 

vote 5% or more of the outstanding 

voting securities of the other person, (b) 

any person 5% or more of whose 

outstanding voting securities are 

directly or indirectly owned, controlled 

or held with the power to vote by the 

other person, and (c) any person directly 

or indirectly controlling, controlled by 

or under common control with the other 

person. Section 2(a)(9) of the Act 

provides that a control relationship will 

be presumed where one person owns 

more than 25% of another person’s 

voting securities. 

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 of the 

Fund or Second-Tier Affiliates solely by 

virtue of one or more of the following: 

(a) Holding 5% or more, or in excess of 

25%, of the outstanding Shares of one 

or more Funds; (b) having an affiliation 

with a person with an ownership 

interest described in (a); or (c) holding 

5% or more, or more than 25%, of the 

shares of one or more other registered 

investment companies (or series thereof) 

advised by the Adviser. 

22. Applicants assert that no useful 

purpose would be served by prohibiting 

these types of affiliated persons from 

purchasing or redeeming Creation Units 

through ‘‘in-kind’’ transactions. The 

deposit procedures for both in-kind 

purchases and in-kind redemptions of 

Creation Units will be the same for all 

purchases and redemptions. Deposit 

Securities and Fund Securities will be 

valued in the same manner as Portfolio 

Securities. Therefore, applicants state 

that in-kind purchases and redemptions 

will afford no opportunity for the 

specified affiliated persons, or SecondTier Affiliates, of a Fund to effect a 

transaction detrimental to other holders 

of Shares. Applicants also believe that 

in-kind purchases and redemptions will 

not result in self-dealing or overreaching 

of the Fund. 

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 Shares of the Fund to sell 

its Shares to and redeem its Shares from 

a Purchasing Fund, and to engage in the 

accompanying in-kind transactions with 

the Purchasing Fund.14 Applicants state 

that the terms of the transactions are fair 

and reasonable and do not involve 

overreaching. Applicants note that any 

consideration paid by a Purchasing 

Fund for the purchase or redemption of 

Shares directly from a Fund will be 

based on the NAV of the Fund.15

Applicants believe that any proposed 

transactions directly between the Funds 

and Purchasing Funds will be consistent 

with the policies of each Purchasing 

Fund. The purchase of Creation Units 


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by a Purchasing Fund directly from a 

Fund will be accomplished in 

accordance with the investment 

restrictions of any such Purchasing 

Fund and will be consistent with the 

investment policies set forth in the 

Purchasing Fund’s registration 

statement. The Purchasing Fund 

Agreement will require any Purchasing 

Fund that purchases Creation Units 

directly from a Fund to represent that 

the purchase of Creation Units 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 of 

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, the 

Shares will be listed on an Exchange. 

2. Neither Global X Funds nor any 

Fund will be advertised or marketed as 

an open-end investment company or a 

mutual fund. Each Fund’s Prospectus 

will prominently disclose that Shares 

are not individually redeemable shares 

and will disclose that the owners of 

Shares may acquire those Shares from 

the Fund and tender those Shares for 

redemption to the Fund in Creation 

Units only. Any advertising material 

that describes the purchase or sale of 

Creation Units or refers to redeemability 

will prominently disclose that Shares 

are not individually redeemable, and 

that owners of Shares may acquire those 

Shares from the Fund and tender those 

Shares for redemption to the Fund in 

Creation Units only. 

3. The Web site maintained for each 

Fund, which will be publicly accessible 

at no charge, will contain the following 

information, on a per individual 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 the Shares have 

traded. 

4. The Prospectus and annual report 

for each Fund 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 individual 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 Shares to deliver a 

Product Description to purchasers of 

Shares. 

6. Each Fund’s Prospectus and 

Product Description will clearly 

disclose that, for purposes of the Act, 

Shares are issued by the Fund, which is 

a registered investment company, and 

that the acquisition of 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 the 

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’s Advisory Group will not control 

(individually or in the aggregate) a Fund 

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

the Act. The members of a Purchasing 

Fund’s Sub-Advisory Group will not 

control (individually or in the aggregate) 

a Fund within the meaning of section 

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

decrease in the outstanding Shares of a 

Fund, a Purchasing Fund’s Advisory 

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

becomes a holder of more than 25% of 

the outstanding Shares of a Fund, it will 

vote its Shares in the same proportion 

as the vote of all other holders of the 

Shares. This condition does not apply to 

the Purchasing Fund’s Sub-Advisory 

Group with respect to a Fund for which 

the Purchasing Fund’s Sub-Adviser or a 

person controlling, controlled by, or 

under common control with the 

Purchasing Fund Sub-Adviser acts as 

the investment adviser within the 

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

Act. 

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 the Shares of 

a Fund in excess of the limits in section 

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

the Fund will execute a Purchasing 

Fund Agreement stating, without 

limitation, that their boards of directors 

or trustees and their investment advisers 

or Sponsors or Trustees, as applicable, 

understand the terms and conditions of 

the order, and agree to fulfill their 

responsibilities under the order. At the 

time of its investment in Shares of a 

Fund in excess of the limit in section 

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

notify such Fund of the investment. At 

such time, the Purchasing Fund will 

also transmit to the Fund a list of names 

of each Purchasing Fund Affiliate and 

Underwriting Affiliate. The Purchasing 

Fund will notify the Fund of any 

changes to the list of names as soon as 

reasonably practicable after a change 

occurs. The relevant Fund and the 

Purchasing Fund will maintain and 

preserve a copy of the order, the 

Purchasing Fund Agreement, and the 

list with any updated information for 

the duration of the investment and for 

a period of not less than six years 


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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 

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 any 

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 NASD Conduct Rule 2830. 

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 or trustees of a Fund 

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

directors or trustees that are not 

‘‘interested persons’’ within the 

meaning of section 2(a)(19) of the Act 

(‘‘disinterested Board members’’), will 

determine that any consideration paid 

by the Fund to a Purchasing Fund or 

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 an investment by the Purchasing 

Fund in the securities of the Fund 

exceeds the limit of section 

12(d)(1)(A)(i) of the Act, including any 

purchases made directly from an 

Underwriting Affiliate. The Board will 

review these purchases periodically, but 

no less frequently than annually, to 

determine whether the purchases were 

influenced by the investment by the 

Purchasing Fund in 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 a Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders 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 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 the 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 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. E8–21545 Filed 9–15–08; 8:45 am] 

BILLING CODE 8010–01–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 Wednesday, September 10, 2008, at 

5 p.m. 

Commissioners and certain staff 

members who have an interest in the 

matter will attend the Closed Meeting. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion as set forth 

in 5 U.S.C. 552b(c)(8) and (9) and 17 

CFR 200.402(a)(8) and (9), permit 

consideration of the scheduled matter at 

the Closed Meeting. 

Commissioner Aguilar as duty officer, 

voted to consider the item listed for the 

closed meeting in closed session, and 

determined that no earlier notice thereof 

was possible. 

The subject matter of the Closed 

Meeting scheduled for Wednesday, 

September 10, 2008, will be: A matter 

related to a financial institution. 

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. 


ebenthall on PROD1PC60 with NOTICES