5814 Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 

Applicant’s Address: 20550 Maxim 

Parkway, Orlando, FL 32833. 

Nuveen Washington Premium Income 

Municipal Fund [File No. 811–7488] 

Summary: Applicant, a closed-end 

investment company, seeks an order 

declaring that it has ceased to be an 

investment company. On August 12, 

1999, applicant transferred its assets to 

Nuveen Premium Income Municipal 

Fund 4, Inc., based on net asset value. 

Applicant’s preferred shareholders 

received one share of municipal auction 

rate cumulative preferred shares 

(‘‘preferred shares’’) of the acquiring 

fund for each preferred share of 

applicant. Expenses of $139,950 

incurred in connection with the 

reorganization were paid by applicant. 

Filing Date: The application was filed 

on December 16, 2009. 

Applicant’s Address: 333 West 

Wacker Dr., Chicago, IL 60606. 

Scudder Municipal Bond Fund Inc. 

[File No. 811–21255]; Scudder New 

York Municipal Bond Fund Inc. [File 

No. 811–21354]; Scudder California 

Municipal Bond Fund Inc. [File No. 

811–21355]; DWS Dreman Enhanced 

Total Return Fund Inc. [File No. 811– 

22100] 

Summary: Each applicant, a closedend investment company, seeks an 

order declaring that it has ceased to be 

an investment company. Applicants 

have never made a public offering of 

their securities and do not propose to 

make a public offering or engage in 

business of any kind. 

Filing Date: The applications were 

filed on December 7, 2009. 

Applicants’ Address: 345 Park Ave., 

New York, NY 10154. 

Oppenheimer Dividend Growth Fund 

[File No. 811–21718] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On November 13, 

2008, applicant transferred its assets to 

Oppenheimer Rising Dividends Fund, 

based on net asset value. Expenses of 

$57,964 incurred in connection with the 

reorganization were paid by applicant. 

Filing Date: The application was filed 

on December 16, 2009. 

Applicant’s Address: 6803 S. Tucson 

Way, Centennial, CO 80112. 

BlackRock Broad Investment Grade 

2009 Term Trust Inc. [File No. 811– 

7250]; BCT Subsidiary, Inc. [File No. 

811–9703] 

Summary: Each applicant, a closedend investment company, seeks an 

order declaring that it has ceased to be 

an investment company. On October 29, 

2009, each applicant made a liquidating 

distribution to its shareholders, based 

on net asset value. BlackRock Broad 

Investment Grade 2009 Term Trust Inc. 

paid expenses of approximately $21,612 

incurred in connection with its 

liquidation. BCT Subsidiary, Inc. 

incurred no expenses in connection 

with its liquidation. 

Filing Date: The applications were 

filed on January 5, 2010. 

Applicants’ Address: 100 Bellevue 

Parkway, Wilmington, DE 19809. 

Calvert Municipal Fund, Inc. [File No. 

811–6525] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On July 31, 2009, 

applicant transferred its assets to Calvert 

Tax-Free Bond Fund, a series of Calvert 

Tax-Free Reserves, based on net asset 

value. Expenses of $3,114 incurred in 

connection with the reorganization were 

paid by applicant. 

Filing Date: The application was filed 

on January 5, 2010. 

Applicant’s Address: 4550 

Montgomery Ave., Suite 1000N, 

Bethesda, MD 20814. 

RidgeWorth Variable Trust [File No. 

811–9032] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On April 27, 

2009, applicant made a liquidating 

distribution to its shareholders, based 

on net asset value. Expenses of 

approximately $5,758 incurred in 

connection with the liquidation were 

paid by applicant. 

Filing Dates: The application was 

filed on August 31, 2009, and amended 

on November 17, 2009. 

Applicant’s Address: 3435 Stelzer 

Road, Columbus, OH 43219. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–2380 Filed 2–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29127; 812–13559] 

ShariahShares Exchange-Traded Fund 

Trust, et al.; Notice of Application 

January 29, 2010. 

