63216 Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 

1All entities that currently intend to rely on the 

order are named as applicants. Any other entity that 

relies on the order in the future will comply with 

the terms and conditions of the application. An 

Investing Fund (as defined below) may rely on the 

order only to invest in the Funds and not in any 

other registered investment company. 

2Neither the Initial Funds nor any Future Fund 

will invest in option contracts, futures contracts, or 

swap agreements. 

important corporate events that are 

disclosed in the foreign private issuer’s 

home country. The purpose of Form 6– 

K is to ensure that U.S. investors have 

access to the same information that 

foreign investors do when making 

investment decisions. Form 6–K takes 

approximately 8.7 hours per response 

and is filed by approximately 12,022 

issuers annually. We estimate that 75% 

of the 8.7 hours per response (6.525 

hours) is prepared by the issuer for a 

total annual reporting burden of 78,444 

hours (6.525 hours per response × 

12,022 responses). 

Written comments are invited on: (a) 

Whether this collection of information 

is necessary for the proper performance 

of the functions of the agency, including 

whether the information will have 

practical utility; (b) the accuracy of the 

agency’s estimate of the burden imposed 

by the collection of information; (c) 

ways to enhance the quality, utility, and 

clarity of the information collected; and 

(d) ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

Please direct your written comments 

to Jeffrey Heslop, Acting Director/CIO, 

Securities and Exchange Commission, 

C/O Remi Pavlik-Simon, 6432 General 

Green Way, Alexandria, Virginia 22312; 

or send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: October 6, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25865 Filed 10–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29459; 812–13605] 

Van Eck Associates Corporation, et al.; 

Notice of Application 

October 7, 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 

(‘‘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, and 

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

for an exemption from sections 17(a)(1) 

and (2) of the Act, and under section 

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

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

Applicants: Van Eck Associates 

Corporation (‘‘Adviser’’), Market Vectors 

ETF Trust (‘‘Trust’’) and Van Eck 

Securities Corporation (‘‘Distributor’’). 

Summary of Application: Applicants 

request an order that permits: (a) Series 

of certain actively managed open-end 

management investment companies to 

issue shares (‘‘Shares’’) redeemable in 

large aggregations only (‘‘Creation 

Units’’); (b) secondary market 

transactions in Shares to occur at 

negotiated market prices; (c) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days from the tender of 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 

Units; and (e) certain registered 

management investment companies and 

unit investment trusts outside of the 

same group of investment companies as 

the series to acquire Shares. 

Filing Dates: The application was 

filed on November 14, 2008, and 

amended on May 15, 2009, January 29, 

2010, August 27, 2010, and October 7, 

2010. 

Hearing or Notification of Hearing: An 

order granting the requested relief 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. November 2, 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– 

1090. Applicants, 335 Madison Avenue, 

New York, New York 10017. 

FOR FURTHER INFORMATION CONTACT: 

Emerson S. Davis, Senior Counsel, at 

(202) 551–6868 or Julia K. 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 

under the Act and organized as a 

Delaware business trust. The Trust will 

initially offer two series, Market 

Vectors—Active Africa ETF (‘‘Active 

Africa ETF’’) and Market Vectors— 

Active Short Municipal ETF (‘‘Active 

Short Municipal ETF’’) (together, the 

‘‘Initial Funds’’). The investment 

objective of the Active Africa ETF will 

be to provide long-term capital growth 

by investing primarily in equity 

securities in Africa. The investment 

objective of the Active Short Municipal 

ETF will be to seek as high a level of 

tax-exempt income as is consistent with 

preservation of capital. 

2. Applicants request that the order 

apply to any future series of the Trust 

or of other open-end management 

companies that may utilize active 

management investment strategies 

(‘‘Future Funds’’).1 Any Future Fund 

will be (a) advised by the Adviser or an 

entity controlling, controlled by, or 

under common control with the 

Adviser, and (b) comply with the terms 

and conditions of the application. 

Future Funds may invest in equity 

securities or fixed income securities 

(‘‘Fixed Income Funds’’) traded in U.S. 

markets or securities traded on global 

markets (together with the Active Africa 

ETF, the ‘‘Foreign Funds’’).2 The Initial 

Funds and Future Funds, including the 

Foreign Funds, together are the ‘‘Funds.’’ 

3. The Adviser, a Delaware 

corporation, is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’) and will serve as 

investment adviser to the Funds. The 

Adviser may retain investment advisers 

as sub-advisers in connection with the 

Funds (each, a ‘‘Fund Sub-Adviser’’). 

