Federal Register / Vol. 73, No. 180 / Tuesday, September 16, 2008 / Notices 53459 

2At the start of 2008, there were more than 9,300 

open-end (including ETFs) portfolios and closedend funds. These entities were managed or 

sponsored by more than 828 investment advisers. 

3These estimates are based on conversations with 

representatives of the fund industry and global 

custodians. 

4The salaries for a portfolio manager and a trust 

administrator are from SIFMA’s Management & 

Professional Earnings in the Securities Industry 

2007, modified to account for an 1800-hour workyear and multiplied by 5.35 to account for bonuses, 

firm size, employee benefits and overhead. 

1 17 CFR 270.19b–1. 

2 17 CFR 270.19b–1(c)(1). 

3The notice requirement in rule 19b–1(c)(2) (17 

CFR 270.19b–1(c)(2)) supplements the notice 

requirement of section 19(a) [15 U.S.C. 80a–19(a)] 

and rule 19a–1 [17 CFR 270.19a–1], which requires 

any distribution in the nature of a dividend 

payment made by a fund to its investors to be 

accompanied by a notice disclosing the source of 

the distribution. 

4Rule 19b–1(e) also requires that the application 

comply with rule 0–2 [17 CFR 270.02], which sets 

forth the general requirements for papers and 

applications filed with the Commission. 

also are required to agree to exercise 

reasonable care. 

The collection of information 

requirements in rule 17f–7 are intended 

to provide workable standards that 

protect funds from the risks of using 

securities depositories while assigning 

appropriate responsibilities to the 

fund’s primary custodian and 

investment adviser based on their 

capabilities. The requirement that the 

depository meet specified minimum 

standards is intended to ensure that the 

depository is subject to basic safeguards 

deemed appropriate for all depositories. 

The requirement that the custody 

contract state that the fund’s primary 

custodian will provide an analysis of 

the custody risks of depository 

arrangements, monitor the risks, and 

report on material changes is intended 

to provide essential information about 

custody risks to the fund’s investment 

adviser as necessary for it to approve the 

continued use of the depository. The 

requirement that the primary custodian 

agree to exercise reasonable care is 

intended to provide assurances that its 

services and the information it provides 

will meet an appropriate standard of 

care. The alternative requirement that 

the funds obtain adequate 

indemnification or insurance against the 

custody risks of depository 

arrangements is intended to provide 

another, potentially less burdensome 

means to protect assets held in 

depository arrangements. 

The staff estimates that each of 

approximately 828 investment advisers 2

would make an average of 7 responses 

annually under the rule to address 

depository compliance with minimum 

requirements, any indemnification or 

insurance arrangements, and reviews of 

risk analyses or notifications. The staff 

estimates each response would take 5.5 

hours, requiring a total of approximately 

38.5 hours for each adviser. The total 

annual burden associated with these 

requirements of the rule would be 

approximately 31,878 hours (828 

advisers × 38.5 hours per adviser). The 

staff further estimates that during each 

year, each of approximately 15 global 

custodians would make an average of 4 

responses to analyze custody risks and 

provide notice of any material changes 

to custody risk under the rule. The staff 

estimates that each response would take 

250.25 hours, requiring approximately 

1001 hours annually per custodian.3

The total annual burden associated with 

these requirements of the new rule 

would be approximately 15,015 hours 

(15 custodians × 1001 hours). Therefore, 

the staff estimates that the total annual 

burden associated with all collection of 

information requirements of the rule 

would be 46,893 hours (31,878 + 

15,015). The total annual cost of burden 

hours is estimated to be $10,081,302 

(31,878 × $239 for a portfolio manager, 

plus 15,015 hours × $164/hour for a 

trust administrator’s time).4 The 

estimate of average burden hours is 

made solely for the purposes of the 

Paperwork Reduction Act. The estimate 

is not derived from a comprehensive or 

even a representative survey or study of 

the costs of Commission rules and 

forms. Compliance with the collection 

of information requirements of the rule 

is necessary to obtain the benefit of 

relying on the rule’s permission for 

funds to maintain their assets in foreign 

custodians. 

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 e-mail to: 

Kimberly_P._Nelson@omb.eop.gov; and 

(ii) Lewis W. Walker, Acting Director/ 

CIO, Securities and Exchange 

Commission, C/O Shirley Martinson, 

6432 General Green Way, Alexandria, 

VA 22312; or send an e-mail 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. E8–21534 Filed 9–15–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213 

Extension: 

Rule 19b–1; SEC File No. 270–312; OMB 

Control No. 3235–0354. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for extension of the 

previously approved collection of 

information discussed below. 

Section 19(b) of the Investment 

Company Act of 1940 (the ‘‘Act’’) (15 

U.S.C. 80a–19(b)) authorizes the 

Commission to regulate registered 

investment company (‘‘fund’’) 

distributions of long-term capital gains 

made more frequently than once every 

twelve months. Rule 19b–1 under the 

Act 1 prohibits funds from distributing 

long-term capital gains more than once 

every twelve months unless certain 

conditions are met. Rule 19b–1(c) (17 

CFR 270.19b–1(c)) permits unit 

investment trusts (‘‘UITs’’) engaged 

exclusively in the business of investing 

in certain eligible fixed-income 

securities to distribute long-term capital 

gains more than once every twelve 

months, if: (i) The capital gains 

distribution falls within one of several 

categories specified in the rule 2 and (ii) 

the distribution is accompanied by a 

report to the unitholder that clearly 

describes the distribution as a capital 

gains distribution (the ‘‘notice 

requirement’’).3 Rule 19b-1(e) (17 CFR 

270.19b–1(e)) permits a fund to apply to 

the Commission for permission to 

distribute long-term capital gains more 

than once a year if the fund did not 

foresee the circumstances that created 

the need for the distribution. The 

application must set forth the pertinent 

facts and explain the circumstances that 

justify the distribution.4 An application 

that meets those requirements is 

deemed to be granted unless the 

Commission denies the request within 

15 days after the Commission receives 

the application. 

Commission staff estimates that, on 

average, each year five funds file an 

application under rule 19b–1(e). The 

staff understands that funds that file an 

application generally use outside 

counsel to prepare the application. The 

cost burden of using outside counsel is 


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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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