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) and 22(e) 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 (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 (‘‘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) 

certain series to pay redemption 

proceeds, under certain circumstances, 

more than seven days after the tender of 

Fund Shares for redemption; (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 Creation 

Unit Aggregations; and (e) 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: ShariahShares ExchangeTraded Fund Trust (the ‘‘Trust’’) and 

Florentez Investment Management, Inc. 

(the ‘‘Adviser’’). 

FILING DATES: The application was filed 

on July 31, 2008, and amended on 

September 16, 2009, and January 29, 

2010. Applicants have agreed to file an 

amendment during the notice period, 

the substance of which is reflected in 

this notice. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on February 19, 2010 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– 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 5815 

1The Initial Index Funds are ShariahShares FTSE 

USA Fund and ShariahShares FTSE Developed exU.S. Fund. 

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. 

3The Underlying Indicies for the Initial Index 

Funds are FTSE Shariah USA Index and FTSE 

Shariah Developed ex U.S. Index. 

4Applicants represent that an Index Fund will 

invest at least 80% of its total assets, exclusive of 

securities lending collateral, 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 Index 

Fund also may invest up to 20% of its assets in 

certain futures, stock options, options on stock 

index futures and swap contracts as related to its 

respective Underlying Index and its Component 

Securities, cash and cash equivalents, as well as in 

stocks not included in its Underlying Index, but 

which the Adviser or Sub-Adviser believes will 

help the Index Fund track its Underlying Index. 

5All representations and conditions contained in 

the application that require an Index Fund to 

disclose particular information in the Index Fund’s 

Prospectus and/or annual report shall be effective 

with respect to the Index Fund until the time that 

the Index Fund complies with disclosure 

requirements adopted by the Commission in 

Investment Company Act Release No. 28584 (Jan. 

13, 2009). 6Under the representative sampling strategy, 

stocks are selected for inclusion in an Index Fund 

to have aggregate investment characteristics, 

fundamental characteristics, and liquidity measures 

similar to those of the Index Fund’s Underlying 

Index taken in its entirety. 

1090; Applicants, 12 Brillantez, Irvine, 

CA 92620. 

FOR FURTHER INFORMATION CONTACT: 

Bruce R. MacNeil, Senior Counsel at 

(202) 551–6817, or Julia Kim Gilmer, 

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 via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

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

and is organized as a Delaware statutory 

trust. The Trust will initially offer two 

series (‘‘Initial Index Funds’’), each of 

which will track an index of selected 

equity securities.1 Applicants may 

establish one or more registered 

investment companies in addition to the 

Trust that may be formed as a separate 

trust or a separate series of the Trust, or 

one or more trusts in the future (‘‘Future 

Index Funds,’’ collectively with the 

Initial Index Funds, the ‘‘Index Funds’’). 

Each Future Index Fund will be advised 

by the Adviser or an entity controlling, 

controlled by, or under common control 

with the Adviser, and comply with the 

terms and conditions stated in the 

application.2

2. The Adviser will serve as the 

investment adviser to the Index Funds. 

The Adviser will be registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’) prior to the 

commencement of investment 

operations of any Index Fund. The 

Adviser may enter into sub-advisory 

agreements with one or more subadvisers with respect to the Index Funds 

(the ‘‘Sub-Advisers’’). Each Sub-Adviser 

will be registered under the Advisers 

Act. A broker-dealer registered under 

the Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’ and such broker-dealer, 

a ‘‘Broker’’) will serve as the principal 

underwriter and distributor for the 

Creation Unit Aggregations of Fund 

Shares (‘‘Distributor’’). The Distributor 

will not be affiliated with the Adviser or 

a national securities exchange as 

defined in section 2(a)(26) of the Act 

(‘‘Exchange’’). 