Any Fund Sub-Adviser will be 

registered under the Advisers Act. The 

Distributor, a Delaware corporation, is 

registered as a broker-dealer under the 

Securities Exchange Act of 1934 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 63217 

3 In addition to the list of the names and the 

required number of shares of each Deposit Security, 

it is intended that, on each day that a Fund is open, 

including as required by section 22(e) of the Act 

(‘‘Business Day’’), the Cash Component effective as 

of the previous Business Day, as well as the 

estimated Cash Component for the current day, will 

be made available. The applicable Stock Exchange 

(defined below) will disseminate, every 15 seconds 

throughout the trading day through the facilities of 

the Consolidated Tape Association, an amount 

representing on a per Share basis, the sum of the 

current value of the Deposit Securities and the 

estimated Cash Component. 

4Where a Fund permits an in-kind purchaser to 

substitute cash-in-lieu of depositing a portion of the 

Deposit Securities, the purchaser may be assessed 

a higher Transaction Fee to cover the cost of 

purchasing those securities. 

5All representations and conditions contained in 

the application that require a Fund to disclose 

particular information in the Fund’s Prospectus 

and/or annual report shall be effective with respect 

to the Fund until the time that the Fund complies 

with the disclosure requirements adopted by the 

Commission in Investment Company Act Release 

No. 28584 (Jan. 13, 2009). 

6 If Shares are listed on Nasdaq, no Specialist will 

be contractually obligated to make a market in 

Shares. Rather, under Nasdaq’s listing 

requirements, two or more Market Makers will be 

registered in Shares and required to make a 

continuous, two-sided market or face regulatory 

sanctions. 

7Shares will be registered in book-entry form 

only. DTC or its nominee will be the record or 

registered owner of all outstanding Shares. 

Beneficial ownership of Shares will be shown on 

the records of DTC or DTC Participants. 

8The Fixed Income Funds also intend to 

substitute a cash-in-lieu amount to replace any 

Deposit Security or Fund Security of a Fund that 

is a ‘‘to-be-announced transaction’’ or ‘‘TBA 

Transaction.’’ A TBA Transaction is a method of 

trading mortgage-backed securities. In a TBA 

Transaction, the buyer and seller agree upon 

general trade parameters such as agency, settlement 

date, par amount and price. The actual pools 

delivered generally are determined two days prior 

to the settlement date. The amount of substituted 

cash in the case of TBA Transactions will be 

equivalent to the value of the TBA Transaction 

listed as a Deposit Security or Fund Security. 

9 In accepting Deposit Securities and satisfying 

redemptions with Fund Securities that are 

restricted securities eligible for resale pursuant to 

rule 144A under the Securities Act, the relevant 

Funds will comply with the conditions of rule 

144A. The Prospectus for a Fund will also state that 

an Authorized Participant that is not a ‘‘Qualified 

Institutional Buyer’’ as defined in rule 144A under 

the Securities Act will not be able to receive, as part 

of a redemption, restricted securities eligible for 

resale under rule 144A. 

10 In the case of Fixed Income Funds, because it 

is often impossible to break up bonds beyond 

Continued 

(‘‘Exchange Act’’) and will serve as the 

principal underwriter and distributor 

for each of the Funds. The Distributor is 

an affiliated person of the Adviser 

within the meaning of section 2(a)(3)(C) 

of the Act. 

4. Applicants anticipate that a 

Creation Unit will consist of at least 

50,000 Shares and that the price of a 

Share will range from $15 to $100. 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 Trust, the 

Distributor and transfer agent of the 

Trust (‘‘Authorized Participant’’). An 

Authorized Participant must be either: 

(a) A broker-dealer or other participant 

in the continuous net settlement system 

of the National Securities Clearing 

Corporation, a clearing agency 

registered with the Commission, or (b) 

a participant in the Depository Trust 

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

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

generally will be purchased in Creation 

Units in exchange for an in-kind deposit 

by the purchaser of a portfolio of 

securities (the ‘‘Deposit Securities’’), 

designated by the Adviser, together with 

the deposit of a specified cash payment 

(‘‘Cash Component’’ together with the 

Deposit Securities, the ‘‘Fund Deposit’’). 

The Cash Component will be an amount 

equal to the difference between: (a) The 

net asset value (‘‘NAV’’) per Creation 

Unit of the Fund; and (b) the total 

aggregate market value per Creation 

Unit of the Deposit Securities.3

Applicants state that operating on an 

exclusively ‘‘in-kind’’ basis for one or 

more Funds may present operational 

problems for such Funds. Each Fund 

may permit, under certain 

circumstances, an in-kind purchaser to 

substitute cash-in-lieu of depositing 

some or all of the Deposit Securities. 