3. Each Index 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’’).3 Certain of the Underlying 

Indicies will be comprised of equity 

securities issued by domestic issuers 

and non-domestic issuers meeting the 

requirements for trading in U.S. markets 

(‘‘Domestic Index’’). Other Underlying 

Indicies may be comprised of foreign 

equity securities or a combination of 

domestic and foreign equity securities 

(‘‘Foreign Index’’). Index Funds that 

track Domestic Indices are referred to as 

‘‘Domestic Funds’’ and Index Funds that 

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 the Trust, an Index Fund, the 

Adviser, any Sub-Adviser to or 

promoter of an Index Fund, or the 

Distributor. The Index Provider to the 

Initial Index Funds is FTSE Group. 

4. The investment objective of each 

Index Fund will be to provide 

investment results, before fees and 

expenses, that correspond generally to 

the price and yield performance of its 

Underlying Index.4 The value of each 

Index Fund’s Underlying Index will be 

disseminated every 15 seconds 

throughout the trading day. An Index 

Fund will utilize either a ‘‘replication’’ 

or ‘‘representative sampling’’ strategy 

which will be disclosed with regard to 

each Index Fund in its prospectus 

(‘‘Prospectus’’).5 An Index 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. 

An Index Fund using a representative 

sampling strategy will invest in some, 

but not necessarily all of the Component 

Securities.6 This may be the case, for 

example, when there are practical 

difficulties or substantial costs involved 

in compiling an entire Underlying Index 

basket that contains hundreds of 

Component Securities, or in certain 

instances, when a Component Security 

is illiquid. Applicants anticipate that an 

Index Fund that uses representative 

sampling 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 

Index Fund will have a tracking error 

relative to the performance of its 

Underlying Index of less than 5 percent. 

5. Funds Shares will be sold at a price 

between $40 and $250 in Creation Unit 

Aggregations which will have an initial 

price range of $1,000,000 to 

$25,000,000. 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’’). The 

Distributor will be responsible for 

transmitting the orders to the Index 

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’’). 

Fund Shares generally will be sold in 

Creation Unit Aggregations in exchange 

for an in-kind 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 an 

amount equal to the difference between 


srobinson on DSKHWCL6B1PROD with NOTICES
5816 Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 

7Each Index Fund will sell and redeem Creation 

Unit Aggregations on a ‘‘Business Day’’ which 

includes any day that an Index Fund is required to 

be open under Section 22(e) of the Act. Each 

Business Day, prior to the opening of trading on the 

primary listing Exchange, the list of names and 

amount of each security constituting the current 

Deposit Securities and the Balancing Amount, 

effective as of the previous Business Day, will be 

made available. Any Exchange on which Fund 

Shares are listed will disseminate, every 15 seconds 

during its regular trading hours, through the 

facilities of the Consolidated Tape Association, an 

amount per Fund Share representing the sum of the 

estimated Balancing Amount and the current value 

of the Deposit Securities. 

8Applicants 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 

Foreign Fund’s portfolio is required, the Adviser or 

Sub-Adviser might prefer to receive cash rather 

than stocks so that the Foreign Fund may avoid 

transaction costs involved in liquidating part of its 

portfolio to achieve the rebalancing. 

9Where an Index 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. 

10Fund 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. 

11As a general matter, the Deposit Securities and 

Fund Securities will correspond pro rata to the 

securities held by each Index Fund, but Fund 

Securities received on redemption may not always 

be identical to Deposit Securities deposited in 

connection with the purchase of Creation Unit 

Aggregations for the same day. The Index 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 of 1933. 

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

Creation Unit Aggregation) of an Index 

Fund and (b) the total aggregate market 

value (per Creation Unit Aggregation) of 

the Deposit Securities.7 An Index Fund 

may permit a purchaser of Creation Unit 

Aggregations to substitute cash in lieu of 

depositing some or all of the requisite 

Deposit Securities if the Adviser or SubAdviser believed such method would 

reduce the Index Fund’s transaction 

costs or enhance the Index Fund’s 

operating efficiency.8

6. An investor purchasing or 

redeeming a Creation Unit Aggregation 

from an Index 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 Unit 

Aggregations.9 The exact amounts of 

Transaction Fees relevant to each Index 

Fund (including the maximum 

Transaction Fee) will be fully disclosed 

in the Prospectus of such Index Fund. 

The method for calculating the 

Transaction Fees will be disclosed in 

each Prospectus or statement of 

additional information (‘‘SAI’’). The 

Distributor will be responsible for 

delivering a 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. 

In addition, the Distributor will 

maintain a record of the instructions 

given to the applicable Index 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 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 or market maker and maintain 

a market for Fund Shares trading on the 

Exchange (each a ‘‘Market Maker’’). 

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 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.10 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. 

9. Fund Shares will not be 

individually redeemable, and owners of 

Fund Shares may acquire those Fund 

Shares from the Index Fund, or tender 

such Fund Shares for redemption to the 

Index 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) Portfolio 

Securities designated to be delivered for 

Creation Unit Aggregation redemptions 

(‘‘Fund Securities’’) on the date that the 

request for redemption is made11 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. 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. Neither the Trust nor any Index 

Fund will be marketed or otherwise 

held out as an ‘‘open-end investment 

company’’ or a ‘‘mutual fund.’’ Instead, 

each Index 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 Creation Unit Aggregations or 

Fund Shares traded on an Exchange, 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 Index 

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 Index Funds will 

provide copies of their annual and semiannual 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), and 

22(e) of the Act and rule 22c-1 under the 

Act, 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, and 

under section 12(d)(1)(J) of the Act for 

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

and (B) 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 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 5817 

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. 

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 Index Funds to 

register as open-end management 

investment companies and issue Fund 

Shares that are redeemable in Creation 

Unit Aggregations only. Applicants state 

that investors may purchase Fund 

Shares in Creation Unit Aggregations 

and redeem Creation Unit Aggregations 

from each Index Fund. Applicants 

further state that because Creation Unit 

Aggregations may always be purchased 

and redeemed at NAV, the market price 

of the Fund Shares should not vary 

substantially from their NAV. 

Section 22(d) of the Act and Rule 22c1 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 an Index 

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 who could 

pay investors a little 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 

directly involve Index Fund assets and 

will not 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 thirdparty 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 22(e) 

7. 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. Applicants state that 

settlement of redemptions for a Foreign 

Fund will be contingent not only on the 

securities settlement cycle of the United 

States market, but also on the delivery 

cycles in local markets for the 

underlying foreign securities held by a 

Foreign Fund. Applicants state that 

delivery cycles for transferring Portfolio 

Securities to redeeming investors, 

coupled with local market holiday 

schedules, may require a delivery 

process longer than seven calendar days 

for the Foreign Funds. Applicants 

request relief under section 6(c) of the 

Act from section 22(e) to allow the 

Foreign Funds to pay redemption 

proceeds up to fourteen calendar days 

after the tender of a Creation Unit 

Aggregation 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. 

8. 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, up to fourteen calendar days, 

needed to deliver the proceeds for each 

Foreign Fund. Applicants are not 

seeking relief from section 22(e) with 

respect to Foreign Funds that will not 

effect in-kind purchases and 

redemptions of Creation Unit 

Aggregations. 

Section 12(d)(1) 

9. 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 


srobinson on DSKHWCL6B1PROD with NOTICES
5818 Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 

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 an 

Index Fund and any person controlling, controlled 

by, or under common control with any of these 

entities. 

14All references to NASD Conduct Rule 2830 also 

includes any successor or replacement rule that 

may be adopted by the Financial Industry 

Regulatory Authority. 

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. 