5. 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 sale of Creation Units.4 The 

Transaction Fees relevant to each Fund 

will be fully disclosed in the Fund’s 

prospectus (‘‘Prospectus’’) and the 

method of calculating these Transaction 

Fees will be fully disclosed in the 

statement of additional information 

(‘‘SAI’’) of such Fund.5 All orders to 

purchase Creation Units will be placed 

with the Distributor by or through an 

Authorized Participant, and it will be 

the Distributor’s responsibility to 

transmit such orders to the Funds. The 

Distributor also will be responsible for 

delivering a Prospectus to those persons 

purchasing Creation Units and for 

maintaining records of both the orders 

placed with it and the confirmations of 

acceptance furnished by it. 

6. 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 at 

negotiated prices on a national 

securities exchange as defined in 

section 2(a)(26) of the Act (the ‘‘Stock 

Exchange’’). It is expected that one or 

more Stock Exchange specialists 

(‘‘Specialists’’) or market makers 

(‘‘Market Makers’’) will be assigned to 

Shares and maintain a market for 

Shares.6 The price of Shares trading on 

the Stock Exchange will be based on a 

current bid-offer market. Transactions 

involving the sale of Shares on the Stock 

Exchange will be subject to customary 

brokerage commissions and charges. 

7. Applicants expect that purchasers 

of Creation Units will include 

arbitrageurs. The Specialists or Market 

Makers, in providing a fair and orderly 

secondary market for Shares, also may 

purchase Creation Units for use in their 

own market making activities. 

Applicants expect that secondary 

market purchasers of Shares will 

include both institutional and retail 

investors.7 Applicants expect that the 

price at which the Shares trade will be 

disciplined by arbitrage opportunities 

created by the ability to continually 

purchase or redeem Creation Units at 

their NAV, which should ensure that 

the Shares will not trade at a material 

discount or premium in relation to their 

NAV. 

8. The Shares themselves will not be 

individually redeemable and owners of 

Shares may acquire those Shares from a 

Fund or tender such shares for 

redemption to the Fund, in Creation 

Units only. To redeem, an investor must 

accumulate enough Shares to constitute 

a Creation Unit. Redemption requests 

must be placed by or through an 

Authorized Participant.8 Shares 

generally will be redeemed in Creation 

Units in exchange for a particular 

portfolio of securities (‘‘Fund 

Securities’’) plus or minus a ‘‘Cash 

Redemption Amount’’ as the case may 

be (collectively a ‘‘Fund Redemption’’). 

The Cash Redemption Amount is cash 

in an amount equal to the difference 

between the NAV of the Shares being 

redeemed and the market value of the 

Fund Securities. At the discretion of the 

Fund, a beneficial owner might also 

receive the cash equivalent of a Fund 

Security upon request because, for 

instance, it was restrained by regulation 

or policy from transacting in the 

securities. The redeeming investor also 

must pay to the Fund a Transaction Fee. 

9. Applicants state that in accepting 

Deposit Securities and satisfying 

redemptions with Fund Securities, a 

Fund will comply with the federal 

securities laws, including that the 

Deposit Securities and Fund Securities 

are sold in transactions that would be 

exempt from registration under the 

Securities Act of 1933 (‘‘Securities 

Act’’).9 The Deposit Securities (and 

Fund Securities) will consist of a pro 

rata basket of a Fund’s portfolio.10


jlentini on DSKJ8SOYB1PROD with NOTICES
63218 Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 

certain minimum sizes needed for transfer and 

settlement, there may be minor differences between 

a basket of Deposit Securities or Fund Securities 

and a true pro rata slice of a Fund’s portfolio. 

11Applicants note that under accounting 

procedures followed by the Funds, trades made on 

the prior Business Day (‘‘T’’) will be booked and 

reflected in NAV on the current Business Day 

(‘‘T+1’’). Accordingly, the Funds will be able to 

disclose at the beginning of the Business Day the 

portfolio that will form the basis for the NAV 

calculation at the end of the Business Day. 

10. Neither the Trust nor any Fund 

will be advertised or marketed or 

otherwise held out as a ‘‘mutual fund.’’ 

Instead, each Fund will be marketed as 

an ‘‘actively managed exchange-traded 

fund.’’ Any advertising material where 

features of obtaining, buying or selling 

Creation Units are described or where 

there is reference to redeemability will 

prominently disclose that Shares are not 

individually redeemable and that 

owners of Shares may acquire Shares 

from a Fund and tender those Shares for 

redemption to a Fund in Creation Units 

only. The same approach will be 

followed in the SAI, shareholder reports 

and any marketing or advertising 

materials issued or circulated in 

connection with the Shares. 

11. The Funds’ website, which will be 

publicly available prior to the public 

offering of Shares, will include the 

Prospectus and other information about 

the Funds that is updated on a daily 

basis, including for each Fund, (a) the 

prior Business Day’s NAV and the 

reported closing price, and a calculation 

of the premium and discount of such 

price against such NAV, and (b) data in 

chart format displaying the frequency 

distribution of discounts and premiums 

of the daily closing price against the 

NAV, within appropriate ranges, for 

each of the four previous calendar 

quarters. On each Business Day, before 

commencement of trading in Shares on 

the Stock Exchange, the Fund will 

disclose on its website the identities and 

quantities of the securities held by the 

Fund (‘‘Portfolio Securities’’) and other 

assets held by the Fund that will form 

the basis for the Fund’s calculation of 

NAV at the end of the Business Day.11

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of the Act granting 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; and under 

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

granting an exemption from sections 

17(a)(1) and (2) of the Act, and under 

section 12(d)(1)(J) 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 

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 provision 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 holder, upon its 

presentation to the issuer, is entitled to 

receive approximately a 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 Trust and each Fund to 

redeem Shares in Creation Units only. 

Applicants state that investors may 

purchase Shares in Creation Units from 

each Fund and redeem Creation Units 

from each Fund. Applicants further 

state that because the market price of 

Shares will be disciplined by arbitrage 

opportunities, investors should be able 

to sell Shares in the secondary market 

at prices that do not vary substantially 

from their NAV. 

Section 22(d) of the Act and Rule 

22c–1 Under the Act 

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

other things, prohibits a dealer from 

selling a redeemable security that is 

currently being offered to the public by 

or through an 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 

the 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 

riskless-trading schemes by principal 

underwriters and contract dealers, (b) 

prevent unjust discrimination or 

preferential treatment among buyers 

resulting from sales at different prices, 

and (c) assure an orderly distribution of 

investment company shares by 

eliminating price competition from 

brokers 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 the Funds as parties and cannot 

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 arbitrage 

activity will ensure that the difference 

between the market price of Shares and 

their NAV remains narrow. 

Section 22(e) of the Act 

7. 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 

Foreign Funds will be contingent not 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 63219 

12Rule 15c6–1 under the Exchange Act requires 

that most securities transactions be settled within 

three business days of the trade date. Applicants 

acknowledge that relief obtained from the 

requirements of section 22(e) will not affect any 

obligations that they have under rule 15c6–1. 

13Applicants state that certain Investing Funds 

may not be part of the same group of investment 

companies as the Funds but may be subadvised by 

an Adviser or an entity controlling, controlled by 

or under common control with the Adviser. 

14An ‘‘Investing Fund Affiliate’’ is any Investing 

Fund Adviser, Sub-Adviser, Sponsor, promoter and 

principal underwriter of an Investing Fund, and any 

person controlling, controlled by or under common 

control with any of these entities. ‘‘Fund Affiliate’’ 

is an investment adviser, promoter, or principal 

underwriter of a Fund or any person controlling, 

controlled by or under common control with any 

of these entities. 

only on the settlement cycle of the U.S. 

securities markets but also on the 

delivery cycles in local markets for 

underlying foreign Portfolio Securities 

held by the Foreign Funds. Applicants 

state that current delivery cycles for 

transferring Portfolio Securities to 

redeeming investors, coupled with local 

market holiday schedules, in certain 

circumstances will cause the delivery 

process for the Foreign Funds to be 

longer than seven calendar days. 

Applicants request relief under section 

6(c) of the Act from section 22(e) to 

allow Foreign Funds to pay redemption 

proceeds up to 15 calendar days after 

the tender of the 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

8. Applicants state that Congress 

adopted section 22(e) to prevent 

unreasonable, undisclosed and 

unforeseen delays in the actual 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 Prospectus and/or SAI 

with respect to each Foreign Fund, will 

identify (a) those instances in a given 

year where, due to local holidays, more 

than seven days will be needed to 

deliver redemption proceeds and will 

list such holidays, and (b) the maximum 

number of days needed to deliver the 

proceeds, up to 15 calendar days. 

9. 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) of the Act 

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

prohibits a registered investment 

company from acquiring shares of an 

investment company if the 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, or any other broker or 

dealer from selling its 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. 