10. 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 

Index Funds (collectively, ‘‘Purchasing 

Funds’’) to acquire Fund Shares beyond 

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

Purchasing Funds do not include the 

Index Funds. In addition, applicants 

seek relief to permit the Index Funds or 

any Broker to sell Fund Shares to a 

Purchasing Fund in excess of the limits 

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

11. 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 an adviser(s) within the 

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

(‘‘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’’). 

12. Applicants submit that the 

proposed conditions to the relief 

requested, including the requirement 

that Purchasing Funds enter into an 

agreement with an Index 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 

by a fund of funds over underlying 

funds, 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. 

13. Applicants believe that neither the 

Purchasing Funds nor a Purchasing 

Fund Affiliate would be able to exert 

undue influence over the Index 

Funds.13 To limit the control that a 

Purchasing Fund may have over an 

Index 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 or 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) an Index 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’’). 

14. Applicants propose other 

conditions to limit the potential for 

undue influence over the Index 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 an Index Fund) 

will cause an Index 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 the 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 Index Fund is 

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

an Underwriting Affiliate). 

15. 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 Index Fund in which the 

Purchasing Management Company may 

invest. In addition, except as provided 

by condition 12, 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 an 

Index 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 

Index Fund in connection with the 

investment by the Purchasing Fund in 

the Index Fund. Applicants state that 

any sales charges 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 National Association of Securities 

Dealers (‘‘NASD’’) Conduct Rule 2830.14

16. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Index 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, except to the 

extent permitted by exemptive relief 

from the Commission permitting the 

Index Fund to purchase shares of other 

investment companies for short-term 

cash management purposes. 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 an Index Fund in reliance on the 

requested order will be required to enter 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 5819 

15Applicants 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 an Index 

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

sale by the Index 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. 

16Applicants believe that a Purchasing Fund will 

purchase Fund Shares in the secondary market and 

will not purchase or redeem Creation Unit 

Aggregations directly from an Index Fund. 

However, the requested relief would apply to direct 

sales of Creation Unit Aggregations by an Index 

Fund to a Purchasing Fund and direct redemptions 

of Fund Shares. 17See note 5, supra. 

into a Purchasing Fund Agreement 

between the Index Fund and the 

Purchasing Fund requiring the 

Purchasing Fund to adhere to the terms 

and conditions of the requested relief. 

The Purchasing Fund Agreement also 

will include an acknowledgement from 

the Purchasing Fund that it may rely on 

the requested order only to invest in the 

Index Funds and not in any other 

investment company. 

17. Applicants also note that an Index 

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, an Index 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 

18. 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 affiliates’’), 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. 

19. 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 an 

Index Fund when they are affiliated 

persons, or second-tier affiliates of an 

Index Fund solely by virtue of one or 

more of the following: (a) Holding 5% 

or more, or in excess of 25%, of the 

outstanding Fund Shares of one or more 

Index 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 

Fund 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. 

20. Applicants assert that no useful 

purpose would be served by prohibiting 

these types of affiliated persons from 

purchasing or redeeming Creation Unit 

Aggregations through ‘‘in-kind’’ 

transactions. The deposit procedures for 

both in-kind purchases and in-kind 

redemptions of Creation Unit 

Aggregations will be the same for all 

purchases and redemptions. Deposit 

Securities and Fund Securities will be 

valued in the same manner as Portfolio 

Securities. Therefore, applicants state 

that in-kind purchases and redemptions 

will afford no opportunity for the 

specified affiliated persons, or secondtier affiliates, of an Index Fund, to effect 

a transaction detrimental to other 

holders of Fund Shares. Applicants also 

believe that in-kind purchases and 

redemptions will not result in selfdealing or overreaching of the Index 

Funds. 