11. Applicants request relief to permit 

Investing Funds (as defined below) to 

acquire Shares in excess of the limits in 

section 12(d)(1)(A) of the Act and to 

permit the Funds, their principal 

underwriters and any broker or dealer 

registered under the Exchange Act 

(‘‘Brokers’’) to sell Shares to Investing 

Funds in excess of the limits in section 

12(d)(l)(B) of the Act. Applicants 

request that these exemptions apply to: 

(a) Any Fund that is currently or 

subsequently part of the same ‘‘group of 

investment companies’’ as the Initial 

Funds within the meaning of section 

12(d)(1)(G)(ii) of the Act as well as any 

principal underwriter for the Funds and 

any Brokers selling Shares of a Fund to 

an Investing Fund (as defined below); 

and (b) each management investment 

company or unit investment trust 

registered under the Act that is not part 

of the same ‘‘group of investment 

companies’’ as the Funds within the 

meaning of section 12(d)(1)(G)(ii) of the 

Act and that enters into a FOF 

Participation Agreement (as defined 

below) with a Fund (such management 

investment companies are referred to 

herein as ‘‘Investing Management 

Companies,’’ such unit investment trusts 

are referred to herein as ‘‘Investing 

Trusts,’’ and Investing Management 

Companies and Investing Trusts 

together are referred to herein as 

‘‘Investing Funds’’).13 Investing Funds 

do not include the Funds. Each 

Investing Trust will have a sponsor 

(‘‘Sponsor’’) and each Investing 

Management Company will have an 

investment adviser within the meaning 

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

(‘‘Investing Fund Adviser’’) that does not 

control, is not controlled by or under 

common control with the Adviser. Each 

Investing Management Company may 

also have one or more investment 

advisers within the meaning of section 

2(a)(20)(B) of the Act (each, a ‘‘SubAdviser’’). Each Investing Fund Adviser 

and any Sub-Adviser will be registered 

as an investment adviser under the 

Advisers Act. 

12. Applicants assert that the 

proposed transactions will not lead to 

any of the abuses that section 12(d)(1) 

was designed to prevent. Applicants 

submit that the proposed conditions to 

the requested relief address the 

concerns underlying the limits in 

section 12(d)(1), which include 

concerns about undue influence, 

excessive layering of fees and overly 

complex structures. 

13. Applicants believe that neither an 

Investing Fund nor an Investing Fund 

Affiliate would be able to exert undue 

influence over a Fund.14 To limit the 

control that an Investing Fund may have 

over a Fund, applicants propose a 

condition prohibiting the Investing 

Fund Adviser, Sponsor, any person 

controlling, controlled by, or under 

common control with the Investing 

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 the 

Investing Fund Adviser, the Sponsor, or 

any person controlling, controlled by, or 

under common control with the 

Investing Fund Adviser or Sponsor 

(‘‘Investing Fund’s 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 SubAdviser, any person controlling, 

controlled by or under common control 

with the Sub-Adviser, and any 

investment company or issuer that 

would be an investment company but 

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

(or portion of such investment company 

or issuer) advised or sponsored by the 

Sub-Adviser or any person controlling, 

controlled by or under common control 

with the Sub-Adviser (‘‘Investing Fund’s 

Sub-Advisory Group’’). 

14. Applicants propose other 

conditions to limit the potential for 

undue influence over the Funds, 

including that no Investing Fund or 

Investing 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 an 

offering of securities during the 

existence of an 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, 


jlentini on DSKJ8SOYB1PROD with NOTICES
63220 Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 

15Any reference to NASD Conduct Rule 2830 

includes any successor or replacement rule that 

may be adopted by the Financial Industry 

Regulatory Authority. 

16Applicants are not seeking relief from section 

17(a) for, and the requested relief will not apply to, 

transactions where a Fund could be deemed an 

affiliated person, or an affiliated person of an 

affiliated person of an Investing Fund because the 

Adviser, or an entity controlling, controlled by or 

under common control with the Adviser provides 

investment advisory services to that Investing Fund. 

17Applicants state that although they believe that 

an Investing Fund generally will purchase Shares 

in the secondary market, an Investing Fund could 

seek to transact in Creation Units directly with a 

Fund. 

18Applicants acknowledge that the receipt of 

compensation by (a) an affiliated person of an 

Investing Fund, or an affiliated person of such 

person, for the purchase by the Investing 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 Shares to an Investing Fund, 

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

The FOF Participation Agreement also will include 

this acknowledgment. 

19See note 5, supra. 

director, member of an advisory board, 

Investing Fund Adviser, Sub-Adviser, 

employee or Sponsor of the Investing 

Fund, or a person of which any such 

officer, director, member of an advisory 

board, Investing Fund Adviser, SubAdviser, employee or Sponsor is an 

affiliated person (except any person 

whose relationship to the Fund is 

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

an Underwriting Affiliate). 

15. Applicants do not believe that the 

proposed arrangement will involve 

excessive layering of fees. The board of 

directors or trustees of any Investing 

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 be required to find that the advisory 

fees charged under the contract are 

based on services provided that will be 

in addition to, rather than duplicative 

of, services provided under the advisory 

contract of any Fund in which the 

Investing Management Company may 

invest. In addition, an Investing Fund 

Adviser, or Investing Trust’s trustee 

(‘‘Trustee’’) or Sponsor, will waive fees 

otherwise payable to it by the Investing 

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 from a Fund by the Investing 

Fund Adviser, Trustee or Sponsor or an 

affiliated person of the Investing Fund 

Adviser, Trustee or Sponsor, other than 

any advisory fees paid to the Investing 

Fund Adviser, Trustee or Sponsor or its 

affiliated person by a Fund, in 

connection with the investment by the 

Investing Fund in the Fund. Applicants 

also state that any sales charges and/or 

service fees charged with respect to 

shares of an Investing Fund will not 

exceed the limits applicable to a fund of 

funds as set forth in NASD Conduct 

Rule 2830.15

16. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that a Fund will be 

prohibited from acquiring securities of 

any investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

to the extent permitted by exemptive 

relief from the Commission permitting 

the Fund to purchase shares of a money 

market fund for short-term cash 

management purposes. 

17. To ensure that an Investing Fund 

is aware of the terms and conditions of 

the requested order, the Investing Funds 

must enter into an agreement with the 

respective Funds (‘‘FOF Participation 

Agreement’’). The FOF Participation 

Agreement will include an 

acknowledgement from the Investing 

Fund that it may rely on the order only 

to invest in the Funds and not in any 

other investment company. 

Section 17(a) 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 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 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 and any person directly 

or indirectly controlling, controlled by, 

or under common control with, the 

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

provides that a control relationship will 

be presumed where one person owns 

more than 25% of another person’s 

voting securities. The Funds may be 

deemed to be controlled by the Adviser 

or an entity controlling, controlled by or 

under common control with the Adviser 

and hence affiliated persons of each 

other. In addition, the Funds may be 

deemed to be under common control 

with any other registered investment 

company (or series thereof) advised by 

the Adviser or an entity controlling, 

controlled by or under common control 

with the Adviser (an ‘‘Affiliated Fund’’). 

19. Applicants request an exemption 

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

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

Act in order to permit in-kind purchases 

and redemptions of Creation Units from 

the Funds by persons that are affiliated 

persons or second tier affiliates of the 

Funds solely by virtue of one or more 

of the following: (a) Holding 5% or 

more, or more than 25%, of the Shares 

of the Trust or 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 

Affiliated Funds.16 Applicants also 

request an exemption in order to permit 

each Fund to sell Shares to and redeem 

Shares from, and engage in the in-kind 

transactions that would accompany 

such sales and redemptions with, any 

Investing Fund of which the Fund is an 

affiliated person or second-tier 

affiliate.17

20. Applicants contend that no useful 

purpose would be served by prohibiting 

such affiliated persons from making inkind purchases or in-kind redemptions 

of Shares of a Fund in Creation Units. 

All shareholders, regardless of 

affiliation will be given the same 

opportunities with respect to creations 

and redemptions in-kind. The method 

of valuing Portfolio Securities held by a 

Fund is the same as that used for 

calculating in-kind purchase or 

redemption values and neither it nor the 

composition of a Fund Deposit or Fund 

Redemption will vary with the identity 

of the purchaser or redeemer. Therefore, 

applicants state that in-kind purchases 

and redemptions will afford no 

opportunity for the specified affiliated 

persons of a Fund to effect a transaction 

detrimental to the other holders of 

Shares. Applicants also believe that inkind purchases and redemptions will 

not result in abusive self-dealing or 

overreaching of the Fund. 

21. Applicants also submit that the 

sale of Shares to and redemption of 

Shares from an Investing Fund satisfies 

the standards for relief under sections 

17(b) and 6(c) of the Act. Applicants 

note that any consideration paid for the 

purchase or redemption of Shares 

directly from a Fund will be based on 

the NAV of the Fund in accordance with 

policies and procedures set forth in the 

Fund’s registration statement.18

Applicants also state that the proposed 

transactions are consistent with the 

general purposes of the Act and 

appropriate in the public interest. 

Applicants’ Conditions 

Applicants agree that any order of the 

Commission granting the requested 

relief will be subject to the following 

conditions:19


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 63221 

A. Actively-Managed Exchange-Traded 

Fund Relief 

1. Each Prospectus will clearly 

disclose that, for purposes of the Act, 

Shares are issued by a Fund 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 FOF Participation 

Agreement with the Fund regarding the 

terms of the investment. 