21. Applicants also seek relief from 

section 17(a) to permit an Index Fund 

that is an affiliated person of a 

Purchasing Fund to sell its Fund Shares 

to and redeem its Fund Shares from a 

Purchasing Fund and to engage in the 

accompanying in-kind transactions with 

the Purchasing Fund.15 Applicants state 

that the terms of the transaction are fair 

and reasonable. Applicants note that 

any consideration paid by a Purchasing 

Fund for the purchase or redemption of 

Fund Shares directly from an Index 

Fund will be based on the NAV of the 

Index Fund.16 Applicants believe that 

any proposed transactions directly 

between the Index 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 an Index Fund will be 

accomplished in accordance with the 

investment restrictions of any such 

Purchasing Fund and will be consistent 

with the investment policies set forth in 

the Purchasing Fund’s registration 

statement. The Purchasing Fund 

Agreement will require any Purchasing 

Fund that purchases Creation Unit 

Aggregations directly from an Index 

Fund to represent that the purchase of 

Creation Unit Aggregations from an 

Index 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:17

ETF Relief 

1. As long as the Index Funds operate 

in reliance on the requested order, the 

Fund Shares will be listed on an 

Exchange. 

2. Neither the Trust nor any Index 

Fund will be advertised or marketed as 

an open-end investment company or a 

mutual fund. Each Index 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 such Index 

Fund and tender those Fund Shares for 

redemption to the Index 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 an 

Index Fund and tender those Fund 

Shares for redemption to such Index 

Fund in Creation Unit Aggregations 

only. 

3. The Web site maintained for the 

Index Funds, which will be publicly 

accessible at no charge, will contain the 

following information, on a per Fund 

Share basis, for each Index Fund: (a) 

The prior Business Day’s NAV and the 

mid-point of the bid-ask spread at the 

time of the calculation of NAV (‘‘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. 


srobinson on DSKHWCL6B1PROD with NOTICES
5820 Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 

4. Each Index Fund’s Prospectus and 

annual report will also include: (a) The 

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

in the case of the Index 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 Index 

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. Each Index Fund’s Prospectus will 

clearly disclose that, for purposes of the 

Act, Fund Shares are issued by such 

Index 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 an 

Index 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 

Index Fund regarding the terms of the 

investment. 

6. 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 

7. The members of a Purchasing 

Fund’s Advisory Group will not control 

(individually or in the aggregate) an 

Index 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) an Index 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 an Index 

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 Fund Shares of an Index 

Fund, it will vote its Fund Shares in the 

same proportion as the vote of all other 

holders of the Fund Shares. This 

condition does not apply to the 

Purchasing Fund’s Sub-Advisory Group 

with respect to an Index 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. 

8. No Purchasing Fund or Purchasing 

Fund Affiliate will cause any existing or 

potential investment by the Purchasing 

Fund in an Index Fund to influence the 

terms of any services or transactions 

between the Purchasing Fund or 

Purchasing Fund Affiliate and the Index 

Fund or a Fund Affiliate. 

9. 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 an Index 

Fund or a Fund Affiliate in connection 

with any services or transactions. 

10. No Purchasing Fund or 

Purchasing Fund Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to an Index Fund) 

will cause an Index Fund to purchase a 

security in any Affiliated Underwriting. 

11. Before investing in an Index Fund 

in excess of the limits in section 

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

the Index 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 Index 

Fund of the investment. At such time, 

the Purchasing Fund will also transmit 

to the Index Fund a list of the names of 

each Purchasing Fund Affiliate and 

Underwriting Affiliate. The Purchasing 

Fund will notify the Index Fund of any 

changes to the list of names as soon as 

reasonably practicable after a change 

occurs. The relevant Index 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 

thereafter, the first two years in an 

easily accessible place. 