2. As long as each Fund operates in 

reliance on the requested order, the 

Shares of the Funds will be listed on a 

Stock Exchange. 

3. Neither the Trust nor any Fund will 

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

fund. Each Fund’s Prospectus will 

prominently disclose that the Fund is an 

actively managed exchange-traded fund. 

Each Prospectus will prominently 

disclose that the Shares are not 

individually redeemable shares and will 

disclose that the owners of the 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 the Shares are not 

individually redeemable and that 

owners of the Shares may purchase 

those Shares from the Fund and tender 

those Shares for redemption to the Fund 

in Creation Units only. 

4. The Web site for each Fund, which 

is and will be publicly accessible at no 

charge, will contain the following 

information, on a per Share basis, for 

each Fund: (a) The prior Business Day’s 

NAV and the reported closing price, and 

a calculation of the premium or 

discount of such price against such 

NAV; and (b) data in chart format 

displaying the frequency distribution of 

discounts and premiums of the daily 

closing price against the NAV, within 

appropriate ranges, for each of the four 

previous calendar quarters. 

5. The Prospectus and annual report 

for each Fund will also include: (a) The 

information listed in condition A.4(b), 

(i) in the case of the 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) calculated on a per 

Share basis for one, five and ten year 

periods (or for the life of the Fund), the 

cumulative total return and the average 

annual total return based on NAV and 

closing price. 

6. On each Business Day, before 

commencement of trading in Shares on 

the Stock Exchange, the Fund will 

disclose on its Web site the identities 

and quantities of the Portfolio Securities 

and other assets held by the Fund that 

will form the basis for the Fund’s 

calculation of NAV at the end of the 

Business Day. 

7. The Adviser or Fund Sub-Adviser, 

directly or indirectly, will not cause any 

Authorized Participant (or any investor 

on whose behalf an Authorized 

Participant may transact with the Fund) 

to acquire any Deposit Security for the 

Fund through a transaction in which the 

Fund could not engage directly. 

8. 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 actively managed 

exchange-traded funds. 

B. Section 12(d)(1) Relief 

1. The members of the Investing 

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 the Investing 

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 voting 

securities of a Fund, the Investing 

Fund’s Advisory Group or the Investing 

Fund’s Sub-Advisory Group, each in the 

aggregate, becomes a holder of more 

than 25 percent of the outstanding 

voting securities of a Fund, it will vote 

its Shares of the Fund in the same 

proportion as the vote of all other 

holders of the Fund’s Shares. This 

condition does not apply to the 

Investing Fund’s Sub-Advisory Group 

with respect to a Fund for which the 

Sub-Adviser or a person controlling, 

controlled by or under common control 

with the Sub-Adviser acts as the 

investment adviser within the meaning 

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

2. No Investing Fund or Investing 

Fund Affiliate will cause any existing or 

potential investment by the Investing 

Fund in a Fund to influence the terms 

of any services or transactions between 

the Investing Fund or an Investing Fund 

Affiliate and the Fund or a Fund 

Affiliate. 

3. The board of directors or trustees of 

an Investing Management Company, 

including a majority of the disinterested 

directors or trustees, will adopt 

procedures reasonably designed to 

assure that the Investing Fund Adviser 

and any Sub-Adviser are conducting the 

investment program of the Investing 

Management Company without taking 

into account any consideration received 

by the Investing Management Company 

or an Investing Fund Affiliate from a 

Fund or a Fund Affiliate in connection 

with any services or transactions. 

4. Once an investment by an Investing 

Fund in the Shares exceeds the limit in 

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

Board of a Fund, including a majority of 

the disinterested Board members, will 

determine that any consideration paid 

by the Fund to the Investing Fund or an 

Investing Fund Affiliate in connection 

with any services or transactions: (i) Is 

fair and reasonable in relation to the 

nature and quality of the services and 

benefits received by the Fund; (ii) 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 (iii) 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). 

5. The Investing Fund Adviser, or 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Investing Fund in an amount at least 

equal to any compensation (including 

fees received pursuant to any plan 

adopted by a Fund under rule 12b–l 

under the Act) received from a Fund by 

the Investing Fund Adviser, or Trustee 

or Sponsor, or an affiliated person of the 

Investing Fund Adviser, or Trustee or 

Sponsor, other than any advisory fees 

paid to the Investing Fund Adviser, or 

Trustee or Sponsor, or its affiliated 

person by the Fund, in connection with 

the investment by the Investing Fund in 

the Fund. Any Sub-Adviser will waive 

fees otherwise payable to the SubAdviser, directly or indirectly, by the 

Investing Management Company in an 

amount at least equal to any 

compensation received from a Fund by 

the Sub-Adviser, or an affiliated person 

of the Sub-Adviser, other than any 

advisory fees paid to the Sub-Adviser or 

its affiliated person by the Fund, in 

connection with the investment by the 

Investing Management Company in the 

Fund made at the direction of the SubAdviser. In the event that the SubAdviser waives fees, the benefit of the 

waiver will be passed through to the 

Investing Management Company. 

6. No Investing Fund or Investing 

Fund Affiliate (except to the extent it is 

acting in its capacity as an investment 


jlentini on DSKJ8SOYB1PROD with NOTICES
63222 Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 

1Claymore Exchange-Traded Fund Trust, et al., 

Investment Company Act Release Nos. 27469 (Aug. 

28, 2006) (notice) and 27483 (Sept. 18, 2006) 

(order), as amended by Investment Company Act 

Release Nos. 27982 (Sept. 26, 2007) (notice) and 

28019 (Oct. 23, 2007) (order). 

adviser to a Fund) will cause a Fund to 

purchase a security in an Affiliated 

Underwriting. 

7. The Board of the Fund, including 

a majority of the disinterested Board 

members, will adopt procedures 

reasonably designed to monitor any 

purchases of securities by the Fund in 

an Affiliated Underwriting, once an 

investment by an Investing 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 Investing Fund in the 

Fund. The Board will consider, among 

other things: (a) Whether the purchases 

were consistent with the investment 

objectives and policies of the Fund; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders. 

8. Each Fund will maintain and 

preserve permanently in an easily 

accessible place a written copy of the 

procedures described in the preceding 

condition, and any modifications to 

such procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in Affiliated Underwritings 

once an investment by an Investing 

Fund in the securities 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. 

9. Before investing in a Fund in 

excess of the limit in section 

12(d)(1)(A), an Investing Fund will 

execute a FOF Participation Agreement 

with the Fund stating that their 

respective boards of directors or trustees 

and their investment advisers, or 

Trustee and Sponsor, 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), an Investing Fund will 

notify the Fund of the investment. At 

such time, the Investing Fund will also 

transmit to the Fund a list of the names 

of each Investing Fund Affiliate and 

Underwriting Affiliate. The Investing 

Fund will notify the Fund of any 

changes to the list as soon as reasonably 

practicable after a change occurs. The 

Fund and the Investing Fund will 

maintain and preserve a copy of the 

order, the FOF Participation Agreement, 

and the list with any updated 

information for the duration of the 

investment and for a period of not less 

than six years thereafter, the first two 

years in an easily accessible place. 

10. Before approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Investing 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 Investing 

Management Company may invest. 

These findings and their basis will be 

recorded fully in the minute books of 

the appropriate Investing Management 

Company. 

11. Any sales charges and/or service 

fees charged with respect to shares of an 

Investing Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in NASD Conduct Rule 2830. 

12. No Fund will acquire securities of 

any investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

to the extent permitted by exemptive 

relief from the Commission permitting a 

Fund to purchase shares of a money 

market fund 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. 2010–25866 Filed 10–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29458; 812–13657] 

Claymore Exchange-Traded Fund 

Trust, et al.; Notice of Application 

October 7, 2010. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application to amend 

a prior order under section 6(c) of the 

Investment Company Act of 1940 

(‘‘Act’’) granting 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 sections 6(c) and 

17(b) of the Act granting an exemption 

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

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

granting an exemption from sections 

12(d)(1)(A) and (B) of the Act (‘‘Prior 

Order’’).1

SUMMARY OF APPLICATION: The Prior 

Order permits: (a) Open-end 

management investment companies, 

whose series are based on certain equity 

or fixed-income securities indexes 

(each, an ‘‘Underlying Index’’), to issue 

shares of limited redeemability; (b) 

secondary market transactions in the 

shares of the series 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 affiliated 

persons of the series to deposit 

securities into, and receive securities 

from, the series in connection with the 

purchase and redemption of 

aggregations of the series’ shares; (e) 

under certain circumstances, certain 

series to pay redemption proceeds more 

than seven days after the tender of 

shares; 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 of the series. 

Applicants seek to amend the Prior 

Order to: (a) Permit certain Funds (as 

defined below) to track an Underlying 

Index that is created, compiled, 

sponsored, or maintained by an index 

provider (‘‘Index Provider’’) that is an 

affiliated person, or an affiliated person 

of an affiliated person, of the Fund, its 

investment adviser, distributor, 

promoter, or any sub-adviser to the 


jlentini on DSKJ8SOYB1PROD with NOTICES