12. The Purchasing Fund Adviser, 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Purchasing Fund in an amount at least 

equal to any compensation (including 

fees received under any plan adopted by 

an Index Fund under rule 12b–1 under 

the Act) received from an Index Fund by 

the Purchasing Fund Adviser, Trustee or 

Sponsor, or an affiliated person of the 

Purchasing Fund Adviser, Trustee or 

Sponsor, other than any advisory fees 

paid to the Purchasing Fund Adviser, 

Trustee or Sponsor, or its affiliated 

person by an Index Fund, in connection 

with the investment by the Purchasing 

Fund in the Index 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 an Index Fund by the 

Purchasing Fund Sub-Adviser, or an 

affiliated person of the Purchasing Fund 

Sub-Adviser, other than any advisory 

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

Index Fund, in connection with any 

investment by the Purchasing 

Management Company in an Index 

Fund made at the direction of the 

Purchasing Fund Sub-Adviser. In the 

event that the Purchasing Fund SubAdviser waives fees, the benefit of the 

waiver will be passed through to the 

Purchasing Management Company. 

13. 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. 

14. Once an investment by a 

Purchasing Fund in Fund Shares 

exceeds the limits of section 

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

directors/trustees of an Index 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 Index 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 such 

Index Fund; (b) is within the range of 

consideration that the Index Fund 

would be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition does not apply with respect to 

any services or transactions between an 

Index Fund and its investment 

adviser(s), or any person controlling, 

controlled by, or under common control 

with such investment adviser(s). 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 23 / Thursday, February 4, 2010 / Notices 5821 

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

2 17 CFR 240.19b–4. 

3Changes are marked to the rules of The 

NASDAQ Stock Market LLC found at http:// 

nasdaqomx.cchwallstreet.com. 

15. The Board, including a majority of 

the disinterested Board members, will 

adopt procedures reasonably designed 

to monitor any purchases of securities 

by an Index Fund in an Affiliated 

Underwriting once the investment by a 

Purchasing Fund in an Index 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 an Index Fund. The 

Board will consider, among other 

things: (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the Index 

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 Index 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 Index Fund. 

16. Each Index 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 Index 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. 

17. 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 

Index 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. 

18. No Index 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, except to the 

extent permitted by exemptive relief 

from the Commission permitting the 

Index Fund to purchase shares of other 

investment companies for short-term 

cash management purposes. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–2381 Filed 2–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61416; File No. SR– 

NASDAQ–2010–010] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Clarify 

Nasdaq Rule 7023 

January 25, 2010. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on January 

21, 2010, The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by Nasdaq. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to clarify 

Nasdaq Rule 7023 to make clear that 

Historical ModelView information will 

be available via NasdaqTrader.com and 

that references to the Historical 

TotalView data product will be deleted 

since it is offered through a technology 

subsidiary of the Exchange rather than 

the Exchange itself. The text of the 

proposed rule change is available from 

Nasdaq’s Web site at http:// 

nasdaq.cchwallstreet.com, at Nasdaq’s 

principal office, and at the 

Commission’s Public Reference Room. 

The text of the proposed rule change 

is below. Proposed new language is 

italicized; proposed deletions are in 

brackets.3

* * * * * 

7023. NASDAQ TotalView 

(a)–(c) No change. 

(d) Historical ModelView [TotalView] 

Information [—ModelView] Nasdaq will 

make historical [TotalView information, 

under the] ModelView [entitlement package] 

information[,] available via 

NasdaqTrader.com. ModelView shall contain 

historical [TotalView] information regarding 

aggregate displayed and reserve liquidity at 

each price level directly from [in] the Nasdaq 

Market Center. ModelView shall be available 

for a subscription fee of $2,000 per month. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

Nasdaq included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. Nasdaq has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to clarify 

Nasdaq Rule 7023(d) to make clear that 

Historical ModelView information will 

be available via NasdaqTrader.com and 

will contain historical information 

regarding aggregate displayed and 

reserve liquidity at each price level 

directly from the Nasdaq Market Center. 

Additionally, references to the 

Historical TotalView data product will 

be deleted from Nasdaq Rule 7023(d) 

since it is offered through a technology 

subsidiary of the Exchange rather than 

the Exchange itself. Historical 


srobinson on DSKHWCL6B1PROD with NOTICES